Improving profitability through integrated e-fulfillment

Mar 27, 2002 12:00 PM

To be successful in today's competitive environment, communications service providers need to eliminate the manual bottlenecks that hamper product and service delivery by getting front-end and back-end systems better connected. Service providers must improve their fulfillment infrastructure so that they can provide timely service delivery on a low-cost basis, meet market needs by rolling out new services quickly and easily, and differentiate on both price and service. 

Providers' current OSS/BSS software infrastructure can severely inhibit improved profitability: different data sources and different customer views make it nearly impossible to facilitate process flows between OSS and BSS services. To make matters worse, provisioning, order management, activation, rating and billing are still disconnected from OSS systems because OSS interfaces are disparate and, in most cases, manual. As the focus of technology investments continues to shift from improving the top line to protecting and enhancing the bottom line, one significant way to reduce expenses is to create a more cost-effective operational cycle.

In particular, service providers can affect their bottom line by streamlining the fulfillment cycle to avoid the bottlenecks caused by a manual process.

The problem: fulfillment or frustration?

The ability to cope with incoming requests for service while containing costs can be difficult. But even if software infrastructure problems are set aside, service providers still face a tremendous challenge in the area of customer service. While yesterday's sales and marketing departments needed to focus only on selling products and services, today it's equally important to sell a good customer experience to remain competitive.

The fulfillment trouble of DSL providers over the past 18 months paints the picture clearly. When DSL service was introduced, consumers looking for instant gratification expected DSL providers to "flip the switch" from their dial-up systems to the faster DSL connection. What consumers got was a confusing, month-long order fulfillment process that left them frustrated, while the service providers delayed income streams and drove up costs, dramatically reducing DSL's potential impact on profitability. The provider's fragmented business software infrastructure, disparate functional software packages and homegrown legacy systems only contributed to the problem.

Compare that to the purchase of cellular phone service. The phone itself works out of the box, and service upgrades can be implemented immediately--over the phone.

The problems posed by disconnected OSS and BSS infrastructures are further illustrated by the millions of dollars in annual fines being levied by the FCC on RBOCs--including Verizon, BellSouth and Qwest--that fail to meet the service level agreements promised to CLECs and mandated by the Telecommunications Act of 1996. To ensure that their competitors are receiving the same interconnection quality as the RBOCs, the FCC requires them to measure and report on hundreds of performance elements. But because current order management systems are not well connected and still pose bottlenecks, these service agreements are not being met. 

And while the almost $70 million in fines that SBC Communications paid over a seven-month period in early 2001 and the $1.5 million in monthly fees that Verizon Communications has incurred are affecting their bottom lines, monitoring and performance bottlenecks are having a more significant impact on profitability. The FCC regulations restrict the RBOCs' access to operate in long-distance markets until they can ensure their networks are open to competitors.

Clearly, the service providers must find a way to eliminate these bottlenecks and dramatically improve their fulfillment cycles if they are going to focus on profitability. 

Short-term fix or long-term solution?

Today, when a provider receives a customer purchase order or a request for service from a CLEC, information that is missing, unreadable, inaccurate or otherwise conflicting typically causes the order to be marked "invalid"--meaning the order cannot be filled without further manual input or correction. Because many service providers and network operators face a percentage of rejected purchase orders from 30% to 50%, they incur higher costs because they have to retrace steps. Industry estimates indicate that a single invalid purchase order detected late can cost from $100 to $200. 

To avoid this, service providers commonly have agents dedicated to entering the purchase order information manually into the order management system. But this is a temporary solution that, while helping to reduce the costs associated with invalid purchase orders, nonetheless bottlenecks operational efficiency by having skilled workers manually processing orders.

An efficient, integrated fulfillment process requires data consistency all along the fulfillment cycle. Each incoming purchase order must be evaluated to ensure that no information is missing, that the information is consistent and therefore recognizable by multiple OSS and BSS systems, and that the order is a technically valid service configuration.

From manual bottleneck to automated fulfillment

The chain of events involved in the relatively simple act of fulfilling a purchase order can be expressed by a sequence of business processes. The logic (or lack thereof) that underlies the business process can be captured and translated into business rules. Business rule management (BRM) systems give businesses the ability to better manage their business processes by capturing the logic supporting a process and putting into the hands of the people using it.

BRM has emerged as a straightforward way to automate fulfillment-related decision processes--such as the ones that drive the telecom industry. Seamlessly embedded decision agents act to bridge operational gaps, enhancing flow-through. Business rules can be applied to any step of the fulfillment process.

For example, to connect the order management system to the sales tools, the interface needs to perform consistency checking to avoid purchase order rejects later in the order management process. An embedded rules-based system easily automates this validation process. BRM software consists of a set of "if, then" conditions that automate decision-making based on established business policies. For example, if the purchase order doesn't have address information, then reject, or if the purchase order is from a residential customer and the products sold are business products, then reject.

Using the OBF's Local Services Ordering Guidelines, validating a local service request for access would require between 700 and 800 rules. Manually processing such a request, much less identifying a reason for rejection, is unreasonably time- and resource-demanding.

With a rules-based automated system, only rejects are handled manually with the rule system providing a diagnosis of the reason for the rejection. Business rule automation also frees skilled workers to concentrate only on valid purchase orders, further increasing operational efficiency.

Current systems don't provide this level of automated decision-making and only allow for a pass/fail assessment. So, for instance, when an RBOC receives a request for service from a CLEC and the request has conflicting, missing or inaccurate information, current systems kick the order back out to the CLEC for manual processing, leading to service fulfillment delays and contributing to hefty FCC fines.

Improved integration with BRM

BRM software is essential for capturing business processes and automating decisions based on company policies--even as that policy evolves in response to changing demands. In most existing systems, business rules are likely 'hard-coded' into the software infrastructure, preventing easy modification. This creates a lack of operational flexibility and leaves the business user with inefficient reactive capability.

Today, BRM software sits on top of a business's existing infrastructure and never needs to be hard-coded--making it possible for the business user to update decision-making support technology without IT support as policies are changed. In this critical way, BRM software serves as a link between the different applications that comprise the fulfillment process.

The 700 to 800 rules that are involved in validating a local service request must be updated approximately every 12 months. For a carrier with various products spread over multiple product lines, updating business rules can become a monumental task. BRM software, however, provides the flexibility to make this annual task less of a chore.

BRM strategies are commonplace in many industries driven by process and business policy--including supply chain management, transportation and financial services. In the financial services industry, BRM is used to automate the decision-making process associated with loan approvals or insurance underwriting--allowing these companies to handle customer requests with fewer resources and with better accuracy than previously possible.

Signs are beginning to point towards the adoption of rules management by CSPs as well. Many of the largest companies are starting to earmark resources to integrate BRM to better connect OSS and BSS systems and speed processing times. The operational results for those companies are immediately noticeable, with clear bottom line and profitability implications.

For RBOCs looking to stave off FCC fines, BRM can overhaul order processing by providing the automation to handle requests for service in real-time. For the 30% to 50% of incoming requests that are invalid, rules-based decision-making evolves far beyond the rudimentary pass/fail assessment current software provides. Instead, invalid requests are evaluated to establish why they "failed," assessed to determine what specifically must be addressed before processing can continue, and, most importantly, pulled from the RBOC's system and sent back to the CLEC.

Fulfilling competitive potential with BRM

For BRM to provide maximum value, changes in business policy must be immediately reflected in the software infrastructure--or the company risks losing real revenue opportunities. To accommodate this, a radical approach to software management must be deployed: business people--not just IT staff--must have the ability to make changes to the software as business conditions change or new products and services are introduced. For instance, to avoid the bottlenecks that delay providers from providing service to CLECs and consumers alike, the people who create and manage business policies--the business users--must have the power to implement rules-based change as they change policy.

The latest BRM technologies also allow businesses to centrally manage their rules, an innovation with clear implications for service providers. Existing rules-based technologies are limited by the lack of rule management and inflexible modification capabilities, and put the business user at risk of compromising the system by implementing conflicting rules. With providers maintaining upwards of 50,000 rules, the static nature of these systems impedes their usefulness. With central rules management, business users will have a dynamic tool to help remove product and service delivery bottlenecks and bridge the operational gaps hampering fulfillment.

In the case of one service provider, newly deployed BRM software has enabled the company to support the rollout of new services with just one week's lead time (vs. the three months previously required). This is possible because the business manager can easily add or change rules by manipulating a rules management application that uses natural business language, requiring no additional IT support. The operational improvements allow the provider to get new product and service packages to market more rapidly, and in advance of customer demand. In addition to the dramatic service rollout improvements, this RBOC is saving millions of dollars each year because it's now able to meet the FCC requirements for providing service to CLECs. 

As service providers continue to evaluate the technologies that have a bottom-line, short-term impact on their business, these companies must maximize their existing human and technology capital resources to the fullest extent possible or risk putting future revenues at risk. By implementing BRM software, service providers can automate decision-making processes and enhance front-end and back-end communication. Just like the financial services company that gains the competitive edge by automating the loan approval process, the provider that puts business rule management to work will turn service fulfillment from a bottleneck into a competitive advantage.

Jean-Yves Tripier is Director of Marketing and Strategic Alliances, Communications and Media Division, for ILOG.

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