Surveying the IT field
Surveying the IT fieldCasino IT executives seek to improve systems, with only modest staff increases
WhiteSand Consulting is a Las Vegas-based firm that provides strategy, operations and technology services consulting for the
gaming and hospitality industries. For more information on the company, visit www.whitesandconsulting.com.
Some resource demand issues, such as staff size and composition, system security, and finding the best mix of outsource and in-house resources, are common challenges in all industries. Other issues involve innovation, such as new analytical uses of customer transaction information to segment customers, optimize customer incentive programs, and make product selection and distribution decisions.
To understand how the industry is addressing these issues, WhiteSand Consulting surveyed casino IT executives in March. The IT executives that participated in the online survey include corporate level executives in organizations with multiple casinos (25 percent of survey respondents) and property level executives in casinos that are part of multiple location corporations (25 percent of survey respondents) or a single location (50 percent of survey respondents). The casinos included in the survey are located in 12 different states. Here are some highlights:
Top strategic issuesTo start, improving IT security is a top priority issue for almost all the casinos. This strong consensus is not surprising given the increased concern about electronic and physical security throughout the entire society. This multi-faceted goal includes controlling access to the casino's Web site, remote access to proprietary databases, and internal security for IT activities at the casino or corporate headquarters.
Another top-of-mind issue with IT executives is data mining analytical techniques, which have been promoted as an aid to more efficient and profitable marketing in many customer-centric industries and by the largest casinos (see case studies in the October and December 2003 issues of Casino Journal). There is now a consensus among casinos that more sophisticated analysis of player information should be used for optimizing player reward programs. Two out of three casinos give top priority to improving their ability to analyze their player database to better allocate player rewards.
Meanwhile, less than half of the casinos said that Web site improvements to promote players' using it for reservations, checking rewards points, and learning about casino events is a top priority, although all but one casino said it is a goal. This lower priority for improving Web site usability could be due to satisfaction with the current state of the Web site or a
perception that the Web site is not yet a significant channel for customer contact. In addition, less than a third of the
casinos give top priority to improving their data collection and analytic abilities to select and place specific slot machines on the casino floor.
Whatever IT improvements are made will be accomplished without replacing their current systems. Only one casino expects to replace its slot system and only four expect to replace their marketing systems within the next two years.
In corporations with multiple casinos, IT strategies can be implemented on a corporate or individual casino level. The decision of which level is best depends, in part, on the organizational issue of whether or not to consolidate the databases and analytical activities. There is an even split on which approach is best. Half the corporations with multiple casinos already have combined or will in the next 12 months combine player databases from all properties for centralized processing and analysis. The other half, those corporations that will maintain separate databases at each casino, are themselves evenly split on whether or not the same data warehousing and analysis applications should be used at each property.
There is a similar split in the organizational approach to decisions about applications programming and the
actual programming. Corporate level IT staff make the decisions and do the programming in half of the multiple casino organizations. The IT staff at individual properties make the decisions and do the actual programming in the other half of multiple casino organizations.
Resources remain the sameWhatever IT improvements a casino decides to make, chances are it will be accomplished by in-house staff. IT executives surveyed said improving Web site usability is the only task where a substantial minority (four out of 10) will use outside consultants or developers.
Indeed, outsourcing IT activities is not yet a common practice in the industry. Only one casino in six is currently or may outsource some or all of their database management and analytical activities to a vendor. One-third have considered and rejected the idea and half have not even considered it.
This lack of outsourcing may be a reason why one in four casinos expect to increase their IT staff within the next 12 months. These increases will be in mid-level positions (programmers, managers, PC support, and business analysts). There will be little or no increase in operators.
When it comes to finding these new employees, the majority of IT executives do not think gaming industry experience is very important in hiring decisions for most IT positions, including the most senior IT director position. The majority thinks prior industry experience is very important for only one position: business analyst.
And survey results show the gaming industry is willing to pay for IT talent. The most senior IT position in the casino has a median total compensation of $100,000, which is consistent with the median total compensation of $119,000 for CIOs and $96,000 for CTOs as measured in a large scale survey of IT professionals (2003 National IT Salary Survey published by InformationWeek Research).
Despite a willingness to pay for top IT management, increases in casino efficiency and profitability from IT improvements will likely come from modest staff growth and a continued dependence on primarily in-house resources. There is no widespread movement towards using outside consultants and developers to improve internal operations or towards the even more dramatic action of outsourcing database management to a vendor.
Perhaps these options will become more attractive if consolidation of individual properties' databases and the demands for more analysis strain current internal IT resources. CJ