Susan Blouin, Toronto Operations Management Paper

8/3/2019 Susan Blouin, Toronto Operations Management Paper

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Operations Management

Process Analysis, Product, Process Design& Quality Systems Deployment

IT CORPORATION Canada Corporation

Susan Blouin

Revised Nov 1, 2011

Athabasca University, Center for InnovativeManagement MBA Program, Operations Management Paper

1.




TABLE OF CONTENTS

PROCESS ANALYSIS, PRODUCT, PROCESS DESIGN .......................................................................1

& QUALITY SYSTEMS DEPLOYMENT..................................................................................................1

IT CORPORATION CANADA CORPORATION.....................................................................................1

OPERATING STRATEGY......................................................................................................................4

OPERATING MODEL..........................................................................................................................5

HOW IT CORPORATION CANADA IS STRUCTURED TO MEET ITS MAJOR ISSUES...........................6

INDUSTRY TRENDS ...........................................................................................................................6

CUSTOMER SERVICE.........................................................................................................................9 Instituting a Quality Management System.............................................................................................10

Analysis of Business Process Management and Process Design Related Issues...................................13

Production/Delivery Processes..............................................................................................................14

Business Processes.................................................................................................................................14DEPLOYING A PROCESS FOCUSED APPROACH TO MANAGING WORK IS NEEDED........................................14

ANALYSIS OF CUSTOMER SERVICE R ELATED ISSUES..........................................................................17

THE CUSTOMER DRIVEN ENTERPRISE MANAGEMENT MODEL AND THE TIES BETWEEN IT CORPORATION

CURRENT STRATEGIC ISSUES ..........................................................................................................17

ANALYSIS OF THE QUALITY R ELATED ISSUES....................................................................................20

2.




EXECUTIVE SUMMARY

The overall shift toward enhanced services and applications support results in a clear need for

closer relationships with customers and increased focus on the personalization and customization

of services. As the number of users subscribing to value-added applications continues to grow,

their expectations in terms of personalization and specialized services also continue to evolve.

The “one-size-fits-all” service concept becomes invalid in an increasingly fragmented marketplace.

Embracing this mass personalization will take a serious effort on the part of IT CORPORATION

Canada to meet these new needs of its new customer base.

This report will review the current state of issues facing IT CORPORATION Canada, and outline

the success criteria needed for IT CORPORATION to accomplish meeting the appropriate

objectives in order to manage their operational issues and complexities.

The analysis of the current issues will detail the related business process, customer service and

operational complexities surrounding the organization. The recommendations will provide insight

on mandatory requirements that will lead towards a new operational platform, implementing a

more customer-focused enterprise and instituting a quality management system through the

organization.

3.




THE ORGANIZATION

IT CORPORATION Canada's presence in the business long distance, local, data and Internet

and E-Business solutions markets allows it to bundle a full spectrum of products. With its

extensive local and long distance facilities and interconnection arrangements, IT CORPORATION

Canada is capable of serving more than 85% of the Canadian business telecommunications

market on its network. Its strategic partnerships and interconnection agreements with other

international service providers, including IT CORPORATIONCorp. and British Telecom, allow it to

provide global voice, data, Internet and E-Business solutions to its business customers.

Operating Strategy

The vast majority of IT Corporation business is represented by the base of its Operating Strategy.

This is data transport, access and the hosting business where the company generates more than

90% of its revenue; where most of its capital is invested and where the vast majority of the

employees work1.

IT Corporation goal remains in strengthening the foundation of its operating strategy. This is

where the bulk of the process improvement work is going on, designed to improve the customer

experience.

1 IT Corporation Proprietary, 2002

4.




Operating Model

IT Corporation Operating Model defines how IT CORPORATION Canada will succeed by aligning

its strategies with its actions, and illustrates how the company will be managed2.

The company's goal is to achieve sustained success. This can only be accomplished with a

balanced approach.

How IT CORPORATION Canada's leadership team manages and operates the company is

reflected in the other components of the Operating Model: Mission, Vision, Values, Baldridge

Process Discipline, Improvement, Learning, and Management and Leadership.

IT Corporation Operating Model is currently surrounded by key "Imperatives" describing areas of

focus for the business that relate to Customer Satisfaction, Process Improvement, Engaged

Leadership and Growth. The core of the model remains consistent as it represents a balanced

managed system on which to operate the company. The key imperatives from 2001 have been

transformed and map very logically against the Business Priorities for 20023.


3Ibid.

5.




The operating organization shown below, is responsible for leading operational

imperatives which are still relevant and will be folded into how the company will

manage the business under the four banners of Customer Satisfaction, Process

Improvement, Engaged Leadership and Growth. The operating organization is

structured in the following verticals – Marketing, Sales, and Customer Service that

shape the framework of the company. This is how IT CORPORATION is structured

today to meet their current issues and operational management requirements.

How IT CORPORATION Canada is Structured to Meet its Major Issues.

Industry Trends

The year 2002 is positioned to be the year value-added services and personalization becomes

the key service drivers for the telecommunications industry4. With the high level of confidence

coming from the past few years of exponential Internet growth as a network and a revenue-

generating industry, IT CORPORATION Canada and analysts believe service differentiation will

continue this growth. Time to market for new services will also be part of the service

differentiation that drives industry growth. As the telecommunications industry evolves, IT

CORPORATION Canada needs to package and deliver new services or bundles as quickly as

possible.

4 Lemay Yates, 2001

6.




KEY ASSUMPTIONS

The following are assumptions that are relative to the company’s operating strategy and

operational model:

- The underlying assumptions of the operating model this was created for, are valid

- The current cost and pace of technology will continue such that the basic cost of telecom will

still be perceived as cost effective

- Continued trained workforce will still be in place

- IT CORPORATION Canada will maintain the pace to be able to move into the higher levels of

value-added solutions, towards the internet and managed network services

- Continued customer and value support

- Cost Related External Factor: The regulator environment will at least support and will be able

to enable a suitable business and competitive environment, as this can effect our cost

structure and IT Corporation operations of their business in what they are able to sell.

MAJOR ISSUES

IT CORPORATION is faced with three major issues in their current operations related to the

management and servicing of delivering non-standard custom solutions. The analysis will

address the deficiencies in business process management and the inefficiencies in customer

service, and the need for instituting a quality management system.

Business Process Management

IT Corporation processes for approving, and managing non-standard business solutions is

imperative in order to be able to provide a systematic design and definition of the

company’s processes and information, including the supporting data and systems

7.




structure, to meet their goals and customer requirements.

Business Process Management provides common processes across services and technologies

that are essential to providing and having the ability to deliver to process cost targets and process

performance improvement.

The non-standard complex solutions are new opportunities that are requested by large clients

within the major business market space (MBM). In order to deliver the service and develop the

solution, IT Corporation Opportunity Review Council assesses the opportunity from a operating

perspective looking at the associated financial obligations, new process development

requirements for NPI, the costs to deliver and manage the solution and the revenue generating

potential.

The operating processes of IT CORPORATION are critical to the success of IT CORPORATION

being able to operationalize these complex solutions. These solutions that evolve generate

tremendous revenue and profitability for AT&T. Each non-standard custom solution that IT

CORPORATION engages in generates additional revenues of 80-200M in new revenue per 5

year-contract term5. The Opportunity Review Council approves aprox.100 of these complex

solutions per year.

From a relative standpoint the current state of IT CORPORATION is not organized to handle non-

standard custom solutions. The organization operationally is organized to handle standard

products only as they are not equipped with the appropriate processes to handle complex

solutions throughout the organization. Each organization within IT CORPORATION faces

operational issues with being able to manage non-standard custom solutions and deliver on

specific requirements on time with accuracy. At present the internally processes are manual with

no internal cost center allocation or method of tracking accountability. This poses vast operational

5 Information Warehouse, 2002.

8.




issues for each custom solution that flows through the organizations current process related to

order management, billing fulfillment processes, system design and integration, finance,

provisioning, maintenance and customer service.

In order to be able to accomplish the operating objectives successfully, IT CORPORATION

current operating processes require re-defining of its end-to-end processes to deliver to

customers and to meet its business requirements.

Customer Service

Customer Service is comprised of three areas, Provisioning, Maintenance and Care Groups that

look after ongoing customer advocacy. The Customer Service organization is responsible for

assessing their ability to manage new non-standard custom solutions, as the care group is

responsible for operationalizing the solution within the back-end of the company’s network to

provide customers with telecommunications. Customer Service provides provisioning for new

services and authenticates billing handling. It also provides maintenance in monitoring network

service levels, provides ticket management and trouble resolution on all customer issues, and

initiates dispatch for alarms and troubles on the network.

Customer Service is an integral part of the supporting needs of customers and the various

customer touch points in the support of the back office.

The non-standard custom solutions present ongoing issues for Customer Service in being able to

manage customized solutions through Customer Service’s operating structure. IT Corporation

custom solutions often call for specialized billing, high turn-around times for maintenance and

provisioning systems, high-levels of ticket handling through the call centers and turn-around times

for meeting service levels requirements. The current structure of IT Corporation internal Customer

Care operations lacks the sufficiency of solid support and systems, process and tools to sustain

total customer care efficiencies. There is a lack of integrated and automated systems to support

the end-to-end, customer support processes.

9.




Instituting a Quality Management System

IT CORPORATION is currently undergoing a paradigm shift towards instituting quality within the

organization. It currently uses the Baldridge System as a defined quality management system to

establish guidelines towards continuous improvement approaches and policy, including

ownership, customer focus and the Baldridge Framework.

The Baldridge framework provides IT CORPORATION with a framework and measures for

continuously improving how IT CORPORATION will run its business. The Baldridge assessment

is a disciplined approach to measuring and improving all aspects of IT Corporation business. This

is important in the growth and sustainment of IT Corporation management and leadership in

building and retaining a skilled, motivated, productive and content workforce.

The current issues that IT CORPORATION face within its organization is:

- Ineffective processes currently in place to manage day to day customer interactions;

- There is little cross functional collaboration of organizational design and the organizations

work as constricted verticals

- no system is in place to ensure end to end management of key processes

- There are no stable defined set of performance metrics

- There is a tremendous lack of accountability

IT CORPORATION requires a defined quality management system to establish guidelines

towards improvements approaches, policy, ownership and to have ongoing assessment

approaches to aid in ongoing management to address its issues.

10.




SUCCESS CRITERIA

A summary of what are key priorities for quality improvements represent what IT CORPORATION

will require to successfully achieve in order to be able to meet their overall objectives and

succeed their current issues and operational state.

Note: The highest important weight factor ranges from 10 to the lowest factor of 1.

Criteria WeightingFactor

Business Planning/ Process Design Requirements:Implement a successful business-planning process that will be

constantly relevant and have integrity – employing the right set of metrics with the right targets and will include the right people in theprocess.

9.0

Business Planning/ Process Design Requirements:Develop service design process to generate new product ideasOpportunity Review Council and process for review and approve of customer opportunities and request to ensure feasible

10.0

Business Planning/ Process Design Requirements:New Product Introduction (NPI) process to launch newproduct/program

8.5

Business Planning/ Process Design Requirements:

Develop Product Lifecycle Management process to manage changes,enhancements, improvements and product sunset

8.5

Business Planning/ Process Design Requirements:Identify gaps in current planning process. Redesign the process andexisting financial model to close the identified gaps.

9.5

Business Planning/ Process Design Requirements:Translate strategic and operating imperatives into clear action plansand identify Senior Leadership Member accountable for each plan.

8.5

Business Planning/ Process Design Requirements:Evaluate Raw Data Summary (RDS) financial database and upgrade,

enhance, or replace as necessary.

7.0

Business Planning/ Process Design Requirements:Test key drivers for each products/cost category to distill raw inputs tothe "critical few" that forecast and describe performance.

7.0

Business Planning/ Process Design Requirements:Evaluate initial output from the operating metrics team and ensurekey metrics is included in forecast output.

7.0

11.




Criteria WeightingFactor

Business Planning/ Process Design Requirements:Build a quarterly strategy/financial/operating review in IT Corp’s

Governance program.

8.5

Customer Focused-Organization Requirements:Conduct customer needs research

9.5

Customer Focused-Organization Requirements:Develop plan for segment-specific customer communications.

9.0

Customer Focused-Organization Requirements:Set up ongoing measurement, consolidated reporting and governanceprocess.

10.0

Customer Focused-Organization Requirements:Link customer satisfaction measures into operational areas

10.0

Customer Focused-Organization Requirements:Build formal feedback loops into the sales organization.

8.5

Customer Focused-Organization Requirements:Measure of customer segment profitability.

9.0

New Quality Management System Instituted for ITCORPORATIONRequirements:Identify Senior Leadership Owners

10.0

New Quality Management System Instituted for ITCORPORATIONRequirements:

Documentation and education of Quality Management System (QMS)to the Senior Leadership Team for approval.

10.0

New Quality Management System Instituted for ITCORPORATIONRequirements:Create training plan to establish Quality Management Systemknowledge and basic Quality tools and approaches

9.5

New Quality Management System Instituted for ITCORPORATIONRequirements:Train senior managers and employees

8.5

12.




ANALYSIS

This analysis will review the issues related to Business Process Management, Customer Service

and Quality.

Analysis of Business Process Management and Process Design Related Issues

One of the issues identified internally at IT CORPORATION is the lack of process management.

This is seen more evidently in the deployment of major service rollouts of customized non-

standard solutions. The organization has not been equipped with the proper structure internally to

be able to manage the deployment of non-standard solutions effectively.

This is initially evident in the absences of a core system being in place to ensure end to end

management of key processes exist. There is very little cross-functional collaboration of

organizational design and effective process to manage day to day customer interactions.

There is also the lack of ownership and accountability with no stable defined set of performance

metrics to aid in assessing how the organization is really doing from a process and performance

perspective. Links between pricing business economics, billing and provisioning are not evident.

This largely becomes ownerous especially for the required need of tracking of multiple non-

standard services.

All of IT Corporation core processes required have not been defined to detail its end-to-end

Processes. This has shown an effect on the company’s ability to deliver to customers and to meet

its business requirements.

13.




The overall Business Process Management issues have three areas of concentration relative to

the company’s requirements for product and process design. The outline below details IT

Corporation production/delivery process, business process and supporting process and the in-

debt issues/requirements related to each that represents the current gaps.

Production/Delivery Processes

• Improvement is required within the five core service delivery processes – Sales Order,

Provisioning, Maintenance, Care and Billing

• Quality Improvement Teams are sanctioned to improve process capabilities

• A problem Solving approach is required for the company’s core improvement methodology

• The Introduction of process management and control is needed

• Introducing value add time line to reduce waste is required

• Defining better the Selling, Order Entry and Sales Management processes is required

• Defined, documented and improved Provisioning, Customer Billing and Collections, customer

care and fault management processes

•

Defining all Customer support processes is required

Business Processes

This is key in depicting how the IT CORPORATION organization will manage its key business

processes.

• Deploying a process focused approach to managing work is needed

• Operating performance metrics and improvement initiatives need to be defined for all core

processes and their sub processes.

Support Processes

This is key in depicting how IT CORPORATION will manage their key support processes

14.




• Applying a process approach to infrastructure, Management and support processes. Core

processes include - Network Development and Operations Processes, Systems Development

and Operations Processes. These are all processes that require strengthening.

Through the company’s measurement and identification of the overall outcomes

related to its organizations state, a quarterly survey is conducted to report on the

core areas of management operations. This is measured through a “Moment of

Truth” (MOT) research program that is conducted by a consulting firm6.

Gap Analysis Assessment

One example demonstrated in a gap analysis in the Moment of Truth Survey identified the overall

customer care as a measure of result based on the current state of IT Corporation business

process management. This shows the impact that the lack of process and process design has on

the company’s overall customer care results. The data results above are a reflection of our

6 Acnielsen 2002

15.

Maintain

Quality

Some Work

Required

Work

Aggressively

Gap Analysis 50% or higher 49% to 30% 29% or lower

Overall Customer Care

ExtremelySatisfied

Dissatisfied Gap

Understanding the unique needs of a business customer 54% 13% 41%

Being responsive to customer business needs

54% 16% 38%

Follow up on actions promised 48% 21% 27%

Resolving new request decisions 44% 30% 14%




business process management system and the use and ability that our systems portrays in being

able to service customers. The data tells us that only 54% of the customers feel that IT

CORPORATION is responsive to customers and understanding their needs. 16% of the

customers are dissatisfied with IT Corporation ability to show they are responsive to customers,

and the gap analysis of 38% shows that some work is required within IT CORPORATION to show

some improvements7. Taking a look at the data that truly effects IT Corporation internal process

design, is the results shown on the length of time to resolve business matters. This measurement

is a directly related to IT Corporation internal process. Resolving issues internally is a cross-

functional requirement that involves the management and use of end-to-end processes once new

policy or decision making has been made.

Only 44% of customers feel extremely satisfied with IT Corporation ability to resolve new requests

and follow through on final decisions. The dissatisfaction of 30% is high showing the results of

customers that feel discontented with the service outcomes. The gap analysis is relatively low,

showing at 14%, which requires the company to work aggressively in this area in order to improve

customer care results.

This analysis shows the company’s need for internal improvements. Based on the results from

the Moment of Truth Survey, Gap Analysis.

A full process-reengineered development and design is needed within IT CORPORATION to

show how the organization manages processes, including customer-focused design, product and

service delivery, support, and supplier and partnering processes involving all work units.

Showing how IT CORPORATION will continue to manage and improve managing key product

and service design and delivery processes is critical for operational success towards

improvement the company’s overall MOT scores.

7 Acnielsen 2002

16.




Analysis of Customer Service Related Issues

The Customer Driven Enterprise Management Model and the Ties Between IT Corporation

Current Strategic Issues

IT CORPORATION currently supports a model known as the Customer Driven Enterprise

Management Model shown in Appendix A8. This detailed model shows the relationship between

the customer interface and support in the network, from sales through to billing and the process

interactions between the customer interface and the organization. All of the required touch points

in customer service that are driven by the customer are represented in this model.

The issues relate to the difficulties represented in the customer enterprise process model of

which customer service supports.

The issues identified within IT CORPORATION is the effect of the customer service

organization’s responsibilities for managing non-standard custom solutions present ongoing

issues for Customer Service in being able to manage customized solutions through Customer

Service’s operating structure. The four areas that make up these related issues are experienced

in9:

• Service Fulfillment, Service Assurance and Billing.

Timely and correct provisioning of what the customer ordered; maintaining

the service--timely response and resolution of customer or network

triggered problems, tracking, reporting, managing and taking action to

improve performance for all aspects of a service; timely and accurate bills.



17.




• Struggling with Technology Deployment. IT CORPORATION

Canada faces the task of rapidly and efficiently deploying new types of enhanced

services over a variety of infrastructures. When this is combined with the problems

associated with supporting a wide range of different network elements and access

technologies, the challenges begin to multiply.

• Growing Operational Complexity. With the addition of each

new network layer, the complexity of managing the infrastructure increases. This

complexity extends throughout operations and support infrastructure and from the

network components and devices to the business support and back-office systems.

• Staffing the Organizations. Retaining skilled personnel who

can effectively support the complex network infrastructure remains a problem. It

seems that the provisioning, management, and support procedures are becoming

more complex than the network infrastructure itself.

The Customer Service Organization needs to continue to monitor and evaluate business needs

on an ongoing basis. There are many processes that require improvement and requires

continued adjustment of the skills and knowledge where necessary until the company is in a

position of providing phenomenal customer service.

The issues have been further identified through the Customer Value Added Survey (CVA) 10.

Results that show the customer requirements that are critical to IT Corporation processes. The

issues are addressed based on the following CVA measures:

- Repairing on schedule;

- Repair correctly the first time;

- Resolving maintenance issues in a reasonable time frame;

- Reduce the number of faults

18.




The issues relate to all commercial and wholesale users of IT Corporation local, LD, data and

resale services including global, large and small businesses.

The primary operational indicators of the main issues are seen in IT Corporation need to improve

network reliability and reduce chronic faults on the network11.

The average Mean Time to Repair (MTTR) for most of IT Corporation services exceed the

company’s standard interval, and the overall MTTR needs to be reduced in order to maintain

good customer satisfaction results. This is having an effect on IT Corporation repair costs from a

contractual perspective, which are becoming high due to the number of MTTR repairs that are

required to managed outside of the company’s standard interval times. In this case, IT

CORPORATION is paying out for SLA penalties higher than what the expected contractual

expectations were at the beginning of the service agreement arrangement12.

From a high-level the following issue statement reflects the overall issues within IT Corporation

customer service operations

13

.

Issue Statement 1: Related to Manual and Usage Billing of Products14

- 100% of all usage based accounts are not billed their final month of usage.

- 75% of accounts that are e-billed for a minimum and burstable usage contains errors

- 40% of IDCS accounts that are billed for minimum usage contained errors.


12 Ibid.

13 Ibid.


19.




Issue Statement 2: SLA and Performance Results between Systems and Support Organizations

- 49 % of all tickets exchanged between CS Support and Systems require multiple hand-offs.

- 63 % of the Priority 3 Tickets

- 35 % of the Priority 4 Tickets

The following diagram outlines the issue related to SLA and Performance, in the issues on tickethand-off volumes.

Information Systems and Tools are needed to support the organization due to fact that the

% of the critical data required for troubleshooting dedicated access services (IP, Customer,

Circuit) is not reliable and is corrupt, impacting efficient trouble resolution.

Analysis of the Quality Related Issues

The issues below have been indicated through internal metrics that has been developed to

identify the core quality related concerns15.


20.

Ticket Hand-Off Volume

0

10

20

30

40

1 - 2 Handoffs 3 - 4 Handoffs 5 - 6 Handoffs 7 - 8 handoffs

# of Hand Offs Pr 3 Pr 4




• All quality attributes rated below parity.

• A number of attributes have experienced significant declines including invoice design, sales

support, and reputation.

• Invoice design dropped from world class to below parity.

• Sales support and reputation moved from above parity to below parity.

• Of all of the quality attributes, customer service is showing the weakest performance.

• Customer Service has significantly deteriorated to below parity.

• Network reliability/quality has significantly dropped from parity to below parity.

• Repair & maintenance, billing process, and provisioning & installation remain below parity.

• Dramatically lower scores than SBM and GBM.

- Significant deterioration price, and quality, in absolute and relative performance.

• Quality has fallen from parity to below parity.

• Price has dropped from world class to above parity.

• The most important customer quality attributes continue to be network reliability/quality and

provisioning & installation. Invoice Design has increased in importance since 2000.

• Emphasis should be placed on these important and poorly performing areas.

• Performance has significantly decreased on all three areas since 2000.

Summary of Key Findings:

The following key findings are based on the diagram metric results for 2002 of IT

CORPORATION Canada’s quality assessment16.


21.




• The overall Customer value-added Survey score (CVA ) for quality score has dropped

significantly since 2000 from parity to below parity.

• Invoice design has declined significantly from world class to below parity.

• Sales support and reputation have dropped to below parity from above parity.

• Customer service, network reliability/quality, and service design have slipped to below parity

from parity.

• Since 2000, Quality and Price have generally not changed; however, weaker competitor

ratings have lead to some CVA improvements (i.e. Small Business Market, SBM)

• 2001 CVA improvements gained as a result of competitors weaknesses - loses as a result of

competitors gains

• In relationship to competitors, Price is the one attribute that performs well across all segments

22.

Emphasis (impact weight) on Invoice Design has increased,

while emphasis on Service Design has decreased. Emphasis (impact weight) on Invoice Design has increased,

while emphasis on Service Design has decreased.

AboveAbove

ParityParity

WORLDWORLD

CLASSCLASS

BelowBelow

ParityParity

ParityParity

All Quality areas performing below

parity.

All Quality areas performing below

parity.

96

103

97 97 97 96 9695

9492

8785

ImpactImpact

WeightWeight10%16% 10% 14% 10%49% 91%

90%

12% 10%51%

O V E R A L L Q U A L I T Y

P R I C E

I n v o i c e D e s i g n

S a l e s S u p p o r t

R e p u t a t i o n

C u s t o m e r S e

r v i c e

S e r v i c e D e s i g n

P r o v i s i o n

i n g

& I n s t a l l a t i o

n

B i l l i n g P r o c e s s

R e p a i

r &

M a i n t e n

a n c e

N e t w o r k

R e l i a b i l i t

y / Q u a l i t y




• Despite IT Corporation efforts, CVA scores have not seen anticipated improvements

• Areas of concern include Sales Support, Customer Service, and Provisioning & Installation

• Measures need to be taken to address areas of weakness to promote a shift in customers’perceptions of IT CORPORATION Canada

• IT CORPORATION needs a defined quality management system. This will establish major

attributes and guidelines towards our continuous improvement approach and policy, including

ownership, customer focus and the Baldrige framework.

Cost Analysis and the Overall Cost of Quality Summary

One of the overall issues that IT CORPORATION faces as an organization is that its business

operations and internal organizational structure does not operate with internal cost center

allocations. This removes accountability from the organizations, with having an overall lack of

metrics and reports, which has presented a huge operational issue for the company. This places

great impact on process development and design, the customer services organization’s ability to

track their internal costs and benefits to understand operationally where they are at financially,

and from a quality perspective, it is difficult for the organization to truly measure the cost of quality

as they cannot prove true cost allocations. The quality office can only look at head count to

determine the amount of resource effort and time is being used to drive and spearhead major

planning initiatives that the company is placing a great deal of financial risk on.

IT CORPORATION does not have cost of quality in place to use to drive the process, which

means that the data is not currently present to draw from as the system is not in place and there

is no collection methods or process.

Taking into consideration the tasks that is required in order for IT CORPORATION to be able to

make improvements and resolve the current issues, if viewed on a per mandate basis (the

complex solutions initiatives), what the current cost that the company is incurring due to the

23.




current state of their organizational and operational issues. This would be an analysis of what it

would cost the company if it were to not effectively modify the organization, change its process

gap issues, improve customer service and develop a defined quality management system for the

company.

The impact of not addressing the current issues results in no future additional gross margin

benefits and IT CORPORATION will not be able to achieve operational and business growth in

order to sustain its operations, manage its issues effectively without incurring additional costs.

New systems and process improvements would add tremendous growth to the company’s overall

operating issues while providing the organization with the ability to generate more revenue

growth. The above financials shows the cost benefits of applying new systems and processes

through the use of an ERP system enhancement, and what the overall margin will do to the

24.

Revenue 2002 2003

New lead management revenue1300$ 1,200$

Data churn reduction2-$ 472$

Rebate reduction3-$ 100$

Hosting revenue ($3 K/month) 36$

Total Revenue 300$ 1,808$

Telco Cost

Telco cost on incremental revenue4225$ 1,253$

Reduction due to improved coordination5-$ (50)$

Total Te lco Cost 225$ 1,203$

Direct Gross Margin 75$ 605$

25% 33%

Operating Expenses (Benefits)

Headcount Reductions6

1 - AISS/ORC consolidation - Jan-03 -$ (70)$

1 - NSR (per Cathy Lewis) - Oct-02 (18)$ (70)$

6 - I per Sales VP (per Ted Rabicki) Jan-03 -$ (420)$

6 - Customer Service (per D. Milligan) Jan-03 -$ (420)$

1 - Lead Management (per J. McLeod) Oct-02 (18)$ (70)$

1 - Rebate reduction (Invoicing) Jan-03 -$ (70)$

Avoid Salesforce.com licensing fees 7 - Jun-02 (29)$ (100)$

(65)$ (1,220)$




company between 2002 to 2003. Note that by 2003, the company will have increased its margins

on its services from 20% to 33%17.

RECOMMENDATION

IT CORPORATION must apply a customer-oriented and service management approach, using

business process management methodologies, to cost effectively manage their businesses and

deliver the service and quality customers require. To manage within a service provider’s value

chain, a common process framework is required. The company required more effective

communications

in common process frameworks for understanding the relationships among

organizational operational process flows.

My recommendation for identifying the business process management and process design issues

is the use of an ERP related management system for telecommunication companies, such as

Blue Springs Software, that effectively ties all of the organizational processes together and effects

a positive value add for customer service operations. Blue Springs is an integrated order

management platform supporting customer management. It Optimizes business processes with

robust workflow and task management capabilities. This is a software advancement that provides

a very customer centric view in management tools and processes.

IT CORPORATION needs to become more customer focused in order to develop and effectively

sell a series of value propositions that are relevant for varying customer needs within many

different markets. This will begin by understanding their customer needs and by building a

corporate culture that's focused on meeting those needs effectively.


25.




Secondly, I would recommend building a new customer focused enterprise in alignment with the

customer enterprise management model to facilitate the customer service related issues more

closely.

My third recommendation for identifying and addressing the company’s quality issues, is to

institute a quality management system for the whole company, that will impact the gaps in the

business process management issues, customer service issues and provide the quality

management system that is needed for the company.

There are some specific requirements that are needed in order for these new tools within the

recommendation to work well. This will require IT CORPORATIONto initially address these

recommendations in a three-phased approach.

Part A – Recommendations – New PlatformBlue Springs ERP System

Looking at the challenges IT CORPORATIONCanada faces in the future

suggests the need for a powerful and comprehensive service creation,

management, and business support platform. Ideally this platform sits

between the network layer and the management and applications layer. This

platform should provide a comprehensive integration across platforms and

equipment and provide an easy-to-use service delivery system for whatever

applications and transport mechanisms a customer may require. Key

requirements for this platform include:

• The ability to integrate and interoperate with the

network elements and multiple protocols at the lower levels of the

network model.

26.




• The intelligence to create mappings between users and

groups, security settings and specific applications or applications

bundles while also mapping these management elements to the

lower-level protocols.

• The need to support business goals through an efficient

tool. This tool needs to allow users, while creating a new service, to

clearly determine the infrastructure resources available and the

cost, as well as the quality of service they can obtain from these

resources.

A service layer implementing this approach constitutes itself as a business

tool for IT CORPORATIONand would interoperate with such as configuring,

provisioning, SLA metrics/enforcement and fault management.

Part B – Recommendations – Building a New Customer FocusedEnterprise

IT CORPORATIONCanada needs to establish a business unit with its own P&L,

marketing, sales etc. to sell solution services.

Key success factors necessary to compete in the integrated business solutions

market are:

1. Recognize it is a new business, not just amodest

line extension

2. Establish a vision and mission for theorganization

3. Create a customer-focused, quality andprocess-

driven enterprise

27.

Enterprise OrganizationEnterprise Organization

Build a fresh, customer-focused enterprise

Build a fresh, customer-focused enterprise




4. Track P&L vigorously by projects

5. Develop effective tools to monitorperformance

and guide pricing of total solutions

6. Establish incentives which reinforceinternal and

external collaboration

7. Expect to need to re-engineer existing salesand marketing processes

8. Critically review skill sets of selected salesand marketing resources: invest asnecessary

9. Align compensation with solution selling

10. Achieve excellence in vertical industrymarketing and consultative selling

11. Extend team approach beyond traditionalsales team boundary

12. Communicate neutrality of vendor choiceto target segment

13. Offer risk sharing and innovative financingto engender trust and communicate long-term partnership

14. Recruit and develop systems integrationexpertise

15. Recruit and develop program/projectmanagement expertise

16. Recruit and develop industry expertise ontarget segments

17. Establish ongoing skills assessment anddevelopment

18. Build internal knowledge and awareness of Integrated Solution mission, targetaccounts, projects

19. Develop processes to allow for quick andflexible staffing ( i.e., create andconsistently update skills inventory)

20. Assess and manage the client relationship:

establish formal procedures to clarifycustomer requirements

21. Create infrastructure to achieve seamlessoperations from the customer viewpoint

22. Master third party alliances to enablecomprehensive and objective solutiondelivery

23. Leverage past experience (i.e., developglobally visible knowledge base)

28.

Marketing & SalesMarketing & Sales

Achieve world-classintegrated solutionmarketing & sales

Achieve world-classintegrated solutionmarketing & sales

Human ResourcesDevelopment

Human ResourcesDevelopment

Maximize HumanResource Utilization

Maximize HumanResource Utilization

Solution Delivery Solution Delivery

Develop client partnershipby achieving optimalsolutions to customers’business problems

Develop client partnershipby achieving optimalsolutions to customers’business problems




24. Develop replicable project methodologiesper target segment and project size toenable quick and cost-effective delivery

25. Include post-implementation supportincluding customer training, in solutiondelivery process

Part C– Recommendations – Institute a Quality Management Systemfor The Whole CompanyBaldrige Framework Initiative

The Baldrige system is a customer and processed focussed mechanism that will help to

improve IT Corporation current business management process/process design, customer

service and requirement for quality issues.

The seven categories of the Baldrige Quality Criteria will provide the structure for IT

CORPORATIONto build a quality system. The categories represented in the diagram below

are18:

1 Leadership

2 Strategic Planning

3 Customer and Market Focus

4 Information and Analysis

5 Human Resource Focus

6 Process Management

7 Business Results

18 Chase, Richard. B.,Nicholas J. Aguilano, F. Robert Jacobs. Operation Management for

competitive Advantage. Ninth Edition. New York : McGraw-Hill Irwin, 2001. Page 263.

29.

4Information and Analysis

2Strate

gicPlanni

ng

3Customerand

MarketFocus

1Leadersh

ip

5HR

Focus

6Proces

sManagement

7Busines

sResults

Organizational Profile:Environment, Relationships, and

Challenges




To deploy a quality management system, a quality system architecture and infrastructure is

needed. The Quality Policy Manual would serves as the blueprint of QMS and describes the

approach used to deploy quality across the company.

This Quality Policy Manual is used to:

• Communicate quality polices approaches and expected outcomes to all employees

• Align all employees to quality policies and goals

• Provide a road map for internal and external assessment of the Quality Management System

• Demonstrate to all stakeholders our commitment to quality principles

• Provide means to realize our quality policy and objectives

• Systematize the Quality Management System

A commitment to continuous learning and improvement is at the heart of the quality approach.

The Plan-Do-Check-Act cycle, originated by IT CORPORATIONquality pioneer Walter

Shewhart, contains the four ongoing steps that ensure this improvement and learning19.

19 Chase, Richard. B.,Nicholas J. Aguilano, F. Robert Jacobs. Operation Management for

competitive Advantage. Ninth Edition. New York : McGraw-Hill Irwin, 2001. Page 267.

30.




The PDCA cycle is the disciplined, closed-loop approach for deploying and implementing plans

that will help IT CORPORATION to keep their goals in sight, align their people and operations,

and systematically check their progress and close the gaps. By using the cycle repeatedly

through these four phases, will help to accelerate IT Corporation progress to higher levels of

performance.

Quality Deployment Strategy

The deployment strategy for quality is shown in the PDCA cycle below. Aggressive objectives are

required to provide direction for the organization. Achieving these objectives requires IT

CORPORATION to focus on what is important and ensures that all of their resources are directly

contributing to the execution of its plan. This will require IT CORPORATION to:

- Align their operations with corporate strategic goals and objectives

- Design and manage key processes to achieve objectives

- Rigorously analyze performance capabilities and results

- Act rapidly and decisively on improvement opportunities

31.




Performing Quality Assessments

The quality assessment process is a check on the health of the business overall and provides

feedback for high-level, systemic gap analysis and action planning.

I would recommend the need for more structured discipline processes within the move towards a

more complete Baldridge framework.

CONCLUSION

32.

Strategy, Goals &Objectives

Quality Management System

AT&T PDCA

Cycle/Methods

PLANDevelop objectives

Deploy plans

Policy Deployment

CHECKK

Evaluate execution capability

Check results

Management System

Assessment

ACT

Analyze gaps

Develop action plans

Problem-Solving Method

DOExecute plans

Business Process

Management




This new marketplace for highly customizable service is beginning to take shape. Broadband

access providers, Web portal sites, e-commerce companies, application service providers, and

even online financial service providers are all examples of business models that emphasize the

delivery of value-added services. To better serve this new customer base, IT CORPORATION

Canada will need to start to looking at their internal management system and processes and

develop more structured processes to manage them.

The pressure to reduce time to market for new services, to react to market forces, and to move

rapidly, cost-effectively, and provide service reliably has become critical. IT

CORPORATIONCanada in dealing with these challenges face a wide range of issues and

concerns that can limit their operational ability to succeed.

The operating model can only be accomplished with a balanced approach, which means enforcing

process improvements to manage the business processes and process design, ensuring that the

enterprise customer model is a model that will be managed with attention to improved customer

care by building a fresh customer focused enterprise and through instituting a quality management

system.

33.




Documents

Susan Blouin, Toronto Operations Management Paper