Case-Study Analysis

Canyon Ranch

Sheetal Rahate (20719871)

10/3/2010

This report is submitted as the partial fulfillment of the requirements for the Management of Information

Systems Unit of Business School, The University of Western Australia, 2010.

Document Organization

Section 1: Introduction

Purpose, Limitations

Section 2: Company Overview

Background, Situation (Core issues/problems), Current Strategy, Stakeholders

Section 3: Analysis and Evaluation

CRM, Major identified problems and analysis, SWOT Analysis

Section 4: Recommendations/Alternate Approaches

Section 5: Conclusion

References

Section 1: Introduction

1.1 : Purpose

This document is intended primarily as a case-study report for the case Canyon Ranch by Piccoli and

Applegate (2004), which provides insight and evaluates the strategic decisions made and/or various

business strategies utilized by the organization in order to incorporate and manage their information system

along with their business, and examines/suggests substitute methods of implementing MIS strategy in

consideration.

1.2 : Limitations

The report focuses on the MIS initiatives taken by Canyon Ranch to leverage their business and the impacts

it had on this organization. Information contained in the report is in accordance to Piccoli and Applegate’s

perspective along with some insights from the key players in this organization i.e. their views and opinions

about the subject matter.

Section 2: Company Overview

2.1: Background

Canyon Ranch (CR) is a health resort and spa that positioned itself such that it pioneered and evolved to be

a leader in this luxury segment of spa industry. Founded by Enid and Mel Zuckerman in 1979, it aimed to

attain its mission - “inspire people to make a commitment to healthy living, turning hopes and intentions

into the highest enjoyment of life” [Canyon Ranch website].

Figure 1: Canyon Ranch's two main business divisions

It encompasses a range of services having both breadth and depth to various treatments and offerings, such

that it’s appreciated several times for its “innovative view towards health, wellness, holistic and integrative

care and for its uniquely relaxing and inspiring experience” that helped it mature to be the most admired

destination resort in the world. It is headquartered in Tucson, Arizona and has expanded to incorporate two

destination resorts (i.e. backbone of CR) and three spa-clubs (Refer Figure 1). Each resort is further

bifurcated into three main departments i.e. Health and Healing, Hotel and Spa to which, separate directors

were allotted for better managing and functioning (Refer Figure 2).

Figure 2: Various departments in CR Resorts

2.2: Situation

Canyon Ranch (CR)

Health resort and Spa

SpaClubs

CR (resorts)

Health and Healing

Hotel

Spa

Spa industry was flourishing in U.S., which was seen a threat to CR, as several other companies had begun

attacking it directly, so much so that companies tired to invade on CR’s uniqueness but as authors have

mentioned CR being coined as the golden standard of the industry, and it is essentially its Health and

Healing department that set it apart from all other competitors. Having said that there was no doubt that the

prosperity of this industry did affect CR, such that it made it difficult for them to compare and analyze their

competitors.

Although known for its high standard services and facilities, competition and alterations to the industry

necessitated/demanded CR to revamp its marketing and their IT strategy. On linking this to Campsey view

where he states that CR required shift in their IT strategy and systems that not only supported internal

functioning but which also:

Advance association within various business silos;

Enhance collaboration within the organisation;

Attract new and retain old customers;

Helped them to obtain valuable information;

Retain this information;

Analyse this information; and

To make it readily available for decision-makers to make informed judgment and actions.

Figure 3: Structure, culture and Environment of CR

2.2.1 Core reasons/issues-identified that contributed and led to the implementation of an IT strategy:

CR’s need to compete with its rivals, both existing and the ones that are stemming (spas and

medical/wellness centres), where the need to incorporate IT on an enterprise-wide level was

mandatory.

To exercise knowledge management initiatives throughout the organisation.

To maintain its identity, and to stay ahead within its market and of the competition.

The prerequisite to review its business-functions and to revive them in order to compliment it

with the various exclusive product ranges they offer, which was essential to retain and advance

it competitiveness.

CR's Structure

Comprised of two main division

CR's Culture

Conisted of various buiness silosAlterations in the culture took place to focus on clients by encouraging collaboration on an enterprie-wide levelprioritized innovation and expertie in buiness to achieve high competitve advantageKnown as 'Gold Standard' in the industry

CR's Environment

Despite of the industry growth, operations remained relatively low-techComputerization was often seen as a threat rather than opportunityPoor data management, as it was synchronized throughout the entire organisation

CR’s decentralized IT-infrastructure necessitated improvement and integration of one system

with another to work cordially on a whole and implement collaboration on an enterprise-wide

level in order to achieve its core strategic goals.

CR did not heavily focus on their marketing strategy which in today’s world requires robust and

effective IT-strategy, but instead relied on direct communication and affiliations with similar

partners.

Less attention was given to IT as computerization was seen as a threat due to its de-personalized

and de-humanized nature, and all the information collected remained in separate business silos.

The need to better manage information and maintain competitive edge triggered the importance

of business intelligence, decision-support functionalities among CR employees.

Even after having data which was 10 year old, management was not able to track information

about their customers that is of strategic importance to them, i.e. “we don’t necessarily know

what they spent it on” [Canyon Ranch, 2004].

The use of legacy system (CLS) that was not interoperable with other new systems (Guestware)

and CRM systems.

CLS focused only on processing transactions but not on collecting decision-support data.

Lack of point-of-sale software (POS), due to which individual transactions couldn’t be tracked.

Poor recruitment system to hire employees, which did not appropriately focus on the skills of

prospective employees.

Recruitment of program co-ordinators was intricate as the job is extremely promising and as the

Marxer mentioned it was even difficult to pay them and find people who were ambitious to

become one.

2.3: Current Strategy

Strategic-goals of CR were based on its structure, culture and environment (Refer Figure 3).

“To grow the business while maintaining the fundamental characteristics of CR, and ensure that

CR maintained its competitive advantage in the face of increasing competition.” [Canyon Ranch,

2004]

To offer customers a place that can “influence the quality of their life from the time arrive till the

time they return home” and essentially most significant was their ability to meet the customers

changing needs “we’ll meet you where you are” [Canyon Ranch, 2004].

CR’s strategic goals emphasized on acquiring and fostering innovative expertise (both in their

resort and spa services as well as IT-infrastructure that supported their strategic goals) to pioneer

the spa-industry.

Aimed to gauge solutions to offer value to various business-functions and activities by expanding

capabilities, skills and proficiency, for instance: to improved management and application of data

collected to make informed and timely decisions.

Aimed to improve their marketing strategy, to attract more new customers and also retain old

customers.

Aimed to align CR’s strategic goals to the IT-strategy by employing a feasible IT-infrastructure to

advance the flow of data (centralize data produced) and to fabricate information that can assist the

various business intelligence and decision-making activities.

To maintain the golden standard title awarded to it, and sustain with a leading position in this

industry.

Aimed to offer innovative services to their customers and leveraging their (customers) experience

by delivering unmatchable and variety of packages when compared to their competitors.

Viewed IT as add potential value to their business-strategy that prompted the top-level management

to take evidence-based decisions.

“Every business-unit was intent on improving the level of customer-service and personalization of

the CR” [Canyon Ranch, 2004] and to better the level of consistency among all their business-units.

2.4: Stakeholders

The key stakeholders identified in this case study are as follows [Group Slides]:

CR Company-owners

CR Employees

Past and potential new clients of CR

Third-party partners such as Venetian Resort, Gaylord Palms Resort & Convention Centre, and

Queen Mary 2

Vendors and suppliers

Neighbouring property owners and businesses to the two destination resorts

Competitors

Section 3: Analysis and Evaluation

3.1: CRM

CR employed CRM system to leverage its business and strategic goals, where CRM essentially deals with

the company’s association with its customers, clients and sales prospects which incorporates technology to

arrange, automate, and device business processes, to leverage primarily sales and also marketing, customer-

service, and technical-support activities.

Figure 4: CRM definition

Mike Randle (Corporate IT director) elaborated the entire IT-evolution that took place in the organisation

since 1996 that eventually led to the implementation of CRM system. Earlier as IT’s significance in the

business was considered as low, it was mainly used to maintain computer system and individual task which

were operated as separate functions. However, later on transition took place in the top-managements view

towards IT, where they identified the potential benefits offered by incorporating computerization into their

business functioning. This change mainly took place due to the increasing competition in this spa industry

(Refer Figure 5).

Customer Relationship Management (CRM)

"...a well defined business strategy is a fusionof a series of functions, skills, processes and technologies which together allows companies to more profitably manage (acyuire and retain) customers as tangible assets" - Shanmugasundaram, 2008

Figure 5: Growth of the spa industry [Canyon Ranch, 2004]

However, on performing an analysis of this case-study it is obvious that CR as an organisation was facing

problems and lacking in some areas which are discussed in detail in this following sections.

3.2: Major identified problems and analysis

3.2.1: Poor IT-Infrastructure:

CR had a decentralized IT-infrastructure i.e. the destination resorts and spaclubs were working

independently.

They had a Computerized Lodging System (CLS), which was a UNIX-based legacy system used

since 1986, which was process-specific and used to mainly perform the scheduling function of

CR, but did not take care of other functions.

Tracking of other activities was not performed, as CLS was designed to efficiently process

transactions and thus data was not strategically gathered to help decision-support systems.

Even after implementation of an IT-system, some special activities/services had paper-based list

system, which again coupled and added to the problem of ineffective data management.

In spite of having data that was 10 yrs old, CR was unable to track some information that is of

strategic importance to them i.e. they couldn’t track the exact expenditure of their guest.

Implementation of Guestware was a strategic and smart move by CR in terms of CRM however

as it was unable to integrate with the legacy CLS system, it operated as a stand-alone system

which was reducing the potential use of the software application and also restricted CR to exploit

all the possible benefits it could have.

CR lacked point-of-sales (POS) software in various departments; as a result the individual

transaction couldn’t be tracked independently.

Data management at CR was poor and inefficient such that valuable data was missed out in some

cases, in addition the collected could not be used for making decisions that could help in aligning

the strategic goals and boost the competitiveness of CR.

3.2.2: Poor Marketing skills:

CR did not focus more on marketing and the marketing-strategy used by CR was also an old one, as

no heavy advertisement was done.

CR lacked any formal recognition or reward program; which if they had, could have generate more

strong customer-base and helped to attract them, as well as to motivate customers to be loyal to

them.

In spite of the advances in the marketing industry and their own industry (spa), CR paid no

attention to spread their business in large magnitude which would ideally generate more revenue

and help them gain more competitiveness over their rivals.

They aimed to establish new customers by focusing on only direct-communication and affiliation

with similar partners.

They had a static website, which was of no help in attracting and connecting customers (new and

old) to CR.

It is also noted in the case-study that although Health and Healing department showed fastest

growth and was one of the factor that essentially differentiated it from the other competitors, still

wasn’t marketed well

Figure 6: CR’s high package rates offerings [Canyon Ranch, 2004]

3.2.2: Increased Competition and decentralized organizational structure:

Increase in competition led to the implementation of IT in CR as a business, to leverage their

overall practices, however as spa treatments were offered by other new emerging companies that

were a huge choice for customers, which CR had a threat from.

CR package prices were comparatively high than the other packages that were offered by

companies (Refer Figure 6)

Health and Healing which was ideally considered to be the uniqueness of CR, was copied by other

spaclubs and also medical centres which offered the same service at quite lower prices than CR,

which was huge threat to their competitiveness and to the overall established characteristics of CR.

3.4: SWOT Analysis

A SWOT analysis was performed to get a clear picture of CR. Its analysis helps in predicting and directing

the possible efficient approaches that the organization can opt, to take a leap from the current state to a

more competitive state.

Strengths:

Market leader, and a string brand –name.

Top-m management was in due course aware and identified the potential benefits of IT, and thus

were making attempts to leverage IT and their business together.

Guestware application system was considered to be a step above in the IT-infrastructure which

proved to be very helpful in gathering customer information.

CR was unique than the other completion in their industry.

Strong customer-base.

Large variety of services and offerings than its competitors.

Weaknesses:

CR as an organisation was divided in 2 main division that made management of CRM systems and

data management challenging and difficult.

IT- infrastructure was decentralized.

Poor data-mining.

CLS- legacy system was used in organisational functioning which caused difficulties for new

application (CRM) to integrate with them

Lack of in-house training for the employees.

Opportunities:

Tremendous progress in achieving the goals of CR and acceptance of employees towards the use of

technology to capture CRM application.

To sustain in the industry to remain the Gold Standard.

Threats:

Increasing competition, and duplication of services from their own rivals and other industry i.e.

medical centres.

Competitors offering similar services at much lower price.

Analysis of the competition was difficult.

Section 4: Recommendations/Alternate approaches

CR’s implementation of an IT-strategy was seen to slow than the market, which could have been

done at a faster pace by conducting seminars throughout the organisation which could have

generated flow of ideas to efficiently capture data right from the top-level management to the low-

level frontline managers.

CR’s female customs were seen to be more, and males were relatively less. In that case CR can

offer special packages and advertising strategy to attract more male customers.

CR’s marketing strategy was poor, so it definitely has scope to leverage it, through internet etc,

which can be accomplished by essentially hiring an industry expert (marketing consultant).

Incorporation of reward programs can also be used to attract new customers and retain existing

ones.

In order to evaluate their services CR can conduct more formalized customer feedback sessions,

questioners wherry customers can evaluate the existing services and also give their suggestions and

request new customized services.

CRM on whole could be improved at CR by collecting valuable data, and linking it together to

main database, to which all the systems of the company were connected. This can help achieve

information that is of strategic importance to the company.

CR could also improve their website to make it more interactive, by having a chat box which could

help customer connect to the website and the brand itself.

The recruitment process of CR needs to focus more on the skills of the prospective employees, their

way of thinking to fit with the culture of CR, and special personal skills demonstration (not by

presentations but by practical sessions).

A gap-analysis must be performed prior to implementing a full CRM system which can be useful

for:

o Identifying the gaps in the organization in terms of knowledge management.

o Defining and exercising a feasible and appropriate CRM systems,

o Monitoring the growth and effectiveness of CRM system implemented.

Section 5: Conclusion

Organizations attempting to establish a CRM system to obtain connection between them and customers,

first needs to take into account the impact of their business strategy with the IT-strategy and tools to be

implemented into their business before implementing and customizing the system. And it is vital that the

designed CRM system should be flexible enough to adjust and adapt to the dynamic nature of the

organization in terms of its culture, process and infrastructure.

References

1. Canyon Ranch Website: http://www.canyonranch.com/inspiration/mission/

2. Piccoli (2008), ‘Canyon Ranch’, Information system for managers: test and cases, Wiley & Sons,

Inc.

3. Shanmugasundaram, Customer Relationship Management: Modern Trends and Perspectives,

Eastern Economy Edition.

Available at <http://books.google.com.au/books?

id=5pxbpaWqjK0C&pg=PA98&dq=customer+relationship+management+definition&hl=en&ei=gJ

ukTIK7OI3QcdrNoMYI&sa=X&oi=book_result&ct=result&resnum=1&ved=0CDMQ6AEwAA#v

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