The elevation of an IT outsourcing partnership: with HP SAP-trained staff, KONE's global strategy is top level - Cover Story

Communications News, August, 2002

When KONE, one of the world's largest escalator and elevator companies, embarked on a globalization strategy several years ago, it analyzed its internal IT processes and costs as part of the process. Management discovered the company's network had burgeoned over time and was continuing to grow rapidly.

With management intent on focusing corporate resources on core competencies and the implementation of standardized, best-of-breed practices in all of its operations, KONE decided to consider an IT outsourcing solution. "Our business is about elevators and escalators, not IT," says Reginald Rusan, infrastructure manager for KONE Inc., North America.

In standardizing its IT infrastructure, KONE examined how technology could help reduce the administrative cost of sales, provide full chain profitability and greater product standardization, and facilitate the rapid integration of newly formed and acquired entities.

Today, KONE has revenues of close to $2.5 billion and 23,000 employees in more than 40 countries. The company, founded in Finland in 1910, develops, manufactures, installs, modernizes and services elevators, escalators and autowalks. KONE supplies more than 20,000 new elevators and escalators annually, and it services 500,000 elevators and escalators, as well as 140,000 building doors. Maintenance and modernization business accounts for nearly 60% of its net sales.

Thirty percent of KONE's net sales are generated in the United States, representing more business for the company than from any other country. In America, KONE previously outsourced its mainframe systems running proprietary software to Computer Sciences Corp.

Around the world, KONE was managing various platforms with a variety of homegrown and nonstandard applications. None of the regional IT infrastructures was integrated, nor were they connected or compatible. The success of KONE's strategy depended on its ability to implement and manage a standard IT environment throughout every region in which it conducted business. After a thorough evaluation, KONE chose SAP as the best integrated solution for supporting and re-engineering all aspects of the company's operations.

FOCUS ON CORE BUSINESS

Outsourcing the support of the SAP software and hardware would eliminate a major time and resource drain, and enable the company to focus on the business' of escalators and elevators. With the rapid rate of technological change, KONE knew it would be critical to have an IT environment that evolved with the company. In addition, the company would have access to competent people in various technologies, enabling it to get the best out of the latest technology--crucial for long-term growth.

"The opportunities and subsequent benefits of outsourcing noncore business competencies are tremendous," says Rusan. "The key, however, is choosing the right outsourcing partner." Deciding on three data centers in three different time zones to ensure IT operations 24 hours a day, 365 days a year, KONE called for bids. "We wanted a company that was agile but strong across Europe, Asia and the U.S.," says Rusan.

With thousands expected to access the system, KONE had concerns about how easily and effectively growth could be managed in a way that provided IT tools and crucial data immediately to users. KONE also faced difficulties attracting qualified individuals to Moline, IL, headquarters of U.S. operations, and doubted whether it could get sufficiently trained resources on board fast enough.

"In today's markets, speed is essential," says Rusan. "IT resources are scarce, however, and it takes up to a year to train staff. Given the dynamics of the business environment, we could not afford to wait so long."

For KONE, quicker implementation also would be possible via outsourcing. Operating costs also would be substantially reduced and more predictable, even with faster- or slower-than anticipated growth. KONE selected HP in Palo Alto, CA, based on its flexibility, and its global capabilities and experience across all relevant areas of hardware and software. "HP demonstrated that it understood the need to partner with us, and not just work for us," Rusan says.

FAST SAP IMPLEMENTATION

"Key criteria in the selection of HP were the immediate availability of SAP-trained staff; the flexibility of the HP proposal, which allowed additional KONE companies to come online in a phased manner; cost effectiveness; and the data center infrastructure," Rusan explains.

Today, HP manages nearly 20 KONE Unix servers in three data centers--one in Atlanta, another in Brussels to serve Europe and the third in Singapore to serve Asia. Seven of the servers are in HP's outsourcing center in Atlanta, two of which are Superdome servers, HP's highest-performing and most powerful Unix server. All servers supporting the SAP application are running HP-UX 11i, HP's most current implementation of the Unix operating systems.

HP's OpenView network and systems management software is also deployed on the systems, as well as HP MC/ Serviceguard software, designed to ensure high-availability environments. The servers are linked with EMC storage systems that provide both online access to data, as well as real-time backup storage, with each unit holding five terabytes of data.