InformationWeek
Defining The Business Value Of Technology
By Mary E. Thyfault
Issue date: Sept. 9, 1996
n Feb. 8, 1996, The Telecommunications Reform Act ushered in a new era of competition--and added a new set of IT challenges to an industry that already spends two to three times the corporate average on operations support.
The Telecom Act has forced sometimes complacent local, long-distance, and cable-TV companies to change into nimble competitors almost overnight. The goal for their IS managers, as the carriers strive to attract and retain customers, is to improve the technology they use for gathering and analyzing information on consumers, for provisioning services, and for billing customers.
"We used to rush to technology for technology's sake," says Dave Laube, CIO of Bell company US West in Denver. "Now we're refocusing our attention on the high-payoff activities."
What's more, the Telecom Act will require carriers to ensure that customers can take their phone numbers with them when they change providers--a potential multibillion-dollar internal IT effort as carriers replace and modify the requisite support systems.
Merger Problems
Meanwhile, telecom carrier mergers, acquisitions, and divestitures will bring their own IT challenges. For example, Bell Atlantic is merging with Nynex and SBC Communications is going with Pacific Telesis Group, forc
ing their IS managers to pick best-of-breed technologies and eliminate systems and personnel overlap. Also, IS managers at AT&T are spending much of their time preparing for the split-off of the company's telecom hardware and computer units later this year.
The cause of all these changes, telecom deregulation, has everyone in the industry scrambling. "There's a lot of anxiety," says Rino Bergonzi, VP of AT&T technology services, "and some companies are frightened for their sheer survival."
The New York Bell company Nynex has spent more than $300 million to develop new support systems over the last three years. Automated touch-tone systems, for example, now handle about 15% of customer inquiries, enabling callers to get answers without the help of an agent. From their workstations, Nynex sales representatives will soon be able to directly set up service for a customer. Also, technicians in the field can receive work orders from handheld devices linked to new decision-support systems.
The project re quired 2,000 man-years of systems work and 20 million lines of code. "There's been tremendous pressure to deliver over the past two years," says Nynex CIO Joe Castellano.
Adds Ralph Szygenda, who, after two years as CIO of Bell Atlantic in Philadelphia, is taking on a new IT challenge at General Motors: "Failures now could be devastating. You won't be able to hide them. They will be very, very visible."
Even before the Telecom Act, some 20 million households flip-flopped between long-distance providers each year. Now that the Bell companies can get into long distance--and long-distance and cable-TV companies can raid the Bells' local business as well as each other's--courting and retaining customers is an even bigger priority for the industry.
Enter sophisticated data gathering, mining, and billing systems. Carriers reason that the more they know about their customers, the easier it will be to provide them with the services and features they want--and the harder it will be for rivals to snatch the m away. It costs the industry up to five times as much to acquire a customer as to retain one.
John Gerdelman, CIO of MCI, credits data mining with bolstering the long-distance carrier's telemarketing productivity by at least 15% in two years. MCI can now run a database query on 100 million-plus records in less than three minutes. One key: "We realized you don't need 2,000 fields," Gerdelman says. Instead, the carrier relies on the rule that 80% of important customer information comes from 20% of data.
As competition marches on, getting new products out quickly is a top priority. "Many of these companies would sell their mother for time to market," says Steve Freeman, a managing partner with Andersen Consulting's Communications Industry practice in Chicago.
Bell Atlantic is putting in systems that let customers who've moved to a new residence start their own service within five minutes of dialing a special number from that residence. "It's a way of keeping customers from going to competitors," Fre eman says. US West is shortening the time it takes to design and build the infrastructure needed to deliver new services. For example, paper diagrams of network wire centers scanned into digital form enable US West technicians to quickly access the documents and, in some cases, reduce design-cycle time from three months to several days, says CIO Laube.
But a new service really isn't a service until you can bill for it. And as the carriers become more competitive, the ability to quickly bill for new products or packages--and to make use of the data gathered from those bills--can mean market share points.
In the early 1990s, MCI was able to steal market share from AT&T with its Friends & Family consumer discount plan, which was created entirely out of a flexible billing platform. AT&T is striking back. The No. 1 long-distance company just finished building a billing system that not only brings AT&T closer to its customers but also lets it lump multiple services under one bill.
In the past, t he local Bell companies would feed customer-usage information to AT&T, then AT&T would generate bills. Every time AT&T wanted to add a product, it had to wait for the Bells. With the new billing system, AT&T can quickly add products and package services from local telephony to long distance, from wireless to direct broadcast satellite TV. "At the new AT&T, we have to be able to provide one bill for all the various services a customer wants," Bergonzi says.
Bell Atlantic is finishing installing a system that lets the carrier add the infrastructure to bill for new products in days, as compared to months. At US West, Laube is focusing on improving the segment of the carrier's billing system that measures how long customers are on the phone.
Laube maintains that it's too risky to throw out the whole billing system. Andersen's Freeman concurs: "Billing systems are notoriously difficult to get right because they're right in the middle of business and connected to everything."
Just as important as gettin g new product out is improving customer-service productivity so that customers keep buying. Customer service can be a challenge at carriers such as US West, which receives more than 40 million customer-care calls a year. US West just installed a call-handling system that routes calls from anyone in the carrier's 14-state region to agents in any of its offices. The routing decision is based on skills, such as proficiency in a certain technology.
Updating Support Systems
US West is also revamping its support system architecture. In the past, every time the carrier added a product, it built a customer-service support system, leading to an unmanageable infrastructure. Now US West is working to give agents a single view of the customer, forsaking five years and $20 million in software development costs for a Unix platform and 13,000 X terminals. It is moving to Windows NT workstations that will use mostly shrink-wrapped software. With the packaged software, US West programmers won't have to start f
rom scratch every time the company needs to support a new product.
MCI mines data gathered from its Friends & Family consumer discount plan to calculate predictable routes for calls and to balance loads--thus reducing costs and improving service.
In addition to warehousing data, the carriers are some of the first to explore object-oriented programming, thus slicing months off the time it takes to roll out a new service. But reality is setting in: Object-oriented programming still has quite a way to go. MCI's Gerdelman predicts it will be two or three years before his company has a full-blown object operating system. "We'd love to see 20% to 30% reuse of objects, but right now it's only at about 8% or 9%," he says.
One problem: "We don't understand the capabilities at this point," says AT&T's Bergonzi. "It's not the language. It's our ability to use it, our ability to think in objects instead of code." Another issue is the dearth of qualified programmers. "It takes a long time to train people, and right now everybody wants the same people," Bergonzi says.
Carriers are also tapping the hottest networking technology, the World Wide Web, to improve internal and customer links. US West is marrying the Netscape Web browser and a search capability to its existing information systems. Agents can quickly access information about, for example, the availability of network facilities. "We used to sell to customers, and we had absolutely no idea if we had the inventory," Laube says. The Netscape project went from concept to deployment on 6,000 workstations in just six weeks. "You just can't deploy software to that many workstations that quickly in the traditional mode," he says.
MCI has more than 125 Web pages on its intranet. "It's opened up a whole new world of 'collaborate, don't duplicate,'" says Gerdelman.
Whether they're building intranets, reorganizing the way customer service is supported, or adding new systems for data gathering and mining, most of these telecom CIOs say the upheaval of compet ition is making their jobs more exciting, at the very least.
"We're working incredible days, but it's hard, positive energy," says Bergonzi. "This is what people live for from a business perspective."
To view the IW 500 Telecommunications chart in PDF format click here
http://www.informationweek.com
University of San Diego seeking System Administrator 2 in San Diego, CA
Hebrew Senior Life seeking Network Analyst in Boston, MA
Cirrus Design seeking Web Architect in Duluth, MN
Comcast seeking Tier 4 CRAN Network Engineer in Chelmsford, MA
Lowe's seeking Network Engineer II in Mooresville, NC
For more great jobs, career-related news, features and services, please visit our Career Center.
