How About the CompanyBy Baselinemag | Posted 2005-06-09 Print
Why did Starwood Hotels pick software from PurchasePro—three months after the dot-com filed for bankruptcy?
?"> "I still believe it's one of the best pieces of software that came out of the Internet boom," says John Noller, BuyEfficient's chief operating officer.
PurchasePro had hosted the software for BuyEfficient, so bringing it in-house required Noller to hire an Oracle database administrator and three other software developers, though he says he had plenty of time to make the switch. "You have to cross the T's and dot the I's early on," he says. "You need to be prepared to operate the software if and when that day arrives."
Hilton, another PurchasePro customer, had a different escape hatch. When PurchasePro's financial trouble worsened, the company migrated to software developed by contract programmers PurchasePro had hired, according to Tony Nieves, Hilton's senior vice president of supply management. "We were very fortunate with that whole scenario," he says.
Those programmers later formed Birch Street Systems, a provider of hosted e-commerce software in Newport Beach, Calif., which today runs Hilton's online procurement system. Nieves, for one, has no interest in owning software or even operating it. "We're in the hotel business," he says. "For us, the technology was always an enabler, but it was not a replacement for strategic sourcing."
Starwood's Shanholtz, though, claims that owning PurchasePro's application will be more cost-effective in the long run than using any other software or service—even considering that it will take a staff of 10 full-time employees, including five software developers, to maintain and improve the system.
The hotel chain originally outsourced hosting and maintenance of the software to Perfect Commerce. But Shanholtz says Perfect Commerce was "slow to react" to some of Starwood's needs. For example, Starwood wants to ensure that all purchase orders have gone through appropriate checks and balances to comply with the Sarbanes-Oxley Act, which requires public companies to document financial reporting processes.
David Rowe, Perfect Commerce's vice president of marketing, says his company was willing to do the customization work Starwood requested but that both parties eventually agreed the best outcome would be for Starwood to take over operation of the application.
As of March, Starwood now runs the PurchasePro application out of its data center in Phoenix. In one more twist of fate, the company has hired one of the original systems architects who designed the PurchasePro software. And so far, Shanholtz has no regrets: "It was the right thing to do for Starwood."
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