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OTIS ELEVATOR

Business Context/Key Business Drivers


OTIS is subsidiary of UTC and was acquired in 1976. o The company has over 61000 employees with 90% of them working outside United States. o Otis operations were organized in 7 regions and it sold products in more than 200 countries and territories. o In 2004 Otis had 1.5 million elevators and 100,000 escalators operating all around the world. o Otis has elevators in 10 of the 20 largest buildings in the world. o Otis has more than 1.4 million elevators and escalators under maintenance. o Revenues grew from $6 billion in 2000 to $8 billion in 2003. In 2010 the revenue was $11.6 billion. There were 2 significant IT initiatives taken o The OTISLINE customer service center was implemented to provide 24x7 customer service. o The e*Logistics information transformation project was initiated to facilitate business process re-engineering that was taking place throughout the company. The reason to take these initiatives was to become recognized leader in service excellence not only in elevator companies but worldwide. Initiative Objectives/Benefits OTISLINE Customer service center o As the installation base was growing, service was becoming higher portion of profit than new unit sale. o Service contracts were given out based on responsiveness, quality and price. o With the help of this initiative they were solving the response time as 98% of transactions were answered in less than a second. o The key benefit was to tap the 75% of the market which was service. e*Logistics o It was an initiative used to manage information flows between participants both in production of elevator or escalator and maintenance process. o Reduction in the process cycle time. o The business benefits were aimed at Otis to become infinitely information enabled and wanting the company to have mastery of information flow. Initiative challenges The delivery of e*Logistic program to desktop. They had to check how scalable the application was. The network and the internet browser settings would have an impact on the performance of the application, as change in the configuration would not let the application behave consistently. Technology and process training had to be provided to roughly 1500 sales representative and 1500 field installation supervisors across the globe. Roughly it was taking employees 6 months to get use to e*Logistics program, which was determined in the pilot. Integration of e*Logistic with legacy systems. The challenges were addressed and pilot projects were successful and UK had guaranteed 100% use of solution by 2005. Results Both the IT initiatives e*Logistics and OTISLINE were success.

OTIS ELEVATOR
The e*Logistic initiative caused the operating profit to grow, but the working capital had nearly doubled. o The main reason to this was streamlining of process. o They got the complete business process right from getting order to production to delivery to maintenance under one system which helped in effective monitoring, and reducing the turn-around time. o This got done with number of intermediary processes which saved money and time. For example sales representative did not have to mail documents as they were available on system, the system automatically generated reminder mails. The OTISLINE would be successful because it aimed at response less than 1 sec for 98% of time this is prime essence of service industry, in which you make the customer experience good for them not to leave you. Relevance and analysis The case illustrates changes made to the Otis elevator maintenance and order fulfillment areas with help of the IT systems. OTISLINE was a customer service center which was created because of the change in the organizations Elevator maintenance. With the increase in competition in the market and service accounting to the greater portion of the profit then sales of new unit caused Otis to work on it customer service as service contracts were given out based on responsiveness, quality and price. OTISLINE was introduced to provide a 24x7 service concept, it was a service dispatch group of 160 people working 24hrs a day to respond to customer in less than a second. Combined with this was REM elevator monitoring which enabled microprocessor enabled elevator to log performance to one of the monitoring computers, hence Otis people knew of the problem before they were reported. OTISLINE helped Otis improve performance because in service industry the key determining factor is the response time the customer receives, with automation and effective monitoring Otis had an edge over its competitors. Order fulfillment which means order to hand over cycle took roughly 8 to 18 months or more depending upon the customer, with e*Logistics it changed significantly to deliver quality products and service to customer. The e*Logistics information transformation project was initiated to facilitate business process reengineering that was taking place throughout the company. The idea of e*Logistics was to integrate all the business process i.e. project proposal, sales processing, order fulfillment, field installation and closing activities under one entity. The information required to all the concerned entities were available during their phase on the system, this omitted the time lag required to pass on information between processes hence speeding up the cycle. There was a very less probability that things or deadlines be missed because on every process reminder e-mails were sent. This initiative will make Otis very strong in the competitive market because with the automation of the complete process cycle will improve the turnaround time significantly, and it is also in-line with the new objective to be number one in service excellence. There has already been significant rise in working capital in 2003 which has almost doubled. Both the initiatives are going to work for Otis because it knows that dissatisfaction in customers is not because of the product but because of service and both these initiative aim at improving the services rendered. Works Cited

OTIS ELEVATOR
Otis Elevator: Accelerating Business Transformation with IT (HBS:9-305-048)