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 heavyconstruction 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.
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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.
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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.
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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.
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Competition
 Toromont faces stiff competition. Many heavyconstruction 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.
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Competition
 The Internet appears to be turning heavyconstruction 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.
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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.
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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.
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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.
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Question 1
 What are Toromont’s requirements?
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Question 2
 What Information System solution(s) do you
recommend?
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Question 3
 What factors do you need to take into
account in order to implement these
recommendations?
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Question 4
 What are the risks associated with your
solution?
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Question 5
 How would you mitigate these risks?
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