Master of Information System Competition

Claudia MariaDanny KimMohan Qian

Transformation ITPaving the Path to LDI’s Long Term Success

Leisure Destination International

February 20, 2015

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1. LDI’s Success and Challenges

2. Recommendations

6. Risk & Mitigation

7. Conclusion

5. Cost & Benefit Analysis

A. Recommendation in a GlanceB. IT Platform StandardizationC. SAP ERP IntegrationD. Database and Cloud Computing

4. Implementation Timeline

8. Appendices

3. IT Team Restructuring

Agenda

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LDI is a global leader in development and operation of resorts but is outgrowing its traditional business structure

11 mountain resorts, 29 golf

courses, 13 resort villages in

North America, EMEA, Asia, and

the CaribbeanNetwork offers all-year-round

high quality resort experience

Wide Network of Resorts

Over $1 billion in revenue (2014)

Successful marketing initiative last year led to 30% increase in sales of frequent skier passes

Strong Financial Results

Market share of North American skier visits grew 11% last year

12 new resorts are planned to open in next 5 years

Momentum for Growth

LDI needs to redesign IT infrastructure to sustain its growth

Inefficient Use of Internal Expertise and

Resources

Complex IT Infrastructure

Lack of IT Support for Issues throughout

Resorts

1

2

3

Every new expansion location requires replication of a full development team

Regional Information Officers in each of 6 operation regions work independently and devise their own system standards

Unstandardized hardware platforms increase work load for troubleshooting and maintenance

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Springfield Hospital Will Save Thousands With RFID

SAINT LUKE’S USES RFID TAGGING TO STREAMLINE INVENTORY MANAGEMENT, IMPROVE BILLING ACCURACY AND CUT COSTS

• Motorola- FX7400 RFID fixed readers- AN480 RFID antennas- MC70 mobile handheld computers• Cenbion Medical inventory management software• RFID Global Solution – Site design and installation services• Coridian Technologies, Inc - Tag supplier

FX7400 RFID Reader AN480 RFID antenna

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LDI will take these sequential steps to standardize its IT platform and applications for use in its business functions

TechnologyHuman Capital

Financial Performance

Different computer OS systems and user

configurations

Too many different system settings to

keep track for quick IT troubleshooting

Standardize all computer systems into a single OS under one administrator configuration

Applications built by different parties

IT budget spent on multiple vendors

and obscured maintenance roles

Adopt one powerful ERP that has modules which can be customized to extend its functions to meet various business needs

Different servers for different computer

systems and multiple data

centers

Multiple configuration settings and

frequently lagging connection

Consolidate data centers into one to streamline data flow and accelerate network with a faster data-sharing option

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LDI needs to change its computer systems into a standardized OS platform under one configuration, in parallel with interim application support

Already in-use and system familiarity requires less

training

LDI’s vital RESERVE system, which four of our

major resort operation systems interface with,

operates on AS/400

Reliable and consistent maintenance support from

IBM

Competence in solving security issues

Built-in and scalable single level data storage

(DB2/400) to streamline the data flow

Business Services that need change of OS

system:

Unix:

Costumer Relationship Management

(outsourced)

Web-Site Management (off-the-shelf)

Windows:

Financial Management (SAP)

Material Management (SAP)

Ski Management (off-the-shelf)

Golf Management (off-the-shelf)Technology

Human Capital


Benefits of AS/400 OS

Comparison of OS OptionsAS/400 Windows Unix

License Cost Labor Cost Data Storage Time to Merge Compatibility Security

Business Services already adopting

AS/400:

Human Resource Management

Reservation Management

(RESERVE)

Lodging Management

Club Management

LDI 7TechnologyHuman Capital


FinancialManagement

Customer Relationship Management

Material Management

Human Resource

Management

Lodging, Ski, Golf, Club

Management

Reservations Management

Marketing and Sales

Management

Management has interest in further

implementing SAP modules (Human Resource

Management)

Many module options available to extend

features to suit additional customization

needs

Cloud and mobile computing are supported

and being actively developed to facilitate

real-time networking

System familiarity and reliable support from

SAP

Key Benefits of SAP ERP

Consolidation of multiple management systems into a single ERP makes it easier to perform back-office functions

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Cloud computing supported for both public and private

clouds greatly enhance connectivity

How does DB2 Accelerate Data Traffic?

Reduces data movement by pushing down computations to in-memory platform where data sits

Dynamic reporting feature enables analysis and simulation of organizational changes

Boosts all background processes like system backup, replication, and recovery

IBM DB

platform

Application

Server

Middleware

serverDatabase server

Compatible database system streamlines data flow and enables faster data access through cloud computing



Tight integration between the database and IBM’s OS

maximizes data accessibility and incurs no

additional setup costFaster and More

Stable Network

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Resolve tickets, manage service requests, interact with users

Link related incidents to problems, identify root causes, and notify all affected users with a single update

Push answers to the knowledge base for even quicker resolution

Measure users' satisfaction and the performance of the team

Publish FAQs and how-tos, and keep users informed through community announcements



LDI needs to re-define role of IT staff in the Service Desks and Help Desks to improve customer experience and share of knowledge

Role of IT Support Staff

Adequate training in the newly adopted IT platform and

following-up with issues is KEY

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Customer Support Ticket managementMultiple channels

Customer Self-service Knowledge BaseCommunityCustomer PortalContent Management Tools

Branding and Language Customizations

Customer EngagementReporting and AnalyticsSecurity and AccessSAP integration

Benchmarking widely used IT consultation interface can improve interactions with IT Help Desk staffs and follow-ups



ZenDesk (Benchmark)Sample Screenshot of LDI’s Help Desk

Interface

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Centralized IT support team structure can efficiently utilize expertise and human resources in both HQ and regional information branches



SVP,Technology &

CIO

VP, Information Technology

Head of Regional Support

Director,IT Operations

Regional Information

Officers (RIOs)

The Six RIOs who are independent and remote entities from VP of Information Technology will now be placed directly under the CIO’s direct line of duty

Head of Regional Support (new position) oversees the work of RIOs and liaisons with HQ

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SA

P

Imp

lem

en

tati

on

Org

an

izati

on

al

Str

uctu

re201

5 May

June

July

Aug Oct Nov Dec

2016

JanMarFeb Apr

Project Preparation Realization

Go-Live and

Support

Scope Validation

& Blueprint

Final Preparatio

nOperate

Implemented by SAP Project Management Team with ASAP 8 Methodology Framework

2016

May

Awareness &

Education

Elect Head of Regional Support and SAP Team Periodic Maintenance and Communication

Deploy management

changesAdopt Zendesk Training Testing

User Feedback

<───────────── Recommendation strategies over one year ──────────>

Initiate Consult

Use migration methods that can be achieved without disruption to current systems

Plan & Design Transition Operate Close Old

Systems

AS

/40

0

Mig

rati

on

Implementation Timeline



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Costs

Benefits

SAP ERP IntegrationSAP ERP Integration

Labor costs, hardware, software, and implementation costs

Costs are to be incurred incrementally throughout the implementation time

NPV of total costs of $6 million Net cost savings of $5.7 million through adoption of fully-integrated SAP ERP

DB2 can achieve cost saving of up to one-third of using Oracle database ($3 million)

IT Team RestructuringIT Team Restructuring

Initial cost of adopting IT Help Desk interface

Required training for IT staffs

that are assigned to new roles

Reduction or elimination of IT team that support obsolete applications

Centralized IT Help Desks estimate to annual cost saving of $5 million through improved efficiency and less work burden

IT Platform StandardizationIT Platform Standardization

Overall expected platform standardization cost is $210,000 [$21K per individual in project team]

Internal IT Solutions Team need more training to utilize and adapt current management systems No more extension of licenses from multiple software vendors is necessary

IT Team can focus more constructive IT support rather than troubleshooting minor issues



LDI incurs significant investment costs in the first year of IT transformation, but eventually benefit from cost savings and improved efficiency

Annual ROI of 17.1% within the next five years achieved through cost savings*ROI calculation based only on direct cost estimates

identified.See Appendix 3 for references to cost and benefit

estimates.

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Probability

Impact / Consequences

1

Rare

Very Likely

Negligible

Extreme

2

3

Probability-Impact Matrix

14

Risk and MitigationPotential Risks Mitigations

ER

P

Inte

gra

tion

Change in Operating System Servers need to be rebooted

to end the connection with

the old storage system and

re-established with AS 400.

Mig

rati

on

Establish steering committees

with senior executive

representation supported by a

project management office

Develop a project plan with a

realistic timeline, milestones and

contingency

Determine installation order and

audit system configurations

Each server reboot has to be

carefully scheduled on low usage

times.

Conduct unit and integration

testing to ensure full functionality

Restr

uctu

rin

g

Failed ERP Implementation Lack of communication &

slow decision-making

Unrealistic timeline with no

milestones and backup plan

Organizational Resistance Leaving training to a small

phase at the end of the

project makes it very

difficult for users to get the

training they need to

understand the system

1

2

3 Ensemble a change management

team and a formal change

management plan

Educate and make the vision of

change clear

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Transformation IT keeps LDI sustainable in being a global leader

Centralized IT management structure can efficiently capitalize on the expertise of human resources in both HQ and regional offices

Standardization of IT platform and ERP Cloud software will bring LDI immense return of investment

Conclusion

LDI

Questions?

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Appendix 1: Graphic Representation of Cloud Computing from DB2

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Appendix 2A: Old IT Team Structure vs. New IT Team Structure

Current Structure

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Appendix 2B: Old IT Team Structure vs. New IT Team Structure

*

*Suggested

New Structure

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Appendix 3A: Cost Estimate for OS Standardization

*Figures are from a report issued by Hitachi Data Systems (March 2014)

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Appendix 3B: Cost Estimate for SAP Integration

*Figures are from an evaluation report by Forrester Research, Inc. on SAP (April 2014)

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Appendix 3C: Cost Estimate for SAP Integration

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Appendix 3D: Cost Estimate for Adopting IT Help Desk Interface

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Appendix 3E: Net Cost Savings from SAP Integration

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Appendix 4A: Diagram of Fully-Integrated SAP ERP

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Appendix 4B: Detailed ERP Implementation StepsFinalPreparation

Project Preparation Business Blueprint

Realization

Setup of Local ProjectOrganization

Adaption of Strategic Framework

Establish OCM Procedures + Responsibles

Infrastructure Requirementsand Design

Early Adoption of BestBusiness Practice Proceesses

Training andDocumentation Strategy

Data ManagementStandards Implementation

Data Cleansingand Data Preparation

Completion Check & Prepare for Next Phase

General Project Management

RIO BlueprintDocumentation

Security Requirements

Infrastructure Planning

System Operation Stategy

Early Adoption of BestBusiness Practice Processes

Training Planning

Data Cleansingand Data Preparation


OCM OrganizationalAlignment + Change Analysis


OCM

Training Preparation

Configuration &Development

Unit / Process / Integration / Business Acceptance Testing

Early Adoption of BestBusiness Practice Processes

Infrastructure Implementation

Data Preparation & Data Migration Simulation


Cutover Planning & Preparation

Business TransitionPlanning for Cutover


OCM

End User Training

End User Practice in the System

Data Migration to Production

Infrastructure Finalization

Help desk support preparation

Business Simulation

Pre-Go-Live Operations


Final Cutover andControlled Process GoLive

GoLive and Support


OCM

Maintenance and Continuous Improvement

System Support

Business Support

*Reference from SAP official ERP integration procedure

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Hire an SAP Solution Provider and System

Integration partner to provide customization

services for LDI’s reservation needs.Because of the flexibility and easy-to-use

developer tools in the SAP platform, LDI will be

able to extend it and accommodate industry-

specific features and functions.For instance, Epiphany, a software developer

and SAP developer, tailored SAP for an

international restaurant supplier as well as a

firm that rents golf carts. The golf cart rental

business required the tracking of cart

maintenance and repairs for 20,000 golf carts.

Part of SAP’s CRM system add-on

Appendix 5A: Reservation Management Transition through SAP Custom Development Services (Real Example)

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Appendix 5B: Reservation Management Transition through SAP Custom Development Services (Real Example)

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Appendix 6: Case Study – Hotel Hesperia enables rapid growth with SAP

Accelerated integration of new and acquired hotels into the chain. It takes one week

to implement and configure the combined SAP ERP and Simhotel applications and train staff

as opposed to eight weeks before the SAP implementation. Thus, should Hesperia decide to

acquire a group of six hotels, these can become fully integrated into Hesperia within less than

two months instead of a year.

Reduction in accounting support staff per hotel. Four new hotels now result in one

additional central accounting employee whereas previously they would have resulted in five.

Faster performance of key processes. For example, the month-end procedure now takes

five working days as opposed to ten before SAP, while the annual consolidation of accounts

takes four working days compared with twenty before.

Revenue per available room , which is the most important indicator in the hotel industry,

has improved since implementation, partly because of SAP, and partly because of both an

increase in sales and service staff and hotel refurbishments.

*IDC - European Enterprise Applications: Special Study (2006)