Operations Management

Process Analysis, Product, Process Design & Quality Systems Deployment

IT CORPORATION Canada Corporation Susan Blouin Revised Nov 1, 2011 Athabasca University, Center for Innovative Management MBA Program, Operations Management Paper

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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.................................................................................................................................14

DEPLOYING A PROCESS FOCUSED APPROACH TO MANAGING WORK IS NEEDED........................................14 ANALYSIS OF CUSTOMER SERVICE RELATED ISSUES..........................................................................17 THE CUSTOMER DRIVEN ENTERPRISE MANAGEMENT MODEL AND THE TIES BETWEEN IT CORPORATION CURRENT STRATEGIC ISSUES ..........................................................................................................17 ANALYSIS OF THE QUALITY RELATED ISSUES....................................................................................20

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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.

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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.

IT Corporation Proprietary, 2002

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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.

IT Corporation Proprietary, 2002 Ibid.

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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 revenuegenerating 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.

Lemay Yates, 2001

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KEY ASSUMPTIONS

The following are assumptions that are relative to the companys 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 companys processes and information, including the supporting data and systems

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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 nonstandard 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.

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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 companys 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 Services 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.

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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.

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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 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 the process. Business Planning/ Process Design Requirements: Develop service design process to generate new product ideas Opportunity Review Council and process for review and approve of customer opportunities and request to ensure feasible Business Planning/ Process Design Requirements: New Product Introduction (NPI) process to launch new product/program Business Planning/ Process Design Requirements: Develop Product Lifecycle Management process to manage changes, enhancements, improvements and product sunset Business Planning/ Process Design Requirements: Identify gaps in current planning process. Redesign the process and existing financial model to close the identified gaps. Business Planning/ Process Design Requirements: Translate strategic and operating imperatives into clear action plans and identify Senior Leadership Member accountable for each plan. Business Planning/ Process Design Requirements: Evaluate Raw Data Summary (RDS) financial database and upgrade, enhance, or replace as necessary. Business Planning/ Process Design Requirements: Test key drivers for each products/cost category to distill raw inputs to the "critical few" that forecast and describe performance. Business Planning/ Process Design Requirements: Evaluate initial output from the operating metrics team and ensure key metrics is included in forecast output.

Weighting Factor 9.0

10.0

8.5

8.5

9.5

8.5

7.0

7.0

7.0

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Criteria

Weighting Factor 8.5 9.5 9.0 10.0

Business Planning/ Process Design Requirements: Build a quarterly strategy/financial/operating review in IT Corps Governance program. Customer Focused-Organization Requirements: Conduct customer needs research Customer Focused-Organization Requirements: Develop plan for segment-specific customer communications. Customer Focused-Organization Requirements: Set up ongoing measurement, consolidated reporting and governance process. Customer Focused-Organization Requirements: Link customer satisfaction measures into operational areas Customer Focused-Organization Requirements: Build formal feedback loops into the sales organization. Customer Focused-Organization Requirements: Measure of customer segment profitability. New Quality Management System Instituted for IT CORPORATIONRequirements: Identify Senior Leadership Owners New Quality Management System Instituted for IT CORPORATIONRequirements: Documentation and education of Quality Management System (QMS) to the Senior Leadership Team for approval. New Quality Management System Instituted for IT CORPORATIONRequirements: Create training plan to establish Quality Management System knowledge and basic Quality tools and approaches New Quality Management System Instituted for IT CORPORATIONRequirements: Train senior managers and employees

10.0 8.5 9.0 10.0

10.0

9.5

8.5

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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 nonstandard 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 nonstandard 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 companys ability to deliver to customers and to meet its business requirements.

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The overall Business Process Management issues have three areas of concentration relative to the companys requirements for product and process design. The outline below details IT Corporation production/delivery process, business process and supporting process and the indebt 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 companys 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

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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 companys 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 Overall Customer Care Extremely Satisfied Being responsive to customer Dissatisfied
16% 13% 21% 30%

Gap
38% 41% 27% 14%

business needs Understanding the unique needs of a business customer Follow up on actions promised Resolving new request decisions

54% 54% 48% 44%

Maintain Quality Gap Analysis 50% or higher

Some Work Required

Work Aggressively

49% to 30%

29% or lower

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 companys overall customer care results. The data results above are a reflection of our
6

Acnielsen 2002

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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 crossfunctional 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 companys 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 companys overall MOT scores.

Acnielsen 2002

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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 organizations responsibilities for managing non-standard custom solutions present ongoing issues for Customer Service in being able to manage customized solutions through Customer Services 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.
8

IT Corporation Proprietary, 2002 Information Warehouse, 2002.

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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

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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 companys 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 companys 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 operations13.

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.

11

Information Warehouse, 2002. Ibid. Ibid.

12

13

14

IT Corporation Proprietary, 2002

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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 ticket hand-off volumes.
Tick et Hand-Off Volum e 40 30 20 10 0 1 - 2 Handof fs 3 - 4 Handoff s 5 - 6 Handoffs Pr 3 7 - 8 handoff s Pr 4 # of Hand Offs

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.
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IT Corporation Proprietary, 2002

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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 Canadas quality assessment16.
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IT Corporation Proprietary, 2002

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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 Emphasis (impact weight) on Invoice Design has increased, Emphasis (impact weight) on Invoice Design has increased, WORLD
WORLD CLASS Above Parity Parity 96

from parity.
103

while emphasis on Service Design has decreased. while emphasis on Service Design has decreased.
All Quality areas performing below All Quality areas performing below parity. parity. 96 95 94 92 87

97

97

97

96

Below Parity

51%

49%

91%

12%

10%

10% 16% 10% 14%

10%

Since 2000, Quality and Price have generally not changed; however, weaker competitor
90%

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

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C u st o m e r S e r vi c e

Insta M llatio ai n nt en an ce Prov

ision Re ing pai & r&

R el ia b ili t y/ Q u al it y
N et w or k

85

Bil lin g Pr oc es s

R e p ut at io n

In v oi ce D es ig n

S er vi ce D es ig n

Sa le s S up po rt

OVER ALL QUAL ITY

PR IC E

Impact Weight

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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 organizations 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

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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.

Revenue New lead management revenue1 Data churn reduction2 Rebate reduction3 Hosting revenue ($3 K/month) Total Revenue Telco Cost Telco cost on incremental revenue4 Reduction due to improved coordination5 Total Telco Cost

2002

2003

$ $ $ $ $ $ $ $

300 $ $ $ $ 300 $ 225 $ $ 225 $ 75 $

25%

1,200 472 100 36 1,808 1,253 (50) 1,203 605

33%

Direct Gross Margin

Operating Expenses (Benefits)

Headcount Reductions6
1 - AISS/ORC consolidation - Jan-03 1 - NSR (per Cathy Lewis) - Oct-02 6 - I per Sales VP (per Ted Rabicki) Jan-03 6 - Customer Service (per D. Milligan) Jan-03 1 - Lead Management (per J. McLeod) Oct-02 1 - Rebate reduction (Invoicing) Jan-03 Avoid Salesforce.com licensing fees 7 - Jun-02

$ $ $ $ $ $ $ $

(18) (18) (29) (65)

$ $ $ $ $ $ $ $

(70) (70) (420) (420) (70) (70) (100) (1,220)

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 companys 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

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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 providers 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.

17

IT Corporation Proprietary, 2002

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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 companys 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 Platform Blue 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.

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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 Focused Enterprise 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:

Enterprise Organization Enterprise Organization

Build a fresh, customerBuild a fresh, customerfocused enterprise focused enterprise

1. Recognize it is a new business, not just a modest line extension 2. Establish a vision and mission for the organization 3. Create a customer-focused, quality and processdriven enterprise

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4. Track P&L vigorously by projects 5. Develop effective tools to monitor performance and guide pricing of total solutions 6. Establish incentives which reinforce internal and external collaboration

Marketing & Sales Marketing & Sales Achieve world-class Achieve world-class integrated solution integrated solution marketing & sales marketing & sales

7. Expect to need to re-engineer existing sales and marketing processes 8. Critically review skill sets of selected sales and marketing resources: invest as necessary 9. Align compensation with solution selling 10. Achieve excellence in vertical industry marketing and consultative selling 11. Extend team approach beyond traditional sales team boundary 12. Communicate neutrality of vendor choice to target segment 13. Offer risk sharing and innovative financing to engender trust and communicate longterm partnership 14. Recruit and develop systems integration expertise 15. Recruit and develop program/project management expertise 16. Recruit and develop industry expertise on target segments 17. Establish ongoing skills assessment and development 18. Build internal knowledge and awareness of Integrated Solution mission, target accounts, projects 19. Develop processes to allow for quick and flexible staffing ( i.e., create and consistently update skills inventory) 20. Assess and manage the client relationship: establish formal procedures to clarify customer requirements 21. Create infrastructure to achieve seamless operations from the customer viewpoint 22. Master third party alliances to enable comprehensive and objective solution delivery 23. Leverage past experience (i.e., develop globally visible knowledge base) 28.

Human Resources Human Resources Development Development Maximize Human Maximize Human Resource Utilization Resource Utilization

Solution Delivery Solution Delivery Develop client partnership Develop client partnership by achieving optimal by achieving optimal solutions to customers solutions to customers business problems business problems

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24. Develop replicable project methodologies per target segment and project size to enable quick and cost-effective delivery 25. Include post-implementation support including customer training, in solution delivery process

Part C Recommendations Institute a Quality Management System for The Whole Company Baldrige 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
Organizational Profile: Environment, Relationships, and Challenges

2 Strate gic Planni ng 1 Leadersh ip

5 HR Focus 7 Busines s Results

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Chase, Richard. B.,Nicholas J. Aguilano, F. Robert

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

3 Custo mer and Jacobs. Operation Market Focus

6 Proces s Manag Management ement

for

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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.

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

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

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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

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Strategy, Goals & Objectives Quality Management System PLAN Develop objectives Deploy plans Policy Deployment

ACT Analyze gaps Develop action plans Problem-Solving Method

AT&T PDCA Cycle/Methods

DO Execute plans Business Process Management

CHECK K Evaluate execution capability Check results Management System Assessment

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

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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.

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