A Fix on BothBy Tom Steinert-Threlkeld | Posted 2003-12-01 Email Print
A meltdown of the ski-resort operator's payroll system could not have come at a worse time. The resort was gearing up for winter and the travel industry already was in a slump. A technical queenwith some additional helpstraightened out the mesSides"> A Fix on Both Sides
That's why PeopleSoft sent in reinforcement development and consulting crews, Silvera says. "It took them a while to come to the realization that [the problem] wasn't just us," she says. The vendor's software had to be reworked if the system was to handle the nuances of time and labor in seasonal industries.
"Initially, we did run into some snags,'' said Becky Mason, director of customer marketing for PeopleSoft. But dealing with the "extremely complex pay types" at Vail Resorts helped the software company develop such features as a desktop pagelet that summarizes where paychecks are in the approval process and alerts that highlight when an employee is about to hit overtime.
Take the case of the Heavenly resort, which was added to the system in 2002. Not only do hours need to be consolidated, state laws have to be reconciled. California requires that a person be paid overtime for any work beyond 40 hours per week in summer. But, in winter, the breakpoint becomes 48 hours because of an allowance for seasonal industries. Regardless of the season, though, if any person works more than 10 hours in a single day, anywhere within the business, that person is entitled to time-and-a-halfand double-time after 12 hours, according to Heavenly controller Paul Pfotenhauer.
By the time the rollout reached Heavenly, the vexing problems of the conversion to the PeopleSoft system had been addressed and fixed. Not only was there a mechanism for consolidating hours from multiple places of employment within the same resort and allowing for state laws, the workings of the software had been altered to make life easier for resort managers who resented the system.
These were folks who wanted to spend time with guests first, employees second and systems least of all, recalls Tim April, the PeopleSoft team leader for Vail Resorts. "Any time spent in front of a computer is considered a waste of time by managers," he says.
The default display on the system became a view of each resort's 14-day pay period so it was easy to see how each employee's pay stacked up. Hyperlinks were added to help the managers move easily between related screens. And a molehill was made out of a mountain of distraction when the "Delete" button was moved from a spot where it could not be seen to a prominent place on the left side of the screen.
While the problems weren't completely resolved until the tail end of the 2001-2002 season, Daly notes, savings were immediate. Managers could keep track of employees' hours well enough to make sure part-timers were indeed part-time and not unexpectedly entitled to health or other benefits reserved for full-time workers. They reduced their time spent tracking hours worked, and increased their ability to manage workers' time in order to hit profit-margin goals, controller Pfotenhauer says. Clerical pay could be cut, by the tune of $85,000 a year.
All told, Silvera figures Vail Resorts saved $1.1 million in the first year of this $10-million implementation of PeopleSoft systems and another $900,000 in the second year.
Those are material savings, but not enough to stem deteriorating earnings at the Vail resorts. In the quarter ended July 31, 2002, the final quarter of its fiscal year, the company reported a net loss of $35 million. By the end of October 2002, the company went on an austerity campaign, eliminating Daly's job and announcing a plan to lower its budgeted expenses for fiscal 2003 by $20 million. Approximately 100 jobs were cut.
Despite these efforts, fiscal 2003 also slid downhill. On Nov. 13, the company reported a loss for the full year of $8.5 million on revenue of $710.4 million. That compared to a profit of $7.1 million a year earlier. A big swing factor: Interest expense grew from $38.8 million to $50.0 million. The company also lowered reported earnings for the previous five fiscal years.
Foreshadowing the results, Aron earlier in the year blamed the outbreak of the war in Iraq for taking skiers off the slopes "during the busiest weeks of our ski season."
As for Silvera, she's taking a new battle plan into any future deployments of software and information systems.
Her watchwords now: Do pilot implementations. No "big-bang" releases. Take one business unit live at a time. Make sure it's stable. Never underestimate the complexity. And, in the end, convert all changes into clear monetary benefits.
Project leaders, she says, tend to "think somehow that we're done when we implement. We're not. You're not done until you know whether you've reached the business goals."
If you have done that, then you have built the credibility to pursue future projects.
But when getting going again, be realistic. The benefits are easy to forget. The troubles, she says, are what everybody remembers.
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