• Tom Murphy, RCCL’s Chief Information Officer, was faced with several challenges:
o insufficient funds to keep IT projects on task
o massive personnel cuts due to budget constraints
o the continued need to invest against RCCL’s corporate strategy
o determining the most effective allocation of IT resources in a “no growth/low-growth” period
• Using the IT-Investment Framework, IT Asset Portfolio Framework, and the Benefits Framework our team recommends a 15% budget increase for 2004 with the following project priorities:
o Silverwhere program
o Complete the OneWorld software package implementation
o Selective integration of the Crunchtime and AMOS operating systems
o Full implementation of the NextGenRes web-enabled reservation system
o Undertake a pilot study of PeopleSoft, the employee management project within Leapfrog to determine the cost savings of a potential enterprise wide implementation in 2005
• Also suggested for consideration, would be to hire a consulting firm to determine potential risks, benefits, and costs of co-locating or outsourcing RCCL’s five call centers.
• The first key issue facing Murphy is what kind of budget should he recommend for 2004? o Should he maintain current spending levels?
o Should he recommend a moderate budget increase to support a phased, multi-year implementation of key Leapfrog initiatives? o Should he recommend a significant increase to support a more rapid implementation of all original Leapfrog initiatives? • The second key issue is determining how and where to invest IT resources such that they are aligned with customer and business requirements (corporate strategy).
• The IT priorities for Murphy to focus on while addressing these key issues are: o Consolidate and simplify the various systems that had been developed for RCI and Celebrity o Invest in necessary infrastructure upgrades
o Decrease overall operating costs
o Increase process efficiency
• Analyzing these competing priorities through a framework such as the IT Investment Framework is a helpful tool to evaluate the trade-offs between short-term profitability and long-term growth • Table A: Framework for IT Investment
• Looking at the projected man hours for the Top 20 Project List (Exhibit 6) the percentage of allocated resources fall under the divisions of the Framework for IT Investement are as follows: [pic]
• Based on current corporate strategy is this the right allocation for IT resources? o Renewal investments represents the majority of the allocation which supports the short term company-wide objectives of improving customer experiences and revenue growth through projects such as website redesign and improved shore excursion application. o The renewal investments also accomplish cost savings primarily through efficiency gains via the hardware, sever, and software upgrade projects. o The transformation investments are driven by a core infrastructure which is inadequate for the current business structure. Projects listed in this category, such as NexGenRes, link directly to the company’s objective of increasing customer experience; while other projects, such as the ERP implementation, reduce the long-term operational expenses o Transformation investments align directly with RCCL’s original mandate for hiring Murphy. o Process improvement investments are driven by the need to improve operational performance. Projects in this category may also be driven by successful implementation of some of the transformation investments. o Process improvement investments, such as the Silverwhere implementation enhance the customer experience, and the IKnow project which should ultimately lead to increased revenue. • Investing against right project...