ROYAL CARIBBEAN CRUISES LTD.

AN IT STRATEGY DISCUSSION......

Presented By
Milan Jha (023EPGP2013) Ankan Paul (008EPGP2013) Deepika Gupta (011EPGP2013) Prajwal Shetty (000EPGP2013) Saurabh Sawla (037EPGP2013) Gotit Chaudhari (014EPGP2013)

VISION
Generate superior returns for our shareholders By empowering and enabling our employees To deliver the best vacation experience And enhancing the well-being of our communities

CUSTOMER EXPERIENCE

IT MAKES A DIFFERENCE

GROWTH SCENARIO
40000 35000 30000 25000 20000 1600000 1400000 1200000 1000000 800000 RCCL Berths

Celebrity Berths

15000
10000 5000

600000
400000 200000

Celebrity Tonnes

RCCL Tonnes

FINANCIALS
4000 3500

Pays ZERO tax !

25 3
Profit (mn $) Revenue( mn $)

Ships in the fleet

3000

2500

Ships to be added in 2003-04

2000

1500

3k
1998 1999 2000 2001 2002

Employees shoreside

1000

500

24k

Employees onboard

BUSINESS MODEL
High willingness to pay
Customer Experience

Advanced IT Systems
Innovation Use of Internet Rapidly growing fleet Cost Reduction Premium Pricing

Differentiation

Investment in IT

Focus on Growth

Superior Processes

CRUISE LINE INDUSTRY

$15 billion industry.

three main players :

Carnival Corporation (49% market share) Royal Caribbean Cruises Ltd. (RCCL) (31% market share) Norwegian Cruise Lines

RCCL ships operate 2 brands Royal Caribbean International and Celebrity Cruises and under 4 different segments. Industry heavily impacted by 2 factors:

9/11 Geopolitical uncertainties

Increase in industry wide supply of berths. 98% bookings made through Travel agent . Yield management under pressure due to last-minute deals.

CORPORATE STRATEGY...

3 pronged
Enhance Customer Experience

Corporate Strategy
Reduce costs Increase revenues

Enhancing the Guest Experience

Silverwhere program linking age, nationality, sex, etc. to get more compatible groups at meal. Ability to change guests dining situation quickly. On-board Internet caf for guests to stay connected with outside world. Introduction of debark cards reduction in disembarkation time by 2 hours.

CORPORATE STRATEGY CONT...

Cost Reduction

Moving shore-excursion booking to Web, happier customers (confirmed bookings) and more spending in other avenues if booked in advance. Cruise ship is like a floating city posed following supply-chain issues

Variety 2 kinds of supply chain hotel and technical. 14K+ SKUs in F&B. Logistics limited time to fill up the ship for the cruise, usually 12 hours only. Connectivity linkages with suppliers was not 24*7 due to satellite issues. Usage of upgraded JD Edwards (JDE) latest Web-enabled financial system. Implementation of procurement suite, One World. AMOS, information system for ship maintenance was fully implemented. Deployed Crunchtime for F&B management. All above were integrated using thin interface to JDE.

Solution to above problems

Increasing Revenue

Shore-excursion program lead to $22 mn revenues in 10 months time. Internet caf web access was chargeable and added further to revenues. Demand determination from a cabins minibar to stock a possibility? Use of technology to replace diesel engines with gas engines enhancing capacity to as much as 55 cabins. Awarded for having best travel web-site.

IT AT ROYAL CARIBBEAN
Upto 1997:

A standalone remote unit. Not given due importance. Viewed as a cost center. No strategy or vision.

1999:Thomas Murphy joins RCCL as CIO:

110% focus on customer service. Experienced in IT and hospitality industry.

REORGANIZATION OF IT DEPARTMENT

Two VPs fired. Several people resigned due to change. Some valuable employees like Perry Sandberg brought up the ladder. New tools like NIKU installed for better controls over efficiency and productivity.

LEAPFROG PROJECT
Supply Chain: Upgrading JDEs ERP s/w:

Automation and simplification of shoreside purchasing and procurement. Better prices by leveraging bargaining power. Improved inventory planning.

Cost reduction.

Employee Systems: Upgrading Peoplesoft Inc system:

Knowledge management system. Crew movement systems. Access to licensing, training and employee background.

LEAPFROG PROJECT
Customer: Web enabled reservation system:

Integration of separate systems like reservation, loyalty, shipboard and revenue systems

To be able to get a holistic view of customers.

Access through a single source. Internet cafes and interactive TVs on board.

IMPACT OF 9/11

Bookings down by 50%. Leapfrog project mostly put on hold. Budget of the continued part slashed. 50% of IT staff cut. IT budget cut by 50%.

RECOVERY FROM 9/11

Many fired employees were brought back. Back to basics (Making core processes more efficient): -Focus on basic IT services. -Making core processes like email and network services more efficient.

Restarting Leapfrog Projrct: -Incremental implementation of Leapfrog project -HR tracking part deferred indefinitely.

IT OPERATIONS

2 Operation centers: Florida and Miramar. Functioning 24/7. 1 Disaster recovery backup center: Armonk, New York. Functioning 24/7.

Integration lab: Hallendale. For testing of configurations of systems to be installed.

On board: 20 to 40 servers housed in each ships data center. Maintenance and troubleshooting staff present on each ship. On shore, 250 servers in Miami including an AS400. 45 servers in Wichita.

R&D EFFORTS

Bernard Gay VP Enterprise Tech. Operations: Working on VMWare to make a fuller use and consolidation of servers by logically partitioning the memory, processor and disk.

Mike Sutten, VP Product Sales Systems:

-Studying performance enhancement by adding more servers in strategic locations.

-Working on real time monitoring, alerting and reporting of information through their agentless monitoring tools.

FIVE YEAR VIEW

Consolidating and simplifying systems of Celebrity and Royal Caribbean International.

Using packages like PeopleSoft and One World instead of the legacy systems and code.

Major focus on security as a result of explosion of online system.

More importance on centralization and flexibility of infrastructure. Consolidation of servers to drive down costs and increase efficiency.

STRATEGIC GRID
High

Factory Current Operational Dependence

Strategic

Support

Turnaround

Low

Low

Potential Strategic Impact

High

THE CHALLENGE
Do Nothing

Single reservation System $8 million, 12 months

Single Reservation System Rapid pace, Higher budget

SINGLE RESERVATION SYSTEM (SRS)

High cost savings thereby meeting organizational goal Rapid expansion of customer base Competitive edge Centralization of customer information Inline with the companys objective of growth 35% of the top 20 project are part of SRS

SRS - DRAWBACKS

Business Priority 2 Business Investment should be routed to the core business of Supply Chain (post 9/11, 84.44 % reduction in investment) Competitive edge without a strong back-end will be effort wasted

RECOMMENDATION

SRS to be implemented at 8MN over 12 M

Proportionate distribution of funds will help the company grow holistically

THANK YOU