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Wednesday, 30 September 2009

Programme Management and Roy Keane

I have a confession to make: I am an Ipswich Town supporter. I know, don't mock, I suffer enough as it is. I have watched over the past five months after Jim Magilton was sacked for only taking Ipswich to 10th in the Championship, and Roy Keane brought in with a great fanfare as the man to put an end to Ipswich's "underperforming" and win promotion to the Premiership.

He immediately professed himself satisfied that the core of his squad was sound, and that he was confident of winning promotion within 2 years. Since then, he has acquired I think 9 new players - I tend to blink now and again and miss one - and has transformed the team into one making a realistic challenge for - er, relegation, actually, bottom of the table in 24th place.

Now I have in my career a few times been introduced as a replacement IT programme manager for a failing project and told to improve matters. On one or two occasions, I have also been told to reduce costs because the budget was already overspent. As any PM knows, you can only juggle with four basic parameters: cost, timescale, quality, scope. And what is more, these are closely linked - you can't change one without affecting another. Reduce cost? OK, then unless you are a magician with higher productivity yet cheaper resources to produce out of the hat, at least one of the other three must move in balance. Now in Roy's case, he has an increased budget, a fixed timescale, pretty much a fixed scope, and so should see quality increase. The jury is still out on that one, but it now looks pretty unlikely that he will win promotion in his first year - indeed, I begin to be a bit nervous as to whether he will keep us in the Championship at the other end. At least the scope was set as 'within 2 years'.

So I started to think around some of the similarities between the roles of Programme Manager and Football Manager. Broadly, Roy has three main communities to keep satisfied: his team's chairman and board of directors (in Ipswich's case, the owner, Marcus Evans); the players; and the fans. That ties in nicely with a PM, who also relates to three communities: the "chairman" (usually the COO or CIO) and a Programme Board of business stakeholders; the implementation team; and the user community. Let's look at how these relationships work.

No outsider really knows what Roy's relationship is like with his Chairman and Directors, and indeed they shouldn't. Similarly, a PM will keep that a confidential relationship. In both cases, the approach, costs versus budget and performance against planned milestones must be reported, progress highlighted and shortfalls explained, and sufficient confidence in your competence and performance maintained.

With both the players and the implementation team, the Manager has to build the right environment for them to be as able as possible to do their job, then structure them and set objectives and priorities, and of course ensure that as far as possible the best resources are part of the team. An important part of that is motivation, and giving them the confidence to deliver their part. Now, often a "parachute PM" dropped into an existing team has limited ability to execute rapid large-scale change of the environment and the resources, so the key is to ensure the structure is right, the objectives are appropriate and achievable, and that the team morale is lifted to the optimum level. In Roy's case, we have to assume he is capable of creating the right team structure and delivering the motivation - his track record with Sunderland, and the fact that several Sunderland players wanted to rejoin him at Ipswich suggest that is the case.

So what about the final community - the fans/users? In both cases it is harder to win wholehearted support than doubt and criticism. In both cases too the community responds to results - or lack of them. Here the PM has a marginal advantage over the football manager, in that the latter has to deliver results once or twice a week, whereas the PM's deliveries are normally months apart. Clearly Roy Keane has what is hopefully a temporary problem in this regard, and the opinion of the fans is clearly getting a little frayed.

What is key in both cases is that the right message must be communicated to all communities. A PM has to make this happen, ensure the opportunity and the timing are appropriate, and that the message is exactly right. The football manager has to do this for two of his communities, but the fans are normally addressed through the media, which is a much tougher proposition. Getting the message right here is harder because it is not possible to pick the moment, and the resulting message is all too often interpreted the way the press want to present it, not necessarily how the manager intended it. In this regard, Roy has done better than I expected - his TV interviews have been thoughtful, and whilst some may consider him too dispassionate, I have been fairly impressed with his control and care with words.

Now all both he and I need to do is to deliver...

Thursday, 17 September 2009

Crystal balls

It’s always fun to speculate about the future.

History is of course littered with men who made predictions which were ever so slightly wide of the mark: my favourite is the prediction of Thomas J Watson, IBM president in about 1950 who opined: “I think there is a world market for maybe five computers.” To be fair to him, that was probably true of the computers of the day, but even so it was a bust flush by the time the fifth was delivered.

To take great leaps of imagination about the more distant future is relatively safe. I could aver that by 2100 we will be taking holidays on Mars, and we might agree that this is an interesting speculation, but since both I and my audience will be dead long before then, it is not exactly sticking my neck out.

Looking at the near future, extrapolating from the world today is more interesting: it is possible to get pretty close to what is likely to happen, but getting the timing right is much more difficult. For example, the use of mobile handsets to run non-telephony applications has been not only long predicted, but operators have been trying to go there for some years now. Only recently however has this started to become the norm with modern high spec smart phones now reaching the mass market.

Now I started to think again about predictions as we seem to be debating the future on several related communications issues. We have the concerns about delivery of television programming, and the (this time predictable!) self-interested complaints from Mr Murdoch; we have comments about the potential demise of newspapers due to competition from digitally provided news; there’s discussion about how we deliver faster broadband across the country (and who pays), and meanwhile the mobile operators are at last moving their services into information provision (or at least enablement for third party information providers), fuelled largely by the surge in smart handsets – thank you again, Apple, for the stimulus of the iPhone.

I’m sure we can draw some strands out of these trends. Here then are my top five predictions.

1. Broadcast TV is doomed.

The BBC iPlayer is the first step in this process. Essentially, we will all move more and more towards watching what we want, when we want it, from the internet – even for live events: not home in time for kickoff? See it from the start when you do get home.

This would mean the TV channel companies becoming more aggregators of content, probably published on a daily or weekly basis, rather than to a serial timetable like today. Content providers will be like the TV production companies or film companies today, and may well start publishing directly since they don’t need airwaves.

I would not be surprised to see the BBC therefore become more a channel to market for published content, including pay per view (which is much easier to arrange on the internet), and focusing its production efforts more on information and news services.

Of course, all this requires adequate high speed internet access – and a lot of it will be mobile. The government no doubt will be slow to give up on TV due to all that investment in the digital switchover, but the frequencies can no doubt be put to other profitable uses, including more wireless internet services. I wonder what Sky will do with all those satellites?

2. Telephony is doomed.

OK, I’d better qualify that a bit. What I mean is that making and receiving voice calls over a switched network is already looking outdated. Skype is pointing the way: internet based voice traffic (VoIP) is increasingly how both business and personal calls are made – unless a mobile is used. And in the case of mobile, with more handsets becoming WiFi enabled and mobile broadband aware, I see VoIP increasingly the way in the mobile world as well.

What this really means is that both fixed and mobile networks will evolve into data only networks delivering just broadband service, with old fashioned switched voice dying a death. It already irks that there is a complicated tariff for voice calls, and in order to attract customers they have to build even more complicated products to give a lot of it away again. Very little call traffic nowadays actually needs individual call pricing: premium rate numbers perhaps, where the operator is collecting a fee for the called party, and – er – well, nothing else really. Even calls to other operators’ networks – including international – could be covered by inter-operator agreements given the low cost of carriage over IP.

This will change all sorts of areas. Billing systems can be much simplified with no need to price most calls, and with effectively all bills becoming prepaid monthly service charges. Quite a lot of things will change in the networks, with no further need for voice switches and IN platforms – ‘calls’ will still need some form of processing but not through this technology. Even the needs of security forces will be impacted – phone taps are different in VoIP networks!

3. Books are doomed.

Alright, I don’t really mean it, but I do think that we are close to the point where eBook readers will become mass market. I doubt we will see dedicated eBook devices, but I do anticipate that smart phones and notebook PCs will quite soon start to become the devices of choice for books (and, indeed, whatever passes for newspapers in the new digital age). As people become accustomed to taking these devices everywhere, thanks to the ‘internet anywhere’ attitudes now emerging (maybe this should be a prediction too? – no, it’s already happening), no-one will want to carry a large paperback as well when it can just as easily be downloaded for no extra weight.

This will have considerable ramifications for the publishing industry. Anyone will be able to publish their latest novel; the only value the publisher will add will be the marketing organisation and revenue collection – oh, and the ability also to produce the hard copy version (which I’m sure will still exist, albeit in reduced form, much like CDs today alongside MP3 downloads).

4. The ‘core network operator’.

It has been interesting to note the growing proliferation of Virtual Mobile Network Operators (MVNOs), buying their airtime in bulk and then addressing everything from tightly focused market sectors to broad spectrum markets. In addition we have the recent coming together of Orange and T-Mobile in the UK.

In effect what is happening is that we have a saturated market – no likely significant growth in the overall subscriber base – and a steady erosion of revenues as services become commoditised and competition drives prices down. The operators are trying to push up the added value chain with triple and quad plays and data services, but network costs are a significant issue for them. One of the significant factors for the Orange/T-Mobile merger is in network savings.

Now in effect we have only two national local loop wireline networks in the UK: BT and Virgin Media (other networks from the likes of COLT are local and business oriented). Virgin’s network is of course dominated by television; but BT is increasingly losing out on telephony service delivery to many other wireline service companies, such as Talk Talk. This ecosystem nevertheless continues to be sustained on the single local loop network that BT runs as a regulated service.

But we still have four mobile networks, effectively providing the equivalent of a ‘mobile local loop’. Now I can see continued cost pressures reducing that number further – even perhaps to one regulated core network? Wouldn’t it be better for the network operation to become a separate business, delivering service through as many MVNOs as wish to set up in business? There’s plenty of market space for the likes of Virgin Mobile, Tesco, and so on to compete for the end user, so why should a mobile operator sell them air time, only to compete with them for customers, and all the while groaning under the cost of maintaining an expensive national network? Might it have made sense for Orange and T-Mobile to combine and float off their networks and continue as separate retail companies?

5. A wallet on my phone

The advent of the electronic purse has been predicted for a long time, but progress has been slow. Mobile operators have explored how this might work for several years, but trial services like buying your can of cola from a machine have not been wholly successful – the palaver of texting to make a payment is so much more long-winded than sticking a coin in a slot. Operators have shied away from serious solutions partly because of concerns about straying into the territory of banking regulations, money laundering and so on.

This is an area where more advances have been made in developing countries – particularly in areas like the Philippines – where banking is less well developed or accessible to ordinary people. Services are now available there for transfer of small amounts of cash, using the mobile phone account as a kind of purse. This is another key development – it’s one thing to use a phone to pay a retailer, but the ability to pay small amounts to friends and family is what will make this into a mass market service.

I am not an expert in financial regulation, but I suspect the pressure to be able to deliver such services in the UK will lead to ways being found before long.

So in conclusion, I don’t think these are particularly outrageous predictions; however getting the timing right may be tricky. I don’t think I’ll stick my neck out there...

Wednesday, 2 September 2009

Why is Customer Care so hard?

Network operators and service providers are uniquely positioned amongst all industry sectors, in that they have the data that describes exactly how all their customers use their services, through call and data records. Every single time a customer uses the network, there is a record logging this.

All this data is painstakingly collected so that bills can be produced. And what else is done with it? Well, not enough in most cases. It will be used to ensure quality of service thresholds are being met, where appropriate, and it is aggregated to help with network planning and optimisation. No doubt various other reports are spewed out of data warehouses to tell directors if the number of call minutes has gone up or down this month, and other pertinent management information, but as to using the information to manage individual customer relationships – well, er....

One of the problems for telcos pretty much ever since number portability became mandatory has been that of churn. Estimates of churn rates vary wildly, and even those that the operators will admit to are difficult to compare, since what constitutes churn can be defined and measured in different ways. Nevertheless it is likely that a mobile operator in the UK will lose as much as 30% of its customers every year, and for ISPs it is even higher, perhaps as much as 50%.

Now these are pretty eye-watering numbers. Some churn is inevitable – people move away from the coverage area, or even die, companies may cease trading, and indeed some customers (such as bad payers) might even be encouraged to leave; however this would be a core churn rate down in the single figures. Something is not right!

Clearly it is much cheaper to retain a customer than to have to recruit a new one as a replacement, and add to the recruitment cost the loss of revenue stream from the existing customer and it all adds up to a significant cost of operation.

Now telcos do make efforts to identify potential churners through data mining and pattern analysis, but clearly these efforts are not bearing significant fruit as yet. The trouble is that the main actions of these operators is to find more attractive products and tariffs, such as double and triple plays which (in theory) are more difficult to churn from. But this simply fuels churn, as the ‘arms race’ between operators means that there is always a more attractive offer out there if you can find it. People are not entirely driven by slightly better deals elsewhere, however, especially as this requires effort on their part – there is usually some other reason why they are ready to move.

One survey by Pitney Bowes identified the three top reasons why people change supplier, and found that these are consistent across Europe and the US. They are:-

1. not being recognised as a valuable customer (all countries average – 55%)

2. unhelpful staff (all countries average – 47%)

3. ineffective call centres (all average – 42%)

Now although this research is almost 2 years old, I very much doubt the position is significantly different today. This should be giving COOs sleepless nights – this implies that better or cheaper deals may dictate the operator a customer switches to, but the trigger for leaving the existing supplier is poor customer care.

Take the first point: the worth of a customer should be apparent to an operator very easily – we are back to the fact of a complete data record of a customer’s activity. Of course a customer will have an inflated view of their own value, but take into account both revenue streams and cost of losing the customer, and most customers are valuable enough to merit effort to retain them. The second and third points above are simply variations on the theme of bad customer care.

And we all know from personal experience how frustrating these companies can be. Not just the call centres, which seem to specialise in getting you through to any department which can’t solve your problem, but also the web sites for self care, which are often impossible to navigate around and find what you want without resulting in dangerously elevated blood pressure.

The problem isn’t the people: they are usually trying to help you as best they can. The problem is partly in the technology that supports them (back to ways of analysing and understanding that customer data), partly the result of poorly designed processes and business flows, and partly the corporate structure, which stove-pipes customer care and treats it as a business cost to be handled as cheaply as possible.

Communications companies have to be better at treating customer care and customer value holistically, or these high churn rates and costs will never reduce - and as consumers we all pay the price.