Managing Information Systems Case Study: Toromont Industries Taken from Laudon & Laudon (2002), chapter 10, p334-335 Dr. Stephania Loizidou Himona ACSC 345

Toromont Industries Ltd Toromont Industries Ltd. is headquartered in Toronto, Canada, and is one of the largest dealerships for Caterpillar heavy-construction equipment in North America. Toromont also makes process systems, industrial and recreational equipment, and operates a series of energy plants supplying Ontario’s deregulated electricity market. Dr. S. Loizidou - ACSC345

Toromont Industries Ltd Two-thirds of Toromont’s revenue, which amounted to US $494 million in 1999, comes from its equipment group, which rents and sells heavy construction and mining equipment and parts. Toromont has more than 2,000 employees throughout North America. Dr. S. Loizidou - ACSC345

Business Toromont’s success has not been based on selling more tractors, parts, and engines but on selling the kind of service that leads customers to purchase 10-year contracts. The contracts call for Toromont to supply them with heavy equipment and maintain that equipment. Dr. S. Loizidou - ACSC345

Business Customers do not need to purchase such equipment, which can amount to $150,000 per earth-moving machine, nor do they have to maintain their own warehouses or mechanics. Toromont supplies the machines and guarantees they will be maintained in top condition for the life of the contract. Dr. S. Loizidou - ACSC345

Competition Toromont faces stiff competition. Many heavy-construction and mining equipment firms, including Komatsu, John Deere, and even Caterpillar itself, are putting more emphasis on customer service by selling parts on-line over the Internet. There are also Web sites such as Equipmentsite.com, Point2.com, and Equipmentrader.com, which are clearinghouses for heavy-construction equipment, parts, and services. Dr. S. Loizidou - ACSC345

Competition The Internet appears to be turning heavy-construction equipment into a commodity. “With so many others vying for your customers’ attention, how do you convince them to buy from you instead of from a discount place on the Internet?” asks Rob Kugel, an analyst with FAC/Equities in Burlingame, California. Dr. S. Loizidou - ACSC345

Strategy Toromont’s management believes that the company can stay ahead of these competitors by offering the best possible customer service through a new on-line system for ordering and maintaining equipment and for tracking customer accounts. The system, ideally, would provide more interactive personalized service than could be obtained from any of its competitors. Dr. S. Loizidou - ACSC345

Strategy For example, the system could provide oil quality and other maintenance statistics on-line that could help customers determine pre-failure conditions faster, reducing the chances of costly downtime or worker injuries on construction jobs. Customers could get quick answers to questions, such as how fast they can obtain the part they need, when their equipment needs to go into the repair shop for maintenance, and how much they owe on their accounts. Dr. S. Loizidou - ACSC345

Strategy Toromont’s senior management wants an interactive customer service capability as soon as possible and is willing to keep things simple to get this capability up and running. It doesn’t want customers to see the same generic information. Each Toromont client should be able to see precisely the information that is specific to their company. Toromont currently provides customers with oil analyses and maintenance updates on their machines but must deliver this information via fax. Dr. S. Loizidou - ACSC345

Question 1 What are Toromont’s requirements? Dr. S. Loizidou - ACSC345

Question 2 What Information System solution(s) do you recommend? Dr. S. Loizidou - ACSC345

Question 3 What factors do you need to take into account in order to implement these recommendations? Dr. S. Loizidou - ACSC345

Question 4 What are the risks associated with your solution? Dr. S. Loizidou - ACSC345

Question 5 How would you mitigate these risks? Dr. S. Loizidou - ACSC345