Royal Caribbean Cruises Limited Made Efforts to Adapt to the Paradigm Shift of Information Technology and Its Function Within the Ever-Growing Cruise Line Industry free essay sample

Royal Caribbean Cruises Limited made efforts to adapt to the paradigm shift of Information Technology and its function within the ever-growing cruise line industry Jesse Brothers Abstract Royal Caribbean Cruises Limited (RCCL) was founded in 1969. They currently operate under the brands of Royal Caribbean International, Celebrity Cruises and Pullmantor. Predominantly known as the second largest cruise ship company behind Carnival Cruises, RCCL still has a firm hold on cruise ship market share. According to their website, RoyalCaribbean. com, RCCL brought in net revenues of over $607 million in 2011, which is up from $515 and $152 million in 2010 and 2009, respectively. They used their fleet consisting of 39 ships to make approximately 92,000 berths last year†¦ but things were not always looking so optimistic for Royal Caribbean Cruises Limited. Problem Statement Things were looking up for RCCL and their hiring of high level IT personnel have led to advancements in the company’s IT infrastructure and future technology endeavors. We will write a custom essay sample on Royal Caribbean Cruises Limited Made Efforts to Adapt to the Paradigm Shift of Information Technology and Its Function Within the Ever-Growing Cruise Line Industry or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page But ultimately, the company had three strategic goals of (1) Enhancing Guest Experience (2) Reduce Costs and (3) Increase Revenues to try to set themselves apart within the cruise industry as they tried to make the leap into the â€Å"digital† age. But given the events of 9/11 and its impact on the industry, how would RCCL optimize its IT spending especially if it is still working on an â€Å"analog† budget? Background Dating back to the 90’s, RCCL has always been the proverbial second fiddle to Carnival Cruises. RCCL’s Chairman and CEO, Richard Fain, noticed that the primary reason for Carnival’s success was their ability to drive down marginal costs per ship by â€Å"standardizing its fleets down to details as small as bedspreads and barstools† (McFarland, 2003). However, it was important to Fain for each RCCL ship to have its own identity. So, the problem in front of the long time CEO and Chairman was high would RCCL take steps toward a bigger market share without compromising its differentiation between Carnival and other cruise ship organizations. For Fain, the answer would be to move RCCL into the digital age. So in April of 1999, Fain brought in a new CIO named Thomas Murphy to lead the paradigm shift. Murphy, with a IT background in the hospitality industry, immediately made an impact as people titles were changed and some positions were even eliminated in an attempt to change the overall outlook of RCCL’s staff, both high and low level, had toward its own IT department. Murphy was once quoted saying, â€Å"there was a huge disconnect in their thinking, a gap that had kept IT and the business apart† (Hughes, 2001). Murphy’s first projects were implemented and received well both by customers and by RCCL’s employees. The first major change was to hire IMB Business Services as a consultant to link together RCCL’s shore-side and on-board technology systems. The second major change was the improvements made were to the previously mentioned shore excursion program and the switch from diesel to gas engines. At this point, the buy-in from the board and staff for the new and improved IT department was completely formulated. The next big project for Murphy and his department was called â€Å"Leapfrog†. This was supposed to be what helps RCCL move into the number one spot for cruise line industry market share. Leapfrog consisted of 3 main IT projects: 1) Supply Chain – automate and simplify the shore-side purchasing and procuring processes 2) Human Resource – automate employee tracking software to help with training and knowledge management 3) Customer Service Upgrade – create a new and improved reservation tool for customers to synchronize all reservation systems for the company and to help sales and marketing utilize the data being collected Leapfrog was set to be a $200 million project that also helped make it affordable to launch 4 new ships and hire 20k more employees. The entire IT infrastructure was going to be revamped, including more servers, new networks and other IT service components. Sink or Swim: the fallout from 9/11 attacks The old adage goes, â€Å"you have to spend money to make money†. Well, after the 9/11 terrorist attacks, RCCL executives knew that making money was going to be a lot more difficult. They lost 50% of their 4th quarter bookings within a week of those attacks and Q1 of 2002 was starting to look bleak as well. Fain quickly gathered his executive team and made a decision that ultimately would affect the company’s future financials for several years. He concluded that there were three avenues that RCCL could possibly go toward now. â€Å"The first option was to slow down and cut 25% off some projects: the second one consisted of shelving some of them[projects] completely, reducing overall costs by 50%; while the third was to shelve the whole thing except for a small part of the supply chain†¦ Fain decided to go for the third option† (McFarlan, 2003) Over the next few weeks, hundreds of employees were laid off and Murphy saw his annual budget cut in half. He knew that the only way to stay afloat was to start thinking smaller. He called the next methodology RCCL would adapt, â€Å"micro-strategy† which he defined as â€Å"the stepping stone strategies needed to be nimble and adaptable within the context of preserving long-term goals† (Hughes, 2002). So for the next year and a half, Murphy spent any monies his department had on shoring the core infrastructure of RCCL, most notably: Network services, Email services and other utilities that people always expect to work when needed. Utilizing these core small strategies, Murphy was able to keep RCCL IT department afloat through 2004, his final year at the company. IT Makeup and Infrastructure Vision Statement Corporate Strategy: The Solution RCCL has three main goals that incorporate its main strategy as it prepares to enter the digital age of the 21st century. The first and foremost being to enhance the guest experience which of course fits in perfectly with the company’s vision statement. An example of this focus is the â€Å"Silverwhere† program, which is not just a clever name but is a software program that links together people of common interests at dinner in hopes of making their dinner and ultimately, vacation, more enjoyable. The ships have also incorporated Internet Cafes that are being put to good use by the customers who want to stay connected while at sea. One final way to enhance the guest experience while on a cruise is the automated disembarkation process or also known as the debark card. The card saves the customer the headache of trying to leave the ship and having to having to fill the necessary paperwork on the same day. According to the case, â€Å"the debark card captured the information required by the INS and was printed the night before debarkation and delivered to each guests’ room (McFarlan, 2003). The second corporate strategy is to of course, reduce costs. One of the most critical functions for a successful cruise company is to have a successful supply chain management structure in place. â€Å"A cruise ship as a floating city posed exceptionally complex supply-chain issues as a result of several factors: most notably, Variety, Logistics and Connectivity† (McFarlan, 2003). Variety is a critical factor because the ship has two key yet differing functions, which are hotel supply and technical supply. Logistics from simply having the aforementioned â€Å"floating city† aspect which made errors almost impossible to correct once the ships left port. Connectivity was also an issue back in the early 2000’s as the satellite positions could dictate whether guests and crew were able to access the Internet. Most cruises have multiple excursions planned throughout its duration. The online excursion booking allows the customer to book the excursions online at their convenience. This not only helps save the customer time but it also allows them to spend more time in the ship. This usually helps bring in more revenue as well. Speaking of revenue, that is the third and final main goal of the RCCL executive staff. As previously mentioned, RCCL provided Internet Cafes that charged $. 50 per minute for guests and $. 10 per minute for crew. Lastly, RCCL decided to make the change from diesel engines to gas engines. Although the fuel costs were higher now, they were more than offset by the extra combine space created. Plus, customers found the cruises to be more enjoyable with the reduced engine noise. These advancements would not have been possible without first bringing the right personnel to have vision and knowledge to implement such technical programs as the online shore excursions and updates to the website. These personnel have to have the intuitiveness to not only be creative with new ideas but also make sure said ideas are in line with the corporate goals of RCCL. Though the technology had not yet been developed, the ultimate goal was to have â€Å"each ship is a fully redundant system, where an authorized user could access data anytime, anywhere† (McFarlan, 2003). Moving forward to present day, once the available technology was literally feasible, Murphy’s dream would come true even if he was not there to see it come to fruition. RCCL’s ships would be streamlined and be more efficient. They would be self-troubleshooting and centralized. Fleets would have full communication with the shore-side infrastructure and give the ability to drive down costs while remaining efficient. The graph below shows the increases in total fleet. Then, there is a graph showing the capital expenditures for RCCL going back to before Thomas Murphy was hired as CIO in 1999.