Tomio Pikhala, CTO at Kone, talks about innovating for customers, trusting partners and astounding IT solutions.
CTO-Talk

Winning with customers.

Tomio Pihkala, KONE CTO, and Serge Vandenhoudt, T-Systems VP Sales & Service Management EMEA, on innovations close to the customer, learning to trust in partnerships, and IT solutions with a “Wow!” factor.
Author: Thomas van Zütphen
Photos: Aki-Pekka Sinikoski

Mr. Pihkala, the world’s cities are constantly growing and approximately 200,000 people move into urban centers every day. Urbanization is increasing and more than half of the planet’s population lives in urban areas. What role does the KONE Technology and Innovation unit play in your corporation’s business model and the desire to set benchmarks for the “people flow of the future?”

T-Systems helps KONE network its elevators.
Traditionally KONE Technology and Innovation has been very much focused on how to improve current businesses through innovations. But today we see new business models emerging which further help us to increase our revenue in addition to the current businesses. So today we are doing both. The function that I’m leading is responsible for innovation generation, in particular innovations close to the customer. That means coming up with an idea that we can translate into value and that customers are willing to pay for. As a company we want to set benchmarks and be known for the best People Flow experience.

What characterizes the best people flow in modern cities?

We think it’s an experience that can be easy and smooth but effective, productive and fast at the same time. And if you achieve this combination it leaves an emotional impression with the customer which really creates that “Wow!” effect. We want to be known as a great company that works really close to its customers and co-creates new services and solutions together with them. This is a big change for us as we generally used to do everything in our laboratory. This is the best way to guarantee that the value that we are trying to create through new services and solutions is really what customers want and are willing to pay for.

Can you give us an example for the new business models you mentioned?

Probably the best example is the 24/7 Connected Services offering that we launched in February. It enables us to connect some 1.1 million elevators in our maintenance globally and it is actually one of the first ever IoT-based offerings in our industry. The great thing about this service is that we can predict the condition of the elevator or escalator and that way help our customers manage their properties and assets over their life-cycle in a much better way. It creates full visibility for our customers into the condition of elevators and escalators within their organization. This transparency and clarity matters a lot for facility managers who are responsible for looking after buildings. And that’s where we can help them solve their problems and keep their tenants happy. The 24/7 Connected Services gives them the peace of mind of being alerted to issues before they can become noticeable to the tenants and of being in full control of their business.

Why did you launch 24/7 Connected Services? What were the drivers?

Tomio Pihkala, CTO KONE, with Serge Vandenhoudt (r.)
Tomio Pihkala, CTO KONE, with Serge Vandenhoudt (r.)
​​​​​​​Our strategy, “Winning with customers,” means we put the customer at the center of everything we do. We are becoming a much more customercentric company. For example: How can you minimize time spent on admin work so that sales people can spend more time with their customer at the site? That obviously means that we can increase activity and can do things smarter. I think connecting people, connecting equipment, connecting customers – all that will help us to improve our operational efficiency. The key point is really how we can help our KONE people to perform the best and serve our customers better.

How did you identify all the necessary technologies and how long will it take to tie them all up?

That’s where we hit the crossroads of IoT real-time data and mobility, so to speak. And KONE is not the company whose mission is to develop IoT. For us it was important to identify world-class partners who have great expertise in technology areas when it comes to IoT, artificial intelligence, analytics and so on. That’s the key to how we started our journey.

Given that there are a lot of potential partners in different fields, how did you make your choice?

If you really just look at world-class companies, there are only a few. Just talking about IoT – this is an area which has developed and progressed a lot in the past few years, and there are a lot of companies that can offer IoT platforms. But very few have invested in and developed an offering in a comprehensive manner. IBM is an example of another partner which is clearly a leader in IoT and cognitive analytics. So at the end of the day it was not that difficult for us to identify those who could really help us – in particular on a global scale.
“As a company we want to set benchmarks and be known for the best people flow experience.”
TOMIO PIHKALA, CTO KONE

But isn’t such an approach also a question of checking numerous proofs of concepts in different areas for digitization – talking about VR, AR, AI – after all your ambition needs to answer the question: How will the end-user benefit from it? You don’t want to be taken in by use cases that turn out to be nice to have but don’t contribute to your business case?

Absolutely. It’s been a journey of investigation. Where does something make sense and where does it not. Technology itself will not solve our challenges. You need a partner who reliably understands both, our industry and our business, so he can create solutions that really address the key values that we are after. That requires investments, a lot of competent people. And of course that applies to ourselves as much as it does to our potential partner.

It seems like KONE’s starting point was looking at the value for the end-users in terms of “win with customers.” But gradually the strategy has shifted to incorporate “win with partners”. Has that become a real strength of KONE?

I’d say yes. We nowadays have a real partnership ecosystem. That means that there are multiple partners with whom KONE is building an underlying digital platform that might be related to IoT devices, to analytics, to cyber security or anything else. Then you have a platform where you can start developing applications on top. We make it attractive for various companies to join us and innovate together. Of course, in this ecosystem big technology partners are key enablers.
“At the end of the day it was not difficult for us to identify those who could really help us on a global scale.”
TOMIO PIHKALA, CTO KONE

How do your field service technicians get their information from the IoT platform?

If you think about the connected world where we get more data from IoT, we of course want to use that to help our field people. So it is clear that we need a mobile application that, for example, the technicians can use to get information about customers, projects or equipment, which person is going to visit and serve what destination, but also information about potential incidents, call-outs or any kind of changes a project has had. Not to forget the help you need to navigate to the right address. Thanks to modern technology we are able to really help technicians to solve the problems they encounter. That’s, for example, where artificial intelligence enters the picture and will develop this capability further in the future. These are things that we need to offer our people. In the future, just consider the 5G networks, this will be much more instantaneous, much more contextual. Robots as well are going to play a major role and help technicians solve a problem by using multiple data sources which are available. I think in this journey we are still at the beginning.
Facts & figures
Founded in 1910, KONE is now one of the largest manufacturers of elevators and escalators worldwide.
The declared mission of the Helsinki-based company is to improve the flow of urban life and to deliver the best people flow experience. To achieve that, T-Systems and KONE will combine their unique strengths to accelerate Internet of Things (IoT) connectivity for the elevator and escalator markets. Sensors in the elevators measure speed, humidity and acceleration. They then collect this data and other information. The remote monitoring gateways link the sensors to an IoT platform and enable KONE not only to provide predictive maintenance for the elevators, but will also offer a range of completely new services based on the sensor data. Furthermore, the Deutsche Telekom subsidiary has been running all of KONE’s Data Center Operations, SAP landscape and services for its workstation systems around the world in a T-Systems cloud since 2013.

What you didn’t mention so far is AR. How relevant will augmented reality be for your business in the future?

AR is one of the user interfaces which can be applied in the future. It will create an advantage because technicians can combine physical and virtual reality. As a result, services can be hands free and much more contextual. That is an exciting area that requires very good product data management, where all of the infrastructure and IT need to be in a good place and coordinated perfectly.

It is easy to create one proof of concept or a demo for AR. But isn’t it much harder to create something that really suits daily business? For instance, you have to make sure that there is a lot of documentation available for an AR application if you want to implement it for more than a million elevators. Then you need to have a massive amount of administration behind it in order to get it implemented.

That’s a big roadmap. But the future eventually will go in that direction. And the question is, what to do first. But the eventual benefits will be some low hanging fruit. Nevertheless these are chances to help our field people to perform the best. So we are doing some pilots, for training purposes, we are learning and we absolutely keep an eye on that. When it comes to virtual reality we obviously already use VR to simulate people flows in buildings that don’t exist yet. That makes our designing and engineering much easier.

Speaking of rolling out the solution, what is the next challenge?

Well, it’s not just about bringing our over 20,000 service technicians more tools and expertise. Just consider that on average service is responsible for 45 percent of our revenue. It’s about our teams being able to help customers more, solve their problems and be in tune with their needs. The same goes for our installation supervisors and sales managers. There is a lot of admin work behind the scenes as well, where we can become more efficient.

In general, in cities like New York, Shanghai or London, people spend years of their working lifetime either waiting for elevators or traveling in elevators or escalators. How is KONE promising to change that for the future?

The speed of elevators and their interaction among themselves is one thing. The other thing is: To turn a waste of time into a benefit. It’s not all about waiting. It’s also about cash flow. If you look at retail buildings for example – if consumers are not able to spend time in the shops you are literally losing money. The more we are able to move people to the upper floors the more they are spending money. So whether it’s about work efficiency or shopping trips – there is a direct correlation with the money flow.

What is the significance of security for global-scale enterprise mobility management like the kind you will be relying on?

Tomio Pihkala, CTO KONE
For Tomio Pikhkala it‘s for sure, that the personalization of every usage of elevators and escalators will be the next big thing for the whole industry.
In particular, cyber security is a very important topic in the IoT space as everything from back end to front end needs to be secure. The whole IT infrastructure needs to be properly designed and managed. That’s not just a question of technology but also a question of competencies. When a company is moving into the digital world it instantaneously needs to update its operating model to address their cyber security. That’s why we built a cyber security strategy for KONE so we can really address this challenge in a holistic manner.

After choosing your partners, how do you manage them?

That’s a good question and there is no single answer to that. When we decided to take digitization seriously we knew that we needed to invest management time to build these relationships with the key companies. Starting from our CEO we have spent much, much more time than in the past to develop strong partnerships. Because partnership is a learning process for everybody. We learned to trust, for instance. Especially when we want to solve a problem, we need to depend on relationship and trust.

What’s been your trigger to implement partnership development more broadly to coordinate the work with your partners?

This step forces our partners into a lot of discussions among each other on a strategic level. That makes them always consider the question, “How can KONE win from the cooperation of its partners?” In this moment you start to approach problems more from a solutions perspective than as a competitor. If you look at start-up companies, there is a different kind of treatment and culture compared to bigger companies. It’s our job to create a kind of team spirit in the ecosystem. And to be honest – in the area of digitization you need to work with almost everybody. We have seen a lot of positive outcomes from this open approach.
450,000
customers worldwide; Forbes has listed KONE as one of the world’s top 100 innovative companies.
 
52,000
employees
 
€ 8.8 billions
net sales
 
> 1.1 million
items of equipment in service

KONE is using an IBM Watson IoT cloud, a Salesforce Service Cloud and a T-Systems cloud to manage all of its global business operations through a central SAP system. What are the major benefits and challenges of this construction?

It is an overall trend that nearly all services are moving from closed-shop data centers to the cloud. It’ll make us more agile and faster because the cloud has a lot of benefits. But since this is something we are not going to do on our own, it all comes down to choosing the right partners. In any case, you need to be pretty good at integrating different cloud services. That is why we have been looking for an integration platform which makes it easier to implement updates and keep up with new releases. In this area, like in many, our ecosystem of partners again enhances our position to harvest the best of all worlds of cloud services that our different partners offer.

What’s going to be the next big thing for solutions in the elevator and escalator industry?

In the future our customers and end-users will enjoy a great personalization of our people flow. It’s going to be much more contextual. It’ll become perfectly normal for a building to know who’s going to enter which elevator and to gain access to the necessary data to know where you are heading, what you care about and what kind of information, news or entertainment you want. In this way the short trip in an elevator will make life even easier and more enjoyable and will add to people’s happiness and comfort in small effective doses. And that’s a matter of connectivity, sensors and networks. In other words: a matter of IT.

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