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 all companies—not just elevator companies—worldwide.”
In 2001, Otis Elevator had two main objectives that were explicitly stated in its “Global State of the Business report.” From the report, those objectives were “…the continuous transformation of our business processes to improve innovation, quality, cost and speed; [and]… the migration of our core business competencies from product and service management to customer solution management and eventually to logistics and information management." In order to fulfill these goals the company looked to information technology (IT), such as the intranet, extranet, Internet, sophisticated computers, World Wide Web, and other networks as the primary method to do so. This major IT initiative was called e*Logistics, where the company used IT to create networks to connect the major operational sectors of its business such as sales, manufacturers, and field installation, in order to better serve its customers.
By implementing e*Logistics, the company was able to create several benefits for the company. One of the benefits was it allowed the ordering process to become more automated, permitting the sales and field supervisors to make easy changes and agreements, and access information with ease. The e*Logistics also allowed the company to reduce expenses associated with the storing of inventory and damage to materials at the jobsite. Before e*Logistics the company maintained many storage facilities and also loss many materials that arrived at the jobsite too early before the installation process. With the e*Logistic systems they were able to shut down many storage facilities, using instead several regional contract logistics centers (CLCs). By using a just-in-time inventory approach with the aid of computer networks, inventory was made or delivered when field supervisor requested it. Finally, the e*Logistic also allowed the company to collect and analyze information about the customers, which allowed the company to identify customers needs before they were requested in order to provided excellent service. Overall, the application of e*Logistics helped the company eliminate theft, hidden cost of lost, and damaged and misplace materials, and therefore for enabled the company to lower customer billing and cost related to the production phase.
During the process of initiating the e*logistics, there were several challenges that were posed to the company. A contributing factor in the company's growth was that it acquired over 150 companies who all used different operations and computer systems. Otis Elevator had to try to find a way to become a global company. In order to standardize the various infrastructures, the e*Logistics was used to stimulate the network applications across the global infrastructures, making the company a more global structure. Another challenge faced by the company was providing training for all personnel on how to use the new e*Logistics system. The problem here was many of the staffs were unfamiliar with how to use IT since the company retransformed from a manual to an automated system. To address this the company conducted pilot projects to gauge on how long would it take to train employees and how effective was the training method. By completing the pilots they were able to make improvements for training employees, and it also helped to create a strategy of implementing the e*Logistics system in the regions with the least developments systems.
It is evident that the e*Logistics initiative taking by Otis Elevator has created great success for the company. Not only did e*Logistics help the company to create a network between it major segments that eliminated inefficiency, redundancy, and complexity, but it also helped the company eliminate majors hidden cost, allowing customer billing and the production price to reduce. The company’s revenue increased over $1 billion bring it to about $8 billion in 2004, while the profits from operations also increase over $300 million to 1.38 billion. This initiative, taken by the president Ari Bousbib, has remodeled the company’s infrastructures while bringing great success to the company. In addition, for the company to continue being successful, it was stated best by Ari Bousbib: “Our quest for service excellence will now require another mini revolution—to become number one in service—but this will also make us an ever-greater company.” Prior to the launch of the e*Logistic initiative, Otis Elevator launched the OTISLINE in the 1980s, which was similar in strategy and nature to e*Logistics. Just like the e*logistics, the OTISLINE's purpose was to increase the quality of customer service. The OTISLINE was basically a customer service center that was available 24/7 to respond to customers quickly by dispatching filed mechanics when service was requested. This was accomplished with the aid of technology, such as mainframes and landlines, where the removal of several layers of the organization sped up the communication between the customers, field mechanics, and management. To further assist the OTISLINE, the company also used an IT called the REM elevator monitoring system. With this IT, the company was able to monitor the performance of the elevators by means of computerized processes. The system creates and sends a report headquarters requesting service on an elevator before it with out of service. What is interesting to note is both the e*Logistics and the OTISLINE used technologies that were appropriate at the time in order to restructure the organization to provide a better quality of customer service. In conclusion, it is obvious why Otis Elevator is the leading company in its industry. The company obliterated its organizational structure by reengineering it with the help of IT. It is more evident to me now how important it is for companies to take advantage of the technologies that are available at the time to help restructure the organization, like it the case of OTISLINE and e*Logistics. We know for a fact that technology will continue improve as we go into the future, so we should continue to utilize it to help us become more efficient within the structural walls of our organizations. Once I enter into my field of accounting, it is important for me to gain an understanding of the information system at my firm. This will allow me to provide suggestions to the information systems department, on ways to further use and incorporate IT into our jobs, helping my company become a leader in its industry. Even though my suggestions might provide minimal change, that slight change might provide my firm with some type of an edge in the industry, which is crucial in this age of information technology.