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

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