Telecom Process Analysis WP

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Partnering to Provide Process Optimization SolutionsFor Telecommunications Service Providers

Reducing Costs andImproving Service UsingQuality Management Tools

Process Analysis A Guide forTelecommunications Service Providers

White Paper

Presented by:

John Tomik - Director of Business ConsultingVertek Corporation

www.vertek.comwww.iGrafx.com

www.minitab.com

2003 Vertek Corporation 2003 Corel Corporation

2003 Minitab Corporation


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Advancing the Business of Telecommunications

Reducing Costs and ImprovingService Using QualityManagement Tools

AbstractTelecommunications Service Providers, driven bycompetition, legislation, and increasing customerrequirements, need to continuously search for new ways toimprove productivity and quality, while simultaneouslyreducing costs in order to remain competitive in themarketplace.

To address these issues, many management teams haveturned to Quality Management techniques to solve specificproblems that they encountered, such as Six Sigma for

process stability and defect reduction; TQM for ContinuousImprovement; and ISO 9000 and TL 9000 fordocumentation and process standards. Most recently,executives must face the requirements of the Sarbanes-Oxley legislation and the emphasis on controls and financialaccountability as a result of the ethical issues introduced byaccounting misrepresentations. Since there are so manymajor quality initiatives that sometimes overlap each other,it is easy to become confused about how to implement aprocess improvement program that provides realmeasurable value.

This paper describes a fundamental tried and tested

approach for instituting quality into everyday processes,and it introduces a set of quality and process managementtools that help facilitate the implementation of a qualitymanagement program. It provides an introductoryframework for quality improvement initiatives to addresscost, performance, and quality control issues that allTelecommunications Service Providers face today.Furthermore, this paper describes results that can beexpected through the implementation of process-specifictools for business analysis.

We, at Vertek, can attest to the success of this program.

Our consultants have delivered dramatic results to ourclients through the use of the statistical methods and qualitycontrol techniques outlined in this paper. Theseimprovements can add up to millions of dollars in annualcost savings, not to mention cycle time improvements,efficiency gains, rework reduction and, most importantly,customer satisfaction.

2003 Vertek Corporation All Rights Reserved 2003 Corel Corporation All Rights Reserved

2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03

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Introduction

Cost reductions and off-shoring

As technology advances and pressures from competitioncontinue to drive how services are delivered to customers,prices plummet to near commodity levels. Service providersthat are not automating the service delivery process andlooking for less expensive methods of delivering services tocustomers will be driven out of the market. In addition, asMCI and Global Crossing emerge from bankruptcy, anotherprice war with the remaining debt-heavy carriers could drivefurther cost pressures.

Dramatic changes to the process, such as outsourcing wholeportions of the process to offshore groups, introduce largerisk and uncertainty into already fragile environments.Understanding the impact of such dramatic process changesis critical for informed management decision making.

Consolidation

Since divestiture, service providers have been looking forways to build up service offerings in order to providecomplete solutions to their customers. Some serviceproviders built these capabilities and increased ITinvestment in past years to support new offerings. Othercarriers are pursuing mergers and consolidations with otherservice providers to obtain these capabilities. Either pursuitinvolves large-scale change and requires significantinformation about the impacts on the existing organizations,processes, and procedures.

Legislation, technology and serviceexpansion

Legislation (e.g. wireless number portability) and newtechnologies are forcing dramatic changes to sales andCustomer Care processes. Process owners supportingthese groups need a place to construct, house, andcollaborate on processes, methods, and procedures in orderto keep up with the rapid pace of change. No longer canindividuals work in silos and stay connected.

Few industries have faced as many technical, operational,legislative, and cost issues as the telecom industry facestoday. Pressures to reduce staff, to outsource resources tooff-shore suppliers, and to conform to legislation continually

push the envelope for delivering higher quality services in ahighly scrutinized and competitive environment whereexisting service providers struggle to stay in the game.



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Necessity of stricter controls

The Sarbanes-Oxley requirements to outline control pointsand performance of key processes, especially those directlytied to financial measures, are stimulating executives toteam up process and quality control associates with financialmanagers and auditors to ensure that the integrity offinancial statements are infallible.

This paper will present an approach that provides processmanagers with tools for more effective processmanagement. The following topics will be discussed:

Attributes of a successful quality control program Tools that facilitate the quality improvement process Available software that simplifies the job Benefits from the quality improvement process

Background

Many of the concepts and tools presented here are familiarto quality managers in the telecommunications industry. Infact, many of the core tools (e.g. Pareto charts, Cause &Effect diagrams) originated from the statistically focusedteams at Bell Labs. Within the general Quality Industry,there have also been some large-scale initiatives like TQM,ISO 9000, and the more recent Six Sigma movement thathave stimulated energy around quality practices. Beforeimplementing these initiatives, however, it is very importantto understand that these projects can easily fail unless theyare adopted completely into the culture of the organization.

A strong team with a strong statistics foundation, armed with

the proper tools is instrumental in achieving breakthroughlevels of success.

As consultants within the Telecommunications industry, weat Vertek have delivered dramatic results using thetechniques and procedures outlined in this paper. Oneprocess simulation project reduced a major serviceproviders ordering cycle time by 10 days, which translatedinto over $6.8 Million in annual savings. We have also usedprocess simulations to coach our clients on projects thatshould be avoided. One client, after reviewing oursimulation results, stopped a costly development project thatwas not returning the right value back to the organization.

Given the intense scrutiny on the practices of telecomcarriers, those corporations that incorporate and invest inquality tools and methods will hold a significant advantageover those who do not. It may mean the difference betweensurvival and failure for many organizations.



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Addressing the challenges

Attacking such large challenges is not easy and should notbe underestimated. Some companies have experiencedincredible success using the many quality improvementtechniques that have come into the spotlight over the last

several years, while others have only grown frustrated withthe lack of expected results. Based on successful QualityImprovement projects, four critical elements need to bepresent in order to maximize the probability of success:Dedication, Planning, Diligence, and Patience.

First and foremost, the organization must be dedicated tothe success of the program. Dedication comes in the formof executive sponsorship, resource commitment, timeallowances, and the relentless perseverance in uncoveringthe true causes affecting performance regardless ofpolitical implication.

Second, the organization must spend a significant amount oftime planning for the program to ensure that it is executedand communicated properly. Quality is contagious andwhen improvement results become publicly known,additional resources and support will be made available.

Diligence is critical when working withprocesses andinvestigating special causes. Teams need to be trainedproperly in the use of quality management tools. Controlcharts, cause & effect diagrams, Pareto diagrams andsimulations with what if scenarios are all tools that need tobe used meticulously throughout the process. Additionally,

the corporation must objectively attack any special causesidentified no matter how they occurred. Feelings, pride,and politics must not impede the improvement processotherwise the project will fail.

Finally, the organization needs to have patience with newlyinitiated quality programs and allow them time to produceresults. Too often, organizations look for that breakthroughimprovement and implement process changes, one on top ofanother, without any regard to their consequences. Rapid,haphazard process change introduces confusion and noiseinto the measures and erases any evidence ofimprovements that may have been uncovered.

These four attributes, while they wont guarantee success ofyour quality improvement program, will significantly improvethe probability of producing positive results and will certainlycreate a supportive environment for the processimprovement teams. Excellent service will not appearimmediately, but with the right environment, it willcontinuousl move towards the redefined oals.

Key concepts:

Four elements critical to

any Quality ImprovementProgram:

1. Dedication2. Planning3. Diligence4. Patience

Quality Improvement Tools1. Process maps2. Control charts3. Pareto diagrams

4. Cause & effectdiagrams

5. Simulations / What ifscenarios



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Tools that facilitate qualityimprovement programs

Standard quality tools should not be unfamiliar to Telecomcompanies since many of the fundamental principles andtools originated from Western Electric AT&T BellLaboratories manufacturing partner. A number of tools areavailable to the process engineer. Five of the mostimportant quality tools are presented below:

Process maps:

As defined by iGrafx, a process map is a graphicalrepresentation of a process, which is used forcommunication, documentation, and visual analysis.Process maps themselves are powerful tools for presentinghow a process operates. Consultants at Vertek have

improved process performance dramatically by thoroughlydocumenting our clients internal business processes. In onecase with a major service provider, Vertek consultantsvirtually eliminated ordering methods variation bystandardizing the organizations work steps based oncorporate best practices.

Control charts

Shewhartand other types ofcontrol charts arefundamental to quality control. Their purpose is to measurevariation around a mean and signal when that variation isdue to one or more special causes. Special causes are

those instances where something assignable has occurredin a process that should be investigated and addressed. SixSigma programs utilize control charts and process capabilityindexes extensively to signal when issues influence processvariation. Employing control charts to demonstrate how incontrol (or out of control) a process is often is enough toconvince an executive team that action is required.

Pareto diagrams

J.M. Juran first published a training document for WesternElectric / AT&T Bell Labs that outlined the Pareto principle,

demonstrating the power of focusing on the vital few ratherthan the useful many. This tool identifies and ranks defecttypes in descending order (based on either frequency orvalue) in order to prioritize the categories that should beaddressed first. In addition to assigning a natural priority foraddressing defects, the Pareto diagram acts as amechanism for quantifying contributing factors to problemsidentified during the process troubleshooting phases.

302010Subgroup 0

57

56

55

54

53

52

51

SampleMean

Mean=54.28

UCL=56.91

LCL=51.65

4

3

2

1

0SampleStDev

1

22

S=1.843

UCL=3.850

LCL=0

Xbar/S Chart for Data

38.00

60.00

80.00

90.00

100.00

Pareto Diagram

#

Errors

Percent Total

InsufficientNumber

Limited Accessto CustomerInformation

NoPerformance

Measures

I nc on si st en t C om pl ex

100

50

0

100%

50%

0%

Pareto diagram:

Control Chart:

Process map:



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Cause & effect diagram

Used in conjunction with Pareto diagrams, a cause & effectdiagram (sometimes referred to as fish bone diagrams orIshikawa charts) helps a process engineer identify the rootcauses associated with an error condition or defect identified

in troubleshooting sessions. Most effectively used in teamenvironments, the cause & effect diagram takes theanalytics to the next level by using creative problem solvingtechniques. When done properly, a cause & effect diagrambecomes one of the most powerful and effective toolsavailable to process engineers. Vertek consultants havedelivered breakthrough results by using this tool with Paretocharts, control charts, and process capability indexes.

Process simulations / What if analysis

Among the most exciting and powerful tools available forprocess engineers, process simulations assist analysts to

create models of current process performance by usingprocess maps, activity times, and transaction volume data.These models can then be manipulated to determine theimpacts that process changes will have on performancemetrics.

Process simulations are powerful tools for a number ofreasons:

Effective modeling of business processes plays a keyrole in identifying and correcting inefficiencies

Improved results are achieved through greaterinsight into your business processes

Hypothesis testing increases the ability to identifyhighest impact opportunities

Full experimentation through simulation increasesaccuracy of analysis and chances of project success

Simulations prevent costly mistakes in deployingprocess changes that negatively impact performance

We at Vertek can attest to the flexibility and power ofprocess simulations. We have incorporated the use ofprocess simulation models into almost every processengagement that we take on. With simulations, we havebeen able to factually answer questions that our clients were

struggling with: How can I rationalize my organization for peak

performance? What steps do I need to take to improve throughput,

on-time-performance, cycle time, and overall quality? Where should I direct my process automation efforts

to maximize my IT investments?

Poor

Customer

Service

Policies

No PerformanceMeasures

Procedures

Inconsistent

People

InsufficientNumber

Plant

No History ofCorrespondance

Inadequate TrainingLack of Awareness

ComplexLow Priority

Poor Funding

No CommonAccess

Limited Accessto CustomerInformation

Not Communicated

BoundariesUndefined

Process simulation:

Cause & effect diagram:



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Available software to simplify the job

Statistical Process Control has come a long way fromcalculating control limits and process capability indexes byhand. A number of software packages exist for this purpose;however one of the most complete and powerful solutions

for process management is the combination of toolsprovided by iGrafx and Minitab.

Statistical analysis using MINITAB

Performing statistical process control can be challenging,especially when performing multiple calculations usingformulas like:

UCL=n

CS

X

+4

3 and Cpk =( ) ( )

3,

3min

LSLUSL

Statistical software packages now can create control charts

like X , R, S, X - R, X - S and calculate process capabilityindexes quickly and with little effort providing the processengineers with more time to focus on analysis. MINITAB, acomprehensive statistical and graphical analysis softwarepackage, is the leading package used in Six Sigma andother quality improvement projects.

iGrafxProcess 2003 for Six Sigma

This tool allows process engineers to identify, evaluate, anddeliver high-impact Six Sigma projects. With a powerfulsimulation engine and seamless integration with MINITAB,

this product brings a new dimension to process modelingthrough advanced techniques such as data fitting and full-factorial experimentation. The Design of Experiments (DOE)features reduce time, cost, and risk to any processimprovement project. iGrafx Process 2003 for SixSigma also facilitates the creation of Pareto diagrams,cause & effect diagrams, and produces detailed statistics forsimulations. The American Society for Quality (ASQ) usesthis package in their Six Sigma Black Belt training course.

iGrafx Process Central 2003

Collaboration is the key to breakthrough processimprovements. iGrafx Process Central 2003, a server-based Process Management repository, is a collaborativegroupware application that delivers true version control,document security, extensive query capabilities, and acomprehensive audit capability. It provides enterprise-wideaccess to materials and supports best-practice development,ust-in-time learning, and quality management.



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Benefits of Quality Programs

A typical Six Sigma Black Belt project saves a client $230-350K and usually spans 4-6 months. Telecom serviceproviders can experience even more dramatic results given

the complexity of processes and systems involved. Somecategories of typical expected results are:

Cycle Time Improvements

Cycle time improvements are critical for service providers the quicker a customer can be turned up onto a network, thefaster that provider can bill for services rendered. At Vertek,we focus on cycle times in order to increase our clients cashflows. In one case, we virtually eliminated the cycle time fora sales handoff process that was averaging 21 days.

Customer Satisfaction Improvements

Customers appreciate (and demand) quality service. Wehave seen where Customer Satisfaction has gone fromPoor (customer leaving the Service Provider because ofbilling issues or poor service times) to Excellent (samecustomer switching over their remaining business to thecarrier). Providing high quality service will result in retainingas well as increasing revenues.

Rework Reductions

Failed service turn-ups cost an organization deeply. Most ofthem can be avoided with the right processes in place. Thedo-it-right the first time principle can be achieved when

quality tools and procedures are deployed throughout theorganizations methods and procedures.

Cost Reductions

The dramatic cost reductions associated with qualityimprovement projects usually result from addressing one ofthe above categories. An additional area of cost reduction isresource optimization. The ability to determine optimalresource levels to support a sales forecast or service level isvery valuable in environments where forced reductions areviewed as primary ways of reducing expenses.

Other Improvements

There are numerous other benefits attainable fromemploying quality improvement programs in an organization.One that is often overlooked is employee morale.

Associates want to see their teams be successful and ifcontinuous improvements are visible in organizations, thencompanies will find that employee morale and productivitywill improve dramatically.



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For more informationcontact:

John TomikDirector of Business [email protected]

Vertek Corporation430 Mountain AvenueMurray Hill, NJ 07974908.464.8400


Summary:

Quality programs can dramatically improve an organizationsproductivity. It is typical to expect high returns on a projectthat focuses on service level improvements, cycle time

reductions, or customer satisfaction. There are many toolsavailable for process managers to perform process analysis.These tools, when deployed correctly, will create a powerfulenvironment for collaborative process improvement. iGrafx

and Minitab support this environment with their integratedsolution for Six Sigma projects. This solution is used byorganizations such as the American Society for Quality(used in their Six Sigma Training Program) and byconsulting companies like Vertek Corporation specializing inprocess optimization solutions for the telecommunicationsindustry.

References:TL 9000 Performance Metrics to Drive Improvement The

Telecommunication Industry takes a new approach tosector standards, Quality Progress, July 1999.

Ryan, Thomas P., Statistical Methods for QualityImprovement, Wiley-Interscience, 2000.

Breaking Away: Leading the TelecommunicationsTurnaround, Ernst & Young, 2003.

The Road to TL 9000: From the Bell Breakup to Today The development of TL 9000 caused a revolution in thetelecommunications supplier industry, Quality Progress,June 2001.

Pande, Peter, et al., The Six Sigma Way: Team Fieldbook,McGraw Hill, 2002.

ASQ Six Sigma Black Belt training program materials:http://www.asq.org/ed/sixsigma/blackbelt/materials.html



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http://www.asq.org/ed/sixsigma/blackbelt/materials.htmlhttp://www.asq.org/ed/sixsigma/blackbelt/materials.html

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Telecom Process Analysis WP