Slippery Slope: Vail Resorts and PeopleSoft

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 queen—with some additional help from PeopleSoft—straight

Vicki Silvera was under siege. Complaints, as the director of information technology for Vail Resorts recalls now, were pouring into "any forum" she could imagine. In e-mail, during managers meetings, in voicemail left with the companys chief financial officer, in dinner conversations around the relatively small town of Vail—the feedback was in.

The new time-and-labor system from PeopleSoft that she had implemented was being verbally trashed. Managers of the top-flight ski resorts her company served were not happy. Their computers were hanging up as they looked at the system. They could not easily compile reports reflecting the time worked around a resort by each employee. They couldnt even find the "Delete" button.

"They were passionate" about their problems, Silvera says. And she had no recourse except to end the pain.

Getting payroll wrong is not an option at Vail Resorts. This is a business that runs five out of the top 15 luxury ski runs in North America, from Vail itself to Breckenridge, Beaver Creek and Keystone—all in Colorado—to Heavenly, on Lake Tahoe, astride the border of California and Nevada.

Every fall, Vail Resorts goes into a "period of the frantic dithers," according to Andy Daly, president of the resort operator at the time of Silveras siege in October 2001. In the space of six weeks, it hires 8,000 employees, including 800 new managers, for the winter ski season. Come spring, the "dithering" works in reverse: The resorts let go the same thousands of workers and hundreds of managers, in about the same amount of time.

Processing the payroll correctly is critical to each resorts profitability. Labor amounts to about 40 percent of expenses, according to Daly—the largest single day-to-day controllable expense of each lodge and ski mountain.

The siege could not have come at a worse time. Vail was in the midst of the dithers, gearing up for the critical winter months. If resort managers cant calculate paychecks, "you cant pay your employees," Silvera says.

Compounding the problem: Expectations were high. Vail had just come off a record year, reporting net income of $13.6 million on revenue of $543.8 million for the 12 months ended July 31, 2001.

Yet, all of a sudden, the travel industry was experiencing turbulence. Airplanes had struck the World Trade Center in New York and the Pentagon in Washington, D.C., just a month earlier. Customers who flew in were about to stay home in droves. The resorts were about to depend on the lowest-margin customers—in-state customers who drive in for a day.

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