Royal Caribbean Cruises Ltd. faces challenges in integrating IT with business needs and adopting new technologies. The CIO implemented a strategy to (1) better serve customers and leverage IT for competitive advantage, (2) overhaul legacy systems through major projects to automate supply chain and employee/customer systems, and (3) adapt to financial impacts of 9/11 by scaling back projects while maintaining infrastructure. This strategic IT transformation aims to provide flexible, centralized systems to meet changing business demands.

1. Royal Caribbean Cruises Ltd.
IT Strategy

2. Company Background
• RCCL sailed across globe
• RCCL – Founder, Edwin W. Stephan in 1969 • Avoid Too much homogenization
• First office – Miami (HQ) • Silverwhere program – Cost same
• Song of Norway in 1970 – 724 capacity irrespective of the number of ships
• In 2003 – RCCL was the number 2 company • RCCL offers – Royal Caribbean
stands behind Carnival Cruse Company International(16) and Celebrity Cruises.(9)
• 27 million passengers per year
TEAM 4

3. Industry Background
• 9/11, SARS, War in Iraq, uncertain winter and
• Ranked 2 in industry. spring in 2003
• Deployed Ships to US port in addition to Miami
• Carnival Corporation – 13 Brands and 66
• Price cut due to geopolitical uncertainties,
ships. weakening economy, increased capacity
• RCCL – 2 Brands and 26 ships • Last minute deal to fill their berth
• Norwegian Cruise Lines - 3 brands and • Pressure from agents on 15% commission
18 ships
TEAM 4

4. Industry Background
• Travel Agents input – specific cruise options,
• Distribution selected itineraries to fit customer need.
• 98% of booking were done through Travel • 5 call centre – Miami (400), Wichita (500),
Agents London (40), Oslo (10), Genoa (10)
• 50% online – 50% call center • No Growth / Low Growth
• Cruise is opposed to an air ticket • Industry wide supply of berth was increasing
• Cruise Match 2000 - RCCL the first to provide • Stock price dropped from $34 in may 2002 to
areal time fully automated reservation system $20 in March 2003
TEAM 4

5. Corporate Strategy • Enhancing the guest experience
• Core proposition • Silverwhere Program
• Reducing cost • Internet Cafes
• Shore excursion booking system • Debark Card
• Supply chain issues • Increasing revenue
• Variety and Logistics • Internet Cafes
• Connectivity • Shore excursion booking system
• Planned maintenance • Replacing diesel engines with gas engines
• Food & beverage • Williams’ Thought
TEAM 4

6. Era of Jack Williams
From 8 to 25 Workforce Modern day External Planning
ships Doubled tools Recruitment Committee
TEAM 4

7. IT @ Caribbean
• Two sided challenge that Jack Williams, COO
• Until 1997 faced:
• Technically focused remote unit • To change what IT was doing !
• Seen as a standalone unit organizationally • Integrate it with firm’s real needs !!
• Regarded poorly by other departments • Thomas Murphy, CIO
• Lacked vision or strategy
• Started developing its own software packages, • Mission: Shake things up at a 2.9 billion $
which were not so great organization and bring it into the digital world.
• No email connectivity and access to data
TEAM 4

8. Murphy’s Strategy
• Leap-Frog Project
• Quantum leap forward in IT’s support to business
• Serve IT customers @ 110 % [ Customers ->
BU’s ] • 3 main IT projects:
• Supply Chain automation and simplification
• Leverage IT to have a competitive edge • JD Edwards , One World
• Fired managers who showed a “ already tried • Employee Systems
before” attitude • PeopleSoft Shoreside -> Crew management
• Recruited people with a “ can do “ attitude • Customer
• Time management processes & PMO set up • NexGenRes, 50 million $ web enabled reservation
system
TEAM 4

9. 9/11 Impact
• Back to basics: Oct’ 01 – Nov’01
• Impact of 9/11 - Bookings down by 50% • Bringing back email and network services
• Three options • Reconsider Leapfrog.
• Survive and Thrive
• Shelf the entire process except small part of • Restart: November’01 and on
supply chain • Jumpstart, would be number one.
• 33% of IT staff and 90% of contractors layoff • IT Projects broken down to meet cash flow
• IT budget 83 million to 42 million objectives.
TEAM 4

10. IT Operations
• Five year view
• Florida – Operation centre
• Access data anytime, anywhere
• Miami – Primary Data centre
• Consolidate and simplify systems
• Armonk – Disaster Recovery
• Peoplesoft and other packages
• 20 servers per small ship
• Flexible and self healing systems.
• 40 on newer ships
• Focus on centralization – meeting customer
• 295 servers offshore
and business requirements.
• Partners – IBM, Compaq, CISCO and HP
TEAM 4

11. The Challenge
$8 Million Rapid change,
Do nothing..
infrastructure higher budget
TEAM 4

12. $8 Million Infrastructure
• Migration possibility
• IT conservative • From Conservative to Competitive
• Legacy system dependency advantage
• Policy of layoffs • Balance the impacts happened during 9/11
• Employee Morale • Flexible to dynamic customer requirements.
• Economic crisis on the brink • Achieving leapfrog objectives.
• Low growth period
TEAM 4

13. Rapid change, higher budget
• IT is not core competency • Can reach more customers than current
• Chances of loosing out to competitors process.
due to high investment • Edge over competitors.
• Can be invested in core business • High cost saving that will lead to
• Fall back process will be tough achieving organizational goals.
TEAM 4

14. Observations
• IT has become a strategic defence. • Ramped up from the 9/11 impact.
• Late to embrace technology • Clear objectives for IT implementation
• High investments in IT along with high • Aligning business and IT in a line
risk. • Transformation of service into
• IT is not given primary focus. commodity through IT.
TEAM 4

15. Current Scenario
• Online check in - credit card and cash
account
• Cartoon characters – E.g. madagascar,
kungfu panda
• Cruise tours
• Pre cruise planner
TEAM 4

16. Royal Caribbean Cruises Ltd.
IT Strategy