Beyond The Margins Survival Strategies Of The Poor......

Royal Caribbean Cruises Ltd. AN IT STRATEGY DISCUSSION......Presented By Milan Jha (023EPGP2013)Ankan Paul (008EPGP2013)Deepika Gupta (011EPGP2013)Prajwal Shetty (000EPGP2013)Saurabh Sawla (037EPGP2013)Gotit Chaudhari (014EPGP2013)

Generate superior returns for our shareholdersBy empowering and enabling our employeesTo deliver the best vacation experienceAnd enhancing the well-being of our communities

VisionCustomer Experience

IT makes a difference

Growth ScenarioFinancials25Ships in the fleet3Ships to be added in 2003-043kEmployees shoreside24kEmployees onboardPays ZERO tax !Business ModelCustomer ExperiencePremium PricingCost ReductionSuperior ProcessesUse of InternetAdvanced IT SystemsFocus on GrowthRapidly growing fleetInnovationInvestment in ITDifferentiationHigh willingness to payCruise line industry$15 billion industry.

three main players : Carnival Corporation (49% market share)Royal Caribbean Cruises Ltd. (RCCL) (31% market share)Norwegian Cruise Lines

RCCL ships operate 2 brands Royal Caribbean International and Celebrity Cruises and under 4 different segments.

Industry heavily impacted by 2 factors:9/11Geopolitical uncertainties

Increase in industry wide supply of berths.

98% bookings made through Travel agent .

Yield management under pressure due to last-minute deals.

Corporate Strategy...3 pronged Enhance Customer Experience

Reduce costs Increase revenues

Enhancing the Guest ExperienceSilverwhere program linking age, nationality, sex, etc. to get more compatible groups at meal. Ability to change guests dining situation quickly.On-board Internet caf for guests to stay connected with outside world.Introduction of debark cards reduction in disembarkation time by 2 hours.

CorporateStrategy

Corporate Strategy cont...Cost ReductionMoving shore-excursion booking to Web, happier customers (confirmed bookings) and more spending in other avenues if booked in advance.Cruise ship is like a floating city posed following supply-chain issues Variety 2 kinds of supply chain hotel and technical. 14K+ SKUs in F&B.Logistics limited time to fill up the ship for the cruise, usually 12 hours only.Connectivity linkages with suppliers was not 24*7 due to satellite issues.Solution to above problems Usage of upgraded JD Edwards (JDE) latest Web-enabled financial system.Implementation of procurement suite, One World.AMOS, information system for ship maintenance was fully implemented.Deployed Crunchtime for F&B management.All above were integrated using thin interface to JDE.

Increasing RevenueShore-excursion program lead to $22 mn revenues in 10 months time.Internet caf web access was chargeable and added further to revenues.Demand determination from a cabins minibar to stock a possibility?Use of technology to replace diesel engines with gas engines enhancing capacity to as much as 55 cabins.Awarded for having best travel web-site.

IT AT ROYAL CARIBBEANUpto 1997:

A standalone remote unit.Not given due importance.Viewed as a cost center.No strategy or vision.

1999:Thomas Murphy joins RCCL as CIO:

110% focus on customer service.Experienced in IT and hospitality industry.REORGANIZATION OF IT DEPARTMENTTwo VPs fired.

Several people resigned due to change.

Some valuable employees like Perry Sandberg brought up the ladder.

New tools like NIKU installed for better controls over efficiency and productivity.LEAPFROG PROJECTSupply Chain: Upgrading JDEs ERP s/w:

Automation and simplification of shoreside purchasing and procurement.Better prices by leveraging bargaining power.Improved inventory planning.Cost reduction.

Employee Systems: Upgrading Peoplesoft Inc system:

Knowledge management system.Crew movement systems.Access to licensing, training and employee background.

LEAPFROG PROJECTCustomer: Web enabled reservation system:

Integration of separate systems like reservation, loyalty, shipboard and revenue systems

To be able to get a holistic view of customers.

Access through a single source.

Internet cafes and interactive TVs on board.IMPACT OF 9/11Bookings down by 50%.

Leapfrog project mostly put on hold.

Budget of the continued part slashed.

50% of IT staff cut.

IT budget cut by 50%.

RECOVERY FROM 9/11Many fired employees were brought back.

Back to basics (Making core processes more efficient):-Focus on basic IT services.-Making core processes like email and network services more efficient.

Restarting Leapfrog Projrct:-Incremental implementation of Leapfrog project -HR tracking part deferred indefinitely.

IT OPERATIONS2 Operation centers: Florida and Miramar. Functioning 24/7.

1 Disaster recovery backup center: Armonk, New York. Functioning 24/7.

Integration lab: Hallendale. For testing of configurations of systems to be installed.

On board: 20 to 40 servers housed in each ships data center.

Maintenance and troubleshooting staff present on each ship.

On shore, 250 servers in Miami including an AS400. 45 servers in Wichita.

R&D EFFORTSBernard Gay VP Enterprise Tech. Operations:Working on VMWare to make a fuller use and consolidation of servers by logically partitioning the memory, processor and disk.

Mike Sutten, VP Product Sales Systems:-Studying performance enhancement by adding more servers in strategic locations.-Working on real time monitoring, alerting and reporting of information through their agentless monitoring tools. FIVE YEAR VIEWConsolidating and simplifying systems of Celebrity and Royal Caribbean International.

Using packages like PeopleSoft and One World instead of the legacy systems and code.

Major focus on security as a result of explosion of online system.

More importance on centralization and flexibility of infrastructure.

Consolidation of servers to drive down costs and increase efficiency.

Strategic gridFactoryStrategicSupportTurnaroundLowHighLowHighPotential Strategic ImpactCurrent Operational DependenceThe ChallengeSingle reservation System (SRS)High cost savings thereby meeting organizational goalRapid expansion of customer baseCompetitive edge Centralization of customer informationInline with the companys objective of growth35% of the top 20 project are part of SRS

SRS - Drawbacks Business Priority 2 Business Investment should be routed to the core business of Supply Chain (post 9/11, 84.44 % reduction in investment)Competitive edge without a strong back-end will be effort wasted

recommendationSRS to be implemented at 8MN over 12 M

Proportionate distribution of funds will help the company grow holistically

Thank You