2008-02-14 - IASTED Innsbruck 2008 - Customer Retention and Delivery Quality in the IT industry

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Customer retention is vital for the survival of software development organizations, especially under current economic trend of global outsourcing. We show that the traditional definition of project …

Customer retention is vital for the survival of software development organizations, especially under current economic trend of global outsourcing. We show that the traditional definition of project success has a blind spot to aspects are extremely relevant for customer retention.

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  • Met name de laatste was een verrassing: medewerkers associeerden de kwaliteit van de spelling (iets dat ze wel konden meten) met de inhoudelijke kwaliteit van het document!

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  • 1. Customers’ Perception of delivery Quality IASTED SE 2008, Innsbruck Jaap van Ekris, Senior Consultant [email_address]
  • 2. The current state of affairs
    • Only 29% of all software development projects deliver what is promissed on time, within budget
    • Around 72% of all customers consider abandoning current IT suppliers due to dissatisfaction with their current supplier
    • How to retain customers ?
  • 3. Retaining customers is a hard job
  • 4. A lot of effort goes into improvement
  • 5. Main focus of these improvement models...
  • 6. The product on time on budget doesn’t suffice...
    • Delivery is a closed brown bag
    • Delivery is a tray of food
    • Employees hardly speak local language
    • Employees listen and verify order
    • Process is completely out of sight
    • Keeps process in front of customer
    • Customers structurally ignored due to highly optimized process
    • Employees are friendly to customers
    • Pay in advance
    • Pay upon delivery
    • Product is good (for fastfood)
    • Product is mediocre
  • 7. Or more close to the industry
    • What is needed to satisfy customers?
    • Doing what you get paid for is not enough (Tracey and Wiersma)
    • A lot of human factors (Paulk)
    • Motivated personnel (Heskett)
    • Surprising customers (Kotter)
    • Delighting customers (Berry)
    • Providing good service besides a perfect product (Kotler)
    • By providing functional quality besides technical quality (Gronroos, Parazuraman, Berry & Zeithaml)
    • Exceeding in the supporting processes (Porter)
  • 8. A hierarchic model for customer satisfaction Delivery Quality Product Quality Functionality
  • 9. Delivery quality?
    • Aimed at the way of attaining the product
    • Contains a lot of “softer” factors in human interactions during the project
    • SERVQUAL defines these softer factors as being
      • Reliability (meeting agreements)
      • Empathic behavior
      • Responsiveness
      • Knowledgeable acting
      • Visual appearance
    • Does it mean the difference between
    • “ not dissatisfied” and “satisfied” customers?
  • 10. An exceptional case
    • Relacement of a highly safety critical system
    • The demands:
      • Complete rebuild of an existing system (15 years in operation)
      • Proven reliability of the total system of 10 -4 , realized by IEC61508 SIL-4
      • Prince2 ® , focused on frequent and open communication
      • ISO9001 certified company
    • Not meeting stated demands would result in large penalties
  • 11. Method of investigation
    • All teammembers at the customer cooperated in the investigation
    • Investigation consisted out of several steps
      • Initial structured interview covering functionality, product quality and delivery quality, focussing on need, expectations and percpetion
      • The most positive and most negative experience
      • Overall grade of the suppliers effort
  • 12. Finding: A technically an exemplary project
    • Budget: fixed price
    • Delivery date: 2 weeks early
    • Functionality: proven 100% complete
    • Product quality: 100% according expectations
  • 13. Finding: Delivery Quality fell short
    • Reliability : all respondents satisfied
    • Empathic behavior is below expectation for every respondent
    • Responsiveness is a bit below expectation for a single respondent
    • Knowledgeable acting is a bit below expectation for some respondents
    • Visual appearance : most respondents indicated that the performance is below expectation
  • 14. Finding: Customer retention is null
    • NONE of the respondents would automatically buy again from the supplier
    • Some respondents even indicated to explicitly select a competitor when given a choice!
    • Respondents scored the suppliers’ efforts:
      • Average of 7,5 (out of 10)
      • Highest score 8
      • Lowest is a 6
    • These marks put the customer in the “zone of indifference”, as expected from the explicit statements about rebuy behavior
  • 15. Findings: Critical incidents identified
    • Not being involved with the customer
      • Not checking how the process really works
      • Not much contact between customer and developer
      • No interest in finding out the surrounding context
    • No regard for the customers culture
      • Not conforming to locally (very established) ways of working
      • Taking decisions that are contrary to the “safety first” culture
    • Abundance of typo’s in critical design documents
      • Presence attributes to the feeling of a less than perfect review process
      • Not solving the typo’s when identified gave subjects the feeling they were not taken seriously
  • 16. Findings: Suggestions for improvement 1 More thorough review process 1 Be an overall responsible contractor 1 Responsiveness 3 Knowledgeable acting 3 Empathic behavior Suggested area of improvement 3rd 2nd 1st Priority of Improvement
  • 17. Results from the case
    • Traditional project management goals fullfilled, recognized by customer
      • On budget
      • On time
      • Right quality, right functionality
    • Customer not willing to return due to delivery quality:
      • Empathic behaviour
      • Knowledgable acting
    • Absence of delivery quality can cause serious unrest at the customer
  • 18. Conclusions
    • Just a perfect product does not help you retain your customers, it will only save you time in court
    • To retain customers, you have to:
      • Deliver what the customer needs, on time within budget
      • perform above expectations on more “softer” areas of project management:
        • Reliability/meeting agreements
        • Empathic behavior
        • Responsiveness
        • Knowledgeable acting
        • Visual appearance
    • Work to be done
      • Tailor SERVQUAL dimensions to the IT industry