Case Study on Otisline

Q1: Why did OTIS launch this project? Background: OTIS was a market leader in both the aspects of elevator industry i. e. sales and services. However, the services industry despite being very stable had become very competitive due to entrance of many small players since services involved higher margin on profits, which attracted many entrants in the field. An elevator service company would be typically invited on the basis of responsiveness, quality and price. OTIS was able to charge premium for its products because of its established name but it had to maintain the quality and customer satisfaction high to get new installation contracts (more sales) and service contracts. It all started for OTIS with a companywide cost reduction program in 1981. Key reasons for the program were: 1. A centralized customer service system was deemed desirable because getting new contracts would only be adjudged based on through responsive call-backs by the company. 2. Reduction of response time which only a centralized system would make possible to do. A centralized system would enable the company to accept calls even during non primetime. This didn’t work efficiently for the company through local answering services due to non alignment of interests. 3. Get timely feedbacks from the customers on service quality. 4. More aligned cost effective solution was needed. 5. The response on call-backs till now varied across locations and it was felt to make it more effective to enhance customer satisfaction, the company needed to be more effective across all locations. 6. Of the 2300 service mechanics employed by NAO in 1985, most handled both call-backs and preventive maintenance. According to NAO OTIS could save up to $5 million by reducing call-backs which centralized system could make possible achieve Q2: How was value created in this model? OTISLINE proved to be greatly beneficial to the company in terms of following value propositions- 1. Responsiveness: Fact: Reduced response time to up to 1 second, enabled component specific problems to be tackled and increased visibility of the company to end customers. Implication: The system not only improved and tracked the responsiveness to customer calls, but also provided reports of response-time tatistics that could be reviewed with customers. The company could therefore start offering a guaranteed response time to customers because of OTISLINE’s capabilities. 2. Communication: Fact: Quality of services also improved owing to centralization of the system. This was made possible through centralized records accessible to all, hence improving overall efficiency of the system. Implication: Not only it improved communication between the customers and manufacturer, but it also provided the sales and service department with an effective submission of various reports to the management. . Reliability of data: Fact: Standardization of procedures through efficient data management. This enabled trend analysis for flawed designs of products and corrective mechanisms to tackle it in advance. Integration of services enabled management to be able to handle and monitor the system in a better way and work to make it more reliable. Implication: Reliability data could be used by management to allocate resources to locations with recurring problems. Engineering could also investigate trends that could be an indicator of flawed design or problem. 4. Customer Satisfactions: All the above lead to greater customer satisfaction and thus improved company’s reputation in services. Also it empowered Otis to compete with independent competitors. Q2: What adjustments in the organization were needed to accommodate OTISLINE? In order that OTISLINE proves to be a good fit satisfying strategic need and delivering successful outcomes, the critical thing is to have an appropriate infrastructure and to employ a good implementation process. One of the very important ways to provide this environment is by transforming the organizational structure from a decentralized one to a centralized centre. This transformation is bound to have a positive effect on performance, but at the same time it would bring a variety of negative effects on many people's jobs. Otis had to move from a highly decentralized handling of elevator service, controlled by the field office managers, to a highly centralized approach. Many of the immediate and future benefits of OTISLINE follow from this radical change, which was not just a redesign of the business process of dispatching, but a transformation of managerial control within the firm. Centralized handling of services mean, replacing local dispatchers with new ones at the central site. For mechanics, the improved dispatching will make their lives better in some ways, but it will also subject their performance to greater monitoring. Also, field office managers may find themselves bypassed as service data would directly flow to corporate headquarters, which will start to liaise in local service operations. So, the consequences for people in the organization are going to be very mixed. Also, some changes have to be introduced both on technical front also. This changes involve migration of one computer platform to other; including IBM 3083 replacing IBM 370/158, change in programming requirements, change in functionality of jobs, which could possibly leave certain professionals obsolete in new environment. In short, we can conclude on the cultural front, the major changes involve shifting of resources to establish new helpful systems rather than application development resources to automate old manual procedures. The organization is changing the way it required its employees to do business.

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