Lecture 14 slide 1

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ITU / BDT Workshop Cairo, Egypt, 19 22
December 2005 Corporate Strategic Management
Lecture 14 The third perspective of
the Balanced Scorecard Method INTERNAL PROCESSES
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Process definition
A process is any operational or administrative
system which transforms inputs into valued
outputs. A process is typically a sequence of
tasks arranged into a procedure or set of work
arrangements perhaps involving various machines,
departments and people.

• Core processes
• Order
• Customer services
• Network services
• Network development
• Network construction
• Network management

• Supporting processes
• Internal services
• Human resources
• Financial control and planning
• Accounting
• Information processing

3
Examples of processes

• Provisioning service for the first connection
  of a new subscriber
• Troubleshooting of a fault after a customer
  complaint
• Clearing a billing complaint
• Setting up the cost-based tariffs (for
  interconnection, or traffic segments for local,
  long distance and international)
• Installing a data communication equipment in
  the office of a business customer
• Negotiating a contract of the collocation of the
  technical equipment of a competitor in our
  technical building

4
Internal business process perspectivegeneral
examples
Operations Management
Customer Management
Innovation
Regulatory Social
I4
I1
Best in class service
New service offering, provide VAS
Optimize asset utilization
Improve environmental,health, safety performance
I12
I8
Understand drivers of customer value
I9
Cross sell services
I5
I2
Continued cost management
Develop segment strategy
I6
Understand customer profitability
Manage regulatory processes
I10
Align cost structure with segment strategy
Build brand strength
Increase existing capacity
I13
I3
I7
I11
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Examples of initiatives Optimize asset
utilization

• To ensure that the allocation of resources
  reflects the strategic priorities.
• To postpone the investments by a better use of
  existing assets, e.g. to increase the occupancy
  rates of switching and transmission systems,
  cables, etc.
• To improve demand forecasting methods for a more
  efficient dimensioning of local loops
• To update computer tools for designing and
  managing local loops
• To improve the spare parts management

6
Examples of initiatives Costing and budget

• To implement ABC (Activity Based Costing) capable
  to provide all data requested to set up
  cost-based tariffs
• To know the costs of each service segment and to
  set up costs based tariffs.
• To develop financial control with a more detailed
  and relevant reporting system, to analyze the
  deviance between the forecasts and the actual
  values.
• To set up a zero-based budget
• only depending on impact on objectives
• taking into account lessons learned from the
  past year

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Examples of initiatives Customer management

• To implement BPR (Business Process Reengineering)
  for the most crucial processes
• Service provisioning (new main lines
  installation)
• Faults repairing.
• To improve the internal processes provided by the
  supporting units (commercial and technical) to
  front-line units,
• Front desk to register the demand and to collect
  information about the applicant
• Back office for administrative tasks with the
  commercial file
• To set up procedures to ensure performances of
  the end-to-end process, with the point of view of
  final customer

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Service offering and innovations

• To study the impact of the substitute effect of
  some new technologies regarding the use of basic
  services (e.g. Voice over IP, mobiles vs. fixed
  lines, mail vs. fax).
• To study the impact of potential competitors on
  the market shares.
• To determine the profitability of each service
  segment through costing model and business plan.
• To stop delivering service segments that are not
  profitable enough during a given period (think
  long term).

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Service provisioning for new lines
Objective to speed up service delivery to
improve cash-flow an the customer satisfaction as
well. Many types of units are involved in the
process and must be coordinated -
administrative tasks for the commercial file -
allocation of a pair in the main cables -
open-wire to be installed and connected in the
distribution - MDF (main distribution frame) to
be updated - CPE to be installed and connected -
customer care - charging system in the switching
unit - billing file to be activate
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BPR (Business Process Reengineering) Dramatic
change in the organisation of tasks by using
today's technology

• Existing routine practices are solutions to past
  problems, but they may no longer reflect core
  business concerns nor what the customer may
  actually want
• Focusing on what is important for the end
  customer and discarding what is less important
• Reconstructing team structures in order to
  decrease the number of persons involved in the
  chain through different units
• Using more powerful and more integrated
  information systems enabling sharing of
  information by all involved employees, without
  hierarchical transit
• Training employees in such a manner that they
  can perform more various activities and more
  complicated tasks with less interaction with
  other colleagues

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Working positions before BPR
Each unit has a separate information system and
personal computers are used as typewriters,
There is no LAN, no server, no common data base
Manual transferof documents between positions
No information sharing
Duplication of data typingwith risks of errors
Individualism
Time consuming tasks
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Working positions after BPR
There is a LAN, a server and a common data base
for all units concerned by the same processes.
Cross-functional organisation, which is more
complicated to design and to implement
Unique data collection, no duplication
I
I
N
N
T
T
Team work,
E
E
R
R
N
N
E
E
T
T
Firewall
-
-
Server witha unique data base for a process
Responsibility
Immediate information sharing,no manual
transmission by paper
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Workflow before BPR
Information between two working positions go
upward and then downward through the hierarchy in
a bureaucratic organisation for routine day to
day activities.
The role of managers is not to be a transit for
operational information.
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Workflow after BPR
Direct relationship between working positions are
established. The role of managers is to define
the process and to control the results.
Electronic mail and Intranet are used to speed up
the transmission of information between working
positions.
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Optimizing processes with Intranet

• To communicate with individuals as well as with
  groups,
• To share information and documentation
• To learn with a e-learning system
• To achieve a procedure for the core activities of
  the company (sales, production) or for the
  supporting activities (accounting, reporting,
  logistics,) or even for a personal activity
  (information about vacant positions, application
  for a new job, ads, ..)

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Advantages of Intranet

• Communication between people working in different
  units are easier with Intranet, and therefore
  transversal organization with multi-disciplinary
  teams are more efficient.
• Information is standard when centralized,
  validated and published on the corporate internal
  web.
• Heterogeneous computer applications can be
  interconnected and automatic transfer of data
  among them are yet possible.
• Intermediary working positions can be avoided,
  and the number of people required for a process
  can be decreased.

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Internal business processes perspective
Selected Strategic
Selected Strategic
Measure
Target
Initiative
Measure
Target
Initiative
Objectives
Objectives
I1
I1
Optimize Asset Utilization
Optimize Asset Utilization
I2
I2
Continued Cost Management

Employee productivity

decrease cost by

Contribution improvement
Continued Cost Management

Employee productivity

decrease cost by

Contribution improvement
I
I
improvement
improvement
10
10
I3
I3
Align cost structure with
Align cost structure with

Lowest operating cost ratio

Lowest operating cost ratio
segment Strategy
in comparison group
segment Strategy
in comparison group
N
N
I4
I4

Customer satisfaction rating

Customer satisfaction rating
Best in Class Service

100

On
-
time market research projects
Best in Class Service

100

On
-
time market research projects
I5
I5

Billing system improvement

Billing system improvement
Understand drivers of
Understand drivers of
T
T
customer value
customer value
full information
I6
I6
Develop Segment Strategy
Develop Segment Strategy

full information

Implementation new billing


Implementation new billing
E
E
gt90
I7
I7

gt90
system

system

Promised delivery

Promised delivery
Build Brand Strength
Build Brand Strength
I8
I8

additional revenue

New service implementation

additional revenue

New service implementation
New service offering

New product growth rate
New service offering

New product growth rate
R
R
increase by 10

Digitalization development plan
increase by 10

Digitalization development plan
provide VAS
provide VAS
Revenue from new products
Implementation
Implementation
I9
I9

100 in urban area
services

100 in urban area
Gross sell services

Revenue from new products
Gross sell services

N
N

Mobile Investment implementation

Mobile Investment implementation
services
Expand network by digitalization

70 in rural area

70 in rural area
I10
I10
Understand Customer Profitability
Understand Customer Profitability

Expand network by digitalization


85 coverage of
Expansion of the mobile GSM

85 coverage of
I11
I11
Increase existing capacity
Increase existing capacity

Expansion of the mobile GSM

A
network
A
country
country
network
I12
I12
Improve environmental
Improve environmental

Employee health improvement

Health observation program for

Employee health improvement

Health observation program for
women
L
women
L
health safety performance
health safety performance
I13
I13

Regulatory body satisfaction

Regulatory body satisfaction
Manage Regulatory processes

Implementation Investment Program
Manage Regulatory processes

Implementation Investment Program