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Otis Elevator: Accelerating Business Transformation with IT

1. Business Context/Key Business Drivers


Otis was the largest manufacturer, installer and servicer of elevators, escalators and moving
walkways in the world with revenue of $7.9 billion at the time when case was written. They
dominated the market space. Though there were some competitors like Kone, Hitachi, and Schindler
etc. these majorly operated in the hardware segment and were not seen as real threat by the
company.
Otis started inculcating IT in its business operations in the 1980s with the introduction of OTISLINE
customer service center a centralized customer service system to dispatch service mechanics. The
main objective achieved by this was that there was an improvement in visibility of the elevator
service business to the senior management, which was instrumental in enabling it to provide more
effective service to customers. Earlier senior management knew only about critical issues. OTISLINE
also streamlined the communication channels between field mechanics, customers and company
management. Another program REM elevator monitoring was essentially a proactive approach to
avoid equipment going out of service. These were later refined and combined to be launched (with a
lot of added features) as a comprehensive program called eLogistics which was aimed at connecting
all the customer facing and internal functions through web.
Company decided to take these initiatives as it wanted to be perceived as a customer-intimate
service provider and not a machine manufacturer, aimed at minimizing the downtime and
adopting a proactive approach rather than a reactive one. Company also wanted to stabilize the
cancellation rate. They achieved this by achieving brilliant response time to a service issue and by
anticipating and thus avoiding machine failure using the above two systems.
2. Initiative Objectives/Benefits
Key Business Objectives
To facilitate business process reengineering
Stabilize cancellation rate
Improve customer intimacy
Improve service response
Minimize machine failure/downtime
Gain higher visibility among the senior
management pertaining to service issues
Streamline communication between field
mechanics, customers and company
management

Planned Benefits Of The Initiative


Seamless connectivity between sales, factory
and field operations
Avoid rework/warrantee costs
Change brand perception, achieve higher
pricing points
Improved perceived value/reliability
Improved customer satisfaction
Management aware of service issues, can
take necessary action quickly if a problem
continues to recur
Improved service time benefit to customer

3. Initiative challenges

Key Challenges
Multiple locations with 50 financial and
15 manufacturing systems with 20,000
PCs across 1,000 locations
Variety of infrastructure and networks
(WANs, LANs)
Personnel changes

Issue Resolution
A cascaded program roll-out rather than
trying to implement at all the locations at
once
Using emerging technology to simulate
the application
Technology & process training
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4. Results
The initiative was fairly successful. This can be seen from the results achieved after implementing
these strategies:
In UK market, company was able to reduce sales cycle from more than six months to less
than three months after implementation of eLogistics program.
CLCs and SSIs were a success in majority of markets. For e.g. In Japan, internal lead time was
reduced to less than one week for some products.
During long sales cycle, customers could easily re-engineer their products and changes were
easily captured across the value chain thanks to eLogistics.
In-built automated follow-up system, reducing the time spent by sales personnel in these
activities and freeing up time to pursue further leads.
This was possible because everyone involved was driven by this one singular vision of Otis
becoming the greatest service organization and knew that success of this initiative would mean
achieving that goal. Everyone from C level executives to the field personnel aligned themselves with
the strategy and its implementation and this wholesome effort is what made this such a success.
5. Relevance and analysis
The most significant process or organizational change that Otis made for the two initiatives and how
these changes affected Otiss competitive position can be summarized as follows:
a. OTISLINE This achieved two objectives. 1) Extremely agile response to customer issues and
2) Improved awareness among the top management about the service issues. To do this Otis
took help of technology and set up a system in which immediate response was assured and if
a problem kept recurring, it was automatically escalated depending on severity. I believe the
change that Otis brought about in its culture was sensitivity to customer and customer
issues. With regards to the competitive position, this initiative created a positive image of
Otis among the market as a responsible and responsive service provider. And this is exactly
what they wanted to be.
b. eLogistics To implement this Otis basically acknowledged the need to incorporate IT as a
holistic solution to transform the business processes right from design to delivery phase. This
change in mentality, culture is what made it a success; along with thorough alignment of
every stakeholder towards the common goal. This gave Otis a competitive edge in the
market in terms of faster delivery times, better capacity to incorporate changes, lesser
inventory, better return on sales, revenue and profit growth and effectively strengthened its
position as market leader.
My personal takeaways from this case are:

Inculcating IT in your business can offer a business serious competitive advantage.


To make sure that the system being implemented is successful, each and every individual
involved has to believe in it and has to align to the common goal fully.
A daunting (or a BHAG) target can be achieved if it is broken down to smaller goals and then
worked on them simultaneously.
IT systems can be instilled in each and every business process to make them more efficient
and standardized.
Initiatives that are fundamentally logical will work across geographies and markets (though
with a varying degree of success).
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