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Heavy reading-order-management-wp-2012


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Heavy reading-order-management-wp-2012

  1. 1. White Paper Enabling Holistic Customer Experience With End-to-End Order Management Prepared by Ari Banerjee Senior Analyst, Heavy Reading on behalf of August 2012
  2. 2. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 2 Introduction Communications service providers around the world are migrating from a prod- uct-centric approach toward a more customer-centric approach. They are beginning to focus on using what they know about the customer to present products and services that are not only highly relevant to the individual customer, but also timely in nature. Additionally, tomorrow's market winners will be able to deliver an experience that is cross-channel by design, allowing customers to shop or buy seamlessly and consistently across multiple channels. The success of a company in delivering a customer-centric, cross-channel experience depends on their ability to align their business processes across multiple internal operational silos, and collaborate with multiple enterprises, from content providers to supply chain partners to selling partners. There is no longer a linear relationship between companies and customers; it is now in a complex ecosystem with changing and evolving relationships. Leading service providers continue to make smart investments in the capabilities that enable them to gain significant advantage over their competitors in the areas of marketing, selling and fulfilling configurable and/or complex products and services. End-to-end order management (OM) systems are important investments because of the impact of ordering on a company's operations. Inefficient OM systems lead to an increased order fallout rate, slower time to market and inferior customer experience. From offer creation, matching offers to customers, order capture and order generation, through fulfillment across different channels and customer touch points to internal and external fulfillment points, OM sits at the heart of service providers' transition to customer-centricity. OM solutions must go beyond the current technical or functional approach, and support a customer-centric approach. Our research shows that many of today's OM implementations will not be able to meet all the requirements of communica- tions service providers today – from improving operational efficiency to improving sales and marketing results – due to limitations in their design or underlying archi- tecture. For example, here are some classic OM architectures: · Middleware-based solutions: Middleware vendors provide custom-made OM solutions that consist of different, integrated tool kits. Integration generally re- sults in an inflexible solution. These solutions take much longer to deploy (any- where from nine to 15 months) and suffer from agility and scalability issues. · Solutions from major BSS/OSS vendors: Most OM solutions from leading BSS/OSS vendors are solutions of multiple integrated (usually acquired) solution components. For some of these vendors, their OM solution is a way to tie their different solution offerings together and is used in a strategic way to upsell their other solution offerings. These joined-up OM solutions have a multi- platform base that is tied together by some sort of lightweight web layer. As ordering systems have evolved from dealing with single products to multiple, converged products, the focus has been first on operations. The requirement was: "How do I efficiently quote and fulfill a multi-product order, including rationalizing product catalogs and dealing with all the downstream impacts on supply chain, etc.?" But as competition becomes increasingly intense, operational efficiency is no longer sufficient. To excel in a world of competitive choices, service providers need to foster deep customer relationships, and that means a different type of ordering process that regardless of customer type, purchase channel and desired products, puts the customer at the center. Next-gen OM solutions alone need to be able to leverage everything the service provider knows in order to recommend the right products to the customer. Only then can it provide complete and trans- parent visibility to the customer regarding the status of the delivery of that order.
  3. 3. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 3 Building Blocks of an End-to-End OM Solution Communications service providers' OM systems are based on three fundamental building blocks: sales OM, service fulfillment OM and B2B collaboration OM. In order for vendors to be able to provide end-to-end OM systems, it is critical for their solutions to successfully bridge the gap among the three building blocks. Figure 1 illustrates the building blocks of an end-to-end OM solution. Sales OM solutions coordinate all processes associated with securing the custom- er's order from order capture until the order contract has been signed (for more complex enterprise orders). The sales OM solution automates the order capture process for various sales channels. It also has embedded workflow that routes the service order to the different departments that need to complete a particular task for that order contract. Retail lines of business will require more sophisticated OM solutions that integrate decisioning capabilities to present personalized offers for cross-sell and up-sell opportunities, resulting in higher-order conversion rates and a truly seamless experience from lead to cash. Service fulfillment OM solutions coordinate the many operations and network- related workflow tasks necessary to fulfill a customer service order. Provisioning OM has greater synergies with other network-facing OSSs. Critical tasks performed by service fulfillment OM solutions involve order decomposition and brokering, routing orders to locations, design and assign network circuits, network activation, etc. Supply-chain B2B OM solutions revolve around gaining real-time visibility into orders across divisions and supply networks, streamlining and lowering the cost of customer order fulfillment processes and accessing up-to-date product and inventory availability. Managing the workforce and technicians required to activate services, tracking inter-carrier service orders and number portability requests also must be handled by these OM systems. Figure 1: Building Blocks of an End-to-End OM Solution Source: Heavy Reading
  4. 4. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 4 Service Providers Face Uphill Battle With Exist- ing OM Systems In a hyper-competitive communications market, service providers' business objectives are focused on critical business priorities, summarized as follows: · Increasing revenue and profitability; decreasing churn: Operators will look to launch a massive new set of offers, products and enabling technologies for more revenue streams. Personalization and rapid service delivery continue to be high on the priority list and are forcing providers to be more imaginative about how they bundle their products and services and explore new areas for sales growth. In this context, the ability to intelligently cross-sell and up-sell to an existing customer base will be critical to this growth. · Deliver contextual offers: Personalized offers based on customer preferences, transaction volumes, social networks and preferences, etc., require a real-time decisioning engine as an integral part of an OM solution. A unified solution can help service providers make 1:1 contextual offers to every customer, improving acceptance rates, and improve fulfillment rates via straight-through processing. · Reducing opex and limiting system complexity: To simplify enhancement and operational cost to support the change in demand, providers want to consol- idate disparate BSS/OSS systems and eliminate the custom approach to providing core capabilities. · Improving supply-chain B2B process management: Service providers' re- quirements revolve around gaining real-time visibility into orders across divi- sions and supply networks, streamlining and lowering the cost of order fulfill- ment processes and accessing up-to-date product and inventory availability. · Providing seamless cross-channel ordering: Next-gen OM solutions need to be able to handle cross-channel orders seamlessly and manage orders that start at one channel and complete at another, regardless if the channel is owned by the service provider. This functionality is critical for service providers that are dealing with well-informed, tech-savvy consumers that navigate across differ- ent channels and make purchases that involve numerous interactions across multiple channels and touch points. With the introduction of wireless and so- cial channels, this has become progressively more complex, with shopping channels no longer restricted to just Web, stores and contact centers. However, many of these objectives cannot be met by operators because of fragmented and inefficient OM systems. Critical process inefficiencies that operators suffer and that can be traced back to fragmented OM systems include: · Bottlenecks around offer design and implementation: Service providers suffer from fragmented design processes across organizations and systems. This is compounded by the complexity of convergent services, creating inefficiency in the overall design process. It is very time-consuming to test new offers, as it is dependent on manual processes and needs coordination across disparate systems and organizations. Lack of reusability of existing workflows means that for every new offer, new orchestration plans must be created from scratch. · Long order cycle time: Lack of end-to-end vision across the OM chain results in complexity in process management, inaccurate fulfillment time estimates and inability to effectively deal with in-flight orders. Lack of accurate data with regard to subscribers, service and resources means that providers have tre-
  5. 5. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 5 mendous difficultly in creating complete and accurate orders, resulting in high order fallout. Common problems as a result of this include the inability of pro- viders to decompose orders and provide orchestration plans for complex ser- vice bundles and lack of end-to-end visibility of the order delivery process. Manual processes or homegrown systems with scalability issues will not be able to adequately handle the demand for services. · Complex order configuration leading to margin erosion: Order configuration and quote generation rely on disconnected tools and time-consuming, error- prone manual order entry without proper validation. This leads to a high num- ber of order rejections, lost margins and decreased customer satisfaction. · Lack of modern ordering system impedes introduction of selling models to drive new revenue: Service providers want to embrace new business models to increase market presence and drive new revenue. The most common new business model initiative is to expand into new sales channels, including new partner channels and customer self-service. However, limitations in their OM systems prohibit the use of these new channels. · Personalized approach to enterprise customers: Enterprise clients represent service providers' highest value customers due to the customization and com- plexity of their orders and strict service-level agreements (SLAs). Key perfor- mance indicators such as roundtrip provisioning timeframe, percent of rejected orders, account and service count mismatch between billing and provisioning systems are directly tied to SLAs that service providers must meet in order to avoid financial penalties. The Cost of Inefficient Order Management Systems Industry research has shown that an average of 30 to 40 percent of IP MPLS orders cannot be deployed as sold, and those order failures typically lead to spiraling support costs. The following example illustrates the costs that can be incurred when errors are introduced into the requirements-to-design-to-quote process: · Order fallout requiring engineer time: Approximately $45 to $50 per incident · Truck rolls due to incomplete provisioning: Approximately $150 per incident · Ongoing support resulting in customer calls: Approximately $12 per incident For 1 million orders per year with an approximate estimate of a 40 percent order fallout rate, the following costs result: · Approximately 40 percent of order fallout cases result in engineer intervention: $50 x 160,000 = $8 million · Approximately 10 percent of provisioning errors will lead to truck rolls: $150 x 40,000 = $6 million · Approximately 40 percent of customers have ongoing minor problems: $12 x 400,000 = $4.8 million
  6. 6. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 6 Building a Next-Generation OM System Let us look at some of key functional areas that next-generation, business process management (BPM)-based OM platforms need to address effectively to help service providers go to market faster with new services, create a superior customer experience and increase operational efficiency. Figure 2: Traditional vs. Next-Gen OM Solutions TRADITIONAL BPM-BASED OM SOLUTIONS NEXT-GEN BPM-BASED OM SOLUTION Translating business objectives into rapid imple- mentation Business user requirements are lost in translation between requirement gathering and actual solution delivery Delivery time of project varies between 6-18 months Business users can directly capture their requirements in a repository that can be directly converted into executable codes Minimize gap between actual business requirements and solution crafted by IT Reduced delivery time frame of 2-4 months Injecting control and relevancy into buying process Every change forces manual copy and maintenance in different systems No way to audit and keep track of changes Administration complexity & scalability issues Lack dynamic decision-making ability Enforce common practices across layers that do not change often and introduce only situation-specific changes Version-controlled, auto-assembled layers help in audit and governance Leverages real-time decision-making capabilities to present the right product to the right customer at the right time, signifi- cantly improving offer acceptance rates Unification of policies and processes Policies and procedures are kept in sepa- rate applications This becomes very complex as applications become more and more interconnected and interdependent, and the number of objects, users and devices tends to increase Agility demands that there should be a single repository where policies and proce- dures are maintained This helps in implementing best practice and process specification Reduction in testing time Every new offer requires changing business processes, creating new workflows, which means substantial modifications must be introduced into the BPM-based custom-built OM system Results in significant regression testing across all affected systems and integration points, which is time-consuming and expensive Reduces complexity by splitting application between foundation layer, which does not change much, and layering in situation- specific changes to enforce common policies, dependencies, etc., which being part of a unified framework adhere to common rules and practices, resulting in reduced testing time Promoting reusability Every change in technology or introduction of new service offering forces BPM-based solutions to be remodeled from scratch BPM-based custom OM solutions require coding for every new offer, which results in complexity and increased launch and configuration time Reusability of base objects as well as layering in only the changes based on common foundation promotes reusability and reduces time to market of services and service bundles Source: Heavy Reading
  7. 7. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 7 The biggest driver for OM systems is to transform companies' business goals into better business outcomes. From a technology standpoint, next-gen end-to-end OM solutions should be able to tailor cross-sell and up-sell offers to each customer, perform multi-channel quote and capture, be proficient in dealing with complex order fulfillment process and build on a core communications foundation frame- work. Centralized product catalog encompasses product and service and resource information that must be closely aligned with this end-to-end OM solution. In the context of finding the right approach to OM solutions, we have seen religious discussions around whether BPM-based, custom-built OM solutions can solve the service delivery bottleneck problems that service providers have traditionally attributed to their order capture, delivery and execution processes. We believe they can if their solutions are built on the right framework and share an integrated fabric that ties together process, policies, design environment, central repository and decision management capability in one seamless, unified environ- ment. Traditional BPM solutions need to evolve to get over some of the functional, performance and cost bottlenecks and also need to provide a flexible, compo- nent-based architecture that can be easily changed by business users. Automated, intelligent exception handling is a critical aspect that can be han- dled effectively by next-gen, BPM-based OM solutions. It helps orders to maintain conformance with their dependencies and exception rules, which helps minimize provisioning errors and eliminate inconsistencies. OM systems should have the capability to build a knowledge base of common exceptions and create auto- resolution mechanisms that quickly resolve exceptions without customer impact. Proactive order monitoring and auto-resolve capabilities help service providers increase efficiency and reduce support costs. Service providers already have existing legacy BSS/OSS systems in their environ- ment. Rip and replace is not a viable option in most cases and as such, next-gen OM solutions should be able to easily integrate and work with existing systems. It should be based on J2EE service-oriented architecture (SOA) and come with an extensive number of application programming interfaces (APIs) that can be exposed quickly in almost any format or protocol. Other key functionalities that next-gen OM solutions should be able to handle are: · Provide integration with supply-chain processes · Provide service-specific templates · Support automated flow-through provisioning as well as manual events · Allow real-time order visibility · Have close alignment with business intelligence and reporting tools · Atomic transaction support and ability to handle in-transit order changes · Have a user-friendly graphical user interface (GUI) for order entry/negotiation · Integrate with centralized, dynamic product catalog as the control point to increase flexibility and optimize product offerings · Provide responsive interaction using fine-grained load balancing
  8. 8. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 8 Vendor Analysis: Pegasystems Inc. One vendor whose BPM-based OM solution is very closely aligned with our vision of a next-gen OM solution is Pegasystems. Pega offers an innovative approach to solving complex OM challenges. Pega combines the entire ordering process – 1:1 offer creation, multi-channel ordering and fulfillment orchestration – on a single, agile platform that can be easily customized to meet communications service provider needs, across any line of business. The result is faster time to market, improved operational efficiency, a superior customer experience and improved business agility. The vendor's OM solution, built on its market-leading Pega BPM platform, provides out-of-the-box product definition, decomposition and fulfillment functionality that service providers can rapidly customize to meet specific business needs. This enables service providers to differentiate themselves from existing and next- generation competitors with compelling offers, and establish themselves as trusted providers through the delivery of superior customer experience. The platform provides a single view to manage, automate and monitor orders across product silos, with pre-integration to product catalogs and a real-time decisioning engine as part of its quote and offer process. In retail channels especially, the ability to not only present products, but present products based on integrated unified marketing capability is of significant value. Part of its market advantage is the ability to deploy once and reuse across other lines of business. Service providers can take advantage of Pega's end-to-end solution to address the unique requirements and challenges within their enterprise, wholesale and consumer lines of business. The enterprise market has always been an area of key focus for service providers, where the fulfillment orchestration of low-volume orders is highly complex and customized, and where service providers struggle to deliver compelling new bundles that incorporate connectivity, man- aged services and hosted software solutions.
  9. 9. HEAVY READING | AUGUST 2012 | WHITE PAPER | ENABLING HOLISTIC CUSTOMER EXPERIENCE WITH END-TO-END OM 9 Conclusions Next-generation, end-to-end OM solutions must be built with close, fully integrated unified marketing, offer design and order delivery application. They should be able to synchronize product classes with master product catalog, decouple from fulfillment to support zero-configuration orders, provide order visibility and notifica- tion, handle exceptions efficiently and fulfill unique customer orders. Hence, end-to-end OM solutions help manage the customer ordering experience so that customers can order new and upgraded services when, where and how they want them. The OM solution also helps in automating the order-handling processes, so that errors and time to order are reduced. A BPM-based, custom-built OM solution can solve the service delivery bottleneck problems that service providers have traditionally attributed to their order capture, delivery and execution processes only if the solution is grounded on the right framework and shares an integrated fabric that ties together process, policies, design environment, central repository and decision management capability in a seamless, unified environment. Traditional BPM solutions must evolve to get over some of the functional, performance and cost bottlenecks and provide a flexible, component-based architecture that can be easily changed by business users. Service provider profitability depends on an efficient OM solution that automates redundant processes, increases operational efficiency and maximizes revenue potential. In a nutshell, it is the job of the end-to-end OM system to bridge the gap between ordering and OSS to reduce order delays and decrease time to revenue. OM solutions can help service providers increase revenues, expand market presence through improved sales, and make processes more efficient to stay competitive, but only if investments are made in agile, end-to-end OM solutions that can eliminate dated manual systems that create bottlenecks and errors. But this will require a shift in priorities and budgets within organizations, placing greater value on the foundations of integration in order to meet customers' needs.