Sink or swim: Royal Caribbean Cruises Limited made efforts to adapt to the paradigm shift of Information Technology and its function within the ever-growing cruise line industry
Royal Caribbean Cruises Limited (RCCL) was founded in 1969. They currently operate under the brands of Royal Caribbean International, Celebrity Cruises and Pullmantor. Predominantly known as the second largest cruise ship company behind Carnival Cruises, RCCL still has a firm hold on cruise ship market share. According to their website, RoyalCaribbean.com, RCCL brought in net revenues of over $607 million in 2011, which is up from $515 and $152 million in 2010 and 2009, respectively. They used their fleet consisting of 39 ships to make approximately 92,000 berths last year… but things were not always looking so optimistic for Royal Caribbean Cruises Limited.
Things were looking up for RCCL and their hiring of high level IT personnel have led to advancements in the company’s IT infrastructure and future technology endeavors. But ultimately, the company had three strategic goals of (1) Enhancing Guest Experience (2) Reduce Costs and (3) Increase Revenues to try to set themselves apart within the cruise industry as they tried to make the leap into the “digital” age. But given the events of 9/11 and its impact on the industry, how would RCCL optimize its IT spending especially if it is still working on an “analog” budget?
Dating back to the 90’s, RCCL has always been the proverbial second fiddle to Carnival Cruises. RCCL’s Chairman and CEO, Richard Fain, noticed that the primary reason for Carnival’s success was their ability to drive down marginal costs per ship by “standardizing its fleets down to details as small as bedspreads and barstools” (McFarland, 2003). However, it was important to Fain for each RCCL ship to have its own identity. So, the problem in front of the long time CEO and Chairman was high would RCCL take steps toward a bigger market share without compromising its differentiation between Carnival and other cruise ship organizations. For Fain, the answer would be to move RCCL into the digital age. So in April of 1999, Fain brought in a new CIO named Thomas Murphy to lead the paradigm shift. Murphy, with a IT background in the hospitality industry, immediately made an impact as people titles were changed and some positions were even eliminated in an attempt to change the overall outlook of RCCL’s staff, both high and low level, had toward its own IT department. Murphy was once quoted saying, “there was a huge disconnect in their thinking, a gap that had kept IT and the business apart” (Hughes, 2001). Murphy’s first projects were implemented and received well both by customers and by RCCL’s employees. The first major change was to hire IMB Business Services as a consultant to link together RCCL’s shore-side and on-board technology systems. The second major change was the improvements made were to the previously mentioned shore excursion program and the switch from diesel to gas engines.
At this point, the buy-in from the board and staff for the new and improved IT department was completely formulated. The next big project for Murphy and his department was called “Leapfrog”. This was supposed to be what helps RCCL move into the number one spot for cruise line industry market share. Leapfrog consisted of 3 main IT projects: 1) Supply Chain – automate and simplify the shore-side purchasing and procuring processes 2) Human Resource – automate employee tracking software to help with training and knowledge management 3) Customer Service Upgrade – create a new and improved reservation tool for customers to synchronize all reservation systems for the company and to help sales and...
References: Hughes, L. (2001, January 01). Royal Caribbean cruises and Micro-strategies [Web log message]. Retrieved from http://www.cioinsight.com/c/a/Past-News/Case-Study-Royal-Caribbean-Cruises-and-Microstrategies/
McFarlan, Warren F. Massoni, Valerie. (2003). Royal Caribbean Cruises Ltd. [Case Study]. Boston: Harvard Business Publishing.
“CTO’s on the Move” Thomas Murphy – Chief Information Officer – AmerisourceBergen. Retrieved 2 July 2012 from http://blog.ctosonthemove.com/thomas-murphy-chief-information-officer-amerisourcebergen/
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