Significant Savings

By Tom Steinert-Threlkeld  |  Posted 2004-01-06 Print this article Print

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 Dalys 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, shes 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 its 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 were done when we implement. Were not. Youre not done until you know whether youve 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.

Vail Resorts Base Case

Headquarters: 137 Benchmark Rd., Avon, CO 81620

Phone Number: (970) 476-5601

Business: Operator of five luxury ski resorts in the U.S., including Vail and Breckenridge.

Project Leader: Vicki Silvera, director of information technology, back office and hospitality systems

Financials in 2003: Revenue of $710.4 million, net loss of $8.5 million, net margin of -1.2%.

Challenge: Consolidate payroll, accounts payable and other accounting systems as well as human-resources management across five ski resorts in Colorado, Nevada and California.

Baseline Goals:

  • Drive down operating expenses of $430.3 million a year, by cutting administrative labor.

  • Reduce back-office expenses as part of a $10-million cost-cutting effort launched in October 2002.

  • Support additional cost cuts, as part of a campaign to save $25 million in fiscal 2004.

    Tom was editor-in-chief of Interactive Week, from 1995 to 2000, leading a team that created the Internet industry's first newspaper and won numerous awards for the publication. He also has been an award-winning technology journalist for the Dallas Morning News and Fort Worth Star-Telegram. He is a graduate of the Harvard Business School and the University of Missouri School of Journalism.

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