Recently we played Crypts & Things and a giant kraken attacked our ship. The referee basically had various tentacles attack as separate monsters with the main body of the creature staying below the water. We had about 20 people on board, five player characters, the ship owner and his two kids and eleven henchmen, nineteen people in all.
The rule we used was simple: The target of each tentacle was determined by a d20. Every defender of the ship was assigned a target number. If an undefended target number came up the tentacle dealt automatic damage to our ship. As some of the crew died, more tentacles started damaging the ship. We determined that the ship had 10 hit dice. After the fight, we rolled for hit points to determine how broken our ship had been.
It worked very well.
The referee also had a system of determining how many tentacles were currently attacking. Incapacitated victims were thrown overboard and would drown. At one point a player character went down and I don’t exactly remember why he wasn’t thrown overboard. I think it was because another player character killed the tentacle before the end of the round.
After defeating half the tentacles, a morale check was made and the creature retreated. Lucky us! Our longboat was about 80% gone, if I remember correctly.