Case-Study Analysis

Canyon Ranch
Sheetal Rahate (20719871)

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

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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).

2.2: Situation
Figure 2: Various departments in CR Resorts
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.
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x 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 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
3.1: CRM

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Section 3: Analysis and Evaluation

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).
 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?
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