How tempting it is to use the benefit of hindsight to criticize those in charge of BP PLC’s Deepwater Horizon oil rig in the Gulf of Mexico. The Wall Street Journal’s (WSJ) coverage even informs readers that BP and its drilling contractor Transocean celebrated 7 years without a serious injury. The introspective reader, especially IT/Telecom professionals, can learn several valuable lessons from this incident.

Gushing Revenue Can Change into Huge Loses in Minutes.

In the course of a few hours multiple warning signs were not fully appreciated. To use an IT/Telecom term, “alarms” quickly built up before they could be assessed. As a result, liquid gold (“revenue”) turned into a fire ball then a toxic sludge that will cost BP billions and is possibly the largest man-made environmental event in recorded history.

Monitoring for Event and Resolution Management

WSJ and other narratives pointed to various warning signs (“alarms”) of potential problems hours prior to vast amounts of methane lifting to the surface and igniting. The lesson learned is not only the need to monitor and set off alarms but the importance of correlating alarms to determine the underlying event proactively before it becomes a major issue. A telecom/IT example is that several warning “alarms” of low severity may mean nothing individually but viewed together, they can point to a power outage. Accurately and quickly identifying the event is necessary to resolve the underlying issue.

In summary, commercial grade infrastructure management systems should correlate alarms into events (based on past history and solid design). Accurate identification of events leads to the right resolution.

Communication is Key

Dual lines of authority and a lack of event/resolution planning reportedly contributed to missed opportunities to stop the chain of events that led to the Deepwater Horizon catastrophe. The take away for IT/Telecom professionals, is to figure out what you can do to improve communications in such a manner that takes advantage of the tools on our desks, smart phones and various management systems, especially with the gradual roll out of Unified Communications features such a presence. The challenge is how to communicate the right information (alerts/events/resolution) to the right resources and decision makers as quickly and efficiently as possible.

What is your experience with proactively identifying and resolving events?  Do you have a way of seeing all of your alarms in a “single pane of glass” in order to correlate them?

Rolling out large enterprise telecom solutions across many sites, as well as supporting geographically disbursed systems and call centers with maintenance, break-fix, and upgrade services creates numerous logistical and economic challenges. C-Suite executives are intuitively aware of the challenges, but often are unaware of how to address them in an efficient, cost-effective manner.

The Challenges:

1. The single vendor fallacy

Selecting a single telecom (Avaya, Cisco, Nortel, Mitel, Siemens etc…) platform accomplishes far less to meet the goal of reducing long-term ownership costs than you would expect. Several flies appear in this well reasoned ointment including:

• Single Vendor maintenance services for the platform you choose/chose are largely an illusion. These global platform developers increasingly rely on small to medium distributors of varying and limited geographies and capabilities. You may have a support contract with the manufacturer; but at the end of the day, your staff will be coordinating and otherwise dealing with multiple service providers to cover your nationally distributed sites. To illustrate, Avaya and Siemens are pushing more tier 1 through 3 services to their partners. In a further outsourcing play, Siemens is outsourcing all field services to broader territories to a third party who traditionally relies heavily on hourly contract workers.
• An acquisition of other companies is likely to create a near instant mix of communication platforms. Your firm ends up managing at least one new platform with each firm acquired assuming the acquisition target had previously standardized its enterprise telecom platform. If the target hadn’t standardized, your telecom team is facing the need to manage and maintain multiple platforms over night.
• As manufacturers rapidly move to develop their VoIP and Unified Communications server technologies, legacy PBX systems are placed on end-of-life and end-of-support status prematurely; long before the installed systems fail to address the 95+% threshold of user needs for a technology refresh. The business case for a platform refresh is absent, yet the voice communication partner has an end-of-life gun pointed at your head.
• Managing new server-based communications technologies along with legacy systems presents similar interoperability and support challenges as managing multiple manufacturers’ platforms. Mix 2 manufactures with legacy PBX and IP-telephony systems and…you get the idea.

2. Multiplication issues

The internal support of IT/telecom systems spread across 50-100 cities compounds the management headache of coordinating service providers. Multiply the number of cities by the number of different platforms in the network and the headache becomes a migraine.

The primary challenge is not the physical distance. The primary challenge is information management. When the headquarters IT/Telecom team has scant records on the remote site, they view the distance (to go look and see, i.e. collect information while trying to fix a service affecting issue) as the challenge. If the design and other records from the original installation were maintained, the need to dispatch a tech to go, look and investigate would be less.

Consider the following recommendations to addressing these challenges:

1. Let go of the illusion of single vendor support. Call them PBX, IP-Telephony, Unified Communications solutions providers. This provides a clearer picture of just how many different communications vendors are entrenched in the firm. These vendors say their main business is developing and selling software-based solutions. The ongoing maintenance and support is being pushed out to distributors and channel partners. It is the rare customer who is supported directly by the manufacturer.
2. Equip your staff with tools that proactively manage the network, servers, and other devices. By proactively managing, I refer to:
   • Active monitoring and with the flexibility to fine tune what events represent “Majors” to your business.
   • Proactively build, manage, and maintain the design, carrier, cable, rack lay out and other information. Having this information readily available will accelerate problem resolution. The on-going management of this information is easier than trying to research for it under battle conditions.
   • Collaboration tools leverage the monitoring and information among the team members (employees, vendors and partners), streamlining the routine support and project management functions.
3. Become more independent utilizing proven tool sets that are designed to manage multiple platforms and generations of technologies.

These challenges and recommendations are often woven into the sales presentations of large IT outsourcing companies. They can hire large staff, apply best practices, and invest in tool sets. However, not all companies are willing to trust that an outsourcing play will not result in less control and personalization than can be accomplished by an internal team.

Telizent offers enterprises the tools and services needed to self service and fill the gaps of the challenges cited above.

What are your thoughts on the prospect of self maintaining your communications environment? If you found this post useful, please leave a comment, share with your peers, or subscribe to the news feed to have my future posts delivered to your news feed reader.

Is your company taking advantage of virtualization technologies? Has the company explored the advantages of communication virtualization for the contact center? This post summarizes how virtualization of resources via an intelligent, enterprise communication architecture can deliver eye-popping returns that even the boldest of system sales person would not claim.

Most telecom solutions providers tout savings such as reduced long distance and telco expenses in traditional tactical (OPEX-reduction) business cases. Most of my blog posts aim to elevate communication investment decision making to the strategic level.

One of our clients delivers broadband service to over one hundred cities, with most calls handled locally in small contact centers within the service areas. The customer care leadership recognized that customer service reps skilled at “saving” a cancellation request were rare. When each service center operated on its own, the likelihood was very low that a cancellation request would be matched up with a customer service representative (CSR) with the skill to turn the caller around. The net present value of each subscriber won or lost is nearly $4,000.

The virtualization concept, in this scenario, refers to unifying all of the small contact centers to appear as one set of resources. A short self-service menu picked out nearly 90% of intended cancellation requests. These calls were routed to those select CSRs proven to be capable of retaining subscribers. The save rate tripled from one out of four to three out of four. Put another way, retention rates improved from 25% to 75%. Based on a conservative rate of $3,500 value (NPV of net cash flows) per subscriber, the aggregate value of virtualizing routing calls based on skill set was greater than the entire capital cost of deploying a distributed (VoIP-networked) communication infrastructure.

Allowing customers, partners and even employees’ quick access to the right resources is applicable to nearly all businesses. While the client above is in a heavy customer service (“call center”) industry, all enterprises must improve the ability to communicate with the right resources quickly and on the first call. Being able to problem solve, using the best media, e.g. voice, text, email, IM, video as selected by the customer, is the business value proposition of unified communications.

The moral of this story is that the success described above is an obvious lesson in how communication technology investments aid in the retention of customers. Immediately matching the right resource to a valuable customer scenario was easily quantifiable … Businesses must be proactive in empowering high value customers, knowledge workers, and business partners to collaborate with them on their terms. That takes planning and forward thinking, moving beyond yesterday’s staid communication and information management tools. If your firm doesn’t, your competitor will.

What are your thoughts on telecom virtualization and skills based routing? If you found this post useful, please leave a comment, share with your peers, or subscribe to the news feed to have my future posts delivered to your news feed reader.

One of John Locke’s better known contributions to political theory of the 17^th century was the Social Contract. The concept is that of men willingly giving up some individual liberty in order to form a state that would act on behalf of the people for the common good, e.g. protection from within and outside the state.

There is a parallel social contract between telecommunication systems manufacturers and its customers. To understand the social contract for a technical (IT leader) or economic (CFO) buyer of telecommunication equipment consider the following:

• The manufacturer invests billions of dollars in software and hardware R & D and sells the systems below the true cost of developing, selling and installation. The general economics are that most new systems are sold at a loss in order to gain the longer term, more profitable relationship of an overpriced, manufacture -based maintenance contract.
• The break-even period is about three and a half years. In other words, it takes two and a half years AFTER the warranty period for the manufacturer to break-even on the equipment sale.
• Most technical and economic decision makers agree to continue paying for manufacturer-based maintenance because the maintenance contract pays for ongoing enhancements, typically in the form of tactical software service patches.
• The social contract is formed when you agree to over pay for high margin maintenance because your company might benefit from ongoing R & D performed by the manufacturer. The parallel is that you give up some personal liberty (how to more frugally obtain telecom maintenance) in return for protection of your telecom asset.

The parallel to Locke’s social contract is that your company can always invest in new technology from your current telecom solution provider, whether you continue to be a maintenance customer or not. Most manufacturers reward loyal customers with upgrade incentives. Often times you can do just as well, or better, through savvy procurement techniques.

SO WHAT?

The question for the reader is this: Are you 5+ years past the warranty period on your telecom platform? If so, this may or may not make economic sense. Below is a case for each:

1. Makes Economic Sense: Your telecom solutions partner continues to be delivering value-added enhancements on your current platform. You are unlikely to move to a different telecom solutions provider. Therefore, it makes sense to continue funding ongoing development into your current and future product set by voluntarily paying a premium for a manufacture-based maintenance Contract.

2. Does not make Economic Sense: Your current platform is dead-ended. The last service patch was installed 4 years ago. No further enhancements are being made. You are therefore funding the manufacturers’ R & D with no benefit likely to be realized by your firm, especially if your plans are to move to an entirely new platform. You may even be funding your competitor’s competitive edge, to take this line of reasoning another step.

Conclusion:

The traditional default decision to play nice with the telecom manufacturer in terms of investing in a solid telecom solutions platform and remaining on manufacturer-based maintenance needs to be closely scrutinized, especially in today’s market. Maintenance contracts are the cash cows for telecom solutions providers. Your firm benefits in the long run if you have access to more economical future patch releases. But, if you are living on borrowed time in terms of extending the life of your PBX and call center platforms, a strong business case can be made that you should divert the premium maintenance fees being paid in to a savings account for the telecom platform in your future.

What are your thoughts on telecom manufacturers’ maintenance contracts? If you found this post useful, please leave a comment, share with your peers, or subscribe to the news feed to have my future posts delivered to your news feed reader.

In a prior blog post I discussed some of the intangible benefits of a properly implemented communications architecture. This entry dives a little deeper with specific examples of intangible benefits realized by a $50 million broadband services division of a Fortune 500 enterprise.

The National Division was challenged to manage customer service centers distributed across 20 cities and three time zones as profitably as the other divisions. There was an expectation of leveraging economies of scale based on the contact center footprint. The original business case for a $2.5 million dollar capital investment was heavily based on an uptick in call center efficiencies and revenue generations. To the enterprise’s delight, the more strategic benefits were recognized by business acceleration. The capital investment replaced numerous standalone telephony and ACD platforms with a distributed architecture that centralized contact center applications at the firm’s headquarters. To maintain local customer service, most calls remained at each remote service center with routing, reporting and automated services offered through the headquarters site. The centralized communications center was networked with the distributed offices via private VoIP links. This is a typical configuration for implementing virtual contact centers.

The company knew its customer service traffic peaks were in the first couple of business hours and late afternoons. This left spare capacity for high quality video conferencing, which shared the same high quality private network, in the middle of the day. Rolling out video conferencing systems to all of the remote sites facilitated training of the remote management and customer service representatives (CSRs). Beyond the obvious travel cost savings, the company was able to train its field staff and CSRs on new service offerings and best practices significantly faster and more thoroughly than its previously used training model. The firm was able to add high quality programs and new revenue streams without having to add incremental CSRs. Video training enabled the firm to accelerate the number of new programs faster and with higher than anticipated customer satisfaction rates.

The National Division’s communications infrastructure plays a strategic role in assimilating acquisitions. Plug and Play is the catch phrase the firm uses in the business requirements phase of assimilation. This phrase refers to the ability to quickly and economically add any site into the virtual contact center including the flexibility to handle calls locally or centrally by a live CSR or via automated services. National Division added nearly 40 sites to the plug-and-play architecture in less than 60 days. The ability to plug-and-play accelerated business integration of a multi-billion dollar acquisition by three months, saving tens of millions of dollars in terms of customer retention and staff productivity.

Companies of all sizes need to be vigilant regarding their communications architecture. A big picture strategy across the entire enterprise enables a firm to leverage emerging technologies, in this case high quality video, to accelerate business processes.

My next blog will address how a sound communications architecture addresses the need to do more with less mantra of business in a challenging business environment.

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How are you measuring the value of your communications infrastructure investment? Most investment analyses, especially related to capital-intensive call center or voice communications investments, are offered by solution sales organizations, the communications vendors. These firms emphasize costs through lowering the total ownership cost (“TOC”), or on return on investment (“ROI”). Their end goal is to sell a new solution based on anticipated reduction in operating costs (operating expense or “OPEX” for short.), This sales model is understandable as, customers are not willing to  risk their job on soft metrics. Yet, many of the intangible, soft metric benefits that result from building the right communication infrastructure turn out to more valuable than the more tactical and traditional ROI analyses businesses typically use to base their investment decisions.

A few examples of soft metric-based strategic benefits that were realized for clients deploying VoIP-enabled communication projects include:

• Broader span of control of management (lower middle management OPEX)
• Dramatic increase in revenue per customer service head count
• Acceleration of business including rolling out new services faster, in higher quality and more profitability than previously imaginable
• Reducing customer churn that in and of itself paid for the new VoIP-enabled platform many times over
• Provided automated service options to a rural customer base that was assumed to be resistant to IVR technology. Acceptance rates assumed to gradually grow to 10-12% over three years, immediately jumped to the 30-35% range. In addition, higher customer satisfaction rates freed customer service reps to focus on more complex requests, and promoting new services.

A forty-site enterprise adopted a similar plug-and-play distributed architecture realizing unanticipated strategic benefits such as:

• Business continuity procedures enabled customer service centers in the Southeast to redirect local service calls from Florida to Louisiana during a hurricane. When the same hurricane hit Louisiana 36 hours later; local service calls to both West Florida and the Louisiana service center were redirected to Eastern Florida. Service levels remained in the mid-90% range, higher than was formerly possible during much less dramatic weather.
• The same BC architecture enabled this small division of a Fortune 100 company to play a huge role when the parent company acquired part of a large competitor. The flexible, distributed architecture streamlined the business integration timeline and saved millions of dollars.

Businesses and even the communications systems sales professionals tend to overlook some of the more strategic benefits of updating a firm’s communication infrastructure to VoIP such as:

1. Accelerating the speed of new product/service introductions
2. Vastly improved business continuity and business process capabilities
3. Leveraging smaller management teams across broad geographies and across multiple partners (virtual process optimization)
4. Streamlining mergers and acquisitions

As one seasoned executive said, “The (vendor’s) business case is probably a bunch of nonsense ; but, I am making this investment for the intangibles.” He was correct. The post-implementation ROI proved to be several times better than the pre-investment ROI. Many tactical metrics turned out to be better than anticipated; but the surprise was how many of the “intangibles” turned out to be quite measurable and…tangible.

Later entries will cover more typical, yet tactical, OPEX savings realized by one or more clients.

Thanks for taking the time to read this post.  If you found it useful, please leave a comment, share with your peers, or subscribe to the news feed to have my future posts delivered to your news read feeder.