Case

1
Lecture 18

• Case
• Royal Caribbean Cruises Ltd

2
Final Exam Outline

• 8-11am, Wednesday June 13
• Half short and long answers on theory and
  principles from course
• Half case-study
• Questions from class case studies
• One new case to read (given probably Thursday)
• Closed book
• Sample questions next week

3
Announcements

• Meetings this afternoon for teams who gave me
  draft projects
• 2pm Toyota
• 220pm Wipro
• 240pm Seagate

4
Quiz
5
Survey

• Joseph Rios
• Kevin Ross
• Extra questions
• Pace of course 1(too fast) 5(too slow)
• Hours spent on course
• 10-5 hours, 5 18 hours
• Major
• CE/CS 2 BINF 3 EE 4 ISM 5 OTHER

6
Royal Caribbean Profile

• No. 2 in industry
• 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

7
IT Activities

• Pre-1996
• 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
• Caught up on IT
• COO Jack Williams from American Airlines
  background
• Doubled budget 40m to 80m
• New staff
• Tom Murphy, CEO
• Typical user background CEO
• Limited technical training
• Effective change agent
• Needs good tech people around
• Mike Sutton joined, now CIO

8
9/11

• Middle of repositioning
• Three options
• Modest cutback in development
• Significant reduction in development
• Complete stop of development
• Chose option 3 due to uncertainty
• Headcount 50 cut
• Budget slashed 83m to 42m
• Survival mode
• Move from strategic to factory quadrant
• Four weeks to cut 50 spending

9
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
• 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

10
(No Transcript)
11
Portfolio of projects

• Exhibit 6
• What should be priority?