Customer Experience Management: A Business Imperative ...viewer.media.bitpipe.com/1000733242_857/1266850695... · companies seek to implement and rollout initiatives. This is because

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In collaborationwith …

Customer Experience Management: A Business Imperative beyond aTechnology Solution

Insights:

CEM has gone beyond

being a pure concept, or

niche idea.

CSPs now have dedicated

and highly structured CEM

initiatives.

The primary (near-term)

objectives associated to

CEM are about top-line

growth.

The specific drivers for

CEM today include Churn

Reduction and Quality of

Service Improvement.

While measurement of

KPIs is a cornerstone of

CEM, it is a key area that

CSPs need to improve.

The successful evolution of

CEM relies on CSPs

successfully tackling

challenges on 3 fronts:

Strategy; Organization/

People; and Process/

Technology.

The opportunity exists for

vendors to proactively help

shape CSPs’ CEM strategies

and initiatives through

insights into best practices

– but greater alignment on

key issues is required.

CEM is generally believed

to be critical to the long-

term survival of CSPs.

Driven by both CSPs and

vendors, CEM will continue

to evolve in sophistication

and reach; it may also act

as a catalyst for much-

needed CSP business

transformation.

Customer Experience Management

Customer Experience Management (CEM) has, over the last 6-8 years, become a majortalking point in the Telecom industry, as well as a number of other industries, includingFinancial Services, Retail and even the Public Sector.

The widespread focus that CEM has received in Telecom from both the CommunicationService Provider (CSP) and vendor communities is, however, far from being homogeneous.For some, CEM is a software/ technology-based solution; for others, it is a business conceptthat is more about an organizational transformation process; for others it is a re-invigoration(or, an extension) of CRM; and, for others, it is a passing vendor-driven fad which will nodoubt be superceded by another fad sooner or later.

By and large, however, the industry seems to understand what CEM is meant to do for CSPs.CEM is meant to: drive a greater level of customer-focus; engender operational efficiencies;generate new revenue streams; and help maximize profits. These are of course easy genericstatements to make and are relatively meaningless unless CEM can be concretely defined(there is no single definition today) and unless there is a clear understanding as to what CSPsare doing to leverage CEM.

Our belief, at Frost & Sullivan, is that CEM is certainly more than a fad. We also believe it ismore than a technology-enabled solution. We believe that CEM is one of the primary axesfor CSP transformation and growth. This is because CEM embodies the challenges andopportunities that are reflective of how telecom markets the world over can becharacterized today, or where they are naturally headed, including: saturation; hypercompetition; commoditization of core business; proliferation of value-added services anddevices; destabilization of the traditional value chain; and increasing sophistication of theend-customer.

Based on these external drivers, CSP transformation is not a question of ‘if?’, it is a questionof ‘how soon?’. CEM is, therefore, a philosophy that acts as a catalyst for change because itaddresses two fundamental business issues: (a) How does a CSP best align to the evolvingexpectations of the external market; and (b) How does a CSP need to re-organize internallyto support that focus?

In September of 2009, Frost & Sullivan embarked on a study of the European market to lookat CEM through the eyes of CSPs and vendors. Our aim was to elicit sufficient feedback to beable to: suggest what an industry definition could look like; identify the key drivers andobjectives for CEM; define some of the common issues and challenges; as well as, establishwhere some of the synergies or lack thereof, exist between views held by CSPs and vendors.

This Whitepaper is based on the outputs of this study, which resulted from interviews withExecutives and Senior Managers of 14 CSPs and 14 vendors.



Customer Experience Management Page 02 of 13

It is commonly said that CEM lacks anindustry definition and our studyconfirms this point.

In fact, of the 28 companies weinterviewed, 60% were unable toprovide a definition at all, let aloneprovide a specific ‘corporate’definition.

The majority of the remaining 40%provided ‘personal’ definitions – andthese definitions varied quitesignificantly. As an interesting side-note, only 2 CSPs are to be found inthis category.

Early on in the interviewing process,we wanted to test the reactionsagainst a research definition of CEM(figure 1). 75% of respondentsagreed with the research definition,while a further 18% strongly agreedwith it. Nonetheless, respondentsgave incredibly valuable (and oftfragmented) insight beyond thispoint.

The interviews were also designed tosolicit open feedback. In response tothis, we found some points wherealignment in relation to the CEMconcept exists. This is particularly thecase in relation to the use of somekey words, including:

Measurement and Analysis

Management

Touch-points/ Interaction

Holistic/ End-to-end

Methodology and Process

Improvement Journey

ROI/ Profitability

Voice of Customer (customercentricity)

Direct/ Indirect Drivers

Defining CEM

It is interesting to note that, even inthe case of open feedback,technology itself fails to make a front-line appearance. The insight that wegained from this part of the study isthat CEM is perceived to be abusiness-oriented concept.

Based on the analysis of openfeedback to the research definition,we have concluded that the right wayto define CEM is in relation to 3components, namely its:

1. Scope2. Activities3. Results/ Impact

Figure 1: from Research Definition to Proposed Definition

While our proposed output (Figure 1)does not constitute a short, elevatorpitch-style definition, it does providesignificant clarity at various levelsover what CEM is meant to be aboutand what it is oriented towards.

Defining an elevator pitch for CEMwill, nonetheless, be necessary ascompanies seek to implement androllout initiatives. This is becausespecific CEM definitions need toreflect corporate priorities,objectives, measures and culture.

“… The discipline, methodology and/ or process used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service.”

1. The scope:

“… The discipline, methodology and process used to …

Research Definition – This was tested in the research

Based on feedback and inputs – the proposed definition is divided into 3 components

2. The activities:

… Comprehensively understand, measure and manage a customer’s cross-channel and touch-pointexposure, interaction and transaction with a company, product, brand or service…

3. The results/ impact:

… To facilitate success through a competitive value proposition and more profitable customerrelationship.”

“… The discipline, methodology and/ or process used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service.”

1. The scope:

“… The discipline, methodology and process used to …

Research Definition – This was tested in the research

Based on feedback and inputs – the proposed definition is divided into 3 components

2. The activities:

… Comprehensively understand, measure and manage a customer’s cross-channel and touch-pointexposure, interaction and transaction with a company, product, brand or service…

3. The results/ impact:

… To facilitate success through a competitive value proposition and more profitable customerrelationship.”




Our sample of CSPs included companiesin Western Europe, Eastern Europe andone in Africa – covering mobile, fixed,converged and cable operators.

With such a variety of companies, it wasrevealing to find that all except 1 hadalready adopted CEM at some level.With reference to Figure 2: of the 13CSPs, 11 already have CEM initiatives upand running. The remaining 2 CSPs areplanning on having CEM initiatives inplace within <1 year and >1 year,respectively (N.B. “>1 year”, according tothe interview referred to a relativelyshort period of time of up to 3 years).

The majority of the initiatives are,therefore, at the early stages of theirlifecycles, namely:

Strategy

Planning

Implementation

Nonetheless, CSPs clearly feel (asillustrated in Figure 3) that CEMinitiatives have gone beyond a pureConcept Stage of evolution. This tells usthat the CEM concept has gained tractioninternally, sometimes winning theinterest (and commitment) of seniorlevel executives and Board members.

Another relevant point regarding thedegree of acceptance and status thatCEM has been afforded is inherent in theinternal sponsorship/ ownershipstructure of the initiatives.

CEM is commonly owned horizontally(across departments), thereby avoidingbeing tied into a specific team, ordepartment.

These teams are transversal because (asan interviewee put it), “it is everyone’sresponsibility” to deliver on CEM.

The Current State of the MarketFigure 2: Prevalence of CEM Initiatives in European CSPs Studied

Figure 3: Commitment vs. Structure Analysis of CEM Initiatives

There is strong reluctance to create specific departments because it is easy tobecome siloed and that would be a risk to the long term viability of CEM. If CEM isspecifically run out of one of the existing functional groups, then it is seen as, “theirproject”, in the words of another interviewee.

It should also be noted that the team’s proximity to customer operations is seen asimportant due to the primary orientation for CEM initiatives today.

Concept Stageof Evolution

Niche AreaBeingDeveloped

Cross-FunctionalInitiative

Board-levelPriority

CommitmentLevel

StructureLevel

Source: Frost & Sullivan European CEM Study 2009 N = 12

0

2

6

4

“Our program is very narrowand very customer driven. In

general it evolved from talkingto the client about improvingquality on specific issues, but

now it is on hold.”“We started a few years ago

where it was mainly me and mydepartment preaching to

everyone. Now it has become asenior director-level prioritywhich has helped in getting

actual traction.”

“Without Board-level support CEMsimply will not work. Since it is about

changing processes and corporateculture you need senior management

to be successful.”

“It is across alltouch-points.”

“It is a Board-level prioritybecause it is closely linkedwith business success and

real business issues.”

Concept Stageof Evolution

Niche AreaBeingDeveloped

Cross-FunctionalInitiative

Board-levelPriority

CommitmentLevel

StructureLevel

Source: Frost & Sullivan European CEM Study 2009 N = 12

0

2

6

4

“Our program is very narrowand very customer driven. In

general it evolved from talkingto the client about improvingquality on specific issues, but

now it is on hold.”“We started a few years ago

where it was mainly me and mydepartment preaching to

everyone. Now it has become asenior director-level prioritywhich has helped in getting

actual traction.”

“Without Board-level support CEMsimply will not work. Since it is about

changing processes and corporateculture you need senior management

to be successful.”

“It is across alltouch-points.”

“It is a Board-level prioritybecause it is closely linkedwith business success and

real business issues.”

Of those that responded, all have (or will have) adedicated CEM program

Almost 60% of these initiatives are still in earlydevelopment phases

Source: Frost & Sullivan European CEM Study 2009

N = 13


N = 13

Yes - 86%

Planning <1Year - 7%

Planning >1Year - 7%

Strategy -13%

Planning -13%

Implementation -33%

Rollout -28%

In-lifemanagement -13%

Of those that responded, all have (or will have) adedicated CEM program

Almost 60% of these initiatives are still in earlydevelopment phases


N = 13


N = 13

Yes - 86%

Planning <1Year - 7%

Planning >1Year - 7%

Strategy -13%

Planning -13%

Implementation -33%

Rollout -28%

In-lifemanagement -13%




Drivers

The study found that the primarydrivers for CEM adoption today relateto:

Churn reduction

Quality (of service)Improvement

Other drivers included: processimprovement; competitivedifferentiation and ability to harnesshigher quality data.

Although CSPs will almost universallyspeak of the ultimate impact of CEMon corporate profitability through itspotential impact on both key levers,Revenue and Cost, they will typicallyassert that in the short term, thefocus is on Revenue Growth/Enhancement.

The Cost Reduction potential of CEMis also widely acknowledged and,while objectives like Churn Reductionwould certainly also affect costs, CSPsthink this second type of benefit ismost likely to be realized in themiddle to long term. This view isbased on the notion that operationaleffectiveness – through CEM’s impacton processes – can only be gainedthrough experience and today, asstated earlier in this paper, CEMinitiatives are still in their early stagesof development.

Other important drivers for CEMadoption are linked to issues such ascompetitive differentiation, which arelargely seen as being motivated byincreasingly saturated andcompetitive markets, where price,coverage and standard quality (will)no longer suffice.

The next stage of competitiveevolution, say CSPs, relates to theability to understand customers at amicro-segment (extended to theindividual) level. This level of insightwould enable CSPs to both targetcustomers with completelycustomized offers and enable them tomanage their relationships through adetailed understanding of personalneeds, preferences and expectations.

The key areas that are in-focus forCEM programs today are front-end,related directly to the customer,including:

Customer activation

Customer behavior

Customer interaction

Customer retention

Customer Service initiatives

Improved monitoring

Network fault management

Service provisioning

These areas clearly relate to thedrivers for adoption (i.e. theobjectives for having a CEMinitiative): churn reduction andquality (of service) improvement.

Restraints

The key barriers to CEM adoptionhave been CSPs’ silo focus andmisalignment between strategicdirection and operational priorities.

The silo focus is a long-standing issuein the CSP environment, which oftencauses issues between teams, ordivisions, such as: R&D and ProductDevelopment; Sales and Marketing;and Corporate Strategy and Sales.

These issues typically stem fromconflicting priorities, contradictorymeasures of performance andpersonal incentives and long vs. shortterm results focus. Ultimately, this isabout CSPs behaving like product, notservice, companies.

In the context of a CEM initiative,which is not a product and whichinherently relies on collaboration andinformation-sharing, silo focuspresents real challenges.

Similarly, differing perspectives onorganizational vs. divisional or teamgoals can cause friction betweenexecutive and operationalmanagement teams. This type ofmisalignment can lead to conflictingKey Performance Indicators.

In many ways it is precisely a focus onCEM that can help throw light onthese organizational issues.However, CEM can rapidly takecentre stage from a politicalperspective within organizations,where there is an inherent lack ofdesire on behalf of managementteams to have it be a vehicle forcasting light on operational short-comings.

It is worth noting that otherimportant barriers that our researchidentified include (descending orderof priority):

System capability

Internal skills

Corporate culture

Internal processes

Short term financial focus

The last point on this list is ratherinteresting in that CEM does require astrategic investment mentality – i.e. abelief in longer term benefits.




Beyond differences in definitions,objectives, drivers and restraints,CEM practices also vary in relationto design.

CEM Initiative Models

Through our research, we havebeen able to identify 6 distinctmodels for CEM initiatives. Thesemodels are illustrated in Figure 4.

The sample size of respondentswas too narrow to determine if anyof these types of modelsdominates as a best practice atpresent.

However, the variety ofapproaches, certainly point tolimited experience in the industryand suggest that, from a top-levelperspective, CSPs are stillexperimenting with differentoperating models to determinewhat works best.

CEM Initiative Management

We were able to identify stronglevels of consistency in relation tothe rigor with which CEMinitiatives are managed.

All CEM initiatives are highlystructured and closely measured intheir own right - - ROI is consideredcrucial; refer to Figure 5.

CEM Initiatives in Focus

Where the budget is held: CEM, allocated by Board

Who leads: CEM Team

Reporting Structure: Directly to Board, or CxO Office

Where the budget is held: Split between product and sales

Who leads: Operational service

Reporting Structure: Sales & Product Leadership Teams

Where the budget is held: Marketing, CRM

Who leads: CRM Team

Reporting Structure: Board

Where the budget is held: Strategy or Finance

Who leads: Strategy Office or CFO Office

Reporting Structure: Cross-company Steering Group

Model 1: Discrete Team Model 2: Customer/ Service Operations Management

Model 3: CRM Model 4: Strategy, Development & Intelligence


Where the budget is held: Marketing

Who leads: Sales

Reporting Structure: Sales & Marketing Organisation

Where the budget is held: IT department

Who leads: IT

Reporting Structure: Chief Information Officer

Model 5: Marketing Model 6: IT

Where the budget is held: CEM, allocated by Board

Who leads: CEM Team

Reporting Structure: Directly to Board, or CxO Office

Where the budget is held: Split between product and sales

Who leads: Operational service

Reporting Structure: Sales & Product Leadership Teams

Where the budget is held: Marketing, CRM

Who leads: CRM Team

Reporting Structure: Board

Where the budget is held: Strategy or Finance

Who leads: Strategy Office or CFO Office

Reporting Structure: Cross-company Steering Group

Model 1: Discrete Team Model 2: Customer/ Service Operations Management

Model 3: CRM Model 4: Strategy, Development & Intelligence


Where the budget is held: Marketing

Who leads: Sales

Reporting Structure: Sales & Marketing Organisation

Where the budget is held: IT department

Who leads: IT

Reporting Structure: Chief Information Officer

Model 5: Marketing Model 6: IT

Figure 4: Distinct Design Models for CEM Initiatives

Figure 5: CEM Initiative Assessment

Most CSPs report having clear plans with milestones

However, in most cases these are relatively short term in terms ofoutlook (i.e. 12-24 months)

Milestones

While most CSPs report having KPIs against their CEM initiatives, manyfeel these are not completely comprehensive, or well thought out

Key Performance Indicators

Most CSPs have specific targets that the CEM initiative is measuredagainst – these were necessary to secure budget

Benefit Targets

Most CSPs had to submit a full business case for their CEM initiative andthis is likely to be annual requirement

Full Business Case

All CSPs with a dedicated CEM initiative report having budget allocated

However, in some cases these are relatively recent allocation (<1 year)

Budget

CommentsPrevalenceElement

Most CSPs report having clear plans with milestones

However, in most cases these are relatively short term in terms ofoutlook (i.e. 12-24 months)

Milestones

While most CSPs report having KPIs against their CEM initiatives, manyfeel these are not completely comprehensive, or well thought out

Key Performance Indicators

Most CSPs have specific targets that the CEM initiative is measuredagainst – these were necessary to secure budget

Benefit Targets

Most CSPs had to submit a full business case for their CEM initiative andthis is likely to be annual requirement

Full Business Case

All CSPs with a dedicated CEM initiative report having budget allocated

However, in some cases these are relatively recent allocation (<1 year)

Budget

CommentsPrevalenceElement





Measuring ROI

To measure ROI, there are plenty ofKPIs that CSPs track – and these varygreatly in terms of their specificfocus. There is one example of a mid-sized CSP operating in Eastern Europethat tracks over 100 KPIs.

Among the top 12 KPIs that the studyhighlighted as mainstream, 2 inparticular stand out:

Customer satisfaction/loyalty index

Churn

According to our study, the next mostpopular KPIs relate to processefficiency and cost reduction, butthese are distinctly less prevalentthan the 2 key ones mentionedpreviously.

We did note, however, that thereseemed to be little focus onunderstanding how KPIs should relateto each other. In a CSP, any systemof KPI design should logically relatehierarchically from ‘top’ to ‘bottom’and between teams/ divisions/ units,i.e. from ‘left’ to ‘right’.

We also noted limited understandingof lead indicators (measures such asnumber of complaints, which can bedirectly impacted through, forexample, specific process changes)and lag indicators (measures such asrevenue, which cannot be directlyimpacted), which are anotherimportant design characteristic thatappears to be largely absent fromCEM initiatives today.

These two weaknesses in how KPIsare set up, lead to the conclusion thatmost CSPs are at present unlikely tobe able to measure ROI from CEMeither effectively or correctly.

We ascribe these weaknesses inrelation to KPIs to two inter-relatedroot causes:

1. CEM initiatives are still inearly development stages

2. CSPs – like many otherorganizations – struggle witheffective KPI designs ingeneral

Process Focus

As Figure 6 highlights, the topprocesses that are in-focus for CEMinitiatives are Customer Services(particularly Contact Centers), ServiceActivation and Billing.

This focus aligns well with the mainKPIs and the main objectives laiddown for CEM initiatives by CSPs.

The chart clearly shows that CSPs alsoconsider off-network elements to bewithin scope for CEM, e.g.: retailoutlets and publicity/ marketing.

Figure 6: CEM Initiative Focus on Processes

These points go some way tosupporting the perspective that CEMis meant to be an end-to-endinitiative, which does consider alltouch-points with customers (directand indirect), as the Experience is infact the sum total of all those touch-points.

Our study, unsurprisingly, furtherconfirmed this perspective as CSPsconfirmed that IT and HR are twospecific support functions that areconsidered very important to supportCEM in achieving its goals.

IT is considered important to CEMbecause it handles the underlyinginfrastructure that allows forseamless sharing of information anddata within the organization.

The importance of HR is explainedbecause it owns many of theimportant people-related enablersfor CEM, including training, careerdevelopment and compensation. HRis also an integral function in drivingcultural change successfully.

-1

1

3

5

7

9

11

Custom

er Serv

ice/

Conta

ctCen

ter

Serv

iceAct

ivat

ion

Billin

g

Retail

Outlets

Fault

Man

agem

ent

Tech

Supp

ort

Serv

iceLe

vel M

anage

ment

Public

ity/ M

arke

ting

• These prioritized areas highlightthe importance of revenuegeneration as a source of benefitfor CEM.

• Managing Customer Services in acost-effective manner is also key.

Comments


-1

1

3

5

7

9

11

Custom

er Serv

ice/

Conta

ctCen

ter

Serv

iceAct

ivat

ion

Billin

g

Retail

Outlets

Fault

Man

agem

ent

Tech

Supp

ort

Serv

iceLe

vel M

anage

ment

Public

ity/ M

arke

ting



Comments




Comments





OSS/ BSS Components

Only slightly more than 50% ofrespondents could identify oneor more ways in which BSSsupports CEM, when asked anopen question.

Similarly, only 1 CSP was able toname OSS processes thatsupport CEM.

The following list representssome of the main points ofimpact for CEM that CSPsidentified:

Customer ResponseManagement

Sales Activation andOrder Handling

Service Assurance

Service QualityManagement

Provisioning

Billing

Contact Center

Campaign Marketing

Yet when prompted to rank froma specific list of functions, CSPsclearly identified Service Quality,Call Centers and BusinessIntelligence as the mostimportant functions for CEM.

Certainly in the case of ServiceQuality and Call Centers, we cansee strong alignment with theaforementioned priorities forCEM and the key businessdrivers for adoption.

The focus on BusinessIntelligence is not surprisingeither given the important ofKPIs and measurement.

.

Figure 7: Importance Rating of Function for CEM

The fact that CSPs were only able toprovide clear views when promptedmay signal that CSPs are mostcommonly:

At too early a stage in theirwork to fully understand theareas that CEM can impactand be impacted by

Thinking about CEM from adifferent perspective first –i.e. Business results, nottechnology domains

.

This observation may also point to alack of overall understanding.

Irrespective of the explanation, this isan area that needs further attentionand one where vendors can workclosely with CSPs on.

0%

20%

40%

60%

80%

100%

Very Important

Useful

Not Important

No opinion

Service

Quality

Probes in

Network

End-Use

r

Simula

tion

Problem

Resolutio

nNetw

ork

Perform

ance

Network

Fault

Call Centers

Billing

Packet Shaping/

Insp

ection

Network

&Serv

ice

Order M

gt

Service

Activatio

n

Devicem

gt

Business

Inte

lligence

Source: Frost & Sullivan European CEM Study 2009N = 11




In order to understand how CEM is likely to evolve, we lookedat critical challenges that the initiatives face.

CSPs gave feedback in relation to 5 main areas when thinking ofshort-term challenges:

1. Strategy• Dealing with behavior typical of a product (not service)

company• Remaining focused while dealing with short term issues

in a fast-moving market

2. Organization• Lacking a business owner• Lacking experience (not tried-and-tested)• Collaborating across silos

3. Process• Inherently poor at solving problems• Prioritization between conflicting objectives

4. People• Requirement to gain consensus from many stakeholders• Senior management yet to fully buy-in• Attaining a change mentality

5. Technology• Technical infrastructure: dealing with the variety of

information sources

Longer term challenges appear to be less well defined, thoughthey can still be classed under 3 main headings:

1. Strategy• Changing to a service-driven culture/ organization• Competition will focus more on customer experience

2. Organization• Finding a sustainable operating model

3. Technology• Continued proliferation of technology makes delivering

a consistent and high quality customer experiencedifficult

Looking Ahead

Against these categories of challenges, we havebeen able to define a set of lessons learnt for CEMinitiatives going forward.

These are:

Strategy

• Once an objective has been defined, stayfocused on it

• Understanding growth levers is critical –distinguish between critical ones and nice-to-haves

• Drive CEM with a strong financial mandate– people are more likely to listen

Organization/ People

• Get leadership buy-in from the start• Be aware that some people have a vested

interest in being against CEM• Get different functions within the

organization to work smoothly

Process/ Technology

• Prepare to manage in a real-time business• Implementation is more complex than you

might think (and more than vendors oftenadmit)




Against the backdrop of challenges, wehave assessed how CSPs see theevolution of CEM within theirorganizations over the short and mid/long term (Figure 8).

In the short term it is evident that,beyond creating a CEM strategy thataligns to corporate, CSPs are looking toapply CEM to both operational (process)oriented issues to seek efficiency gainsand to revenue oriented opportunities,including ARPU maximization and cross/up-selling of multiple services.

Figure 8: CEM Evolution

In the mid/ long term, CSPs arelooking to tackle more strategicchallenges and opportunities.

The nature of these more ambitiousviews varies from company tocompany and can include:

International rollout of bestpractices

Cross pollination of bestpractices between divisions

Recognition as a leader inCEM

Moving from CEM as aninternal concept to help drivebusiness with customers, to aconcept that will helpcustomers and the customers’customers (i.e. developing aservice model around CEM)

The disparity in long term viewssuggests that there may be anopportunity for best practices to beshared between CSPs for mutuallearning and benefit.

The level of ambition for development inthe mid/ long term is, however, matchedby level of importance that CSPs’attribute to CEM.

The vast majority of CSPs studied statethat CEM is between Very Important andCritical to the future success of theirorganization (Figure 9).

Frost & Sullivan expects, therefore, thatCEM practices and initiatives willcontinue to grow and develop in termsprevalence and sophistication.

Figure 9: Importance of CEM

Short term priorities appear to relate internally/operationally

Mid/ long term are less well defined and span acrossmore operational and strategic developments

• Standardization and optimization of processes

• How to leverage analytics throughout the organization

• Prioritizing which issues we need to address

• Determine key levers for customer service improvement

• System simplification and integration

• Process definition

• Figuring out which processes, products and services driveARPU

• Increase proportion of customers using multiple services

• Promote internal change – better customer understanding

• Going beyond our processes to help our customers improvetheirs (B2B)

• Digitization and automation of processes

• Must achieve organizational transformation

• Rollout to subsidiaries

• Rollout to other divisions (e.g. Wholesale)

• To be #1 in Customer Experience by the end of 2012

• To focus on customer retention, rather than (re-) acquisition


0 1 2 3 4 5 6 7 8 9 10

Not important

Relatively important

Very important

Critical

Importance of CEM

• “We need to get customers moreinvolved.”

• “Competition is getting tougher – and inour market things change quickly.”

• “CEM has the potential to addressmargins through both revenueenhancement and cost efficiencies.”

Comments


N = 13

Question: How important is CEM to the future success of your organization?

0 1 2 3 4 5 6 7 8 9 10

Not important

Relatively important

Very important

Critical

Importance of CEM

• “We need to get customers moreinvolved.”

• “Competition is getting tougher – and inour market things change quickly.”

• “CEM has the potential to addressmargins through both revenueenhancement and cost efficiencies.”

Comments


N = 13

Question: How important is CEM to the future success of your organization?




With minor adjustments, our interviews with vendors followed a similar structure to those done with CSPs. This has allowed us tocompare and contrast perspectives between both sets of respondents.

In some cases we found interesting consistencies (or points of alignment). For example:

Focus on churn reduction as a key objective for CEM

Important technical challenges: integration of front/ back office and real-time information flows are critical

Primary processes that are in-scope (Customer Service, Service Activation and Billing – according to vendors) match CSPs’ perspectives

Primary OSS/ BSS relationships (Call Center, Business Intelligence and Problem Resolution – according to vendors) align with CSP views

However, there are a number of areas of misalignment. For example:

Vendors communicate extensively about the importance of having a Board-level focus:

• Executive buy-in and sponsorship are important factors for CEM, but the Board of most CSP is not (yet) the primary stakeholderfor CEM

• The tendency to elaborate on this group as a center of attention may detract from understanding the operational stakeholders• For the Board, there will need to be complete transparency in the business case (CEM-driven benefits) at a revenue and margin

level and at a meaningful quantum

Seldom do vendors communicate the full importance of strategy and organization:

• Vendors seem to focus their communication extensively on information, analysis, process improvement and other lower-leveloperational issues

• Clearly these focal areas are important to CSPs and are ultimately important enablers for transformation• However, there is limited focus on communicating an understanding of the vision for business transformation – even if, in some

cases, vendors are able to articulate the point

Vendors often position cost reduction as a key objective for CEM:

• Cost reduction will always be a part of any initiative – whether strategic or operational• However, this study suggests that this may not be a primary dimension for CEM at this time• The focus at present is on churn and quality improvement (both of which do of course also impact costs)

Vendors tend to fail to convey a strong sense of prioritization of how/ where CEM should be applied within a CSP:

• Vendors seem to communicate an “all things to all people” message in relation to CEM• While this has its benefits and aligns to the concept that CEM is end-to-end and holistic, it also has its issues• CSPs consciously need to prioritize where CEM is going to be oriented – now and in the future – even if this varies from

company to company• There is some clarity over the short term and vendors should align to this• The longer term is less clear; vendors need to help customers prioritize, based on best practices and experience

Vendor Perception Gap Analysis




It is interesting to note – building on thelast point of misalignment betweenvendors and CSPs – that this lack ofprioritization coming from vendors mayalso be a part of the reason why CSPsexhibit limited clarity on OSS/BSS.

It is important to remember that CEMstarted (and still is) a vendor-drivendevelopment (albeit inspired by CSPchallenges).

It is Frost & Sullivan’s belief that vendorshave an opportunity to lead CSPs throughthe CEM journey, from initial adoption torollout and in-life management.

Through our interviews with vendors, wehave been able to isolate 8 types ofchallenges associated to implementationand rollout of CEM. These challenges,which are critical to understand in orderfor vendors to lead CSPs, are summarizedin Figure 10.

In Figure 11, we have presented some ofthe key future trends that vendorsbelieve will impact CEM.

Our key take-away from this analysis isthat the future of CEM remains incrediblyfluid and that vendors need to take aproactive approach to helping CSPsnavigate through the commercial andtechnical complexities inherent in“Managing the Customers’ Experience”.

Figure 11: Trends Impacting CEM – Vendors’ Views

Figure 10: A Vendor Perspective on Challenges in Implementing and Rolling Out CEM


• The Horizontal Challenge: Getting CSP to operate outside traditional silos

• The Solution Challenge: Being able to customize for each CSP

• The Sustainability Challenge: Enabling CSPs to benefit fully from CEM

• The Implementation Challenge: Projects can be big; losing sight of objectives is easy with so many conflicting stakeholders

• The Strategy Challenge: Fundamentally lacking a long term view that is broken down into bite-size chunks

• The CRM Challenge: Getting pinned down as another CRM initiative

• The Stakeholder Challenge: Dealing with the conflicting agendas of the CIO, CTO, CFO, etc.

• The Expectations Challenge: Hype about CEM means CSPs expect immediate results, which are not always feasible

Challenges

Social Networking“It is already important, but will become more sophisticated. We need to understand moreabout how it is used in order to analyse it properly.”

SaaS and Cloud Computing “Not only will this change how we deliver our services, it will change how CSPs deliver theirs.”

Mobility“The mobile lifestyle will put pressure on CSPs to react and provide appropriate services. Timecriticality of delivery will be key and we need to understand this better.”

Open Standards“CSPs have been used to dictating things. They are having to move toward a more dynamicmarket, where openness could threaten retention rates and ARPU.”


Continued Device Proliferation“Managing the user experience across various devices – including smartphones, netbooks,laptops, etc. – will be of major importance to CSPs.”

End-User Sophistication“Communications technology is becoming an integral part of life. Consumers are gaining innegotiating power. Social media enables people to share opinions and opportunities.Consumers are better informed about suppliers than ever.”

Mass Individualization

“From service definition to customer care; this requires great insight into individual behavior andpreferences. This also enables early churn prediction. It requires open information sharingacross different units - - in real-time.”

Micro Segmentation“The trend is for network planning to be more business (rather than technology) driven. Ratherthan spending on network rollout for coverage and compliance, CSPs want to extend/ improvetheir networks based on a detailed understanding of the end-customers on the network.”

Social Networking“It is already important, but will become more sophisticated. We need to understand moreabout how it is used in order to analyse it properly.”

SaaS and Cloud Computing “Not only will this change how we deliver our services, it will change how CSPs deliver theirs.”

Mobility“The mobile lifestyle will put pressure on CSPs to react and provide appropriate services. Timecriticality of delivery will be key and we need to understand this better.”

Open Standards“CSPs have been used to dictating things. They are having to move toward a more dynamicmarket, where openness could threaten retention rates and ARPU.”


Continued Device Proliferation“Managing the user experience across various devices – including smartphones, netbooks,laptops, etc. – will be of major importance to CSPs.”

End-User Sophistication“Communications technology is becoming an integral part of life. Consumers are gaining innegotiating power. Social media enables people to share opinions and opportunities.Consumers are better informed about suppliers than ever.”

Mass Individualization

“From service definition to customer care; this requires great insight into individual behavior andpreferences. This also enables early churn prediction. It requires open information sharingacross different units - - in real-time.”

Micro Segmentation“The trend is for network planning to be more business (rather than technology) driven. Ratherthan spending on network rollout for coverage and compliance, CSPs want to extend/ improvetheir networks based on a detailed understanding of the end-customers on the network.”




CEM is already a widely adopted concept. The popularity of the concept corresponds to the amount of activity related to it. CEM has,in many cases, developed beyond the Conceptual and Niche stages of development – most commonly, it is now found as a cross-functional (and funded) initiative – though less often, CEM has also been adopted a Board-level priority.

CEM is typically aligned to highly strategic objectives, including Churn Reduction and Quality (of service) Improvement. This providesstrong indications that most CSPs aim to drive revenue through CEM. This expectation aligns with the belief that CEM is integral to thelong term survival of CSPs.

Nonetheless, CSPs are also focused on the fact that CEM can help drive down operational costs – though this is seen as a mid/ longerterm objective, signaling that rationalization of process is only possible once an individual CSP has amassed sufficient experience toreap the benefits of efficiency. Yet, when outlining short and mid/ longer term development plans for CEM, most CSPs focus the shortterm on process improvement and other operational aspects. This may give an insight into a perceived time lag between effort andpayback. CSPs will require support to gain this experience; the starting point will be in determining how to best leverage the fullcapabilities available through existing CEM implementations from other organizations.

CEM’s barriers (in relation to adoption, implementation and rollout – as well as benefit realization) are related to the classic functionalsilos that CSPs are structured in relation to. There are often competing objectives and misaligned measures of performance betweendifferent departments, which creates friction. Organizationally, this issue manifests itself horizontally and vertically (i.e. betweendepartments and from Executive to Operational leadership). This is a major development area and one in which CSPs can workalongside vendors that have strong consulting capabilities to capitalize on best practices – even from other industries where CEM hasbeen deployed.

Despite the challenges and – as noted before – CEM initiatives have flourished. These initiatives tend to be set up through the backingof a clear business plan, business case and roadmap, with associated milestones and KPIs. Many of these dedicated CEM initiatives arestill in their infancy, to be found in the first 3 stages of development: Strategy, Design and Implementation. In fact, some of theseinitiatives have literally gone live in the last 12 months. As such, initiatives are typically still focused on certain domains, havingprioritized where the impact will be greater. Typically, these areas are front-end (customer-facing) domains, particularly CustomerService (Contact Centre), Service Activation and Billing. This is despite the view that CEM should have an all-encompassing (end-to-end) focus in relation to a customer’s interaction with the CSP.

Given the complexities and the long term nature of the work, it is imperative that CSPs remain focused on the core objectives laid outin the business plan – trying to do too much too soon is a risky proposition for any initiative that is still trying to prove its value to theorganization.

There is every indication, however, that CEM will continue to grow in relevance and importance to the Telecom industry. Over thecoming 2-3 years, Frost & Sullivan fully anticipates that a growing number of CSPs will put in place dedicated CEM initiatives and, thatthose that already have, will extend the scope of their work to encompass other functional areas and drive real operational andstrategic changes. As such, we expect the industry will evolve a number of standard operating models for CEM and that best practiceswill be codified in a way that is not yet done today. This will necessarily be accompanied by a standardization of industry definitions.

As CEM initiatives go through the lifecycle stages, until they eventually become fully embedded into CSP’s strategies and operationalways of working, they will face a wide variety of challenges. Some of these challenges will be extremely difficult to address and requirenothing less than organizational transformation. One such challenge relates to the notion that CSPs behave like product companieslargely due to their structure and setup (in the widest sense, including: organization, process, people, technology), whereas CEM ispremised on the notion of a service-focused organization.

Addressing these challenges will require cooperation between industry players, particularly to share best practices and lessons learnt,including CSPs and vendors.

Conclusions



About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions ingrowth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team withdisciplined research and best practice models to drive the generation, evaluation and implementation of powerful growthstrategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businessesand the investment community from 40 offices on six continents.

To join our Growth Partnership, please visit http://www.frost.com.

About HP

As the communications and media industries continue to evolve, HP remains a reliable partner for managing change. HP applies itsknowledge from more than 35 years of extensive industry experience through the HP Communications and Media Solutions (CMS)organization. In close cooperation with our valued solutions partners, CMS assists the world’s top communications and mediacompanies in transforming their customers’ experiences and exceeding business objectives. To achieve this, we draw upon afoundation of people, processes, and technology. Through this three-pronged approach, HP manages the complete design, delivery,and deployment of services and software-rich solutions, including Service Delivery Infrastructure and Applications, RealTimeBusiness Support Systems, Next Generation Operations Support Systems, and Digital Media. Every HP solution leverages provenglobal expertise from our Solution Consulting Services, Solution Delivery Services and Solution Management Services organizationsto help companies get the most from their IT investments. To learn more, visit www.hp.com/cms.

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