Lecture 18
Case
Royal Caribbean Cruises Ltd
Final Exam Outline
• 12 – 3pm, Wednesday June 14
• Half short and long answers on theory and
principles from course
• Half case-study
• Closed book
• Sample questions next week
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Royal Caribbean Profile
• No. 2 in industry
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Distant 2nd
Profitable (even after 9/11)
Strong balance sheet
Compete on innovation and brand
Built by acquisition and construction of new ships
Very aggressive construction schedule
Wrong side of economic scale
Recently lost large acquisition – morale problems
9/11 massively disruptive
– Recently recovered booking-wise
• Two brands with different images
– Challenge to squeeze back-office costs
– Commoditize standards in operations
– Maintain key elements of brand differentiation
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IT Activities
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Pre-1996
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New IT leadership
Cost frozen, reported to CFO
Budget of $40million
No innovation (even email)
Home-grown legacy systems with code and data mixed together
Low-level support environment
Chosen not to compete in IT
1996 – Sep 10,2001
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Caught up on IT
COO Jack Williams from American Airlines background
Doubled budget 40m to 80m
New staff
Tom Murphy, CEO
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Mike Sutton joined, now CIO
Project Leap Frog conceived and funded
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Typical user background CEO
Limited technical training
Effective change agent
Needs good tech people around
Supply chain
Employee support
Customer interface
200m cost budget
Strategic IT
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9/11
• Middle of repositioning
• Three options
– Modest cutback in development
– Significant reduction in development
– Complete stop of development
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Chose option 3 due to uncertainty
Headcount 50% cut
Budget slashed 83m to 42m
Survial mode
Move from strategic to factory quadrant
Four weeks to cut 50% spending
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Recovery
• How to allocate scarce resources
• How to move from defensive to offensive
• IT priorities managed by committee led by Jack Williams
– Meets 4 times per year
• Research lab on new IT applications for use on ships is
maintained
• Innovation remains important
• Aggressive development of external interfaces
– Sophisticated website
– Still travel agent dominated
– IT enhances sales channel rather than replaces it
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Phasing out legacy systems
Moving to packages with flexible architecture
Operations dependence becoming more critical onshore
Moving supply chain management problem
Compare outsourcing this to Cathay Pacific
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Portfolio of projects
• Exhibit 6
• What should be priority?
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