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Canyon Ranch

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In 1979 Enid and Mel Zuckerman sought to create a place where people could go and use activity and healthy thoughts to transcend themselves physically and mentally through inspiration and motivation. The results of their efforts are Canyon Ranch, a leader in the health resort and spa industry. (Applegate, Austin, Soule, 2009, p. 156) Today it is recognized worldwide as the gold standard for healthy vacations. The company has expanded far beyond the family-run health resort envisioned by its founders, while always remaining true to their original mission: 

Canyon Ranch aims to inspire people to make a commitment to healthy living, turning hopes and intentions into the highest enjoyment of life. (Canyon Ranch Web Site, 2012)
For the first 25 years following its inception, Canyon Ranch opened additional resorts and evolved by expanding service offerings with a focus on health and healing, spa services and fitness. In 2004 the company faced competitive pressures from industry growth, which revealed both opportunity and limitations within their information technology infrastructure. The corporate IT function at Canyon Ranch numbered 20 professionals headed by Mike Randle, corporate IT director, who reported to the COO and CFO. The function was responsible for internal software development and maintenance, as well as evaluating software packages and performing help-desk and support tasks. (Applegate, Austin, Soule, 2009, p. 171) IT was considered a support function however; the need to address competitive forces would lead to consideration for IT to become a strategic business partner.
Information systems were decentralized and mostly non-integrated. Canyon Ranch owned the source code for the core information technology platform; a property management system, Computerized Lodging System (CLS). Owning the source code allowed for easy customization however, the system did not properly collect and report information management could use to make decisions for example; prior to 1999 it could report how much a guest purchased during their visit but not specifically what they purchased. Some paper-based processes existed which captured information that if automated, could reveal improvement opportunities by exposing inefficiencies. 1999 upgrades to the CLS system allowed better transactional tracking however, the company had been collecting information about customers i.e. anniversaries and special accommodations that were in free form note fields making it difficult to search using automated processes. After the Berkshire property implemented Guestware, an application designed to complement CLS, it could collect guest preferences as well as handle guest surveying, and incident responses. Although there were numerous benefits the new platform could provide, Guestware was still a stand-alone application used mainly for recording guest preferences (Applegate, Austin, Soule, 2009, p. 172). Guestware would be the first step needed to increase the profile of the IT function. There were also plans to implement a long overdue point of sale platform.

Major Stakeholders

Canyon Ranch’s primary stakeholders were the employees, customers and founders, Enid and Mel Zuckerman along with their business partner Jerry Cohen who has worked with the Zuckerman’s since 1979. (Joiner, 2011) Secondary stakeholders were the owners of third-party properties where Canyon Ranch operated spa clubs. The primary stakeholders are significantly invested in the company’s success. The livelihood of hundreds of employees balanced on the company’s industry sustainability and growth. As a luxury destination attentive to service, Canyon Ranch used a 2.5:1 staff-to-guest ratio. The company focused on finding people who would provide excellence in their positions and complement the set of skills currently available at the site. (Applegate, Austin, Soule, 2009, p. 164) Enid and Mel Zuckerman significantly influenced the service offerings of the initial and subsequent resorts and spa clubs by staying true to their vision of creating an experience that could influence the quality of life. As a commitment to their vision, in 1979, they sold their home and moved into the Tucson Facility. (Joiner, 2011) As CEO and co-founder, Jerry Cohen deeply believed in the company’s mission. Jerry’s firmly held belief in Canyon Ranch manifested into the concept of the Canyon Ranch Institute, a 501(c) 3 non-profit public charity founded in 2002 by Mel and Enid Zuckerman and Jerry Cohen to translate the unique health and wellness philosophy and expertise of Canyon Ranch to communities beyond Canyon Ranch. (Canyon Ranch Institute, 2002) As the spa industry grew by more than 200% between 1997 and 2000, third-party properties viewed the partnership with Canyon Ranch as a significant opportunity to offer complementary services to their destinations. (Applegate, Austin, Soule, 2009, p. 169) Because Canyon Ranch as a supplier group to the third-party locations did not depend heavily on their industry for its revenues, they had a strategic advantage over their competition by leveraging the relationships. (Applegate, Austin, Soule, 2009, p. 133) Case Symptoms and Root Problems The need to incorporate IT as a strategic partner was realized in 2004 as Canyon Ranch faced competitive pressures. They lacked the capacity to retrieve customer information that could help them analyze business activity and incorporate data analysis into business decisions. Additionally, health and healing was central to the mission of Canyon Ranch. Because of the higher pay required for medical professionals, the health and healing department showed the fastest growth but accounted for the lowest profit contribution. (Applegate, Austin, Soule, 2009, p. 164) Canyon ranch also suffered from process management issues. Guests experienced a lengthy and rigorous pre-booking and check in process, which if automated, could be streamlined to remove redundancies and contribute to a better customer experience. Workers involved in these processes turned over an estimated 50 percent per year.

Case Evaluation Criteria

A. Integrate the Guestware platform across the entire enterprise in 18 months.
B. Increase the return on investment of using therapeutic medical professionals in 3 to 6 months.
C. Reduce attrition in the program coordinator job class from 50 percent to 30 percent in 12 months. Alternative Solutions

Canyon ranch can address the IT infrastructure weaknesses by starting with an integration of the Guestware application across the enterprise and completing it within twelve to eighteen months. A project of this magnitude would be costly however, the organization would realize improved efficiencies, which are difficult to measure, but they would gain knowledge of specific consumer purchases which would lead to a better product mix selection. Because the platform would be enterprise wide, other properties would have knowledge of consumer preferences allowing them to better prepare for guest with appropriate inventory. Additionally, the return on the investment would be seen through the increase in sales of complementary and supplementary products purchased in the spa fitness and health and healing departments, which typically have high profit margins. Healing and medical therapeutic professionals pay can be a significant obstacle in any industry. The personal attention they can give helps to provide a connection between guests and their needs. One option for Canyon Ranch in this regard is to offer guests the option of visiting with a healthcare provider by teleconference and pay the providers on a case basis instead of an hourly basis. This project would involve integrating IT systems with telecommuting providers which could be accomplished in three to six months. This option would have a low capital investment cost and could pay for itself with the reduction of capital paid to medical professionals. Process management issues at Canyon Ranch stemmed from a legacy process, which involved customers calling a pre-booking 800 number and giving them background information about the goals for their stay. Due to human interaction, the potential for data entry errors exists. After guests are settled in, they met with a program coordinator who basically would ask similar questions to further customize the guest experience. Mobile technology could be used to obtain the information provided in the pre-booking process. Guests could answer a questionnaire, which could be customized, and pre populated for return guests. The integration of a mobile platform in less than a year’s time could benefit the organization. The costs of pre-booking personnel would return to the bottom line and the potential for entry error would be considerably reduced. Additionally, the mobile platform would be integrated into the enterprise system for making the data available to all properties as well as to program coordinators. Armed with distinctive personal data, the coordinators are better suited to assist guests with special needs and improve their experience. Providing tools for program coordinators would reduce the frustration level for the position and directly impact attrition.

Best Solution The most significant change would be realized by the integration of the Guestware platform across the enterprise. If there were only one option to pursue, the Guestware platform provides the best opportunity for improvement. While the project would be costly, it allows management to receive information that could impact growth, and help them understand how to react to industry wide competitive forces. Understanding the industry by observing customer buying allows management to better position the organization to take advantages of industry opportunities and weaknesses. (Applegate, Austin, Soule, 2009, p. 134)

Follow-up Questions

1. Can Canyon Ranch differentiate themselves even more than they already have in the destination resort industry?
2. What does it mean to be the best in the industry and based on competitive forces, should your mission ever change?
3. Can the competitive rivalry in the industry be reduced?
4. How can legacy IT systems that become obsolete be avoided?

Bibliography
Applegate, Austin, Soule. (2009). Corporate Information Strategy and Management (8th ed.). New York, New York, USA: McGraw Hill/Irwin.
Canyon Ranch Institute. (2002). Overview. Retrieved February 13, 2014, from CanyonRanchInstitute.Org: http://www.canyonranchinstitute.org/about-cri/overview
Canyon Ranch Web Site. (2012). About Canyon Ranch Our Mission. Retrieved February 12, 2014, from CanyonRanch.Com: http://www.canyonranch.com/about-canyon-ranch/our-mission
Joiner, L. L. (2011, 8 22). 2011 Entrepreneur Exchange - Canyon Ranch spa grew with a consistent mission. (B. Jones, Editor) Retrieved February 13, 2014, from USA Today: http://usatoday30.usatoday.com/money/smallbusiness/2011-08-19-entrepreneur-exchange-keeping-consistent_n.htm

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