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MANAGEMENT OF INFORMATION SYSTEMS

MGMT8620

Individual Assignment – Case Study & Case Analysis

OUTRIGGERHOTELS ANDRESORTS

(CASE STUDY)

HUSSAIN ALAIDAROUS

20404431
CONTENTS

1 INTRODUCTIOn:....................................................................................................... 3

2 THE RELEVENT ISSUES:...........................................................................................4

3 INFORMATION SYSTEM CONCEPT IN OUTRIGGER HOTELS:......................................4

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1 INTRODUCTION:

Overview and background of case study:

Outrigger Hotels and Resorts is a private family firm which was owned by Roy Kelly
located in Hawaii since 1963. Throughout the next 60 years of experience Outrigger’s firm has
become one of the largest companies in the hospitality segment in Asia Pacific and Oceania
regions. It applies distinct services of hotels, condominiums and vacation resorts properties, and
it has grown fast and successfully to form series of hotels and resorts including Outrigger Hotels
and Resorts OHANA Hotels & Resorts, Outrigger Condominium Collection, Embassy Suites,
Best Western and Wyndham Vacation Ownership. By that time the firm was still centralized in
Hawaiian Islands with more than 30 locations, after a while, in 1996 the first international foray
was opened in Marshall Islands then new international properties were added in Australia,
Guam, Fiji, Tahiti and New eland with total of 47 locations and 12 thousand rooms in all
Outrigger firm’s properties.

During the time of expanding geographically the organization was adaptable with the marketing
improvement by adding good new values such as new brands with diversity services , new
accommodation types in terms of customer’s needs, and using different strategic marketing
methods and so on. For example, adding new brands in some nations such as OHANA Hotels of
Hawaii which meet some consumer needs in terms of the value and price.

Outrigger Enterprises Group also operated and developed hotel properties and hospitality-related
retail and real estate opportunities for partners in Hawaii, Pacific, mainland USA and Asia.
Outrigger Enterprises Group relies on outsourcing strategy.

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2 THE RELEVENT ISSUES:

In this case there are some issues that we would to discuss and interpret. Outrigger’s firm faced
some challenges through its way to the success. The strategic Information system planning
process is the first issue, when the firm has to make important decision about selecting the
locations and expand the regions they had to analyse and plan the strategy. Competitors in the
hotel and resorts industry is another issue that the firm should indicated by adding new values to
make a barrier for competitors. The last issue is IT infrastructure and how the firm transacting
with the integration between IS and IT. In next sections we will indicate each issue with some
interpretations and analysis. But before that, I would like to clarify the concept of information
systems in the firm and how that has affected its performance.

3 INFORMATION SYSTEM CONCEPT IN OUTRIGGER HOTELS:

Outrigger Hotels and Resorts had clearly implemented information systems’ roles in its
strategy and planning and it is considered as a positive example of implementing
information system. In general, when we look to the work system of Outrigger’s
organization we find that the technical and social subsystems were applied in the firm
fairly clear. In terms of technical subsystem Outrigger’s firm had strong IT basis which
can be developed periodically and integrated with new hardware and software
technologies any time depending on the IT and IS strategy. IT component played an
important role to achieve the firm’s strategy whether in internal or external environment.
Outrigger’s firm used IT as a competitive advantage through developing the IT
infrastructure and using electronic commerce strategy through third party owners or
through its website. Also Outrigger’s firm had clear processing systems such as the
centralized data center which facilitate transforming information between various
branches within the organization. It was depending on the centralization strategy from the
point of view of process perspective in many departments. In terms of social subsystem
the structure of the firm in terms of hierarchical perspective was “a highly centralized
organizational structure”, (Piccoli 2008), and it contained experts in different fields.

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Moreover, employees had a good workplace environment; they were trusted to do the
tasks and they are respectful toward each others. Kimberly Ages explained the condition
“every one has a narrow job [description] and outside of that they will refer you to a
colleague. Out of respect, because of contract restrictions or because that’s how they look
at it: “this is I have to do” structure” (Piccoli 2008).

From these four components we came up with that Outrigger’s organization had worked
interdependently on the work system putting on its eye the IS as an entire concept not a
part concept which is called systemic system. However, IT strategy had been taken the
largest part of thought and the development in Outrigger’s firm for some reasons. First,
although the hospitality industry is depending on the quality and the service, IT plays a
crucial role to applying them. Outrigger put IT infrastructure as corner stone of its
strategy by initiation new systems that lead to centralize and integrate all systems
together such as Stellex, E.piphany and JD Edward. Second reason, to meeting
customer’s needs and IT competitive advantages, IT have capability to do it.

4 THE STRATEGIC BUSINESS PLANNING:

The strategy of Outrigger was very clear; it “…was a drive to position its properties in
places where people could enjoy a vacation experience leveraging Outrigger’s own core
competencies.”, and “…original mission was to bring the opportunity for a vacation in
paradise within the reach of middle-class families.” (Piccoli 2008) To implement and
achieve this strategy and the mission, Outrigger’s firm made some important decisions.

Geographic locations:

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Selecting the geographic property was crucial decision, so Outrigger’s hotels and resorts
centralized only on the prosperities which are on beaches in Hawaii. Moreover,
Outrigger’s firm did not expand internationally during 25 years tell it rooted its business
in Hawaii. It had a priority to renovate the hotels in Waikiki which cost 315 million
dollars rather than expansion their business globally even though they have a strategy to
growth. This is decision indicates a part of the strategic information systems planning
process which is the strategic business planning. The firm understood deeply who they
are what their ability is, how they achieve their goals and what are their opportunities
currently and in the future. They initiated this strategy depending on the given analysis
and information that is people tends to spend their holiday on the beach with reasonable
price and acceptable services. Therefore, the company has diversified in the way of
services depending on customer’s demand.

External expansion:

Another important decision was the expansion to international hotels. The decision was
founded on customer’s vision as the CEO of Outrigger Enterprises stated “Given our key
competencies, expanding to Guam, the pacific, and Australia was a source- customer or
distribution – driven growth strategy. It leveraged both markets where the customers
know us because they had experienced our hotels before and…”, (Piccoli 2008). The
decision was successful for the firm in term of marketing strategy and good reputation.
However, in terms of information system implementation there was a problem with
decentralization of the system. The international branches were working individually
with their own information system and IT infrastructure which make some difficulties to
integrate the organization’s system and collect the data from each branch. In contrast of
local hotels which had an efficient high centralize system integrate all the departments of
the firm.

In fact, at this point the company should understand the dimensions of the adoption of
this resolution from technical resources perspective. Does IT have the ability to solve the
problem of distance between the branches and what is the solution?

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Is there an impact on the company's performance in the case of a decentralized system?
Answering these questions will diminish the negative impact of the decision.

5 ADDING VALUE AND COMPETITIVE ADVANTAGE:

Even though Outrigger’s firm is one of the successful operator companies in Hawaii, it
has a number of competitors such as ASTON Hotels and Marc Resorts which have a
number of prosperities and high level of services. This strong competition the firm should
pay attention to it, and it has already done so. Outrigger’s organization attempted to
create new marketing and technological value which make an IT dependent competitive
advantage and a barrier against its competitors.

Online travel agents:

Outrigger’s firm in its marketing strategy attempted to add value by outsourcing


partnership. This value was creating an online channel through Third Party Companies
applying dynamic packages service which means more fixable and multiple choices in
prices and services. The questions are does Outrigger’s firm need this type of service?
Why Outrigger’s applied this value through the outsourcing although it has its own IT
team that could be able to initiate this value? In response, adding value is a requirement
to be in the competitive advantages. It is easier for the customer to realize which hotel is
cheaper and which one has good services, this method makes it easier for the customer to

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communicate with all companies instead of using the telephone or email with each. Thus,
this is an opportunity for the firm to appear the advantages and to be sustained in the
competition. Also, in Expedia website; for example, the customer can read the reviews
through the hotel’s guests, so the reviews may reflect on the hotel’s services and its
candor. Outsourcing Third Party Company’s contract needs to expend money and applies
package of advantages to the supplier and customers, and the firm will gain a good
profitability with less effort and cost. Even though the firm has its own IT team which
can apply this initiative, the strategic information system planning prefers to delegate
outsourcing in the competitive external environment in order to executing IT team to
work on the internal information technology which is more important from the IS vision.

Website:

However, what is the benefit for Outrigger’s firm to have its own website since it has a
contract with Third Party Company? And the debate here is whether the firm should
spend money to build website or not. In fact, Add this value does not have any
investment and it is not the core business but it could cost more. Nevertheless, the
website is considered the main gate of the company from which the customer can identify
the company and the services from near, and it could be provided by some images,
activities, classes, locations and contact numbers and so on. The decision of initiate
website is information system decision not information technology, so the IS strategy
could set this value as a competitive advantage to frame a barrier for competitors.

Even though the firm has strong added value and competitive advantage, it should be
aware about its competitors to save their money. It will not be fully productive when they
concentrate on “service delivery”, (Piccoli 2008) regardless their competitor’s
circumstances. They could lose money on applying service that customers can find it

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easier and cheaper in other hotels, or they could applying technology that their
competitors have already upgrade it or substituted by new technology

6 THE STRATEGVIC IMPACT GRID:

Information Technology played a major role in decision-making in the firm. It is clear


from the case study that IT infrastructure was evolved gradually to contribute to fulfill the
goal of IS strategy. The date is collected by Stellex then it is transferred to JD Edward
system for accounting then to E.piphany for analysis and forecasting. . In this section we
will analyze the IT infrastructure by using the strategic impact grid and it was working in
the strategy. From the analysis of strategic impact grid we find that Outrigger’s
organization is guided by IS and it has used all quadrants effectively as shown in the
figure below. Unlike small hotels who don’t need to use all these quadrants.
For Reliable IS
Low TO High

News

High

Low
For

TO
IS

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- Support Quadrant:

The firm needed to build its IT infrastructure and that decision was from high level
managers. Thus Durocher was the VP of IT who brought Stellex system as the first IS
system at the firm. This was an important decision which supports the role of IS
functionality. Stellex is used as tools to support the administrative operations, these tools
such as room, revenue and block management, reservations for end users tools and the
reservations, availability and pricing for In Information System layers. Outrigger’s
considered this system and upgraded it several times to integrate it with other
applications and to centralize the system with international hotels in order to cutting
price. Therefore, Outrigger’s firms applied the purpose of support quadrant which is
using “IS a tool to support enables operations” (Piccoli 2008).

- Factory Quadrant:

As an example of this quadrant Outrigger’s firm implement JD Edwards to perform


some important functions such as accounting, payroll and human resources whether
for end users or information manager layouts. In this quadrant the firm attempted to

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use electronic interface instead of fax machine to organize and improve those
functions to be more effective and efficient.

- Turnaround Quadrant:

The organization had to upgrade and initiate IT infrastructure when it found that is
necessarily. It has hired Durocher to establish the IS which was an important decision for
the organization. Then IS team has developed the systems by planning to be implemented
effectively. For example, the training of employee which is necessarily to inform how
can they deal with new technologies. The method of training was old employees train
new employees in the framework area. This strategy could be appropriate for the firm
because they upgrade and develop the system periodically. However, it could affect the
performance of the firm because employees are engaged in this program while they do
their job, so this will be duplicated.

- Strategic Quadrant:

Outrigger’s Organization applies IT infrastructure as a strategic component to fulfill


its operations, unlike small hotels who could use IT infrastructure as a support
component. Thus, Outrigger’s firm uses E.piphany system for several intelligent
strategic purposes, this system able to “do forecasts and generate business indolence
both at the source of business and at guest levels” (Piccoli 2008). E.piphany was a
power for the IS strategy, it can be used for communicating with customers to
acknowledge the special customers, giving the visiting history of the guests which is
really important to realize the return guests rate; also, E.piphany can be accessed by a
web interface for marketing and operational analysis. From E.piphany functions we
can say that “information systems are part of the firm’s DNA”, (Piccoli 2008).

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7 RECMMENDATIONS:

After I analyzed the case I would to set some recommendations for Outrigger’s
organizations. First, since IT strategy has received much money in the organizations, it
could be a disadvantage if the firm did not control this expansion. They should be aware
how much they spend on IT and should realize if the new technology will add value for
the firm or not. Second, I believe the methodology of the training was not accurate, so a
big firm like Outrigger Hotels should set a training part in the human resource department
to be a center for many useful courses not only for IT sector but for improving staff’s
skills in general or for any other purposes. A last recommendation is using the website
more effective. They can shift the site to point of communication between staff and
clients as well by using applications such as E-mail for staff, and opening a window to
connect with customers in writing or audio way.

A further idea can be done is a special application of computers and mobile phones such
as Apple and where it can be IT investment of the company.

8 CONCLUSION:

In conclusion, Outrigger’s organization can be applied as a positive example for the


companies in the hospitality segment. It has high implementation for IS strategy and high
quality to integrate and active the systems between people and IT strategy and structure,
make smooth changes by using automate, informate and transform orders and it was

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evaluating the. In addition, it used strategic information system planning to evaluate and
implement its information system; also, it exploited its IT infrastructure to create a
sustainable competitive advantages and added values.

9 REFERENCE:

- Gabriele, P 2008, INFORMATION SYSTEMS FOR


MANAGERS TEXTS & CASES, 1st edn, John Wiley &
Sons, INC.

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