Automating the Supply Chain

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.

Image: Telecom Supply-Chain

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.