BPR Written Assignment
Content
Pacific Bell: Centrex Reengineering
Case Analysis Written Assignment
Submitted to: Prof. Punyaslok Dhall
Submitted By:
Kusum Sahoo, 15 Jangyesh Prasad Samantaray, 13
Ravenshaw Management Centre
Debasish Padhy, 10 Debasish Nachiketa, 09 Asutosh Mishra, 06 Amitav Sahoo, 02
Contents
1. Situation Analysis
a. Pacific Bell as a company b. Centrex c. Why Centrex reengineering d. The reengineered process e. Pilot testing f. Advantages of the reengineering
2. Problems 3. Possible alternatives 4. Centrex reengineering: as an example for future 5. Conclusion
Situation Analysis:
Pacific Bell: as a company:
Pacific bell was a subsidiary of Pacific Telesis Group. It provided a broad range of services like local exchange service, network access, toll service, directory advertising and selected information services to the customers in California. Its management viewed technology as a means to reduce costs, strengthen competitive positioning and improve customer satisfaction. So in 1990 Pacific Bell CEO and president announced a long term initiative called Competitive Readiness. This was called 3R¶s: Restructuring, Refocusing and Reengineering. Restructuring led to breaking the giant company into seven decentralized regional business units, statewide business units and support organizations. Refocusing led to organizing the firm¶s priorities and resources around a vision, values and bold goals. Bold goals were established for a number of key areas including maintenance, provisioning, revenue, job fulfillment, customer complaints etc. Reengineering was to apply many of the techniques of Total Quality but create discontinuous change in core processes. Hence the Centrex Reengineering was started in the year 1991 focused on the Centrex provisioning or order fulfillment process. Provisioning refers to the activities involved in understanding customer requirements and deliver the service to the customer. After that another reengineering project Infotel was also started in the summer of 1993. A major reengineering project which was Core Process Reengineering was also started in 1993.
Centrex:
To understand what Centrex is we have to understand PBX or Private Branch Exchange. A private branch exchange (PBX) is a telephone exchange that serves a particular business or office, as opposed to one that a common carrier or telephone company operates for many businesses or for the general public. PBXs make connections among the internal telephones of a private organization (usually a business) and also connect them to the public switched telephone network (PSTN) via trunk lines. Because they incorporate telephones, fax machines, modems, and more,
the general term "extension" is used to refer to any end point on the branch. Centrex is a PBX-like service providing switching at the central office instead of at the customer's premises. Typically, the telephone company owns and manages all the communications equipment and software necessary to implement the Centrex service and then sells various services to the customer. No switching equipment resides on the customer premise as the service is supplied and managed directly from the phone company's exchange site, with lines being delivered to the premises either as individual lines over traditional copper pairs or by multiplexing a number of lines over a single fiber optic or copper link. In effect, Centrex provides an emulation of a hardware PBX, by using special software programming at the central office, which can be customized to meet a particular customer's needs. As with a PBX, stations inside the group can call each other with 3, 4 or 5 digits, depending on how large the group, instead of an entire telephone number.
Why Centrex Reengineering:
The case is basically about the reengineering of the order fulfillment process of Centrex in Pacific Bell. Centrex was a flagship product offered to Business customers. The order fulfillment process was highly complex, labor intensive and error prone due to its numerous product features. An order used to touch 11 systems and involve 10 to 12 people from several functional areas who did not function as team. Multiple handoffs were required and an error at any point in the process could necessitate significant rework to identify and rectify that error. Lead times for the Centrex orders were long. Lead time for a simple order (2-19 lines) order was 5 days and for a complex order (>19 lines) was 15 days at least. The customers were not satisfied with the lead time. The customer marketing and operations data suggested that cost effectiveness and quality of the provisioning process would have to improve if Centrex was to remain competitive. Hence a totally new process was required. A project team of 13 individuals representing various specialty groups involved in Centrex provisioning was assembled to develop an initial design. The team spent 20
days documenting current state. The team established some measurable stretch or radical objectives for the new design. Those were: a) Increase Speed, b) Minimize Cost, c) Error free process, d) To have 100% customer satisfaction.
The Reengineered process:
The reengineering team completed the new design in June 1991. It assumed primarily two scenarios: a Flow Through Scenario (FTS) and a Virtual Team Scenario (VTS). Under FTS an order would be fulfilled by a single person the Centrex Service Provider from an inventory of pre-provisioned packages. This was revolutionary that one person could provision a Centrex order. When a pre-provisioned package did not exist, then a VTS would go into effect. Under this a team of two or more people, with the expertise needed to complete the order would be electronically or virtually assembled. The two members would work concurrently rather than serially as in past. The reengineering team also considered a third scenario where the customer would enter his or her order directly into Pacific Bell¶s system and there by a virtual team to be formed, if necessary, without the intervention of a customer service provider. The reengineered team acknowledged that the third scenario could be realized in future.
Pilot Tests:
The first trial for the Centrex reengineering was done in Downing, the Bay regional business unit in January 1992. The trial was a 90 day trial. During the planning several changes were made to the original scope. Firstly the role of the customer service provider was scaled back to include only ordering and provisioning service as opposed to the previous role which also included customer contact and the title was changed to Centrex service coordinator. This happened because the sales management was unwilling to expand the role of traditional customer contact personnel to include additional administrative tasks. Secondly the scope of the trial was originally conceived to handle provisioning for all Centrex systems but it was scaled back to only simple (219 lines) Centrex systems. This was to assist in training. Third, the information technology was not as sophisticated as originally conceived due to the lead time to
develop systems. This also resulted conversion of the virtual team¶s work in to manual. The trial team member did not want to stop the trial after 90 days due to its advantages. After the trial was successful the managers from different RBUs visited the trial and started pilot testing but none of them implemented it fully. The first Pilot testing was done in Orange County. In Orange County the management estimated that to implement the BPR would be expensive and the realization of benefits would be delayed. They also anticipated that significant union negotiations would be required to redefine roles and job responsibilities. They did not collapse the job roles instead collocated those people who wanted to involve in this. The second RBU to implement Pilot testing was Sacramento RBU. The Sacramento RBU was interested to experiment with the new job roles. So they followed the implementation in Bay RBU. They were interested to make it permanent but they did not feel providing pre-provisioned Centrex systems feasible as the number of customers of Sacramento were higher and were different from Bay RBU. The Valley Central RBU implemented the pilot testing and was successful by improving its productivity by 10%. The enhancements also made people more willing to be supportive to proposed changes. The North Coast RBU implemented the Pilot as proposed by the reengineering team and became successful but it had an unresolved issue with the union regarding the customer service coordinator. In December 1993, the San Francisco Bay RBU had not implemented a formal pilot bur it continued to provide the pre-provisioned packages after the trial. As many 80% of the Centrex orders were fulfilled from pre-provisioned inventory and it took on average 3 days to fulfill an order. The San Diego RBU implemented the collocation strategy without new roles and new technology. The trial was limited to simple Centrex orders. The San Diego RBU did not implement the new roles because of the concerns expressed by the union. Los Angeles RBU implemented the pilot after Chuck Smith moved to the RBU.
Advantages of the Reengineering:
y The firm achieved improvement in all expected areas Such as: Time, Cost, Quality, and Customer Satisfaction. y The lead time for simple line order was reduced from 5 days to 3 days. The error has been significantly reduced. y y y y y Customer satisfaction had increased. The no. of people involved had reduced. The process became less complex. Productivity improvement had occurred in Valley RBU. It was successful in Valley Central and North Coast RBUs.
Problems:
Though the reengineering was considered to be successful it had some problems. The problems can be as follows: The reengineering team did not propose the BPR by looking in to all the RBUs. As the RBUs had different customer base and different environment their requirements were different. The project management team also did not look in to all the aspects of the project such as software availability for the complex systems. They assumed the availability of the IT- based systems such as groupware and single system image. The implementation was limited to simple (2-19 lines) order as the software development lead time was very high. The trial members were given access to additional systems from their work stations but the data from those systems was not integrated. As the organization was a decentralized one there was a problem in implementation of the BPR project. The RBUs behaved as independent units. They were not able to convince union people about the reengineered process.
Possible Alternatives:
Though the technology developed for the trial was designed to be customizable to the demands of various RBUs, other processes like the FTS should have made customizable depending on the customer characteristics of the RBUs The project management team should have ensured the availability of the system software. There will always be resistance to change. So the union members who were opposing should have assigned new roles or would have given the opportunity of VRS (Voluntary Retirement Scheme) with compensation. The management of Orange County RBU thought the process was expensive and realizations of benefits were late. To prevent this type of thought the managements should have been properly educated.
Centrex Reengineering: as an example for future:
Thought the reengineering was a success the pace of the project was much slower than anticipated at the outset. Littlejohn learned lessons from this reengineering and was wondering what organizational policy and/or infrastructure changes needed to be made realize the original vision of Centrex reengineering. He was also wondering that the RBUs would not achieve the more dramatic changes required to realize the initial vision of Centrex reengineering with the current magnitude of improvements realized during Pilots. So for the next reengineering which was referred to as Core Process
Reengineering, they wanted to rectify the mistakes and implement the lessons learned from Centrex reengineering project.
Conclusion:
The Centrex reengineering project team worked well but they neglected some of the aspects of the project. The RBUs did not consider themselves as Pacific Bell as a whole and the union members were opposing the project. Because of which full implementation was not possible and the dramatic changes were not achieved though the RBUs succeeded in achieving objectives like cost minimization, speed maximization etc up to some extent.
Case Analysis Written Assignment
Submitted to: Prof. Punyaslok Dhall
Submitted By:
Kusum Sahoo, 15 Jangyesh Prasad Samantaray, 13
Ravenshaw Management Centre
Debasish Padhy, 10 Debasish Nachiketa, 09 Asutosh Mishra, 06 Amitav Sahoo, 02
Contents
1. Situation Analysis
a. Pacific Bell as a company b. Centrex c. Why Centrex reengineering d. The reengineered process e. Pilot testing f. Advantages of the reengineering
2. Problems 3. Possible alternatives 4. Centrex reengineering: as an example for future 5. Conclusion
Situation Analysis:
Pacific Bell: as a company:
Pacific bell was a subsidiary of Pacific Telesis Group. It provided a broad range of services like local exchange service, network access, toll service, directory advertising and selected information services to the customers in California. Its management viewed technology as a means to reduce costs, strengthen competitive positioning and improve customer satisfaction. So in 1990 Pacific Bell CEO and president announced a long term initiative called Competitive Readiness. This was called 3R¶s: Restructuring, Refocusing and Reengineering. Restructuring led to breaking the giant company into seven decentralized regional business units, statewide business units and support organizations. Refocusing led to organizing the firm¶s priorities and resources around a vision, values and bold goals. Bold goals were established for a number of key areas including maintenance, provisioning, revenue, job fulfillment, customer complaints etc. Reengineering was to apply many of the techniques of Total Quality but create discontinuous change in core processes. Hence the Centrex Reengineering was started in the year 1991 focused on the Centrex provisioning or order fulfillment process. Provisioning refers to the activities involved in understanding customer requirements and deliver the service to the customer. After that another reengineering project Infotel was also started in the summer of 1993. A major reengineering project which was Core Process Reengineering was also started in 1993.
Centrex:
To understand what Centrex is we have to understand PBX or Private Branch Exchange. A private branch exchange (PBX) is a telephone exchange that serves a particular business or office, as opposed to one that a common carrier or telephone company operates for many businesses or for the general public. PBXs make connections among the internal telephones of a private organization (usually a business) and also connect them to the public switched telephone network (PSTN) via trunk lines. Because they incorporate telephones, fax machines, modems, and more,
the general term "extension" is used to refer to any end point on the branch. Centrex is a PBX-like service providing switching at the central office instead of at the customer's premises. Typically, the telephone company owns and manages all the communications equipment and software necessary to implement the Centrex service and then sells various services to the customer. No switching equipment resides on the customer premise as the service is supplied and managed directly from the phone company's exchange site, with lines being delivered to the premises either as individual lines over traditional copper pairs or by multiplexing a number of lines over a single fiber optic or copper link. In effect, Centrex provides an emulation of a hardware PBX, by using special software programming at the central office, which can be customized to meet a particular customer's needs. As with a PBX, stations inside the group can call each other with 3, 4 or 5 digits, depending on how large the group, instead of an entire telephone number.
Why Centrex Reengineering:
The case is basically about the reengineering of the order fulfillment process of Centrex in Pacific Bell. Centrex was a flagship product offered to Business customers. The order fulfillment process was highly complex, labor intensive and error prone due to its numerous product features. An order used to touch 11 systems and involve 10 to 12 people from several functional areas who did not function as team. Multiple handoffs were required and an error at any point in the process could necessitate significant rework to identify and rectify that error. Lead times for the Centrex orders were long. Lead time for a simple order (2-19 lines) order was 5 days and for a complex order (>19 lines) was 15 days at least. The customers were not satisfied with the lead time. The customer marketing and operations data suggested that cost effectiveness and quality of the provisioning process would have to improve if Centrex was to remain competitive. Hence a totally new process was required. A project team of 13 individuals representing various specialty groups involved in Centrex provisioning was assembled to develop an initial design. The team spent 20
days documenting current state. The team established some measurable stretch or radical objectives for the new design. Those were: a) Increase Speed, b) Minimize Cost, c) Error free process, d) To have 100% customer satisfaction.
The Reengineered process:
The reengineering team completed the new design in June 1991. It assumed primarily two scenarios: a Flow Through Scenario (FTS) and a Virtual Team Scenario (VTS). Under FTS an order would be fulfilled by a single person the Centrex Service Provider from an inventory of pre-provisioned packages. This was revolutionary that one person could provision a Centrex order. When a pre-provisioned package did not exist, then a VTS would go into effect. Under this a team of two or more people, with the expertise needed to complete the order would be electronically or virtually assembled. The two members would work concurrently rather than serially as in past. The reengineering team also considered a third scenario where the customer would enter his or her order directly into Pacific Bell¶s system and there by a virtual team to be formed, if necessary, without the intervention of a customer service provider. The reengineered team acknowledged that the third scenario could be realized in future.
Pilot Tests:
The first trial for the Centrex reengineering was done in Downing, the Bay regional business unit in January 1992. The trial was a 90 day trial. During the planning several changes were made to the original scope. Firstly the role of the customer service provider was scaled back to include only ordering and provisioning service as opposed to the previous role which also included customer contact and the title was changed to Centrex service coordinator. This happened because the sales management was unwilling to expand the role of traditional customer contact personnel to include additional administrative tasks. Secondly the scope of the trial was originally conceived to handle provisioning for all Centrex systems but it was scaled back to only simple (219 lines) Centrex systems. This was to assist in training. Third, the information technology was not as sophisticated as originally conceived due to the lead time to
develop systems. This also resulted conversion of the virtual team¶s work in to manual. The trial team member did not want to stop the trial after 90 days due to its advantages. After the trial was successful the managers from different RBUs visited the trial and started pilot testing but none of them implemented it fully. The first Pilot testing was done in Orange County. In Orange County the management estimated that to implement the BPR would be expensive and the realization of benefits would be delayed. They also anticipated that significant union negotiations would be required to redefine roles and job responsibilities. They did not collapse the job roles instead collocated those people who wanted to involve in this. The second RBU to implement Pilot testing was Sacramento RBU. The Sacramento RBU was interested to experiment with the new job roles. So they followed the implementation in Bay RBU. They were interested to make it permanent but they did not feel providing pre-provisioned Centrex systems feasible as the number of customers of Sacramento were higher and were different from Bay RBU. The Valley Central RBU implemented the pilot testing and was successful by improving its productivity by 10%. The enhancements also made people more willing to be supportive to proposed changes. The North Coast RBU implemented the Pilot as proposed by the reengineering team and became successful but it had an unresolved issue with the union regarding the customer service coordinator. In December 1993, the San Francisco Bay RBU had not implemented a formal pilot bur it continued to provide the pre-provisioned packages after the trial. As many 80% of the Centrex orders were fulfilled from pre-provisioned inventory and it took on average 3 days to fulfill an order. The San Diego RBU implemented the collocation strategy without new roles and new technology. The trial was limited to simple Centrex orders. The San Diego RBU did not implement the new roles because of the concerns expressed by the union. Los Angeles RBU implemented the pilot after Chuck Smith moved to the RBU.
Advantages of the Reengineering:
y The firm achieved improvement in all expected areas Such as: Time, Cost, Quality, and Customer Satisfaction. y The lead time for simple line order was reduced from 5 days to 3 days. The error has been significantly reduced. y y y y y Customer satisfaction had increased. The no. of people involved had reduced. The process became less complex. Productivity improvement had occurred in Valley RBU. It was successful in Valley Central and North Coast RBUs.
Problems:
Though the reengineering was considered to be successful it had some problems. The problems can be as follows: The reengineering team did not propose the BPR by looking in to all the RBUs. As the RBUs had different customer base and different environment their requirements were different. The project management team also did not look in to all the aspects of the project such as software availability for the complex systems. They assumed the availability of the IT- based systems such as groupware and single system image. The implementation was limited to simple (2-19 lines) order as the software development lead time was very high. The trial members were given access to additional systems from their work stations but the data from those systems was not integrated. As the organization was a decentralized one there was a problem in implementation of the BPR project. The RBUs behaved as independent units. They were not able to convince union people about the reengineered process.
Possible Alternatives:
Though the technology developed for the trial was designed to be customizable to the demands of various RBUs, other processes like the FTS should have made customizable depending on the customer characteristics of the RBUs The project management team should have ensured the availability of the system software. There will always be resistance to change. So the union members who were opposing should have assigned new roles or would have given the opportunity of VRS (Voluntary Retirement Scheme) with compensation. The management of Orange County RBU thought the process was expensive and realizations of benefits were late. To prevent this type of thought the managements should have been properly educated.
Centrex Reengineering: as an example for future:
Thought the reengineering was a success the pace of the project was much slower than anticipated at the outset. Littlejohn learned lessons from this reengineering and was wondering what organizational policy and/or infrastructure changes needed to be made realize the original vision of Centrex reengineering. He was also wondering that the RBUs would not achieve the more dramatic changes required to realize the initial vision of Centrex reengineering with the current magnitude of improvements realized during Pilots. So for the next reengineering which was referred to as Core Process
Reengineering, they wanted to rectify the mistakes and implement the lessons learned from Centrex reengineering project.
Conclusion:
The Centrex reengineering project team worked well but they neglected some of the aspects of the project. The RBUs did not consider themselves as Pacific Bell as a whole and the union members were opposing the project. Because of which full implementation was not possible and the dramatic changes were not achieved though the RBUs succeeded in achieving objectives like cost minimization, speed maximization etc up to some extent.
