INDUSTRY TRANSFORMATION WITH BIG DATA Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INDUSTRY TRANSFORMATION WITH BIG DATA Case Study Solution

Introduction & Problem Diagnosis

Revenue Management is one of the most critical elements of the hospitality industry that controls the pricing and distribution of the services of the hospitality industry. Duet to Consulting had been formed to provide consulting services to their customers within the hospitality industry however, the founders of the company had shifted the business model of the company from consulting to revenue management services in 2012. By the summer of 2015, Duet to had grown to $ 7 million in revenues and now it requires series C round of financing to sustain the growth of the company.

Currently, Duet to helps the hotels and provides them with superior revenue strategies. The owners of the company are now striving to make a modern cloud application to meet the needs of their customers within the hotel and travel companies. The tourism and the hotel industry is the target market of Duet to and the main competitors of the company include Maxim, Rainmaker, EasyRMS and IDeaS. The main problem faced by the hotel and travel companies is management of their revenues. As these companies begin to grow in their size, their operations become more complex and thus they face issues with forecasting of demand and the management of the available rooms.

According to Duetto, the only way to maximize the revenues within the hospitality industry is through some optimal strategy. The prices for each room should be set based on the customer segments and the distribution channel. The spreadsheet can also be used along with this to adjust the room rates however, they would have to work with the drawback of this approach, which is that the spreadsheet approach lacks scalability, and it requires a massive amount of the data for its forecasting.

Key Facts

The key facts that determine our primary problem for finding the solutions are as follows:

As stated above the company had traditionally used Excel spreadsheet that lacks scalability and it requires a massive amount of the data for its forecasting.
Duetto believes that they should amend their traditional business model approach and incorporate big data analytics within their operations so that they can determine an optimal strategy for distribution and pricing based on a range of factors. These factors could include channel distribution, room type etc.
Duetto clearly understood the need to develop quickly, iterate fast and ship often.
A multi tenant SaaS approach would allow multiple customers to interact through the software on a cloud server. This would be challenging but it would offer many advantages as compared to the traditional approaches.
Open pricing had not yet been implemented in the industry on a large scale because of computational burden and the volume of rates that had to be transferred to the PMS of the hotel.
Duetto had applied for three patents, which covered many aspects of the intellectual property of the company.

The question in front of the founders of Duetto was sustainability of the growth of the company. Should the company stay true to the original version of helping the hospitality and lodging operators by offering them superior revenue strategy solutions? This could lead to IPO sometime in future. Alternatively, should the company seek early exit by selling their business to a major OTA or revenue management vendor. The company wants to find out that whether it could enter the next growth phase and if they become successful will they be able to go for a successful IPO or not.

SWOT Model

Let us analyze the strengths, weakness, opportunities and threats of Duetto within the hospitality industry:

Strengths

Duetto is the first company to introduce the open pricing strategy within the hospitality industry.
The company has strong management teams, which has always balanced the growth speed of the company and the needs of the customers.
The company had tailored the software to the specific needs of their customers.
The management had integrated the processes, information technology and the structure of the company quite well.
Duet to clearly understood the need to develop quickly, iterate fast and ship often.
The key advantage of the Duet to architecture was evident from the ability to ingest new streams of the digital data, which could improve the accuracy of forecasting.

Weaknesses

The company faced financing difficulties many times. It was currently also seeking for series C financing.
The open pricing strategy had resulted in increased complexities for the business model of the company.
Open Pricing had never been implemented in the industry previously. The owners were unsure that whether such strategy would work in the hospitality industry or not................

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