Posted: 06/1999
Automating the Supply Chain
By Keith Giarman and Naiel Kanno
Competition in the communications industry is inspiring providers to find ways to deliver integrated, multidimensional services that are easy for customers to use. An example of one of these complex new services is integrated messaging, a nifty product that lets users access messages--such as telephone, e-mail, pager and fax--from a single mailbox.
Developing this service--and others like it--meant providers had to recognize the benefit to customers of using a single tool to exchange messages over a variety of transmission media. In other words, providers had to recognize a common desire among their customers to integrate data and manage it more efficiently. Ironically, few providers have been as zealous about simplifying their own internal processes using integrated solutions.
While regulatory requirements are sometimes to blame for perpetuating the paper trail, they are not the major obstacles by any means. More often, providers that are still executing critical business processes by hand simply don't have enough information about the software solutions that are available. On the other hand, a little knowledge about billing systems or customer-care solutions can be dangerous if a provider automates just one or two mission-critical functions but fails to integrate the systems. The solutions may work well independently, and users will realize some benefits, but these islands of automation never can be as beneficial as an integrated system.
Driven by competition and the potential commoditization of some services, the telecom industry rapidly is moving toward the time when automating business processes no longer is optional. It is becoming a competitive necessity. Those sectors of the telecommunications industry that have been open to competition for a longer time, such as long distance carriers, have developed sophisticated billing and customer care (BACC), order-entry and provisioning systems. For years, interexchange carriers (IXCs) have considered their billing systems as competitive tools that can help them keep customers and sign new ones. Alternative providers must follow a similar course if they hope to win business from the incumbents and succeed over the long term in any sector of communications.
New Solutions
But providers don't have to do it themselves. Software vendors are developing more nimble versions of the traditional carriers' operations support systems (OSSs) especially for alternative service providers that joined the industry after deregulation. And alternative providers aren't alone. Incumbents invested $10 billion in OSSs in 1997 and have spent billions more every year since then as they shift the focus of their systems to BACC.
New solutions targeted at competitive local exchange carriers (CLECs) and other alternative providers that compete in the local exchange market are especially promising. Today, it isn't unusual for a CLEC to fax service orders, forcing scores of printed orders on the incumbent provider--orders that must then be manually entered into their systems. Not surprisingly, this process can result in monstrous error rates--as high as 50 percent or more--and can threaten customer satisfaction and profitability. With so many choices available, customers no longer are willing to put up with delays and they have a low tolerance for mistakes. CLECs and other competitive providers that hope to differentiate themselves based on price and service quality can ill-afford to lose time and money this way; ultimately, a nonautomated service order process can threaten a CLEC's very existence.
Part of the service-order problem stems from the fact that the incumbent LECs (ILECs) each have different procedures for requesting, changing or stopping service. Automating a process that isn't standardized is difficult and can divert an alternative provider's attention from its core business. For that reason, leading-edge providers are opting to purchase turnkey service-order systems from a specialized developer.
What has been a challenge for CLECs--developing integrated BACC, order and supply-chain management systems--has proven an opportunity for new companies that specialize in creating these systems. But some CLECs are reticent to work with these relatively young companies. In some ways, their reluctance is understandable. First, billing-systems vendors are chronically over budget and seldom manage to meet their delivery deadlines. But the top vendors recognize this weakness and are striving to overcome it by communicating more effectively with customers.
Similar to order and supply-chain management, BACC is a critical business process that cries out to be automated and integrated. Many CLECs recognized the need for a robust billing system as bundled services became an increasingly important part of their strategy. Few, however, have linked their billing systems to an automated customer-care solution, and fewer still have made the great leap to a complete solution that integrates a BACC solution to automated order and supply-chain management systems. That is the ideal toward which most alternative providers should strive.
"The communications industry is increasingly an extended supply chain," explains Elizabeth Adams, president and CEO of the TeleManagement Forum, an international group leading and facilitating the industry's efforts to streamline operations. "Automating customer-care processes, including links to other providers in the chain, can have a very positive effect on the business's bottom line if it can be done without a lot of expensive custom development on the part of the provider."
Order and provisioning systems and automated supply-chain management tools are quite new in telecommunications. Because these systems are mission-critical and complex to create, it would seldom make sense for a service provider to attempt to develop a "soup-to-nuts" system on its own. The software developers themselves are opting for partnerships. By developing open, scaleable systems, customers can link a BACC system developed by one provider with an order-management and supply-chain automation tool from another. Open platforms also allow users to install systems in stages. Since the systems developers are constantly upgrading their products' systems to keep pace with the fast-changing telecom market, users can opt to add new features or increase functionality at any time.
Impact of Integration
Let's look more closely at the benefits to CLECs and Internet service providers (ISPs) of using more integrated information systems to manage five critical business processes. These five processes--customer relationship management, order entry, order management, supply chain management, workflow and billing--are fundamental to running virtually any business. When executed efficiently and economically, these basic processes become competitive weapons and market differentiators.
An automated customer relationship management system should house a complete customer profile that is accessible to customer service representatives (CSRs)--and sometimes customers themselves--via the web, as well as to the marketing and executive teams. The specifics of who can access the system and how the data is formatted can be altered to meet each user's preferences. Tying the customer-relationship management system to other systems creates a complete customer profile that can be used throughout the company. Service representatives, for example, can use it to respond to virtually all customer inquiries. They also can use it to cross-sell or upsell additional services.
Automating the exchange of information between a CLEC and an ILEC can facilitate the cumbersome process of taking an order for new service and seeing it through to installation. At least one order-management solution integrates preorder functions such as address validation, record retrieval and appointment scheduling. The system supports a variety of services, ranging from Centrex to digital subscriber line (DSL) and directory assistance (DA) to unbundled local loop. With integrated supply-chain management and workflow systems, new services can be provisioned seamlessly.
A supply-chain management system should include, in part, a direct electronic interface to a CLEC's suppliers--most often the ILEC in their region. This eliminates the time-consuming and expensive practice of filling out and faxing lengthy forms. (These service-order forms can be up to 25 pages long and cost as much as $17 to fax. Mistakes that require the form to be corrected and retransmitted are common, pushing the total cost of a fax-based service order as high as $200). Since each ILEC has different order-placement procedures, developing a packaged interface is difficult and time-consuming.
CLECs also should be able to integrate the supply-chain management system with an order management system that houses both the business rules defined by the CLEC and workflow processes that can expedite order execution. The workflow system evaluates each order to determine what services have been requested and what component actions--including the steps the CLEC itself will take and those for which external suppliers or partners are responsible--will be necessary. Finally, integrating the billing system with the applications supporting customer care, order entry, order management, workflow and supply-chain management completes a circle of business-process automation that continuously delivers updated usage information throughout the linked systems.
Although few alternative providers are reaping maximal benefits from automating business processes--and even fewer have seen the exponential gains that integrating these systems can deliver--this state of affairs won't last long. As service providers learn more about the new options available, more will take steps to improve their systems.
Soon, deregulation and competition will prompt successful companies to all but disregard functional boundaries within their organizations to automate business processes virtually from beginning to end. Those service providers that accomplish this will have much more than a highly efficient business model; they will have a highly efficient business model and the clearest possible picture of their customers' communication habits. With this information, providers can anticipate their customers' needs and bundle services that will meet those needs.
Keith Giarman is vice president of sales and marketing for NightFire Software Inc. and Naiel Kanno is president and CEO of EXL Information Corp. Berkeley, Calif.-based NightFire develops order-management and provisioning software solutions for communications service providers. Vancouver, British Columbia-based EXL, a wholly owned subsidiary of OAN Services Inc., Northridge, Calif., provides billing and customer-care solutions for communications service providers.
