...OTISLINE CASE ANALYSIS Group – E1 1. Why might be the motivation for Otis to launch this project? Otis, a subsidiary of United Technologies Corporation, was the first elevator company to introduce microchip into the elevator mechanism. It incorporated the latest technology into its elevators, (indicating that Otis was investing in the technology as it saw some advantage out of it.) Otis installed its first computer IBM 1401 in 1965 to automate maintenance billing which was used for production control and accounting. It kept upgrading its information systems from time to time as and when new computer or technology was available. But this still was unorganized as each department had separate technological advances, i.e. in some departments like billing and production, the technology was advanced, but in departments like dispatching it was still lagging behind. This led to the inefficiency in dispatching. They introduced information technology in 1981 to check the feasibility of centralized customer service department. It used answering machines to turnaround on weekends and no prime time calls, which was inefficient. Hence Brad Robertson decided to start the OTISLINE project which would improve the visibility of the service business and help in better managing of the current operations. • • • • • • They used answering machines to turnaround on weekends and no prime time calls, which was inefficient. Remain the Market Leader: In order to remain at the market leader...
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...leader in both sales and service segments. Consider the time when OTISLINE was just being conceived. Why do they need to do anything at all, and that too in the service sector? Higher Margins in Services-Elevator industry was highly competitive with players comprising Otis, Westinghouse, Dover, Montgomery, Schindler, U.S. Elevator and Fujitec. Otis was the industry leader in sales and service. The manufacturing companies were more focused on getting service contract rather than sales because the income proportion was substantially high in services as compare to sales. Also due to price wars in Sales, the margin was lower while services accounted for greater profit margin Direct correlation between effective service and sales in elevator industry- The service attracted many player because of its steady and high profitability. Moreover OTIS faces competition from small service providing companies in terms of competitive pricing. Cyclical Demand for New Elevators- Demand for new installations was directly correlated with building and construction cycle while existing services sector had a stable demand. Long-term Service Contracts- The primary basis of selection of service companies were based on prompt responsiveness, optimum quality and reasonable price. Also these contracts were negotiated for a long term which led to stable revenue streams. A centralized customer service system like Otisline different from commercial answering services would help Otis to differentiate...
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...OITS Assignment Report Group F2 OTISLINE Group Members Shirsho Biswas (0344/48) Shridhar Jaiswal (0347/48) Shubhkarman Singh Sidhu (0350/48) Q1. What might be the motivation for Otis to launch this project? Ans. The elevator service business alone was $2 billion, which was almost twice that of product sales. Also it was a more stable market than the product sales market. It was essential that this part of the business ran as effectively and efficiently as possible. Customer call-back responsiveness was the main factor on which this business depended. Earlier, when they used commercial answering services to attend non-primetime calls, the quality of service varied greatly since the answering services did not have the same motivation as the company to provide a fast response to the customer. NAO had earlier calculated that reducing call-backs for each installed elevator, by one a year, the company would save $5million annually. By launching OTISLINE, OTIS expected to improve the responsiveness and quality of their call-back service significantly, and thus saving a significant amount of money and increasing their share of the highly profitable elevator service business. Q2. How was value created in the product? Ans. OTISLINE created strong value for the company. It provided a real competitive advantage to OTIS with its ability to collapse both distance and time, providing in faster responses to customers and better maintenance procedures. The marketing services improved...
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...OTISLINE Otis Elevator was the world leader in elevator sales and services with $2 billion in revenues in 1984. New equipment sales and service of elevators formed the two main business segments in the industry. Otis led the former category owing to its technological superior and reliable products. The service market was competitive and had many players. Otis had opportunity to gain a bigger market share in this by delivering better service at a competitive price to its customers. Investing in OTISLINE Service market was more fragmented than the new equipment sales. Company’s market share dependent on responsiveness, price and quality. Responsiveness to customer call backs was seen as the main differentiating factor in assessing the quality of a service company. OTISLINE not only helped in this regard but also improved Otis’ service by impacting the following headers: Customer Service – Call back responsiveness was greatly enhanced since OTISLINE made service available 24 hours a day and reduced the time to fulfil the service requests. Microprocessors technology – The future of elevator technology lied in microprocessors and to provide servicing to those microprocessor powered elevators required access to propriety information which small service providers would not have. Thus Otis with OTISLINE would have a comparative advantage in better handling the needs of the future. Process automation – Otis had historically pursued automation of their manual process, OTISLINE...
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...1. Suppose you have conceived the idea of Otisline. What would be your arguments to convince the management for investing in this project? Our proposition would be elaborated on the following points: 1. Existing Market Scenario: The study of North America sales and services shows the industry of elevators is very competitive and stable with steady demand and high profitability that attracts new entrants. Use of similar technology in all the elevators led to increase in many small companies devoted purely for service. The competitive edge exists in acquiring the long-term service contracts, as elevator sales market was very competitive with marginal profits. Thus the focus was mainly on targeting the service industry. 2. Differentiating Our Product: Our product could be differentiated on the basis on responsiveness, quality and price. a. To target the responsiveness (24 hours a day): With the concept of the OTISLINE, the company can accept the customer requests not only in the working hours but also during non-prime-time hours. This would decrease the response time to the consumer calls thus increasing the visibility of our service business. b. To target quality: The quality of the company’s service was a measurement of its responsiveness to callbacks. Thus, reducing the response time increases customer satisfaction and brand loyalty. The employees would also be effectively trained which would buttress the quality...
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...China. Revenues climbed from $6 billion in 2000 to $8 billion by the end of 2003 with 80% coming from outside the United States. The company had always provided solid and steady profit contribution to UTC since its acquisition more than 25 years earlier. In the period from 2000 through 2003, Otis’s contribution to UTC’s profit increased from 25% to 35%. Otis’s sales and profit growth helped drive the strong performance of UTC, which had projected revenue of $35 billion for 2004, 14% over 2003’s. Early Application of IT (OTISLINE) In The early 1980s, Otis created a centralized customer service system to dispatch service mechanics. IT worked with many functional areas to implement this 24 x 7 concept, called OTISLINE customer service center. Previously, service personnel were dispatched from local offices, and there was no central view of service delivery, response time, or cumulative product issues in the field. With the OTISLINE customer service center running on a newly installed mainframe, a centralized Otis service...
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...Otis Elevator: Accelerating Business Transformation With IT Otis Elevator, a subsidiary of United Technology, has witnessed many transformations since Elisha Graves Otis first found the company in 1853. As a result of these transformations, the company has become the leader in its industry as the world’s largest manufacturer, installer, and servicer of elevators, escalators, and moving walkways. Across the world, the company has over 1.5 billion elevators and over 100,000 escalators in operation, with some operating inside some of the world’s most prominent building structures. Today, mainly informational technology (IT) is responsible for the company becoming the leader of its industry. During the years from 2000 to 2004, the company experienced significant growth and grew to over 61,000 employees with operations in over 200 countries. As this growth occurred, the elevator service market became more stable as there were now elevators installed in almost all buildings in the world’s major cities. The company’s profits now relied heavily on the service and repair of elevators and escalators. The problem at hand was that the company was facing new competitors in the global market, including other similar elevators manufacturers and also other companies that exclusively offered elevator services and repairs. At this point in time the then president of Otis Elevators, Ari Bousbib, knew it was time to remake the company “To become the recognized leader in service excellence among...
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...companies worldwide, the goal of Otis was to differentiate itself from other companies through logistics and service. Otis’s objectives were 1. To improve innovation, quality, cost and speed during the continuous transformation process and; 2. To move Otis core business from product and service management to customer solution management, and in the end to logistics and information management. Using a single finance and manufacturing system enabled Otis to add value to its entire supply chain. Below, two main transformation waves shown the progress of changes from the manufacturing company toward a total solution company to customers by Otis. Firstly, Otis introduced OTISLINE and REM, which facilitated the company to increase the efficiency of customer service and customer satisfaction. OTISLINE was a 24 hour customer service center, which produced excess callback reports to improve product reliability and allowed customer to experience an immediate response from Otis. REM was a control system that provided log performance statistics of the elevator directly into a distant computer, and the company could adjust and maximize the elevator performance. The second wave of the transformation was to increase the coordinated effort between operations, such as engineering, supply...
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...world * Specialize in logistics, service excellence, and total solutions for customers * Key drivers: * Transform the culture of Otis to become a single-customer centric business model to increase profitability, attract new and maintain current customers to beat out competition * Shift focus of the Otisfrom manufacturing to logistics and information management Initiative Objectives/Benefits * Redefining the processes in the engineering, supply chain, sales, and field operations sectors to improve innovation, quality, cost, and speed * Convert the culture and migrate core business competencies from product and service management to customer solution management and logistics and information management * OTISLINE Customer Service Center * Centralize customer service system to improve service delivery, response time, and cumulative product issues in the field * Improveperformance visibility of the elevator service business to management * Reduce callbacks, improve product reliability resulting in improved customer satisfaction, thereby, reducing maintenance contract cancellations * Restructuring the company, eliminating several layers of management and speeding communication between field mechanics, customers, and company management * REM elevator monitoring * Enables a microprocessor-based elevator to monitor its control system and log performance statistics directly to a database * Service mechanics...
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...world. It not only manufactures but also installs the equipment in the respective customer desired locations. It then continues its relationship with the customers by providing timely service facilities. It was soon recognized as a leader in service excellence among all the companies. The main competitors included multinational companies such as Hitachi, Kinetek, KONE, etc. Otis grew aggressively by acquiring elevator business in China. By 2004, the company had 1.5 million elevators and 100,000 escalators operating in the world. Its revenues increased by $6 billion. The company was a huge success. Initiatives taken to improvise 1. OTISLINE customer service center During any service emergency, the service panel was dispatched from the local offices that caused huge delay time and hence decreasing customer satisfaction. The OTISLINE customer service center was created to dispatch service mechanics on immediate requests. The main aim was to implement 24x7 concept. This initiative also allowed Otis to produce ‘excess’ callback reports for various levels of management. The managers had the information they needed to manage services business operations relatively easier. This concept changed the expectancy within the customers and hence decreased the cancellation rate. 2. E*Logistics This major initiative was taken to basically to improve the information flow within the company. This was a huge success as it bridged the gap between the all the teams including sales...
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...not just elevator companies – worldwide.” * Culture: Change the norms, values and processes of Otis – how they do business – so that the company focus shifts from a manufacturing company to that of a service company. Become the number one service company in the world. * Systems/Functions: Both systems and business functions need to be changed to align their processes and procedures with the new company vision and culture. This included integrating pre-existing systems already established in the company such as Otisline and REM and go from managing the flow of products, to managing the flow of information. * Growth: Provide excellent service in mature elevator regions as service and repair account for 75% of revenues in these locations. Expand to key growth areas and emerging markets such as China in order to win new business and stay ahead of their competitors. * Redefine Services: Go beyond traditional support tools such as Otisline and REM and include new equipment design, supply chain, new equipment delivery and field installation. * BHAGs: Set bold goals that will reduce complete cycle times and continue to ensure quality delivery of products and services to customers. II. Change and Implementation Otis Elevator already had in place several key tools and information systems that had been implemented previously in various departments to enhance the company’s operations. By...
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...Otis Elevator: Accelerating Business Transformation with IT At Harvard the only thing considered duller, safer, and less adventurous than working for a bank was working for some old-line can't-miss industrial firm like Otis Elevator, which only needed caretakers. —Tom Wolfe, A Man in Full (New York: Farrar, Straus and Giroux, 1998), p. 31 At the northeast corner of 20th Street is the turreted red-brick Victorian Apartment house . . . the first cooperative apartment house in New York City. Peek into the luxurious lobby! The foyer is adorned with stained glass and Minton tiles, and the building is equipped with Otis hydraulic elevators installed in 1883, and among the oldest of their kind still in service. —Gerard R. Wolfe, New York: 15 Walking Tours (New York: McGraw-Hill, 2003), p. 261 In early 2004, Otis Elevator President An Bousbib (pronounced boozbe) finalized his presentation to United Technologies (UTC)—the parent company. The past 12 months had been a success for Otis, as highlighted in the 2003 Annual Report: Otis completed the second-largest acquisition in its history with the addition of Amtech Elevator Services. Amtech brings . . . a customer base spanning universities, hotels, hospitals, airports and convention centers throughout the United States. Overall, Otis revenues grew by more than $1 billion to $7.9 billion. Operating profit increased by more than $300 million to $1.38 billion, and operating profit margin grew by more than one point to 17.4%) Otis was the...
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...evolved without common systems, and had many duplicated processes and systems across the company. The new CFO decided to focus on IT cost, and saw that a common platform for business processes across the company (SAP) could reduce cost and provide more effective communication. This was more a cost-driven decision rather than a decision to improved business processes. So the management structure they had in place seems appropriate for their strategic needs. At Zara and Otis, business process improvement was the key driver for IT development. In both cases, IT decisions were made at the highest levels of the company, and projects were specifically targeted at speeding business processes and decision-making. The Zara POS system and the OTISLINE customer service center fed information to a central location and this information was used to allow quick response to changing needs. For SEJ and Hilton, IT systems were focused on customer needs in support of corporate strategy. At SEJ the strategy was “Freshness Job #1” and at Hilton, it was CRM which could mean customer relationship management, but in Hilton it also meant “Customers Really Matter.” Their organizations were well set up to support these customer-centric strategies. At VWoA and Pfizer, the IT departments were managing existing processes, and were directed by committees rather than by a CIO. The measures seemed to be on specific projects and on cost management rather than on overall corporate goals. b. Do...
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...customer-centric business model. One Interesting fact is that 80% of the company’s revenue comes from outside the united states. This emphasizes that globalization played a significant role in terms of customer base, revenue. So, going forward the company should concentrate in expanding it’s operations all over the world, especially the emerging economies and attaining diversified customer database. One can easily infer form Otis transformation that Information Technology, Improvement in information flow and understanding market trend, customer needs plays a major role in changing the face of the company. Otis has restructured itself taking upon the fact that customer service, maintenance contributes more to the market along with the sales. OTISLINE Customer service center is one of the early IT applications in Otis which helped Otis dispatch group respond to customer in less than a sec. IT applications aids in improving visibility of business performance to management and providing more effective quality service to customers. Another important application was REM elevator monitoring, which helps in servicing the elevator even before it went out of service. An IT Initiative, e*Logistics program, facilitated business reengineering that took place throughout the company. With the e*logistics program the project proposal became automated and data...
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...averages • Establish strategic advantage in emerging markets e.g. China • Make the transition from a manufacturing to a service organization • Reorient Otis to a customer-centric organization • Employ technology to provide an information advantage over service company competitors Competitors FedEx, UPS, Procter & Gamble, Other Supply Chain Companies like The Wheels Group and Exel plc. Decisions Test Tom and Ryan Problems, opportunities and risks • Problem 1: Challenges for e*Logistics p 233/13 • Problem 2: Otis needed to embrace a culture of service and to develop the processes needed to deliver world-class service. Otis had to re-define its processes, beyond service support tools like OTISLINE customer service center and REM elevatore monitoring. • Problem 3: The major problem facing Otis how can they can continue their dominance and profitability within a new market space, which is providing global logistics and service support to firms of any kind, while leveraging their investments in IT. Evidence Alternatives Alternative 1: Improve upon their current business model by incorporating analytics to their ERP and CRM systems. By utilizing analytics, Otis will be able to use the data in a quantitative manner to provide reliable, cost effective logistical and service support to customers world-wide. - This is also consistent with the vision of President Ari...
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