Customer King of Telecom Jungle - Industry Trend or Event

Telecommunications, Sept, 2000 by Dave Nelsen, Andy Fraley

Coupling network and performance data with customer service data is key to proactive, personalized service.

Accelerating competition in the telecom industry has profoundly empowered the telecom customer. Enterprises shopping for telecom and data services now have more choices and therefore greater power than ever before.

For telecom and data networking service providers, the fundamental law of survival in this increasingly ruthless jungle is simple: Adapt or perish. Adaptation requires a shift in business models and recognition of what customers expect from services.

Service providers must become "customer-centric," understanding customers' service experiences and how network fault and performance issues impact them. To avoid churn, proactive customer service must be a top priority. To survive, a provider must make the customer king of the jungle.

A fundamental technological roadblock stands in the way of this change in focus: Today's service management systems and processes are network-centric, not customer-centric. They focus on managing network elements, not individual services and customers. The key to addressing this shortcoming is to inject customer and service information into fault management and performance monitoring systems.

Choices

The broadening range of customer choices stems from increased competition to deliver the most advanced and valuable services. These include transparent LAN service and other flavors of VPN, integrated access for converged voice and data, DSL, managed routers, and customer service control. These managed services typically involve advanced configuration and management of access and transport equipment for a variety of traffic types. Managed services feature increasingly sophisticated SLAs covering QoS, performance and availability on an end-to-end basis.

IT managers seeking to outsource WAN connectivity to remote campuses are willing to pay a premium for services that precisely fit their bandwidth and service quality needs. The advantage will go to service providers that can provide more service flavors and a wider range of SLAs and prices. The service provider that can couple these options with proactive, personalized customer service will win higher customer loyalty, lower customer churn and, as a result, higher profitability. Frederick Reichheld of Harvard Business School claims that just a 5-percent improvement in customer retention results in a 75-percent increase in profitability. To offer differentiated SLAs and proactive support, the provider must have an improved method for tracking faults and performance problems affecting individual service instances and specific customers.

Disconnected Systems

Most service providers use three or more separate systems to provision services, manage network faults and monitor network performance. Other independent systems are used to coordinate billing, process service orders and manage customer care functions. As a result, there is no coherent picture of or knowledge about the customer. While the net work is concrete, the customer is abstract (see Figure 1).

Discrete, network-centric systems cannot answer a host of important questions:

* When there are serious faults or performance degradations, which services and customers are affected?

* Which customers are most important or have the tightest SLAs? How quickly can the provider identify and contact those customers when there is a problem?

* How have individual customer's services performed over time, and how does this compare to the SLA?

* Which customers regularly hit their bandwidth limits and might be candidates for service upgrades?

* Which customers are served by specific network elements, and how overbooked are those elements' ports? How does this affect performance against those customers' SLAs?

Answering these questions requires embedding customer awareness and the services they receive directly into the service creation and management processes, enabling fault and performance management systems to create a direct association among the network, services and customers.

For this to occur, information about customers, services and network elements must reside in a common knowledge base accessed by the service management applications. The same knowledge base becomes the repository for all information related to the network, the services and the customers using those services.

Typical service management systems use separate databases for storing information. Uniting these information bases is the key step in moving from a network-centric model to a customer-centric model (see Figure 2).

This model uses customer information as the common denominator for all functions related to the creation and management of services. The result is complete visibility into customers and their services. This means the service provider has:

* Instant correlation of network faults and performance problems with services and customers;

* Real-time visibility into how specific service instances are performing for individual customers, relative to their SLAs;