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ABSTRACT
Telecom New Zealand field technicians now use portable computers
linked with mobile phones to access a computer system and a centralised
call reception centre. This allows the field technicians to directly
receive work to fix faults, then manage the clearance of the faults.
The paper covers the project that implemented this innovative way
of running a customer service operation. It shows how Information
Technology can be used as a trigger for innovative business process
design. Taking very much a 'lessons learned' approach, it covers
both the way things were done and how things could have been done
better.
THE FIRST TELECOM
By 1992 Telecom New Zealand had checked up some impressive business
gains as it changed in 1987 from a State run Post, Telephone and
Telegraph department to an internationally owned corporation.
Telecom's shareholder value had increased from 3 billion to 5.2
billion dollars while customer satisfaction levels had gone from
20% to 43% excellent.
These gains had been achieved by taking three parallel approaches:
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Modernise the telephone network.
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Computerise operational systems for each business function.
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Establish measurement systems.
In 1992 the company saw possible future erosion of its profitability
as additional competitors entered the market. The New Zealand Telecommunication
market is unique around the world in that it has no industry specific
regulations or regulatory body. This has seen a high level of competition.
The company decided to establish a Futures Task Force to fundamentally
examine the way it delivered its customer products and services.
THE NEW TELECOM
The Board approved the Futures Task Force's recommendations in
February 1993. Many of goals adopted went beyond current industry
best practice. New technology was seen as an enabler for introducing
innovative new business processes.
It was decided to:
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Nationalise Operations eg.
For Fault repair reception and testing
- One national centre
- 24 hour, 7 day service
- Firm appointments and commitments
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Allow front line staff to have customer information at fingertips
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Reduce computer systems from 175 to 70
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Reduce employees from 12,700 to 7,500 by March 1998
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Invest $120 million in new systems.
A Business Information Services Department was established having
combined accountability for information systems and business processes,
with Board and Senior Executive sponsorship [6].
BUSINESS PROCESS INNOVATION
Well what is Business Process Innovation? Is it just cost cutting
by removing people from an organisation? Does it just mean designing
new business processes? My definition for Business Process Innovation
is that it is major surgery to a business. It delivers substantial
improvements in value for customers and investors through innovative
business process design that is enabled by information technology
[1]. It usually takes place over a few years, and the execution
is painful both for the business and for the people on the project,
as they work towards fulfilling the vision.
The approach that my team developed for the implementation was
a parallel business process, change management, and information
technology (I.T.) development methodology known as PACE™ or
Process Acceleration for a Changing Environment. The Design Criteria
phase specifically looks at innovation.
Telecom New Zealand uses a team approach with business process
designers, business subject matter experts, I. T. experts, and change
management advisers working to turn an idea into reality [7]. Work
progresses through the PACE™ Methodology along the three stages
of:
CUSTOMER VALUE MANAGEMENT
Well what is it that customers want from a phone company? Telecom
New Zealand has undertaken extensive qualitative and quantitative
market research since 1989 [2, p90]. In addition to this, feedback
from customers during normal transactions is continuously monitored.
The conclusion from this analysis is that New Zealanders want value
for money within an ongoing relationship with their phone company
[3]. Specifically they want the subattributes of:
Looking specifically at the "Prompt" subattributes for
the repair service in regard to faults cleared, we track a subattribute
called "Time Taken to Fix Problem"(Fig. 1). The graph
shows the customer satisfaction score in terms of percentage excellence
for recent consumer transactions.
Figure 1
As Telecom's customer satisfaction monitors are reported monthly,
a corresponding internal process metric of "% Faults cleared
before 5.00 p.m. on next business day" (Fig. 2) is used for
daily management.
Figure 2
But do these internal metrics line up with what customers value
[4]? Correlating the time series data for the market research and
the process metric checks this. A high correlation indicates that
a link exists (Fig. 3). Processes using targets set with key process
metrics that are linked back with a golden thread to what customers
value, will deliver what customers really want [5]. Elasticity models
and Relationship matrices, such as the House of Quality, allow linkages
of customer needs to be considered as a group and weighted according
to stakeholder importance.
Figure 3
INNOVATION AND FORESIGHT
For the Repair Process Project, financial and customer satisfaction
goals were set by Telecom New Zealand. The long term overall customer
satisfaction goal is 60% Excellent. Customer Satisfaction targets
are also set for each intervening year. This very high target was
set by international benchmark comparisons.) An element of foresight
is necessary when setting these goals. The goals set must be capable
of delivering a competitive advantage in terms of customer and economic
value when the project is completed rather than when it is started
interacts with customers.
For the repair process, the vision established was the two person
model. The customer would only ever have to deal with two Telecom
people and they would have all information available instantly.
There would be no back office, as all back office activities would
be computerised.
To establish this vision a number of 'what if' scenarios were considered
using technology as an enabler. e.g.
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'What if all field technicians had computer terminals with
access to the customer data by cellular radio?'
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'What if all of the repair service representatives had access
to all the data and not just the repair database?'
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'What if all of the repair service representatives had windows
based computers?'
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'What if there were intelligent agents scanning the repair
database looking for fault patterns as they were happening?
Gradually all of these ideas, along with the customer and stakeholder
needs were consolidated into a single achievable vision (Fig. 4).
Relationship matrices, such as the House of Quality, were found
to be a useful tool for reaching a common view. Completing the importance
weightings in a team situation provides group buy in to the final
design criteria.
The technology that allowed this innovative process to be designed
uses mobile data terminals for field technicians to receive and
sign off work assignments, and an underlying open systems architecture
with a relational database.
THE IMPLEMENTATION PROJECT
As stated above business process innovation projects usually take
from two to three years from start to finish. A multi area pilot
was used before the production platform was installed as a check
of the new technology. And even when the new process and systems
were fully deployed, ongoing tuning was needed over a period to
optimise performance.
THE RESULTS
The Repair Process Project achieved its productivity improvements
targets as people in the process reduced from 608 in 1993 to 331
in 1995 for Service Representatives, and from 1714 in 1993 to 1087
in 1995 for Field Force Technicians. The cost of establishing the
new process was more than covered by these productivity improvements.
In terms of customer service, this deteriorated in March 1995 following
the full rollout (Fig.5).
Figure 5
The measurement systems allowed operational managers to tune the
process promptly by going to the root causes of any issues and overcoming
them. Smoother queue management on incoming calls along with work
assignment using the mobile data terminals were just two of the
areas that were worked on. Improvement work continues with an overall
customer satisfaction level of 84 % good and excellent being achieved
at March 1996. This puts the service level within the same statistical
variance band as the highest levels achieved previously.
While the existing metrics have a strong correlation with the research
results, it has been decided to move to a set of metrics which are
expected to have an even higher correlation. eg. "% Faults
cleared before 5.00 pm the next business day" has been replaced
by "% Repairs met customer requested time". With the old
easy metric, the % achieved was 91%. With the new harder one, the
% achieved was 84%. The benchmark has been raised!
LESSONS LEARNED
The good thing about any really difficult task is you always learn
from the experience. A strong innovative vision is essential to
ensure that you stay on track and deliver the planned business benefits.
Goals expressed in metrics ensure that there is a precisely defined
customer and business benefit that the project is focussed on delivering.
Only then will the dramatic stakeholder gains possible through foresight
and innovation be delivered.
THE BROADER TELECOM RESULTS
For the company as a whole substantial gains in profit were achieved
through revenue growth, and cost reduction. The share market echoed
these gains with an increase of the share price to $6.60 on March
31, 1996.
This project and the other initiatives leave Telecom New Zealand
positioned well to move through the next stage of meeting the needs
of its customers in a highly competitive market.
REFERENCES
[1] Davenport, T. Process Innovation: Reengineering Work Through
Information Technology, Harvard Business School Press, 1992.
[2] Gale, B.T. Managing Customer Value. Free Press, 1994.
[3] Gallagher, R. W. Driving Your Business with Customer Satisfaction
Measurements. Customer Satisfaction Measurement Conference, Auckland,
New Zealand, 1992.
[4] Gallagher R.W. & P. J. Danaher. Modelling Customer Satisfaction
in Telecom New Zealand. European Jnl. of Marketing. Vol. 31, Issue
2, 1997.
[5] Kordupleski, Rust, Zahorik. Why Improving Quality Doesn't Improve
Quality. California Management Review, Vol 35, No. 3, Spring 1993.
[6] Praire, P Planning Review, Jan/Feb 1993.
[7] Tapscott, D & Caston, A. Paradigm Shift: The New Promise
of Info. Technology. McGraw-Hill, 1992.
(This paper is copyright, 1997 to Rodger W. Gallagher. It contains
Telecom New Zealand data published at the "Re-engineering in
the Telecommunication Industry" Conference held on 26-28 June
1996 in Hong Kong. PACE is a trademark of Telecom New Zealand Ltd.)
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