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Teresa kicks off the Telesperience guide to the PCC landscape.

This spring we're looking at the PCC market. This begins with a description of the vendor landscape.

In this first edition of the Telesperience Directory of Policy Control & Charging, we present around 30 companies. The next edition will feature 20 more, including some more of the big hitters. And there'll be another update in March. We hope you find this information useful. Watch out for the updates – and those of you interested in this area can subscribe to the PCC list to ensure you get information that is specifically relevant to that market.

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Telesperience Directory of Policy Control and Charging – January Update

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Billing is dead, right? Here's Teresa Cottam's post mortem.

I have lost count of the number of times I've been told that billing is dead. Apparently, we should now only talk about charging (also varyingly called realtime, prepaid or online charging). But whether we decide to call it billing, charging or invoicing is irrelevant – the interesting thing to do is to pick over the corpse. Is billing really dead? Is it sick or dying? Here's what I think.

Undoubtedly there is an enormous role for realtime charging both now and in the future. Most of the key concepts of advanced price plans and controls that we envisage rely on being able to charge in realtime.

The question is though, is the future purely one of realtime charging or is there still a role for billing systems?

I'd argue that billing is likely to be here for some time to come. There are a number of reasons why I believe this. Here's just a few reasons:

1. Primary research amongst CSPs shows that many are still planning investment in billing systems – this can be in the form of convergent billing that can handle both online and offline charging, or in the form of an adjunct billing system. In a recent Telesperience study of 32 CSPs we found that just under one-third (28%) were planning to buy new convergent billing systems in the next three years; just over one-third (34%) were planning to buy OCS; and nearly two-fifths (38%) were planning on buying a new billing solution.
2. There are often regulatory or legal requirements for billing. For example, since 2006 the EU has required the retention of telecoms data for between 6 months and 2 years. (EU Data Retention Directive) This must enable authorities to be able to trace and identify the source and destination of a communication, be able to identify the the date, time and duration of the communication, and be able to identify the type of communication, device and location. This data is substantially provided by a bill.
3. Billing is seen as a customer care issue. Regulators are beginning to identify a need to retrieve details of communications made, and the associated charges, in order to facilitate the resolution of disputes. For example, the TRAI (the Indian regulator) has said that all CSPs should provide an itemised bill to prepaid users within 30 days of request and should not charge more than Rs.50 for doing so (at January 2012 rates that's 63p or 97 cents). Around 96% of Indian customers are prepaid, and this represents a significant shift for the Indian market. (This is described in the new  "Telecom Consumers Complaint Redressal Regulations, 2012")
4. Some customers value the record-keeping and granularity of a bill. For example, customers that use a phone for both personal and business use often appreciate the ability to split their charges and require bills as evidence of usage either to reclaim costs from employers or for tax returns.
5. In order to do analytics on usage data we need to have the data stored somewhere – in the classic prepaid scenario data isn't retained. Since data has become the new telco goldrush, then processing and storing data is not just a function of systems such as billing but is now a corporate asset.
6. Not all charges need to be processed or paid in realtime. This puts the emphasis back on balance management and rules which determine how the customer's balance is managed and which charges are billed, which are charged for in realtime, even which are charged to a third party, and so on. What we're really doing in this type of scenario is picking apart what prepaid and postpaid means within the industry and reassembling them into something that is more meaningful and convenient for customers.

Who will dominate this convergent billing-charging world is an interesting question. It's my belief that it's often easier to add billing expertise to a fully scaled up realtime solution than vice versa. However, what we're seeing in the market is that there are far fewer RFPs for pure play billing than for OCS or convergent charging (+ policy control). On the vendor side we expect to see the billing vendors developing or buying realtime solutions to round out their charging offer, and vice versa. We're also expecting to see all serious billing/charging vendors developing, buying or partnering to achieve a credible policy play, because of the tight coupling of 2G PCC.

In the billing world things change but they also stay the same. So when people tell you billing is dead, maybe you should remind them that billing 1.0 might be; but we're already well on our way to billing 2.0. In a later post I'm going to tell you what billing 2.0 looks like and how it differs from its predecessor.

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Teresa Cottam looks at telecoms tariffs, service plans and our approach to pricing. She argues that too often our approach is so basic as to be "dumb", and sometime so commercially stupid as to be "dumber".

In my years in BSSOSS I've had a few jaw-dropping moments when I couldn't quite believe what I was hearing or seeing. I've seen stupidity, naivety, and how the road to hell is gold-plated (never mind paved) with good intentions.  But I must admit that one of the bits of telecoms I seem to spend an awful lot of time shaking my head at is pricing and service plans.

In this post I'm going to point out just seven reasons why our approach to pricing and service plans isn't sensible either from a commercial or customer point of view. I look forward to hearing your views and also your suggestions for how we can improve our approach.

1. Pricing is based on cost+ approach

In telecoms we still tend to have a view of pricing which starts from what the product costs us to deliver – how much network capacity, for example, it will consume. Now on a macro level we do need to align our costs and our revenues, ensuring that the former stays below the latter, but this is not necessarily the case on an individual product basis.  In retail it has long been the approach to use "loss leaders" – products where little if any profit is made – because the retailer knows that these products will tempt customers and customers will buy other goods from them which means across the basket of goods purchased they make a good margin.

Retailers do not price goods based on cost+, they price them based on the perceived value of the goods (so-called value-based pricing). Of course we have the ability to do this in telecoms, but too often our approach and our conversations resort back to cost+.

eg Typical dumb telecoms approach to pricing: This video must cost more to watch because it requires more network capacity to deliver.

The iPhone has clearly demonstrated that it's possible to create a desirable telecoms product that is by no means the cheapest or even the most functional in the market. SMS is another example of where price is not related to cost of data. In fact, as we know, SMS is the holy grail of retailing: a product where the price is high compared to cost but the customer perceives it to be great value.

There is only one defensible constraint here and that is where regulation prevents cross-subsidy of services or mandates the pricing approach. However, this constraint while valid is not an excuse for the entire industry to use a dumb pricing approach across its entire portfolio.

2. Pricing is reactive, follow-me and based on margin objectives

Too often our pricing is not based on a clever strategy aligned to brand values, customer expectations etc but is purely reactive. Company 'A' cuts its prices so we feel we must follow suit. We're also guilty sometimes of having preconceived ideas about our margins which means we don't take a mid-term or long-term view but are married to the here and now. Many CSPs have been blinded by the idea that they need to react to competitors cutting prices by cutting their own prices. The problem with this is that is positions all as cut-price providers. We only have to look at the retailing model to realise that there is room in any market for a number of different business models, and that all consumers are not motivated solely by lowest possible price. By having a better and intentional pricing strategy that's aligned to brand values, along with the insight to understand customers and the likely commercial impact of any price changes, offers or new products, CSPs can respond quickly but appropriately to competitor offers. This may not be by slashing prices – there may be other options open to the CSP.

eg Typical dumb telecoms approach to pricing: Company  A slashes its prices to stay in line with Company B; Company C follows suit.

Quite often, profit and/or service uptake is constrained by margin objectives – that is, we decide what is an acceptable margin before we design the tariff. This means the margin objective determines the price rather than what the market is willing to pay.

3. Competition inevitably mean price slashing

Closely related to the previous problem, is the belief that competition inevitably is based on price. We like to think in telecoms that we work in an ultra competitive market. I'd argue that competition is still low in comparison to that seen in retail. Grocers, for example, don't just have to attract customers once every two years, or even once every month; they have to engage and stay aligned to the customer on an almost daily basis. Yet even in the grocery sector, supermarkets do not automatically slash their prices to remain competitive. They know that only part of the market is highly price sensitive, and even these shoppers value other things such as convenience and choice. Supermarkets are able to remain competitive by occupying certain niches, meeting customer needs, offering a differentiated experience, communicating their brand values and so on. In the UK this means they range from high-end grocers like Waitrose to "value-based" (by which retailers mean "cheap") retailers like Aldi. But even Aldi differentiates itself from competitors by offering high-quality own-label or unbranded goods at competitive prices. CSPs have much to learn from retailers' approach. Although customers do factor in the level of price when making a purchasing decision it is by no means the only factor.

eg Typical dumb telecoms approach to pricing: if we don't reduce our prices in line with our competitors then customers will churn.

4. Pricing is unrelated to the customer experience

CSPs often do not consider the role that pricing plays in the customer experience, nor do they take a customer-centric approach to pricing. I frequently come across examples where the CSP is trying to bamboozle the customer and fool them into believing the price is lower than it is, or things are included that aren't, or plans are unlimited while having limits hidden in the small print. Trying to bamboozle customers is not a good place to start the customer journey from. It positions a CSP in the "used car salesman" market rather than as a professional and trustworthy provider of products.

eg Typical dumb telecoms approach to pricing: if you'd read the small print you'd have discovered we have the right to reduce your speed if you're "over-using" the service.

Few customers articulate to CSPs why they feel confused or why they are developing negative perceptions of the CSP's pricing or service plan. Many just give up and look elsewhere. Price level has many psychological aspects to it – whether the customer perceives the price to be good value is certainly not related to the cost of providing the service, or the margin, but rather the utility of the product, its uniqueness or novelty and so on. Customers also typically perform a comparison of the price with what a product cost historically. Then they compare what competitors are charging and compare. Finally, they may think about how much the product costs, or how valuable it is to them, although in telecoms the former is often an unknown to the average consumer.

I'd argue that how CSP's approach pricing is a key component of the customer experience, and a determinant of customer loyalty. The dumbest thing about telecoms pricing to me is when we charge loyal customers more than disloyal or new ones. This is completely counter-productive and simply fuels both churn and acquisition costs. More importantly, customers themselves perceive it to be unfair.

eg Typical dumb telecoms approach to pricing: we'll design this price plan so it generates overages. (Surprise, surprise, this results in customer complaints (added cost), churn and dissatisfaction.)

5. The perceived wisdom is that customers don't want differentiated pricing

I've worked with retailers and so I've learnt a little about their cunning strategies for parting us from our money. In telecoms we have got ourselves trapped into this idea of consistency of prices – particularly around some network-based services (eg QoS). We write hundreds of articles and spend years wringing our hands over whether differentiated QoS (aka "net neutrality") is moral or reasonable. Questions that retailers would not be asking themselves. If retailers were selling these services they would absolutely want to offer differentiated QoS. They would design a macho, Ferrari of a service offer that was faster, slicker and very expensive. It would be an aspirational service that people paid over the odds for just so they could boast their broadband was better than your broadband – whether or not they actually needed it. How do you think retailers sell high-end sports cars that their owners can only drive at 70mph on UK roads? How do they sell £5,000 handbags to women who only want to carry around their money and maybe a lipstick? (And despite the fact that most coats and trousers come with pockets which renders a handbag unnecessary.)

The point here is that retailers are so much smarter around the psychology of pricing. They know that some people will pay over the odds for "luxury"; others who cannot afford this will upgrade to "affordable luxury". The reason is not because that bag has much more utility to them, or that it cost much more to make; it's because it is different, exclusive and it says "I've made it". This is ceiling-based pricing and its subtle psychological effects can sucker in the most canny of us. As consumers we desire different pricing levels not just because of the product's utility, but because it sets us apart from the crowd. This is true of cars, wine, clothes and hundreds of other types of goods. I'd argue it could also be true in the comms market.

Over-emphasising features rather than psychologically positioning the product is one of the Achilles Heels of telecoms pricing that ties us to Moore's Law.

6. Customer-centric pricing means offering lots of options and letting the customer choose

We tend to believe that having choice is a good thing, and most customers certainly desire the ability to choose. However, there also comes a point at which choice becomes demotivating because the human brain simply cannot process all the options. (See: The Tyranny of Choice – why simplification leads to more sales) We have certainly reached this point in telecoms where there are now so many available products and price points in some markets that customers are struggling to choose, which rather than stimulating commerce is creating inertia and stagnation. I frequently have discussions with customers who point out that despite there being so many tariff options in the UK none of them suit their actual needs. (BillMonitor,  for example, calculates there are now over 8 million different combinations in the UK and rising!) The key lesson here is that too many options are expensive to support and still might not meet the customer need. The ability for customers to self-personalise their offer by choosing from a catalog of options, with the option to change these options at will, is the right approach to customer-centric pricing, rather than the CSP trying to prepackage more and more bundled deals that don't quite fit anyone's needs.

There are more than 60 million people in the UK. Even if we could design 60 million tariffs we still couldn't be sure we'd met everyone's needs, or stayed aligned with their needs. How would a customer navigate those 60 million offers to find the one that suited him or her? How could we support so many tariffs cost-effectively? Sometimes less is more. We need the ability to create a method of pricing and bundling that hides the complexity and enables the customer to add in and remove the options that suit them.

We're still making it too hard for customers to buy from us by bewildering them with options.

7. Technology determines price

Historically, and still largely today, what you pay for your service is frequently determined by the choice of payment you made at the start of your relationship with your CSP. Prepaid customers typically pay more per unit of consumption (per min, per megabyte, per text) than postpaid customers. This is a legacy mindset that has to be eradicated. In future customers will want to have the option of paying however they like, and the only constraint should be that they are only permitted credit subject to their credit worthiness. Basing price on your billing technology in this day and age is frankly daft. It would make some sense if price was related to what it cost to support a customer, but clearly there is more to determining this than simply whether they are prepaid or postpaid. This is a complex argument but in summary we believe that pricing for loyalty makes sense; pricing for profitability makes sense; pricing for payment method doesn't.

eg Dumb pricing approach: Prepaid customers should pay 10p per text; postpaid customers 7p.

Summary

This has been just a quick dive into why telecoms pricing so often fails to hit the mark. In fact the very best pricing strategies I see, often come from developing markets – where CSPs are more aligned to customer need and often act in a far more "retail-like" manner.

There are two different approaches to pricing to consider. This post concentrates on the consumer opportunity, and shows how this needs to take a more retail-like approach. The other opportunity is the so-called B2B opportunity where CSPs are acting as enablers of other businesses. This is a topic I will revisit later this spring. For now though, I would like to direct you to an excellent article on this latter opportunity by Monica Zlotogorski who interviewed eBay's Yaron Levi. See Telling It Like It Is: CSPs and the Cloud

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Teresa Cottam looks at the opportunities for CSPs to support the move towards enhanced privacy.

If like me you were around during the early phases of the internet age, then you can probably still remember a time when it was hard to find information and when we communicated with people verbally. I still remember queuing for phone boxes, a teenage right of passage that is as extinct as the dinosaurs in the UK. And I remember having to order books from the inter-university loans scheme and wait weeks for them to arrive before I could take a look to see if they contained the information I needed.

Today, everything and everyone is increasingly interconnected and that has brought enormous advantages. Writing a story would have taken weeks of painstaking research before the 90s, involving physical trips to read through newspaper archives or consult vast caverns of books. Even finding the right person to talk to in a company, or that the company itself existed, was far more challenging than today.

In the early 90s I received maybe ten to twelve emails a day; within a year that reached 30, then 50, 100; now unfiltered I'd be receiving hundreds of emails – more than I can possibly read or answer. What's more I have Skype texts, voicemails, SMS, Tweets, Linked In messages and so on. And with the advent of smartphones we're now never really able to shut the door on it anymore.

Research shows smartphones blur the lines between work and home

According to Ericsson research, 40% of Americans admit to using their smartphones in bed in the evening and 35% in the morning before they get up. And it's not just Americans either. Recent research from UK regulator Ofcom revealed that the British are also a nation of smartphone addicts. Twenty-seven per cent of adults and 47% of teens now own a smartphone, with the majority (59%) having acquired them in the last year. And when asked about the use of these devices, 37% of adults and 60% per cent of teens admit they are ‘highly addicted’. The Ofcom report paints a picture of always-on individuals, continually connected and a blurring of the work-home boundary.

• 81% of smartphone customers have their mobile on all the time – even in bed
• 38% of adults and 40% of teens say they have used their smartphone in bed after having been woken by it
• 23% of adults and 34% of teens have used their smarphone while eating
• 22% of adults and 47% of teens admit answering their smartphone in the bathroom or toilet.

And while 30% of smartphone users take personal calls during the working day, 70% take work calls during holidays, evening and weekends – with 24% doing so regularly.

Health implications of always-on lifestyle

A range of research findings suggest that the always-on lifestyle is not necessarily a healthy one. Side effects range from "Blackberry thumb" to mental health problems, antisocial and aggressive behaviour, and sleep disruption and deprivation. Research by AK Consulting studied the effects of constant BlackBerry monitoring and found workers' productivity dived as a result, causing them to take up to three times longer to complete a task using a spreadsheet. Othere research reports the rising incidence of the phantom vibe – where stressed workers start to feel non-existent vibrations from their smartphone.

Chicago police Sgt. Jeffrey Allen decided that enough was enough and sued City authorities for all the "overtime" he and his colleagues spent outside work hours monitoring CrackBerrys and responding to them on behalf of the City. City authorities in turn scoffed at the suit. Chicago Mayor Richard Daley was reported as saying: "This is unbelievable. We're public servants. If I asked for that, I'd be paid millions of dollars. We'd have to take all the BlackBerrys away from public servants." Daley also called the suit "silliness in time of economic crisis."

However, Daley might live to regret these words, since in Germany at least the tide is turning in favour of workers. Under a new set of labour rules agreed between unions and car-maker Volkswagen, emails will only be forwarded to company BlackBerrys during a shift and for 30 minutes at either end. After that the BlackBerry server will simply be turned off. Heinz-Joachim Thust of VW works council is reported as saying: “The new possibilities of communication also contain inherent dangers.”

Deutsche Telekom came to a similar conclusion in 2010 instantiating a Smart Device Policy that ensures workers have communication-free time when they're not at work. And more recently, Atos Origin's CEO Thierry Breton announced the company's intention to become a "zero e-mail company" within three years. Breton noted the volume of e-mail was "unsustainable for business," citing that his managers were spending between five and 20 hours weekly on e-mails, using 25% of their time searching for information, and reporting that only 15% of emails they received were useful.

Meanwhile the CEO of Henkel, Kasper Rorsted, imposed a BlackBerry free week over Christmas and New Year for his management team, commenting: "I don't want to have to read mails just because someone is bored somewhere and wants to show he's busy."

CSP opportunities: why privacy is the new connectivity

Listen to press reports and they'll soon have you convinced that telecoms is so commoditised that my cat could run the world's networks and he'd be happy with the 25 pence you gave him for doing it. Clearly this isn't yet the case – especially when new revenue-generating opportunities abound. Whereas once network coverage and connectivity were clear differentiators for many CSPs – and we could argue that there is still some room for differentiation here – now an emerging new opportunity is smart privacy.

Telesperience defines smart privacy as: "a service that supports the ability to set rules that restrict access to a mobile device, mobile services or applications, or channels of communication". It is not about restricting the spend or usage; but about restricting access for privacy, social or health reasons.

Here the CSP has a great opportunity facilitating companies wishing to protect workers' rights to downtime, or even ensuring that agreements with unions, and possibly in due course regulators, are supported automatically and at low cost. We believe that both business users and consumers will increasingly value the ability to set rules around how, when and where they can be contacted – particularly when it comes to vulnerable groups such as children. Dumb privacy involves turning off the device, or the servers in the case of Volkswagen; smart privacy in contrast doesn't require you to turn off the device but allows you to disable certain categories of contact, services and so on – either on a scheduled or ad hoc basis. Smart privacy means that kids can't access the internet on their smartphone during school hours, or communicate with peers; however, they can call mum in an emergency and receive calls from their parents or teachers.

Smart privacy is something that I predict consumers and businesses will increasingly value as communications overload increases and channels of communication proliferate. As I said in my recent article: SmarthPath: where is the regulator, the rules and the industry upside? on the whole CSPs are trusted brands, and they have the opportunity to be brokers of our data – ensuring we are protected, that we gain the "what's in it for us", and that our risks and burdens are managed. CSPs can only do this though if they maintain the high ground and the trust that goes with it – by doing not just what's legal, but also what's right, what's ethical and what customers expect or want. This starts with really understanding customers, understanding their preferences and empowering them to communicate how they choose rather than being at the mercy of all and sundry. I am mindful at this point of a story recently related to me at a 160 characters event where a participant described the onslaught of SMS faced by the average Russian customer. In such an environment there is real value in the ability to manage such an unasked for attack on our attention and time.

Being a safe port in the data storm has considerable value to both CSP and customer. And I think wise CSPs recognise that money is to be made not simply from providing more and more services, connectivity, applications and communication, but also from helping subscribers control and silence the noise.

PathIntelligence sensor, image by DCRC-UWE via Flickr

Teresa Cottam looks at the controversy surrounding the FootPath retail monitoring system.

In November, the UK newspaper the Daily Mail, broke a story about how retailers had been quietly trialling and installing the FootPath technology from a British firm PathIntelligence. The technology enables retailers, transport authorities and others to analyse the behaviour of pedestrians using mobile phone signals. The aim is to enable companies such as retailers to understand how customers are using their stores in order to optimise layouts and thereby improve sales.

The issue

The problem is that yet again a bunch of technologists and marketers went off and installed what is essentially fairly benign technology without mentioning it to customers. Well okay, the mall owners who installed it added a line to their CCTV notices where of course everyone was going to ignore it, and were unlikely to understand the significance even if they did notice it. For our overseas readers, I'd just like to point out here that the UK citizen is the most watched in the world. Even totalitarian states have less CCTV surveillance per capita of innocent citizens than we do. The issue is significant because the country is so small: thus the ability of any citizen to escape being watched is increasingly limited. Typically each and every one of us is captured on CCTV dozens of times a day.  As such here in goldfish bowl UK we're becoming moreand more sensitised to any initiative to track or monitor us further.

So is the PathIntelligence outcry merely a Luddite overreaction? I don't believe so. I think the problem once again does not lie with the technology but with how it has been implemented.

• The companies – largely retailers – who installed the technology failed to reasonably consult or inform their customers. This created a feeling of stealthy surveillance, as though something was being taken without permission. The signage was clearly inadequate and the explanation insufficient to allow customers to make an informed decision about whether they wished to be surveyed or not.
• There was no exchange of value. There is a clear value to understanding customer movement – otherwise PathIntelligence wouldn't have a business at all. However, at no point did anyone appear to consider sharing any value with the customer. This does not just create a feeling of exploitation amongst customers, it clearly is exploitation of customers.
• Legislation and regulatory rules are failing to keep up with technology. Although we live in a region with one of the tightest set of data privacy rules in the world, time and time again we the UK public find ourselves in a situation where our information, data, images and so on are being used without our permission. Whether that's our house picture now available for global view on the Internet courtesy of Google, our image being resold to reality TV shows when we fall over in the street, or our movements being monitored for profit. The regulators need to wake up and ensure that we are asked our permission before our data is used; and likewise the principle should be that our image and that of our home belongs to us and cannot be exploited either by local police authorities or multinational companies.

The lessons

What do I think should be done about this? Well clearly PathIntelligence deserves its wrist-slapping because quite frankly it should have thought about the potential for consumer backlash and done something about it. This isn't about the technology per se; it's about an exploitative business model and a failure to act like a good corporate citizen. What do I mean by that? To prosper companies such as PathIntelligence need to go beyond the bare bones of the law and do their utmost to act in the most ethical fashion towards end customers, and support their technology with training and consultancy to ensure end customer needs are being met. There's an upside here for the company, since it could create additional revenue streams from training retailers and others how to do analytics without offending or upsetting customers. What's more, if they were a bit more entrepreneurial they could actually create a loyalty-generating opportunity for retailers. How about an approach that says – every third trip you get a free cup of coffee for letting us understand your shopping habits, or a few free reward points per visit if you keep your mobile switched on?

As a customer though I'm not sure I'd want to entrust any data to a start up. With a more trusted brand I'd be happier to share my footfall data, my loyalty data and answer questions directly that retailers would find useful. So that begs the question as to what sort of company would you share that with? And a good candidate is your mobile company – with the proviso they can ensure the data is secure, we're not getting bombarded and they don't abuse our trust.

So that's one potential upside for the mobile industry – here's another: I believe that instead of rusting yellow signs put in the least obvious position in malls, the information commissioner and Ofcom should insist that customers entering the mall are warned by text that their movements are being anonymously tracked. They should be given the option of a) not being tracked (at the very least being warned to switch off their mobiles to avoid tracking, but preferably the option to have their data deleted from the database) b) offered a reward for allowing the tracking. The problem is that PathIntelligence can't do this. Why? Becaues they do not have the mobile phone numbers of the people they are surveying – but of course the mobile firms do.

In short I do not blame PathIntelligence for what has happened, since it is a combination of a lack of thought on the retailers' part and the general climate within a country that is now very sensitive to any indication that their privacy may be being invaded even more. However, I do think PathIntelligence could have anticipated this effect and done more to mitigate it. I also blame mobile firms for this. Yet again they have missed an opportunity that they are well placed to meet, and which they can combine with other capabilities into a much broader offer to retailers. CSPs can also act as gatekeepers to consumer privacy, which helps deepen their own relationship with their customers (but only if they act ethically and not just according to the bare legal minimum). In fact, as CSPs should be noting, FootPath is just the first step on the road to a mobile-based Retail VAS.

Related Content

Microsperience post: Smart Privacy: why privacy is the new connectivity

As you’re probably aware, fishermen are renowned for their tales and tendency to exaggerate. The following tale may relate to fish but is most certainly not exaggerated. In fact there are several key lessons we can learn from it.

Two years ago almost to the day, in December 2009, the UK supermarket Asda stole headlines when it began selling 2.6lb Alaskan wild salmon for the recession-beating price of £3. This was news because in the UK these salmon would normally cost nearer to £7. How could they do it? Was this inferior salmon? Its rivals not only missed out on the market opportunity but the publicity made them look boring, shabby, less generous in the season of generosity.

While not revealing their margin on this deal, Asda gave a simple explanation of how they could offer such a deal: the firm had discovered a new shipping route which enabled them to shorten the journey from Alaska to the UK and thereby massively reduce the cost of the salmon.

What can CSPs learn from this fishy tale? Firstly, I often hear people in the global telecoms market making sweeping statements about everything from speed of innovation to quality of service. It’s “impossible” for mobile QoS to be like fixed, for service to be good end-to-end, for CSPs to innovate in anything less than 9-12 month cycles.

“It always seems impossible until it’s done.” Nelson Mandela

When I hear people say such things I tell them that this might be the reality today, but we need to improve our performance, never be satisfied with it and keep on improving. Sometimes operational staff find it hard to see when we’re reaching an inflection point. They’re so busy keeping our lights on that they often haven’t got chance to raise their heads and dream big dreams of how it could be better. They work really hard to deliver incremental improvements, continually increasing our performance in a whole host of areas which produces positive outcomes for customers such as faster broadband speeds and lower tariffs.  However, every now and then we approach one of these inflection points which render incremental improvement no longer adequate. Someone identifies a way of doing things differently and the result will be an enormous leap forward. Such a leap is usually inspired by one or a small number of people having a clarity of vision and sufficient imagination to conceive of things being not just a little better, but a lot better.

“It’s kind of fun to do the impossible.” Walt Disney

Whether you’re an Apple fanboy or not, few of us would argue with the fact that Steve Jobs inspired just such a leap forward in the handset market. What I’d argue is that we’re about to witness similar leaps forward in terms of service plans and tariffing. For too long, billing and charging have been seen as something necessary but dull. Those with greater clarity of vision can see that within the BSS domain lie enormous possibilities for CSPs to differentiate themselves, create much-needed new revenues and to delight customers. The question is are you as a service provider happy to risk falling behind when the leap comes, or are you one of those already preparing their run up?

Tomorrow I’m going to point out why our approach to tariffing in many markets is old-fashioned, boring, ineffective and fundamentally flawed. For now I’d like you to consider the lesson in my fishy tale. Asda outperformed its rivals by linking several key pieces of information in order to create an opportunity for itself.

• It knew based on historic sales data and customers preferences that there was a market for good quality salmon around the Christmas period if it could get the price right, and that this was a time-limited opportunity.
• It recognised that it could lower the price by changing the shipping route and making it more efficient.
• It realised that cut-price salmon was an offer that would draw in customers who would buy other products as well – the salmon was not just a standalone great offer but a component of a wider proposition.
• It was aware that the quality of the product had to be right or the whole opportunity would be wasted.
• It calculated that rivals might accuse it of supplying an inferior product, so it ensured that its spokespeople were briefed to explain that the salmon was not just high quality and flavoursome but also “sustainably sourced”.

However, having the idea was not enough: all parts of the retailer had to work together to deliver it (in a way that CSPs still struggle to do). Getting each operational team to do their part, understanding the customer and the opportunity, working with partners to deliver the right product, at the right price and at the right time are what makes the difference between a successful retailer and bankruptcy. Data is the retailer’s friend, but so is creating an efficient delivery mechanism for their products.

So next time you find yourself tempted to say that something isn’t possible in telecoms think about how we’re delivering today what was impossible yesterday. Stop focusing on the negative and start focusing on how to deliver the (currently) impossible. Don’t make the excuse that there’s no money for innovation, after all “necessity is the mother of invention”. In other words you may need to innovate faster, cheaper and more effectively but “not innovating” is simply not an option. And finally, remember the difference between “impossible” and “I’m possible” is a small technicality!

Related content

Microsperience (with free white paper to download): The Olympic Opportunity – will UK CSPs be able to maximise it?

Microsperience: Is the Telecoms Industry Too Focused on the Negative?

We may have, for once, got our major infrastructure projects delivered on time for Olympics 2012, but in true British style, the UK communications business is bracing itself for the likely impact. We're arguing about capacity, QoS and the politics of communications provision, but essentially most of the noises from the industry are still network-centric and still defensive.

I'd argue with the best of you about capacity. Firstly, capacity is not the only thing that determines QoS, and we have to see QoS not from our point-of-view but from the customer's perspective (as a key component of so-called QoE). But the main point I'd like to make about capacity is that building out new capacity is only an option until a certain point is reached. At that point the CSP has to move from building capacity to optimising the use of what it has. Capacity building is not a short-term option.

In fact, this is where BSSOSS really comes into its own. Let's be clear: there is no single solution that will deliver a great Olympic 2012 communications experience. Rather a whole raft of different strategies and technologies will help maximise the opportunity and create a great customer experience.

Some of these are network-centric. We need better insight into the experience the customer is actually receiving and the performance of our networks at both the macro and micro levels. We can employ technologies that help manage our data and applications so that the available capacity is used optimally and a good customer experience is maintained. There are undoubtedly some great options out there that have a very important role to play, but this is not what I want to talk about today.

What I'd like to talk about is the role of the BSS, which is possibly the most neglected part of the equation. The BSS can help support the design of sexy new tariffs and offers, and service plan innovation, that will help the CSP proactively shape traffic while also delighting customers. The problem here isn't the lack of great technology to support this, it's the lack of joined-up, positive and strategic thinking within CSPs. And another missing piece of the puzzle is the ability to work proactively with partners. There's a great opportunity, for example, to work with roaming partners in order to market out Olympic packages before the visitor comes to the UK. This has a range of benefits to the home CSP in that it gives more insight into the number of roamers and helps them influence those roamers to behave in a way that makes operational as well as commercial sense. It provides a better customer experience, as well, since it gives the roamer certainty and makes them feel cared about by their home provider, as well as the visiting network.

Furthermore there are great opportunities for CSPs to market products not just to the Olympic visitors and enthusiasts but also to the "refuseniks" like me, who have no interest in the Games. There are many, many potential business partners who need to target these people in order to ensure that they still make a profit while the Games are on. They range from providers of entertainment (think Alton Towers and Nottingham Playhouse) and hospitality (hotels, restaurants etc) outside London, as well as retailers and more. If the CSPs can provide a retail pipe for these businesses then there is a great win-win for everyone.

But we don't work with our partners in such a strategic way. We don't see ourselves yet as a platform for retail and business innovation.

The question therefore is can the commercial departments of the CSP (product management and marketing) work with the BSS department, OSS and networks to develop an Olympic strategy that delivers great outcomes for the CSP, the customer and partners? This is about orchestrating all elements of the customer experience (see The Four Main Pillars Of The Telecoms Customer Experience), plus their supporting departments, processes and systems, to work well together. But can CSPs do this while also thinking big enough thoughts to create a truly delightful experience for all customers (both enthusiasts and refuseniks) and a profitable opportunity for themselves? Or is Olympics 2012 going to be remembered for outages and lost opportunities? In our view, success will require CSPs to move from being purely reactive and even proactive to being positive.

Related Content

Telesperience white paper (downloadable PDF) Olympics 2012: opportunities and risks

Microsperience story: Is the telecoms industry too focused on the negative?

Image by fakelvis via Flickr

Teresa Cottam tells you why UK Communications Ombudsman Lewis Shand Smith is “right on the money” with his recent comments, revealing a failing by CSPs and UK regulator Ofcom to protect UK consumers.

EU roaming regs have helped resolve one source of billshock

We might be still patting ourselves on the back in Europe that we’ve implemented regulations (courtesy of the EU) to avoid roaming billshock. As I predicted back in 2009, other countries have taken note and decided that this might be a good idea for their consumers too. But before we get too smug, this doesn’t mean that billshock has gone away or even decreased overall. It just means the spotlight now needs to turn to two other common culprits – data and broadband charging.

Other sources of billshock and charging uncertainty are growing

This week the UK Communications Ombudsman (the customer complaints watchdog) Lewis Shand Smith highlighted the growing confusion, billshock and dissatisfaction surrounding data service plans. His comments, couched in diplomatic and constructive terms as they were, lay bare the fact that the UK regulator Ofcom has substantially and repeatedly failed to tackle clarity and control around data and broadband pricing. Something that is harmful to customers and to the industry overall, and has long needed a heavier hand of regulation.

There is little excuse for it, because the technology exists to help avoid it, and business practices could easily be adjusted. In fact in my opinion it’s just another indication of how Ofcom has “gone native” and is now so up to its eyes in industry posturing that it has forgotten its primary duty to champion the needs of customers. We might have felt that Ofcom’s forerunner Oftel sometimes went too far in its pursuit of better conditions (eg lower prices) for customers, but in its prime it aggressively pushed the industry to higher and better things. In contrast, Ofcom is a middle-aged man, sitting on a couch and spouting lots of knowledge about what’s going on and in his experience what this means. But he isn’t active enough in challenging or showing the industry how to do better. The result is that the UK is stagnating and falling behind the best in the global industry, and customers are suffering conditions that should not be tolerated. We like to be “oh so superior” in thinking we’re in the first world and have the best of everything, but consumers in developing markets such as Africa sometimes have better functions, greater clarity and a better deal than UK consumers.

That’s why I applaud Shand Smith for “outing” the issue around broadband and data charging. He points out that customers do not understand data plans, advertising around mobile services, or their own usage, and that this inevitably leads to overcharging, billshock and dissatisfaction.

“Unlimited” – the most abused word in the English language

Shand Smith offered three very simple and achievable ideas to combat this problem. The first is that “unlimited” (arguably one of the most abused words in the English language) should be defined precisely and clearly. When CSPs advertise something as “unlimited” then most reasonable lay people interpret this according to the usual English standard definition to mean “without limits”. Of course, increasingly our industry has willfully misinterpreted the word, burying limits in the fine print. So my question is how have Advertising Standards permitted the use of a word that is clearly misleading, and is intended to be misleading? Why does Ofcom permit it?

Next, we know that the speeds touted in the adverts for broadband are also woefully misleading. USwitch recently published the results of two million broadband speed tests in the UK and came to the conclusion that not only do speeds drop like a stone during busy periods, but that few people experienced anything like the touted speeds – to do so people have to live in one of the fastest speed areas nationally and would need to be using the service between 2am and 3am to get something like the advertised speed. It’s advertising, after all, so there’s a tendency to push the positive to the limit – though I’d argue that’s happened to a point when it is no longer representative of the reality of service provision.

What’s interesting about the USwitch data is that it records what customers are actually experiencing, not theoretical speeds. As such, the USwitch report highlighted something that UK consumers have long suspected. That for many people speeds plummet during the times when they most want to use the service. If you’re unlucky enough to live in Weston-Super-Mare in Somerset, for example, then recorded average download speeds drop almost two-thirds (64%) from off-peak morning rates of 9.5Mbit/s to 3.4Mbit/s in the evening.

This led USwitch to conclude: “Not many internet users enjoy the maximum headline broadband speeds offered by providers, and certainly not during the working week.” Of course the industry claims that the data is flawed and that it’s inevitable that speeds will fluctuate. The point for me, however, is that how come they are permitted to advertise an often theoretically favourable speed for broadband and not a speed that is more representative of what users are likely to receive? I don’t care that someone in London could at 2am in the morning receive a speed approaching 100Mbit/s. What I want to know is what is the average speed I could expect out here in rural Nottinghamshire during the working day? Is it really beyond the wit of man to devise such guidance so that I, as a customer, know what to expect and can reasonably compare between service providers?

By not providing information that I can use to base my purchasing decisions upon, the industry has created an environment of distrust, and this has been aided by Ofcom which should have done far more to limit the advertising claims and provide workable figures to aid customer comparison.

Talking specifically about mobile, Shand Smith points out that “unlimited” deals are frequently limited and are leading to billshock events. I ask again: how is it that the industry can redefine the word “unlimited” and get away with this in their advertising? Shand Smith says that the industry could be doing far more to warn customers about their data usage to help them manage their spending. He makes an enormously relevant point here: “Most mobile operators are playing by the rules, so that then begs the question are the rules what they ought to be?”

Hidden in this question are two key points: firstly that Ofcom has not sufficiently regulated the industry to provide rules that protect the rights and needs of consumers; secondly, that the industry is working in a manner which provides little incentive for any player to push for better, fairer and clearer conditions. I strongly believe that if CSPs went beyond watching the opposition there is an opportunity here for a provider who offered more help and control to customers, as well as clearer pricing options and choices, to differentiate themselves.

Bamboozling the customer is bad business

From my point of view the current situation is pretty stupid from a business point of view. Firstly, it leads inevitably to customer disappointment at a time when the entire industry is talking about the need to delight the customer and enhance their experience. Secondly, it leads to customer disappointment unnecessarily, since it isn’t fooling the customer or differentiating the provider. Thirdly, it leads to inflated costs due to complaints and churn. Fourthly, it damages brands because it communicates that customers cannot trust providers to be honest with them – and without trust there is no basis for loyalty.

Shand Smith’s sensible suggestions and an unconstructive industry response

Shand Smith makes three very achievable suggestions as to how to resolve this situation:

1. clearly define what “unlimited ” means in advertisements
2. give advice to consumers so they know when they’re reaching their limit
3. give advice on the amount of data that’s being downloading.

What was the industry response to this? “There are a variety of different tariffs and deals that let customers manage their bills effectively…Customer satisfaction is always a priority and there are several ways people can keep track of exactly how much data they use.”

My response to this is that clearly the packages and methods are not working, since customers are still confused and billshock events are still happening. I’d like to see a less PR-based defensive “spokesperson’s” response and instead hear some of the chief execs telling us what they’re going to do about it. The invisibility of our telecoms chief execs is a matter of concern to me; in retail you could bet your bottom dollar that if there was such a key challenge to business models the chiefs execs of Tescos, Sainsbury’s, Asda and Morrisons would all be fighting each other to give their opinion of this and what they intended to do about it on the early evening news.

Customers need more help in understanding data costs, and the technology is readily available to do this

The truth is that data charging is very complicated from the customer’s point of view – there’s an understanding gap between the tariff and how the service is consumed. How can a customer be expected to estimate how much data is likely to be used by downloading a video? There are simply too many variables to calculate for any lay person to make a reasonable guess or assumption. The BBC correspondent reporting the Shand Smith story concluded with this advice: “Depending on your download connection the amount of data you use for one song is roughly 3 megabytes, for a three-minute video it’s 15 megabytes and for a half hour TV show it’s around 350 megabytes.” This is highly simplistic to the point of being misleading because it fails to take into account what is “video”. That is, it isn’t a single service with a single set of characteristics – the cost of video cannot be measured in “time” (something the customer finds easy to understand) because the industry is measuring it in data volume. And data volume is a translucent measure since the data size is highly variable depending on the format, whether the file is optimised or compressed and so on. Furthermore, it’s the content provider not the operator who controls the size of the file, and currently there are few incentives for them to minimise the size of the video or application.

The answer, of course, is to provide control to the handset so that the customer can see how big a file is, how long it will take to download, and what the likely cost is, as well as make informed choices about the available options. The cost of downloading at 2am when there is plenty of spare capacity on the network should be less than at 7pm during busy hour. That makes business sense and it makes sense from the customer’s perspective. By supporting differentiated pricing, the CSP can provide choice to the customer and also shape their traffic better to the benefit of themselves and all their customers.

This is just one example – there are many more – but it demonstrates that CSPs have to stop being so defensive and either unintentionally or deliberately misleading their customers. They also have to stop pretending that there’s no solution to these issues. By being clearer and more honest, by offering options and advice, they could instead present themselves as the “honest Joe” and provide the basis for a trusted relationship with their customers

Ofcom, Advertising Standards and the EU will eventually act – the wise provider will pre-empt this

I believe that since the technology is available today to improve matters by taking the guesswork out of using data services (thereby increasing customer utility), Ofcom should be rolling out industry-wide guidelines. I want to see Ofcom force, encourage, strong-arm or kick the industry up the backside (if it is not willing to reform independently) to increase the transparency of data pricing in a way that means customers can make reasonable decisions. Understanding tariffs and terms & conditions shouldn’t mean having to have a PhD in Accountancy, Physics and Law.

But whether Ofcom acts or not, I’d like to see UK CSPs understand that this is a point of differentiation and loyalty. I’d like to see them work far harder to clarify charges, help customers gain control of their spend, and provide more choice. I’d also like to see both Advertising Standards and Ofcom forbid the industry from making misleading claims in advertising. Apart from anything else this just breeds distrust and is bad for the entire industry. How can we pretend to be professional and trustworthy when the claims in our advertising would make a used-car salesman blush?

Isn’t it a sad indictment of all those customer-centricity and customer experience noises that we’ve been making when we are effectively training our customers not to trust us through misleading advertising and charging structures that the average person cannot ever hope to grasp? Isn’t it sad that rather than embrace some really sensible and achievable suggestions, the industry’s immediate response is one of denial and rebuttal? As I said in a previous post, it’s high time we became more positive and stopped the defensive posturing which is helping no-one. In other words, there are real opportunities here to differentiate offerings and provide a level of control and insight that will encourage greater uptake of services. Until customers are confident in data pricing and in what they’re being sold then the industry cannot move to the next level, and those elusive next-generation revenue streams will remain just that.

Complaints are critically important to the customer experience

Often it’s how a CSP deals with a customer complaint that to a large extent defines how the customer feels about the service provider. Customers may be frustrated, upset or angry when things go wrong, but if their problem is handled well then that can positively change their impression of their service provider. In fact it can become a point of loyalty rather than of dissatisfaction or churn.

“The customer doesn’t expect everything will go right all the time; the big test is what you do when things go wrong.” Sir Colin Marshall

From the CSP’s point of view the complaint can be viewed as a:

• cost – which needs to be minimised
• risk – a risk to the brand, which requires defensive measures; or a risk to the business due to customers churning or taking legal action; or a source of fraud when customers use an over-generous compensation system in order to make money or benefit
• alert - in many countries relatively few customers complain, many just walk away. Therefore a complainer is alerting you to a potential problem which may be more widespread. This enables you to act proactively in order to prevent dissatisfaction spreading
• loyalty building exercise – when a customer complains this provides a crucial point of interaction which can be used to build loyalty
• legal issue – certain rights or levels of performance may be guaranteed by law. The company may have a legal duty to comply, recompense and resolve, and failing to do so may lead to legal or regulatory penalties
• commercial issue – the reported problem may be in breach of a commercial agreement such as a contract or service-level agreement (SLA)
• point of differentiation – a company may use its complaint handling or low level of complaints as a point of differentiation from its competitors. Thus minimising complaints and resolving them quickly and effectively may be closely tied to brand values
• point of learning – about the customer, their needs, likes and dislikes and so on
• point of sale – there may be an opportunity to sell the customer additional services to enhance their experience, although to be effective this needs to be handled extremely sensitively.

As Ashley Bowen argued in his article Too Many Customer Complaints – or Not Enough? properly analysed complaints can trigger continual improvement within a CSP – they are a business opportunity and not just a problem. And here Mr Bowen is in good company.

“Your most unhappy customers are your greatest source of learning.” Bill Gates

CSPs need to improve their reactions to complaints, but reactivity is not sufficient

Many CSPs still have not sufficiently refined their complaint handling processes. Yet this is an area where they can differentiate themselves from non-traditional rivals such as the OTT players, who often have a far weaker approach to problem resolution. So OTT services may be appealing to customers initially, but when things go wrong it is often a very different story. The OTT player has typically concentrated on price, product, marketing and sales rather than investing in robust processes to resolve problems which can and do occur.

I frequently hear of CSPs who have lost customers to a rival who has won them on the basis of a new plan, lower prices or a new product; a year down the line those customers may start to trickle back when they discover that the customer support provided was not what they expected. This rarely makes the headlines, but is nevertheless a relatively common phenomenon.

Thus the first hurdle is to react swiftly and effectively to a complaint; but this is just the first hurdle.

The next challenge is to become more proactive. In other words to resolve the problem before the customer is so irritated they decide to complain, or to compensate before they have to ask, or even to prevent or minimise the problem in the first place!

Proactivity enhances the customer experience by demonstrating professionalism and caring. When done well it communicates to a customer that the service provider is really striving to meet and exceed your expectations. It also reaches out to those customers who wouldn’t complain but would simply churn, and can therefore create very valuable touchpoints.

The next step – positivity

My main point though is that currently there is an overfocus on when things go wrong, and upon selling things to customers. Customers are viewed as complainers and patsies. Now this might seem natural, since complaints have to be handled and sales have to be made. However, these two necessary functions fit within a bigger context, and overfocusing on either is a big clue that the CSP is not realistic or customer centric. Why?

• Many customers never complain – they just leave. So customers are not complainers; complainers are a subset of customers. What about all the customers who don’t complain? There is no opportunity to influence them or find out what they want.
• Focusing too much on complaints means that the CSP is not capturing the positive. ie which aspects of the experience are seen as good, differentiating and valuable by customers? Understanding this helps you to build on the positive and create more successful services and experiences. Pessimism is also bad for your staff. If you ring a CSR and say thank you for something that went well, the CSR may not even have a bucket for that. I’ve done it and as a customer it’s rewarding to hear how really, really excited and very happy the CSR is because such an event is as rare as diamonds. My point is that more customers would thank your staff if there were mechanisms to do so. And these positive interactions are not just morale boosting, they are also a source of very valuable information and are relationship building.
• Seeing customers as patsies to sell to is not customer centric. Instead there needs to be a shift in mindset to being a company that enables customers to do what they need to do, instead of trying to sell them services you want to sell.

“Too many people think only of their own profit. But business opportunity seldom knocks on the door of self-centered people. No customer ever goes to a store merely to please the storekeeper.” Kazuo Inamori (founder of KDDI)

So why does positivity matter so much? In school we learnt this little rhyme from Oscar Wilde which describes it well: “Tween the optimist and the pessimist the difference is droll. The optimist sees the doughnut; the pessimist the hole.”

In other words a positive organisation will see opportunities where a pessimistic or defensive one will not. That’s not to say that we don’t have to be pessimistic or defensive ever – in times of crisis we need to be realistic after all. However, the telecoms market is entering a period of unparalleled opportunity. Instead of focusing on loss of control, loss of market share, falling revenues and so on, we should instead be focusing on broadening our outlook and of embracing a more positive and holistic relationship with our customers. By doing this we will see possibilities and opportunities that weren’t there before or that we couldn’t see. That’s why we shouldn’t be grieving for the old world of telecoms, but opening ourselves up to what the future will bring.

From the viewpoint of how we manage our customer relationships, embracing positivity requires a fundamental shift in thinking. It means capturing suggestions and positive feelings and utilising these. It means engaging with customers to deepen the relationship without the immediate purpose of the engagement being sales. It also means creating a much better understanding of what our customers really need, want and value rather than imposing our vision of telecoms upon them – it’s about enabling them to live their telecom future and “making it happen” for them.

But a word of caution – fake or “canned” laughter is very easy to detect. False positivity is likewise offputting. Asking customers what they like can result in fake answers. Instead positivity has to be captured at the point of delight. The challenge is to provide an enjoyable and easy-to-use mechanism to do so. This is something it would be great to discuss with you: how do we create the buzz and positivity around telecoms brands that some other brands enjoy? And how do we embrace mind-broadening positivity amid what are some tough market conditions?

I’m worried – we’re not keeping up. I vividly remember one of my old school masters who, whenever I made a particularly inane comment in class, would look at me over his horn-rimmed glasses and say: “keep up Bowen, keep up”. I can see him making the same comments to modern business: “keep up, keep up”.

Right back to early times, business has always been looking for smarter ways to do things, constantly driving for further efficiency, and technology has always been a key focus.

Computational tools have evolved:

• The abacus goes back to Sumerian times in ancient Mesopotamia over 4000 years ago and it performed a key role in most of the ancient civilisations of the area
• Much later came the slide rule in Europe’s Age of Enlightenment
• Then the beginnings of electronic computers, with Colossus built by the Brits to decode enemy messages in World War II, followed by the big American mainframes aiming this time at business and commerce
• Next the ubiquitous personal computer brought power to the home and now we have apps on our smart-phones bringing huge capability to the individual

Alongside these tools, software has evolved enabling us to use the hardware:

• Early mathematical systems were the ‘language’ of the abacus
• Logarithmic maths was used by the slide-rule
• Colossus and the early US mainframes used their own proprietary machine code
• As software development became more widespread, different layers began to develop taking ‘application’ development just that little bit away from the hardware itself.

In many ways the associated ‘people roles’ have developed in line with the tools and the software but with one very big hole:

• Designers of the tools have always been the clever guys:
  • The designer of the abacus has been consigned to pre-history but it was a notable invention in the early civilisation of the time
  • William Oughtred’s slide rule was a natural exploitation of contemporary thoretical work on logarithmic maths and was a huge boon to Isaac Newton and others in the expanding scientific community of the time
  • Tommy Flowers and his team were giants in early electronic computing as were the pioneers of the huge American mainframes
• The builders of these tools are the skilful guys, able to turn complicated designs into durable devices – initially carpenters for abaci, and later, electronic gurus for modern machines
• Software designers are the astute guys second-guessing what people actually want to do with their slick new computational tools
• “users” have perhaps changed the least, often with high expectations and a readiness to blame the tool whenever it gives the ‘wrong’ answer. I like to imagine an ancient Babylonian tax collector in 1500 BC trying to calculate the amount of tax due on a herd of goats and going round to the carpenter’s house for an explanation as to why his abacus was giving the wrong answer!

However, I do not believe that the user/business role has kept up with modern development.

Hit and run vendors…

Twenty or thirty years ago application software was becoming complex and inflexible, taking an age to develop and providing a fixed, hard coded set of functionality. Users either had to change their ways to fit in with the system or they had to pay for development of an entirely new customised product, often costing a small fortune.

This was commercial nonsense. The market was demanding products tailored to their exact requirements while at the same time putting strong downward pressure on prices.

The wise guys recognised this and produced hard-coded ‘packages’ that had flexible configuration layers on top. Organisations now got exactly what they wanted: products that shared development costs across a number of purchasers plus a configuration layer allowing them to make their own systems unique. They could change their own business rules as and when they wanted, without referring back to the system vendor.

Of course, this is where the problems begin! The vendor suddenly appears as if from nowhere and is crawling all over you – and just as suddenly they disappear, job done. It’s like a big ‘hit and run’! You have a new system tailored exactly as you need it with detailed instructions as to how to keep it going.

But somehow those instructions don’t quite register. Who exactly should be keeping it up-to-date?

Responsibility: where does the buck stop?

“It’s a system, so the IT department must keep it current”, so say many commercial departments. “No, the system has been defined to give commercial users complete flexibility to fine-tune to their ever changing needs. It’s their responsibility to manage the business rules”, so say many an IT department.

These arguments are often never resolved, leaving systems to languish, falling further and further behind the requirements of the business.

Let’s look back twenty or thirty years. The business community was demanding autonomy: flexibility to manage its own business rules rather than having to make costly changes to the hard code. Business wanted to be agile, reacting to the market where needed and leading it wherever possible. They must therefore now face up to their responsibilities and not just let the opportunity pass by.

Every item of technology, whether IT related or communications related or anything else, should have a ‘business owner’ to represent the business. These people should have a detailed understanding of current business operations and of future aspirations and they should be able to translate this into business rules to ensure adequate support from appropriate technologies. They should know the capabilities of the technologies, both in terms of available functionality and in terms of configurable flexibility and thus be able to advise the business on what is easy and what is not. They should ensure that solutions under their care are exploited to the full, ensuring optimum return on capital investments.

Call them “Product Owners” or “Business Consultants” or whatever you will but without this bridge between IT and the business, systems lapse into premature obsolescence. Countless millions are needlessly wasted every year throughout industry both in lost ROI and in lack of business agility through the lack of these roles.

Bridging the gap between IT and the business

In the heading to this homily, I said that IT should not be allowed anywhere near our systems. Perhaps that’s not totally right… They should obviously be involved in the implementation and the day-to-day technical nurturing: backups, accessibility, security and the like. What they shouldn’t be involved in is the configuration. These are the business rules developed for the business and there they should remain. Commercial departments should take up the baton of their responsibilities.

I have expressed this view before and been criticised for it. I have been told that many departments find the business rule layer too complex and have given up trying to use it. I hate this sort of comment because I know that it’s true. This is where system vendors have to measure up to the mark and realise that their customers are not just the IT department but the commercial users as well, not just for day-to-day operations but for re-configuration to address changing business needs. Get this right and the whole structure of modern systems usage will change for the better.

This is the thinking behind Telezoetic. As specialists in both of these areas we understand both standpoints – business and IT. We help commercial departments remain at the leading edge, and exploit their often complex technology assets to the full. So please let me have your comments – who do you think should own our systems?

Ashley Bowen is an Associate Principal Analyst with Telesperience, and Director & co-founder of the BSSOSS consultancy Telezoetic. Ashley has spent nearly 20 years in the telecoms sector, implementing billing and customer management solutions and has had senior roles with X-Tension Telecoms and Danet International, a global telecoms SI. Working at the intersect of commercial departments and IT, he specialises in pragmatic solutions to ensure that organisations attain maximum lifetime benefit from their IT assets. He has a long track-record in systems selection, mergers & acquisitions evaluation, customer insight exploitation and pragmatic process development.