How Royal Caribbean is protecting its major digital projects as the coronavirus outbreak deals a blow to the cruise industry

• The cruise ship industry could be one of the hardest hit by the coronavirus panic. As the outbreak spreads, US officials are warning Americans against traveling on cruise ships altogether.
• Despite the potentially tough economic conditions ahead, Royal Caribbean's ongoing tech overhaul could be largely shielded.
• Chief digital officer Jay Schneider told Business Insider that 98% of the company's ongoing projects are "hard value," meaning that they're "things where the investment yields a better outcome that we can measure. And as a result, there's no reason not to do it."
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The coronavirus outbreak is having widespread impact across corporate America, but one of the hardest hit segments is the cruise ship industry.

On Sunday, the US State Department advised Americans to avoid traveling on cruise ships altogether because of the potential for infection. The warning comes as one cruise ship is docked outside of Oakland, California, after at least 21 passengers on board tested positive for the virus.

Experts say the sector could stand to lose significant revenue as a result. Analysts at JPMorgan Chase, for example, said the pandemic is creating "the toughest environment cruise operators have had to contend with in most of their histories."

The ramifications are so significant that President Donald Trump is reportedly considering a tax break for the industry.

Despite the potential fallout, some tech leaders remain confident that the digital investments underway will be able to continue largely unabated.

At Royal Caribbean, chief digital officer Jay Schneider says projects are chosen because they produce value for the organization - whether that be reduced costs, growing revenue, or improving employee morale - and that doesn't change in the face of an external threat.

"There are some things in our [digital transformation] journey where the value has been squishy. During economic challenges, our job is to focus on the things that drive hard value," he told Business Insider. "And 98% of what we do I can attribute hard value to, things where the investment yields a better outcome that we can measure. And as a result, there's no reason not to do it."

Reductions in funding for digital initiatives in the face of tougher economic conditions can also set companies back significantly, according to Schneider. "They cut too deep and then they have a hole to fill in that they have to make up a year or two later," he added.

A 'never-ending journey'

Schneider refers to Royal Caribbean's digital transformation as a "never-ending journey."

Among other things, the company is trying to digitize how it educates passengers on the safety features of the boat on the first day of travel - a process that currently requires all customers to be physically present in a specified location. It's also continually updating its application to make the onboard experience more seamless for customers, like digital room keys and remote control of the air conditioning in a cabin.

But many of the digital overhauls underway might not actually need major software investment. Instead, they are heavily reliant on organizational changes.

"It isn't just about software. For us, yes it's software, but it's built on a system of process reengineering and thinking differently about the guest experience," Schneider said.

Royal Caribbean, for example, sought to transform how passengers boarded their ships at the start of trips. It implemented facial recognition software and other applications to ease the process. But a major impediment had nothing to do with the technology.

Passengers were previously stopped nine times during the onboarding process, whether for security checks, directional cues, or other human interactions.

Royal Caribbean ended up reducing that to two instances: once for security and another for the last check onboard the ship to make sure the right travelers were present.

While facial recognition tools helped reduce that, it was largely a process of analyzing all the touchpoints and figuring out which were repetitive or could be eliminated.

Royal Caribbean is sure to be one of many companies that must struggle with evaluating ongoing investments in the face of economic uncertainty due to the coronavirus. But the reliance on both organizational changes and tech improvements show that progress can still be made even with tighter budgets.