Operational Excellence Model en Whitepaper

ON THE ROAD TO OPERATIONAL EXCELLENCE AN OPERATIONAL EXCELLENCE MODEL FOR MANAGED SERVICE PROVIDERSSTRATEGIC WHITE PAPER

Traditionally, service provider efforts to create a high quality of experience

(QoE) for end users have been focused on deploying and maintaining a state-

of-the-art network infrastructure to provide connectivity and advanced

communication services. More recently, these efforts have included new

business processes that improve customer service, such as the introduction

of detailed billing and self-care portals. Some providers have realized that

a managed service delivery model is a viable option to achieve increased

levels of operational excellence while they concentrate on their core business

functions, such as marketing and customer service. This white paper describes

an operational excellence model that can be used by managed service

providers to create higher levels of operational excellence in a managed

service organization. With this model, managed service providers can improve

operations in support of their service provider customers efforts to enhance

end user QoE.

TABLE OF CONTENTS

Operational excellence for managed service providers / 1

Enhancing managed services with operational excellence / 3

Foundation levers / 3

Cultural levers / 8

Implementing operational excellence / 10

Foundation levers / 10

Cultural levers / 11

Conclusion / 11

Acronyms / 12

Author / 12

On the road to operational excellence An operational excellence model for managed service providersALCATEL-LUCENT WHITE PAPER

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OPERATIONAL EXCELLENCE FOR MANAGED SERVICE PROVIDERSIn todays everchanging telecom market, end user demands are increasing and customers are becoming extremely conscious of the quality of service (QoS) they get from their service providers. As a result, service providers are increasingly focusing on improving QoS and quality of experience (QoE) through innovative efforts to manage their business.

For service providers, this means going beyond independent efforts to improve network infrastructure, services, or customer service. It requires operational excellence in every area of the business that contributes to an end users overall experience. And it requires service providers to move from network-centric to service-centric Key Performance Indicators (KPIs) and Key Quality Indicators (KQIs) that shift the metrics from measuring the network to those measuring services and experience. This can only be achieved through proactive planning across the entire organization, including network, marketing, and customer care.

Customer research indicates that network quality is the second most important factor service providers must consider to create a high level of end user satisfaction(Figure 1). But while service providers strive to improve network quality, they must also reduce costs and extract the maximum value from their existing investments. Some service providers have realized that a managed service delivery model is a viable way to achieve increased levels of operational excellence while they concentrate on their core business functions, such as marketing and customer service.

Figure 1. Customer perception and key satisfaction drivers

Source: Integrated Customer Experience Management, McKinsey & Company, February 2010.


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Meanwhile, telecommunications product companies have evolved their position in the telecom product and service value chain. They have shifted from being niche product suppliers to managers of multi-vendor networks.At the core of this shift is the premise that these organizations are more adept at managing multi-technology, multi-vendor networks and make them more operationally efficient by synergizing their product knowhow with the service delivery paradigm.

As a result of this shift, the onus for network quality is transferred to managed service providers. Therefore, managed service providers must ensure they manage their customers networks as efficiently as possible to satisfy the main reasons for service providers outsourcing network operations and management functions:

Improvethebottomline

Realizeincreasedoperationalefficiencies

Enablequickdeploymentofnewservices

Meetincreasedcompetenceneedstomanagemulti-technology,multi-vendornetworks

This paper describes an operational excellence model (Figure 2) that can be used by managed service providers to better manage their customers networks and ensure desired network quality levels are maintained. It explains the internal foundation and cultural levers managed service providers can manipulate to achieve higher levels of operational efficiencies for their customers networks.Foundation levers form the core operating execution base for an organization, which can catapult it to higher levels of operational excellence. Cultural levers are those that reflect organizational values or beliefs that an organization and its individuals should live by. With this model, managed service providers can improve operations in support of their customers efforts to enhance end user QoE.

Figure 2. An operational excellence model for managed service providers

Governance

Strategic alignment

Leadership

Delivery model

Operationalexcellence

The core

Process & service excellence

Learning & development

Tools & technology

Employeeengagement

Customercentricity

Foundation leversCultural levers

Delivery excellence

Accountability

Problemsolving

Team work

Innovation

Continuous improvement

OE benefits

Customersatisfaction

Increasedrevenues

Lowercosts

Improvedcompetitive

position


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ENHANCING MANAGED SERVICES WITH OPERATIONAL EXCELLENCEOperational excellence is a structured approach to business management to steer the organization to world class performance by the apt amalgamation and implementation of the foundation and cultural levers in the Operational Excellence model.

When a managed service provider accepts the responsibility to maintain a desired level of network quality for service provider customers, it must deliver a combination of quality, price, ease of purchase, and service that no other organization can match.This can be achieved by implementation of an operational excellence (Figure 2) model that:

Alignsmanagementsystemswiththeneedsofserviceproviders

Runsoperationsthatarestandardized,optimized,simplifiedandcontrolled

Fostersaculturethatcentersonexcellenceandaccountability

By carefully managing the foundation and cultural levers that enable the implementation of this model, managed service providers can achieve their operational excellence objectives and deliver on network quality commitments.

Foundation leversThere are eight key foundation levers (Figure 3) that a managed service provider organi-zation must be able to leverage to achieve operational excellence.

Figure 3. Foundation levers in an operational excellence model

Governance

Strategic alignment

Leadership

Delivery model


The core



Tools & technology

Employeeengagement

Customercentricity


Delivery excellence

Accountability

Problemsolving

Team work

Innovation


OE benefits


Increasedrevenues

Lowercosts

Improvedcompetitive

position


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Strategic alignmentAny organization striving for operational excellence must have strategic alignment in four key areas.

First, it must ensure its corporate strategy is defined based on business and customer needs. A corporate strategy must always flow from the needs of the business and its customers. An organization with a corporate strategy not aligned to business and customer needs will lose its focus over a period of time and will not be able to sustain its competitive advantage.

Second, it must ensure its operations strategy is always aligned with its corporate strat-egy. In this way, an effective operations strategy becomes an enabler for the organization to achieve its business goals, rather than an obstacle.

Third, the organization must ensure that individual business unit operations are aligned to function as a cohesive whole. In todays dynamic market environment, it is important that individual departments do not operate or try to achieve excellence in silos. By coordinating efforts, the organization can ensure a focused delivery of products and services aligned to customer needs. Therefore, any initiative taken by the organization must be agreed to by all business unit heads. With this approach, the organization can move from a functional organizational structure towards a process- or service-oriented organizational structure where the spotlight is on processes executed or services delivered to the customer and not on individual department deliverables.

Finally, the organization must ensure it develops and introduces an organizational performance scorecard to continuously monitor performance. It is important for all organizations to continuously monitor organizational performance and improvements. A corporate performance management system, such as a Balanced Scorecard, is an effective way to ensure the organization stays on course in all efforts to meet and exceed customer expectations.

With these elements in place, the strategic alignment lever ensures the managed service provider has its management system synchronized with customer needs.

LeadershipBut understanding the need for strategic alignment as part of an overall operational excellence effort is not enough on its own. An organization must also have senior managers whocanleadtheorganizationthroughallstrategicalignmentinitiatives.Researchhasshown that leaders who have been instrumental in developing operationally efficient organizations share similar character traits. Usually, these leaders are:

Visionary: A leader with a vision has a clear sense of where the organization is supposed to go, is going, and how to keep it on track. Usually, the leader is able to clearly and passionately communicate the organizational vision to the team and explain how each employees contribution plays a role in achieving key goals. In addition, the leader is able to manage the team and steer the organization on the path towards achieving the vision. Throughout the process, an effective leader always maintains focus on the vision and never loses sight of it. He or she is able to see the big picture and make adjustments as needed. Most importantly, a true leader is able to get the entire team enthused about the vision and inspire the team to work together to achieve objectives.


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Perseverantandunrelenting: A truly effective leader is unrelenting in efforts to achieve the final goal. The leader steers the team in the right direction and helps it overcome obstacles on the path to success. Typically, the leader will persevere until all goals are achieved. In short, an effective leader actually walks the talk and inspires employees to emulate the traits the leader demonstrates.

Motivating: A leader who is visionary, perseverant and unrelenting also has a motivating influence on employees. Under the right leadership, employees are motivated to follow the leaders example and strive towards achieving the leaders vision. Motivated employees have the drive to accept accountability and take ownership of their work because it will help the organization meet its operational goals.

Empathetic: Finally, any leader with the first four traits mentioned above is also empathetic. Typically, the leader understands an employees position and empathizes with any problems the employee may face. Of course, there may be issues the leader may not be aware of on a daily basis. Therefore, to keep a finger on the pulse of the organization, the leader must perform a status check periodically to assess the teams performance and ensure it is still aligned with strategic objectives. When required, the leader steps in and eliminates any issues that may affectteam operations and make it harder to attain business goals.

Delivery modelA truly effective leader is also instrumental in ensuring the organization has a delivery model in place, which defines its management style, service delivery approach, and human resource philosophy. A delivery model specifically designed to help an organiza-tion achieve operational excellence is usually built based on three key considerations.

First, the organization must consider the appropriate sourcing model to fulfill human resource needs. Hiring, in-sourcing and outsourcing all have pros and cons, and creating the right balance of approaches can be difficult. The right blend must be selected based on a variety of factors, such as the need for knowledge versus operational competencies in an organization, associated costs, the impact on organizational efficiencies, and expected productivity.

Second, the organization must create the right balance between centralized and decentralized decision making and day-to-day operations to ensure optimum delivery of services to customers. An organization striving to achieve higher levels of operational excellence cannot operate on either extreme of the centralization or decentralization models. Some amount of centralization keeps the organization aligned with a particular focus and goal. Whereas decentralization helps translate and percolate this focus on a wider scale throughout an organization by creating levels of leadership and decision making across the entire chain of command. It also empowers employees and allows them to improve their performance by acting to address deficient or inefficient areas immediately without approval from the top of the organization. Plus, decentralization allows managers of business areas to actually use their firsthand knowledge and experience to improve operations in their specific domains.

Finally, the organization must also consider an appropriate approach to service delivery. Shared service delivery allows a common pool of organizational resources to be used to provide services to multiple customers. With this approach, the focus is on the service provided. The same service can be provided to multiple customers using the same set of resources. On the other hand, a project-based delivery model allows every customer


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project to have a different set of organizational resources responsible for the projects delivery. Choosing the right delivery model may depend on factors like the number of projects the organization is running, their scale, customer needs and the organizational vision for service delivery.

Process excellenceAnother key foundation lever required to achieve higher levels of operational efficiencies is process excellence. Quite simply, process excellence is achieved in a process-oriented organization because there is awareness of the core operational and support processes at all levels. Plus, the owners of each process are clearly defined.

A process owner is the person responsible for process definition, implementation and adherence, as well as performance monitoring and visibility, and continuous process improvement. Every process owner must execute a specific process and take complete ownership of that process.

To ensure an organization continues to demonstrate increasing levels of process maturity, it is essential that a baseline process repository is created and maintained for all organi-zational processes. Where needed, processes must be standardized. Organizations with offices in geographically diverse locations must standardize their processes across these locations to ensure consistent design, standardized execution, and uniform monitoring.

In addition, organizations must standardize processes where differentiation brings little or no incremental value. This allows them to avoid the huge inefficiencies involved in re-inventing the same process over and over again, and allows them to apply their energies to innovating around those processes and business models that bring true differentiation and value to the business.

Of course, deployed processes must be monitored for their performance and continuously improved. This requires monitoring process KPIs and analyzing if they are meeting defined Service Level Agreements (SLAs) and Operating Level Agreements (OLAs).Process adherence checks are used to determine if a process is being executed as designed, and quality or process audits are used to ensure adherence. Gaps identified in process execution must be analyzed and bridged and the new optimized process should be put into operation. Ultimately, process and quality excellence is abundantly rewarded.

Customer centricityCustomers are the be-all and end-all of any organizations existence. An organization that is not focused on the needs of its customers will find it difficult to sustain and grow its market position. For this reason, customer centricity is an important foundation lever on the road to operational excellence.

What is customer centricity? Simply put, it is knowing a customers needs and aligning service delivery to meet and exceed customer expectations. The stress here is on exceeding customer expectations because, in todays market, it is no longer sufficient for organiza-tions to just meet customer needs. Only when an organization and its employees change their operating paradigm from one designed to meet expectations to one designed to exceed expectations, will their efforts to improve a customers network and business succeed.


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For this to happen, customer centricity must be more than a corporate buzzword used by the leadership team. A customer-centric culture must be an intrinsic part of the structural fabric of the organization and a fundamental goal of every employee in the organization. Therefore, every employee must assess every action to determine how every process can be improved to better serve customers and exceed their expectations. When such think-ing is ingrained in every employee, the entire organization will catapult itself towards becoming a highly successful business in the global marketplace and set ever new benchmarks for operational excellence.

Finally, to ensure a customer-centric culture is maintained, managed service providers must keep a constant tab on customer centricity. This can be achieved by measuring customer satisfaction levels with customer satisfaction surveys, or by eliciting feedback in governance meets.

Employee engagementOf course, customer centricity can only be achieved by organizations who have fully engaged employees. An engaged employee is one who is fully involved in and enthusiastic about his or her work and, therefore, will act in a way that furthers the organizations interests. According to Scarlett Surveys, Employee engagement is a measureable degree of an employees positive or negative emotional attachment to their job, colleagues and organization, which profoundly influences their willingness to learn and perform at work.1

Employee engagement is a heightened level of ownership or accountability that ensures all employees want to do whatever they can for the benefit of their internal and external customers, and for the success of the organization as a whole. Managed service provider organizations can increase employee engagement by:

Introducingrewardsandrecognitionprogramsthatacknowledgeandrewardparticulartraits in the organization

Creatinginternalbrandingthatmakesemployeesproudtobeapartofthemanagedservice provider brand

Bringingclarityinemployeeroles

ClearlydefiningemployeeKeyResponsibilityAreas(KRAs)andexplainingthelinkbetween their role and the organizations ability to achieve business objectives

Definingcareerroadmaps

Definingcareeradvancementopportunities

Emphasizingemployeebenefitsbeyondwork

Sendingsufficientandrelevantinternalcommunication

Stressingthevaluesoftheorganizationattherightforumsandattherightintervals

Learning and developmentLearning is a never-ending process. This is true for an organization as much as it is for an individual. For this reason, the learning and development lever can have a substantial impact on an organization striving for operational excellence. At all times, every organi-zation must ensure it has mechanisms in place to enable the learning and development of its individual employees and the entire organization.

1 What is Employee Engagement, Ken Scarlett, Scarlett Surveys International, http://scarlettsurveys.com/employee_engagement.cfm.


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Individual learning and development refers to how an individual in an organization learns various skills (behavioral, technical, and managerial) and competencies and progresses from beginner to expert on each. Organizational learning and development refers to how an organization goes through the process of learning to become a continuously learning organization.

Managed service providers must have learning programs to meet the competence needs of their organizations. Typically, these are structured around the multi-technology, multi-vendor expertise needed to manage their service providers networks and make them more operationally efficient. By carefully managing individual and organizational learning processes, organizations striving for operational excellence can better manage their customer networks and serve their customers.

Tools and technologyThe final foundation lever in the operational excellence model is related to tools and technology.

In todays competitive, ever-changing market, tools and technologies are very important enablers for an organization working to improve its efficiency and productivity as part of an operational excellence program. To ensure all its processes are able to achieve operational excellence, an organization must identify the tool and technology investments suited to its business needs, and it must integrate them in its operations. With the right tools and technologies, an organization can drastically reduce manual effort and improve employee efficiency.

Cultural leversIn addition to foundation levers, a managed service provider organization must also be able to leverage six cultural levers in the operational excellence model. Each of these levers plays a specific role in an organizations efforts to build a culture focused on operational excellence (Figure 4).

Figure 4. Cultural levers in an operational excellence model

Governance

Strategic alignment

Leadership

Delivery model


The core



Tools & technology

Employeeengagement

Customercentricity


Delivery excellence

Accountability

Problemsolving

Team work

Innovation


OE benefits


Increasedrevenues

Lowercosts

Improvedcompetitive

position


9

Delivery excellenceThe delivery excellencelever refers to the ability of an organization to consistently deliver on time, reliable, high quality services. The objective of delivery excellence is to delight the customer by ensuring the organization and each individual in it strives to deliver on customer expectations, and meet and exceed those expectations at all times.

AccountabilityTo ensure delivery excellence, employees and the organization must be accountable. Therefore, the accountability lever refers to the ability of all employees to be account-able for the work they do and what they deliver to customers.It is aboutempowering employees to take end-to-end ownership for the tasks they perform and the subsequent outcomes of those tasks. Ultimately, it is about honoring commitments the organization has made to each customer and striving to live up to those commitments.

Problem solvingAn organization focused on delivery excellence by accountable employees must also be able to solve problems as they arise. The problem solving lever refers to the ability of employees to first acknowledge the existence of a problem because a problem acknowledged is a problem half solved. Once the problem is acknowledged, the organization must have the mechanisms in place to empower employees to work on developing and delivering optimum solutions.

TeamworkAn organization can facilitate the development of more effectivesolutions by enabling the creation of multi-disciplinary teams that can tackle complex problems more efficiently than could otherwise be achieved by an individual employee. Therefore, the teamwork lever is an important consideration. Organizations striving for operational excellence need to recognize the importance of teamwork and team spirit in achieving organizational goals.

InnovationOf course, to continuously meet and exceed customer expectations, all managed service providers must not only consider what customers need today, but what they will need in the future. In todays agile business world where market demands are constantly changing and customers are becoming choosier by the day, the innovation leveris the key to continuously ensuring an organization remains ahead of the curve. By focusing on innovation, managed service providers can ensure their operational excellence efforts enable them to have the most efficient backend processes, offer the most effective customer touch points, and deliver the most advanced services.

Continuous improvementObviously, an organization that continues to innovate has the foundation for the final cultural lever, continuous improvement. Over the years, this concept and catchphrase has been overused and misunderstood. What does it mean within the context of opera-tional excellence? Quite simply, it implies being aware of individual, organizational, and system performance indicators, viewing these performance indicators with an objective eye and continuously making improvements to ensure the organization continues to deliver superior service.


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To chart their continuous improvement efforts, managed service providers can use the operational excellence continuum. This tool helps organizations assess where they are on the continuum and re-align their efforts to achieve higher efficiencies. Figure 5 shows the operational excellence continuum for the six cultural levers outlined in this paper. It compares the traits of an organization with low operational efficiencies with those of an organization with high operational efficiencies.

Figure 5. Operational excellence continuum for an organizations operational excellence cultural levers

IMPLEMENTING OPERATIONAL EXCELLENCEAppropriate implementation of the operational excellence model can steer a managed service provider organization to increased levels of performance. Ultimately, better performance will affect network quality and support service providers with their efforts to meet customer quality expectations. This will increase service provider and end user satisfaction and delight. Although there are many ways for a managed service provider organization to manipulate the foundation and cultural levers of the operational excel-lence model, there are a few guidelines that can be followed to ensure success:

Foundation levers

AligntheManagedServicebusinessdeliverywiththecustomersbusinessobjectivesby translating the customers Key Business Objectives(KBOs) to the Managed Service providers KQIs (Key Quality Indicators) and KPIs (Key Performance Indicators).

Strategicallymovetoaprocess-andservice-basedorganizationinsteadofafunctionalorganization.

Implementacorporateperformancemanagementinitiative,suchastheBalancedScorecard,to balance the organizations delivery in four key areas: customer satisfaction, financial performance, process health, learning and knowledge management.

Low operationaleffectivenessand efficiency

Ad hoc delivery

Responsibility assignment unclear

Problems due to other departments

Working in silos

Few or zeroinnovations acrossthe organization

Reactive approachto bridging operationsgaps

Managed delivery

Shared responsibility

Intermittent problem acceptance and solving

Teams working together,however individual agendas take priority

Conscious approach to innovating

Improvement projects planned and executed when needed

Optimized delivery

Accepting responsibility and owning the results

Innovative and proactive problem solving techniquesin operation

Output bigger than the sum of individual efforts- team synergy at work

Innovation a way of life

Continuous Improvement part of day-to-day operations DNA

High operationaleffectivenessand efficiency

Deliveryexcellence

Accountability

Problemsolving

Team work

Innovation



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Groomleadersatdifferentlevelsintheorganizationwithleadershipprogramsand workshops. Leadership can be classified into business leadership, functional leadership, project and team leadership and individual leadership.

Selecttheappropriatehumanresourcedeliverymodelwiththerightmix(betweenhiring, insourcing and outsourcing).

Selectandimplementappropriatelevelsofcentralizationanddecentralization.

Identifyandassignprocessownershipforeveryprocessandservice.Developanddeploy a process repository of the organizational processes and monitor process execution on a periodic basis.

Implementprocessimprovementinitiatives,suchasSixSigmaandLeanAnalysis,to identify bottlenecks and improve processes. Consider implementing a process automation system to reduce manual intervention and improve process performance.

Usesurveysand/orperiodicgovernancemeetingstomonitorcustomersatisfaction and feed results back into the operation to enable continuous improvement.

Createaninternalbrandthatemployeesareproudtobeapartof.

Appropriatelyrewardemployeesforajobwelldone.Alsorewardparticulartraitsthatthe organization wants to foster in its work processes and culture.

Clearlydefinecareerroadmapsandcareeradvancementopportunitiesforemployees.

Communicatetheorganizationbrand,vision,missionandvaluesatappropriateintervals and forums.

Identifythecompetencyneedsoftheorganizationandindividualsanddevelopalearning plan for both.

Identifythetechnologyinvestmentsrequiredandimplementthem.

Cultural levers

Rewardindividualswhoreflectthetraitstheorganizationwantstofoster.

Makeindividualsaccountablefortheirdeliveryandlinkindividualperformancewithorganizational goals.

ImplementinitiativeslikeManagementbyObjectiveswhereindividualobjectivesflowfrom organizational objectives to increase alignment.

Identifyandimplementtherightbehavioralandleadershiptrainingrequiredtosupportoperational excellence efforts.

Stressonthesynergycreatedbyteamworkandrewardindividualandteamperformance in different scenarios.

Fosteracultureofinnovationandcontinuousimprovement.

CONCLUSIONWith this model, managed service providers canachieve operational excellence in a managed service organization. More importantly, by carefully managing and manipulating the internal foundation and cultural levers,managed service providers can achieve higher levels of operational efficiencies for their customers networks. Foundation levers enhance the organizations core operating execution base. Cultural levers enhance organizational values or beliefs that the organization and its individuals should live by.

www.alcatel-lucent.com Alcatel, Lucent, Alcatel-Lucent and the Alcatel-Lucent logo are trademarks of Alcatel-Lucent. All other trademarks are the property of their respective owners. The information presented is subject to change without notice. Alcatel-Lucent assumes no responsibility for inaccuracies contained herein. Copyright 2011 Alcatel-Lucent. All rights reserved. SBG5677110506 (September)

Of course, as the model shows, any efforts to manage foundation and cultural levers must be supported by effective governance. With proper governance, the foundation and cultural levers can be institutionalized and carefully monitored to ensure they are functioning as desired. In addition, governance ensures the organization can makechanges, as required, to keep itself aligned to customer and business goals.

An organization that successfully implements this model will improve operations in support of its customers efforts to enhance end user QoE. Ultimately, this creates higher levels of customer satisfaction, lowers costs, improves revenues, and enhances the organizations competitive position.

ACRONYMSKPI Key Performance Indicators

KQI Key Quality Indicators

KRA Key Responsibility Areas

OLA Operational Level Agreement

SLA Service Level Agreement

QoE quality of experience

QoS quality of service

AUTHORDuhita DharwadkarHead of Process & Quality Alcatel-Lucent Managed Solutions

DuhitaDharwadkarisHeadofProcessandQualityatAlcatel-LucentManagedSolutions.Inthis position, she is responsible for implementation of Process and Quality Management initiatives like Process Architecture creation, Process Performance Monitoring and Analysis and CMMI for services implementation.

Operational excellence for managed service providersEnhancing managed services with operational excellenceFoundation leversCultural levers

Implementing operational excellenceFoundation leversCultural levers

ConclusionAcronymsAuthor

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Operational Excellence Model en Whitepaper