1 by Raul Katz Paul Kocourek Decio Mendes Gary Neilson Telecommunications Service Providers A New Operating Model
2 1 Telecommunications Service Providers A New Operating Model In the last two decades the structure and nature of the telecommunications industry have been transformed. AT&T s breakup in 1984 launched an intensely competitive market in long distance and gave birth to the Regional Bell Operating Companies (RBOC). Shortly thereafter, the wireless market emerged. Over the next ten years, these three industry sectors (local, long distance, and wireless) rapidly expanded and consolidated. We witnessed the long distance wars, the relentless spread of wireless, and the Incumbent Local Exchange Carriers (ILEC) moves to lock in local customers with an expanded range of services and features. Then the forces of deregulation and increased price competition took hold as the Telecommunications Act of 1996 relaxed the barriers between local and long distance, and wireless penetration reached 50% of the U.S. population. 1 Add to this the profound and accelerated impact of the Internet on telecommunications capital investment, and you have the makings of a revolution. But as the marketplace has transformed over the past twenty years, the operating models of the industry s leading players have not leading to an increasing disconnect between competitive market imperatives and telecommunications service providers ability to respond. The cycle of expansion fueled by deregulation and expanding voice and data traffic came to an abrupt halt in April Companies and investors who had bet on a build it and they will come philosophy have been sorely disappointed. And the ability of telecommunications companies to return their cost of capital has been seriously handicapped 2 (see Exhibit 1). Still, absent changes mandated by regulation (e.g., structural separation of the RBOCs wireline and wireless businesses) or engineered for financial reasons (e.g., spinning off wireless subsidiaries), the operating model of most telecom companies dates back to the time of Ma Bell. It is our view that telecommunications companies need to transform their operating models (defined as the sum of organization structure, business processes, management systems, decision rights, and culture) to compete effectively in the current competitive climate. If they do not, their continued viability may well be at risk. The Need for Change While each segment of the telecommunications industry contends with its own unique competitive dynamics, three Exhibit 1 U.S. Telecommunications Players 2002 WACC vs. ROIC Source: Company reports; Shuper (2003); Booz Allen Hamilton 1 Between 1995 and 2001, U.S. wireless operators drove penetration from 25% of the population to 50%. 2 R. Katz and C. Junqueira, Managerial Strategies and the Future of ROIC in Telecommunications, Columbia University Program on Telecommunications Recovery, March 2003.
3 2 Exhibit 2 High Performance Operating Models Share a Common Architecture common trends have emerged across the wireline and wireless sectors: Slowing growth: For the first time since the Depression the number of access lines in the U.S. has contracted as a result of broadband and wireless substitution. In the first quarter of 2002, basic access line growth declined 2.8%. Meanwhile, incremental wireless penetration has slowed. The last two quarters of 2002 show clear signs of a falloff in subscriber growth. Severe price-based competition: Pricing in all segments basic landline, long distance, wireless, enhanced data has been consistently declining. Since 1995, the average price per wireless minute has fallen from 56 per minute to 11 per minute. 3 Similarly, long distance pricing has slipped at a compound annual rate of 6% over the past eight years. High customer acquisition costs: The cost to acquire a new customer in the U.S. wireless market has climbed to $360, the highest in the world. A new retail DSL customer costs a Local Exchange Carrier approximately $350. These trends have exerted tremendous pressure on the telecommunications industry s operating margins, which have fallen from a healthy 45% in 1995 to an expected 33% in Meanwhile demand for nextgeneration services (e.g., 2.5G, DSL) drives continued capital expenditures across the industry. Total capital spending by wireless carriers is expected to reach $23.3 billion in 2003, which is slightly higher than 2002 s total. Across the entire telecommunications sector, capital investment may be down as a result of significant reductions on the part of the ILECs, but at 23% of sales, it is still above the threshold of 20% required to generate sustainable returns on any investment. 4 To make matters worse, the cost of capital has never been higher as both the equity and debt markets have turned away from the telecommunications sector in recent years. Margin pressure, competitive intensity, and shifting customer needs all expose the deficiencies in carriers current modes of operation and organization. The New Telco Operating Model To a greater or lesser extent, the concerns described above apply to every telecommunications company. The question on the minds of industry executives is: How do you overcome these barriers and develop a new operating model for success? How do you leverage legacy strengths, while aligning structure, processes, measures, rewards, and decision rights behind the right strategy moving forward? While organizational configurations will continue to differ across the telecommunications sector, the basic elements of the New Operating Model are consistent and enduring (see Exhibit 2): Profit-accountable business units formed around distinct market segments and value propositions Separate, market-efficient support services that provide internal clients with responsive, competitive offerings 3 11 /min at the end of D. Endicott, Is Low Telecom ROIC Here to Stay, and How Long Will Investors Bear This? Columbia University Program on Telecommunications Recovery, March 2003.
4 3 Lean and strategically focused corporate centers Alliances and partnerships with best-in-class external service providers to leverage scale, access expertise, and increase flexibility Connective rules and tools that measure, inform, and motivate organizational elements to work together in executing the firm s strategy. Moving from organizational concept to operational reality takes applied effort and fierce commitment applied effort across the entire enterprise and fierce commitment from the very top. The move to a new operating model is nothing short of a transformation. In the case of the telecommunications industry, there are three competitive imperatives driving this transformation (see Exhibit 3): 1. Improve the cost structure. The immediate priority for companies across the industry is to rein in costs. If growth was agenda item no. 1 in the 1990s, the turn of the millennium has pushed efficiency front and center. In a carrier s bid for continued relevance and viability, operational excellence and economies of scale are the base requirements for competition. 2. Create customer intimacy. Telecommunications providers need to address new customer requirements for tailored and integrated products and services. Bundled offerings, unified billing, and single channel customer service require major changes in organizational structure and systems to promote cross-functional cooperation. If improving cost structures are the base requirements for telcos, customer intimacy will be the prime point of competitive differentiation. Exhibit 3 Telecommunications: The New Operating Model Imperatives 3. Enhance organizational alignment and adaptability. To strengthen operating economics and business unit linkages, telecommunications service providers will need to change the way they are organized to do business. The full gamut of organization levers from structure to management systems to business processes to roles and responsibilities will need to be adjusted, even overhauled. Competitive Imperative #1: Cost Restructuring The case for cost restructuring in the telecommunications industry is readily made and well understood. Stagnant growth and increased price pressures have eroded margins and returns on invested capital industry-wide. Some carriers have already responded by slashing capital expenditures; others have squeezed specific functional areas for cost savings. Both tactics are short-term palliatives, however, and could seriously hamper long-term growth. For example, indiscriminate reductions in customer care staff can result in customer dissatisfaction, hence increased churn, hence higher acquisition costs. How do telecommunications carriers find sustainable solutions to the cost-restructuring imperative? How do wireline and wireless carriers quickly shift their focus to achieve step-change reductions in cost and capex levels? Functional Organization Structure Many in the industry use the immediacy of the costrestructuring imperative to justify their maintaining a functionally oriented organization structure. Indeed, it is true that a disciplined and tightly run structure organized around such functions as sales, customer service, marketing, network operations, IT, finance, and legal and human resources generally results in very low operating costs. Scale functions are consolidated in stand-alone cost centers or shared services units allowing companies to reap significant economies. The danger, however, with a functionally oriented organization structure is that it leads to a functionally driven operating model. Such models do not encourage customer focus. Instead, they often reward silo behavior as the managers of each function set their sights on their individual goals and financial targets, rather than enterprise objectives or customer requirements. Operating decisions tend to be budgetdriven, and cross-functional coordination is a challenge. Moreover, functional models require the hands-on involvement of senior management, often the COO or CEO, since true P&L responsibility can reside only at the top of the organization.
5 4 Shared Services To reduce costs and hone business unit focus, a number of telecommunications companies have introduced shared services in recent years (e.g., AT&T, Verizon). In fact, companies across industries ranging from aerospace to electric utilities to consumer products are turning to shared organizations to improve the cost efficiency and effectiveness of their administrative and technical support services. 5 When a company chooses to organize around shared services, it consolidates support services from headquarters and business units into a single organization. Rather than functioning as an arm of the central hierarchy with costs allocated to the rest of the organization (the support services model employed by most of the telecommunications industry), a shared services organization collaboratively plans requirements and pricing with its internal corporate and business unit customers. The fundamental principles of shared services noted in Exhibit 4 introduce marketlike discipline and appropriate incentives to the provision of internal support services. Transparent pricing and the contestability of services act to improve the quality of service rendered while limiting service demanded to that which the business unit customer is willing to pay for. No longer a free good, internal support services are now market-priced products with costs and benefits. Corporate and business unit customers make trade-offs accordingly, with an explicit understanding of the true economic impact of their choices. The service providers become not only vendors to the internal customers, but also expert advisers on what services would best suit the business needs of the customer and whether they should be sourced internally or externally. Still, many companies have stumbled in implementing shared services. Many that claim to have implemented these models have not realized the desired benefits. In such cases, we often find that companies are misusing the term shared services to refer to centralized and fully insulated staff support functions rather than independent, market-focused, accountable service providers. Shared services, it should be emphasized, is not just a new name for cost center. Outsourcing The commercial give-and-take of the shared services model, combined with the external benchmarking and internal cost transparency that characterize it, provide a solid, organic foundation for outsourcing. Increasingly, telecommunications carriers are embracing these new supplier relationships to not only lower costs, but also to enhance flexibility, access expertise, and free up inhouse resources to focus on core business capabilities. Telecommunications outsourcing began with peripheral, nonstrategic activities such as logistics and facilities management. But as outsourcing has taken hold among telecommunications players, its reach has spread into areas that are closer and closer to the core, according to research conducted among service providers. 6 Today, business process outsourcers (BPOs) are providing complex end-to-end services for missioncritical operations such as call centers, data centers, IT applications development (e.g., administrative and ERP systems), and billing. Vertical thinking (i.e., own or control every link in the supply chain) has given way to virtual thinking (i.e., create a flexible web of supply relationships and focus exclusively on what you do best) as telecommunications companies grapple with the imperative to restructure costs. Generally speaking, outsourcing is becoming increasingly prevalent in asset-intensive functions (e.g., IT, billing) where separation from the corporate core is possible (i.e., operations rather than planning and development). Activities that require standards setting or close integration with corporate planning are easier to perform in-house. Exhibit 4 Shared Services Principles Rest on Market-Like Mechanisms Shared Services Principles Price Transparency Business Management Market Responsiveness Best Practices Proliferation User Governance Service Culture Each service has its price. The business unit determines how much, if any, it wants at that price. The service is managed as a business, not a fixed overhead. It exists to serve internal customers. Service levels are determined by what the users want, not by what support staff thinks they need. Internal and external best practices are continually identified and, if appropriate, incorporated. Users have the dominant voice in setting standards and processes for commercial interaction. Support services exist to serve the business needs of the users, proactively as well as reactively. 5 P. Kocourek, V. Couto, P. Hyde, and L. Dunn, Getting Shared Services Right: Capturing the Promise, Booz Allen Hamilton, S. Eikelman, Outsourcing Options for Mobile Network Operations, Booz Allen Hamilton, 2002.
6 5 While network operations have been regarded by most carriers as too strategic to outsource, our research indicates that network outsourcing has significant potential scale benefits, especially if the BPO manages multiple networks (e.g., expert staff, warehouse consolidation, equipment maintenance) Carriers are beginning to consider various outsourcing alternatives from the outright transfer of network functions to the BPO to the reengineering of processes and the redefinition of boundaries between carrier and outsourcer. Of course outsourcing presents risks. In cases where the outsourcer enjoys a virtual monopoly, it will often raise transaction charges such that the aggregate economic cost of outsourcing (i.e., transaction plus production costs) exceeds the cost of keeping the function in-house. In such areas (e.g., systems integration, ancillary IT services), some telcos are weighing whether to bring the services back inside the company. 7 Sharing Infrastructure Another option that telecommunications companies have been considering to leverage scale is sharing infrastructure, particularly network resources. Both the wireless and wireline segments of the industry have examined this possibility; indeed, a number of wireless carriers in the U.S. and Europe have networksharing agreements (e.g., T-Mobile/Cingular, German wireless carriers). Our economic analysis indicates that wireless carriers can save an estimated 48% in access network costs. This figure obviously depends on the degree of cooperation and the regional synergies of the particular networks. Competitive Imperative #2: Customer Intimacy In addition to responding to mounting cost pressures in the immediate term, telecommunications carriers need to enhance their customer responsiveness dramatically. In conducting market assessments in the telecommunications sector, we at Booz Allen find wide and consistent agreement among both business and consumer customers on the need for greater integration of products and services. In the enterprise market, customers value the opportunity to build a relationship with a one-stop supplier of telecommunications services. They want a package of solutions that wraps systems and connectivity requirements around information technology with a single bow. In the consumer market, customers are looking forward to product and service bundles, unified billing, and a single customer sales and service channel. They want a seamless experience, which puts great pressure on carriers to reorganize their operating model. They need to build and cement linkages between business units that have been growing apart for years. The telecommunications industry is not the first to tackle the challenge of customer intimacy. The retail banking, consumer goods, and automotive industries have all tried in recent years to deepen the penetration of their existing customer base. Telcos are fortunate, actually, in that consumers are not only willing; they demand a more penetrating and full service relationship. They want one-stop shopping. They want bundled offerings. Building a customer-centric service organization, in our experience, requires repositioning the business around a seamless continuum of tailored solutions. So, for example, a bank needs to transition from a provider of transaction services to a partner in wealth creation. Telcos need to shift from a carrier mindset to a full-service provider model. The telecommunications company of the future will provide tailored bundles of products and services to anyone, anytime, anywhere, anyhow. The experience of other industries suggests that the critical enabler to achieving this new strategic position is organization structure and the corresponding business processes. First, telcos need to understand the full range of customer requirements (e.g., define segments, value propositions, product sets). Then they need to modify their internal processing architecture to reflect a market rather than a product orientation. Each market segment will have its own differentiated set of economics. This new customer-centric and solutions-oriented operating model will: Optimize overlap in service/product coverage Provide for effective management of pricing and cross-selling Integrate across all points of contact, both in sales and care Generate a holistic view of product development In every industry where solutions plays have worked, there are three key success factors. First, customers desire, perceive, and are willing to pay for true solutions. Second, the solution bundles 7 R. Katz and B. Sarma, The Importance of Scale and Scope in Driving Telecommunications Industry Structure, Columbia University Program on Telecommunications Recovery, 2003.
7 6 Exhibit 5 Customer-centric Operating Model for Telecommunications Providers are a combination of strong underlying positions and capabilities, not an attempt to hide a suboptimal offering within a broader package. Third, successful companies acknowledge (rather than deny or ignore) the inherent tensions between being customer-centric and internally disciplined and efficient. 8 This tension is especially pronounced in asset- and scale-intensive businesses where it is necessary to heed the needs of the production plant be it manufacturing facility or the network as well as those of the customer. Our client experience in a range of service industries suggests there are four design principles that telecommunications service providers should keep in mind in building a customer-centric organization: Differentiate the customer experience via new, open and transparent customer interfaces Redesign distribution and customer management around a solutions approach Develop a segment-aligned delivery model that genuinely differentiates economics by segment Pull away from competitors by getting execution right the first time (a bundle handicapped by poor delivery is worse than no bundle at all) Putting these design principles to work results in a fundamental transformation of most telecommunications carriers operating mode. No longer are companies organized around functional areas; instead, customer segments are the primary axis (see Exhibit 5). This customer-centric organization structure represents a major departure from the current models prevalent in the telecommunications industry today. It will require redefining roles and responsibilities at nearly every level, as well as processes and procedures. It also fundamentally alters the operation of the business, as P&L responsibility no longer needs to reside at the top of the organization. Rather it can roll up to customer segment heads. While dislocating over the short run, the reward of such a structure is an increased focus on what is ultimately a carrier s greatest asset the customer. Competitive Imperative #3: Organization Alignment and Adaptability We ve established that telcos need to dramatically change their operating economics and deliver an integrated product to the customer. These competitive imperatives are, in turn, driving the need for a new operating model among telecommunications carriers. To support this new operating model, many telcos will need to restructure their organizations to foster both 8 D. Sharma and R. Katz, Customer Solutions: From Pilots to Profits, Booz Allen Hamilton, November 2000.
8 7 alignment with strategic objectives and adaptability as these objectives shift in a constantly changing competitive environment. Telecommunications companies need to optimize organizational effectiveness to cope successfully with rapid, often unanticipated, market and technology developments. Our experience suggests that most carriers should focus immediate efforts on improving the effectiveness of four key organizational areas: Product Development Speed to market is critical and will only become more so as the telecommunications industry continues to evolve. To optimize the product development process, telcos need to reduce organizational tensions and promote cross-functional collaboration. We find that most companies stumble in getting new products and services to market because of their own intrafunctional roadblocks. Marketing, sales, finance, network operations, and engineering cannot seem to cooperate in launching new ideas and integrated solutions in a timely manner. Moving from functional organization structures to a customer-centric model will help break down this silo behavior. However, telecommunications service providers also need to address nonstructural organizational attributes. In particular, they need to redefine roles and responsibilities to establish clear ownership of critical end-to-end processes and design new incentive mechanisms to foster true accountability for results. Customer Care Customer services costs can represent up to 20% of a telco s total operating expenses. Moreover, poor customer service is a key driver of the unacceptably high churn rates in the industry. So, enhancing customer care operations is clearly a priority. We find that most telecommunications customer care organizations suffer from two major weaknesses: 1. Lack of effective coordination between customer care, marketing, and billing. The result? Marketing rolls out new products and services before IT has implemented the requisite billing system changes and before Customer Care is prepared from a procedural, staffing, and training standpoint to support the new offerings. Customer dissatisfaction is the direct outcome. Higher operating costs are an indirect impact as staff scramble to develop work-around processes and custom services to accommodate the new products and service in the short to medium term. 2. One-size-fits-all approach fails to optimize customer demand. Most telcos have historically subscribed to the conventional wisdom that one-size-fitsall solutions result in the lowest overall costs. However, our recent client work across industries suggests that this logic is outdated and faulty. In practice, this approach typically overserves a service provider s least profitable customers, while underserving the most valuable customers. Again, the result is dissatisfied customers and higher than necessary costs. Telecommunications customer care organizations need to migrate from one-size-fits-all to fit-forpurpose customer service solutions tailored but efficient service delivery solutions for customer segments (defined according to cost-to-serve and ability-to-serve). By assessing and addressing customer needs and priorities, companies can provide a set of affordable yet responsive solutions. 9 Retail Sales and Distribution As telecommunications shift to a new operating model, they need to focus special attention on customer touch-points, not only customer care operations, but also retail sales and distribution. The telecommunications industry has boxed itself into a retail distribution model that is increasingly out of sync with customers needs. 10 The symptoms of this dysfunction are obvious: uneconomic companyowned stores in the wireless sector; telcos inability to distribute bundled products through common channels, and numerous supply chain inefficiencies. In designing a new organizational structure for the retail channel, telecommunications carriers need to accommodate: The migration toward a multi-product channel that can distribute and support bundled offerings The differentiation of the carrier-owned store based on customer segment (i.e., business versus consumer) to complement and support an overall customer-centric organization model A redesigned retail supply chain that minimizes working capital requirements through business process simplification 9 V. Couto, G. Neilson, F. Jones, E. Alvarez, and others, Attacking Overhead Costs from Both Sides: Optimizing the Supply and Demand for G&A Services, Booz Allen Hamilton, D. Endicott, A. Clyde, N. Hodson, and J. Harrison, Lifting Wireless EBITDA Margins by Redefining Retail Distribution, Booz Allen Hamilton, 2003.
9 8 The Corporate Center As telecommunications carriers delegate P&L responsibility and, consequently, business strategy decisions to customer-focused business units and centralized support activities to shared services organizations, what remains in the corporate center? The right answer is a significantly stripped-down set of clearly defined functions that revolve around strategic leadership. However, telco corporate centers have traditionally presided over functional and geographic organizational structures that require hands-on, day-to-day management and oversight. The transition to a lean, strategically focused structure represents a dramatic break from the past. The corporate center must shift its focus from running the business to developing the capabilities necessary to support the new operating model. Roles, responsibilities, and relationships within the organization will necessarily change. 11 Role of the executive team: Telecommunications carriers need to move away from staff-heavy executive bodies and toward leaner, business-focused managing structures and systems (i.e., Executive Committee). Business unit heads must step up and play a more active role in driving the corporate change agenda. Corporate functional leaders must support the business units more effectively and efficiently, while also driving change across the enterprise within their own areas of responsibility. Exhibit 6 Lessons of Successful Operating Model Transformations Relationship between the CFO and the business units: In the current business climate, the CFO is taking on greater accountability and authority. Traditionally focused on reporting and control functions, the CFO is now also responsible for connecting capital markets requirements directly with business unit operations and raising red flags whenever and wherever significant risks exist. He or she is now called on to provide an independent perspective on the performance of individual businesses, actively challenging line management s decisions in some cases. CFOs are identifying and focusing on the billion dollar decisions, testing the business cases for large investments and allocating restructuring resources. At some telcos, the CFO will need to have direct line authority and control enough of the corporate budget to take failsafe actions to make plan. 12 Putting the New Model into Action Conceptualizing a new operating model for telecommunications carriers is one thing; designing and implementing it is another. Putting this new telecommunications operating model into action will transform the way telecommunications companies conduct business. It will encompass and alter the full gamut of organizational levers from structure to measures to incentives to processes to management systems and responsibilities. This change cannot be incremental; it must be dramatic. It cannot be business unit-specific; it requires a top-down and enterprise-wide vision. It cannot be led by middle management; it has to be driven by the CEO. Fortunately, telecommunications service providers can learn from the example of other industries (e.g., basic manufacturing, automotive, financial services) that have already confronted significant threats to their operating model and transformed their organizations to meet new competitive requirements. Companies that effect successful transformations apply many of the same lessons learned (see Exhibit 6). In our experience, operating model transformations work best when the top management team works collectively and in offsite mode. Corporate officers, business unit heads, and functional leaders convene for a series of working sessions to hammer out the strategic direction and overall objectives of the new operating model. At this point in the process, many companies make a fatal mistake. They hand these strategic objectives 11 M. Moran, G. Neilson, and S. Hedlund, The View From the Top: Rethinking the Roles of Senior Management, Booz Allen Hamilton, I. Heinz, J. Neibuhr, W. Schirra, and V. Couto, The New CFO Agenda: Setting the Pace for Value Generation, Booz Allen Hamilton, 2003.
10 9 Exhibit 7 Implementing a Strategy-Based Transformation over to the business units and functional departments to execute. Developing and implementing a new operating model requires a cross-functional approach that is led from the top and draws on expertise from throughout the enterprise. To reach aggressive, step-level objectives (i.e., 20 to 30% cost reduction versus 5 to 10%), an organization needs to implement wholesale changes in its organization. Often, the greatest opportunities are located in the seams between functional silos. This cross-organizational approach has the additional advantage of directing management attention forward. Department heads focus on future synergies and economies rather than turf issues. The process for establishing the new operating model vision and implementing it involves translating analytic findings into a change management agenda (see Exhibit 7). The integrated methodology we recommend can take anywhere from six months to a year and moves through three overlapping phases: opportunity identification, model design, and implementation. This process enables the top leadership of a company to engage the organization in framing the change, developing the blueprint for the new operating model, and then rolling it out. This is a transformation process that requires full-time attention from a cross-functional team. Part-timers cannot translate good intentions into meaningful progress. The organization s capacity and willingness to change play a key role. Management needs to be sensitive to pockets of resistance and leverage apostles of change. Ultimately, the leadership needs to engage the entire workforce to ensure change sticks. The value of building ownership in a new operating model cannot be underestimated, as Exhibit 8 demonstrates. Early on, high levels of commitment help the organization set stretch targets in terms of cost reduction or revenue improvement. Ownership built during design gives management the confidence to factor changes into its budget commitments. The greater the degree of ownership across the organization, the more likely it is that the new operating model will exceed its budgeted objectives. Exhibit 8 The Value of Ownership
11 10 Why Now? Purposefully deploying the principles and building blocks of the new operating model against strategic objectives is a critical first step toward telcos realizing step-change improvements in shareholder returns, not to mention operating economics and customer focus. The new operating model represents the types of organization design that telecommunications service providers are gravitating toward in their pursuit of cost restructuring, customer intimacy, and organization alignment and adaptability. It is not a specific organizational prescription, but an approach that can manifest itself in different end points and in different stages of evolution. Our belief is that strategic positioning alone will not drive competitive advantage moving forward. Executional excellence is equally, if not more, critical, and execution is a matter of organization. In an era of strategic ambivalence, market esteem is gravitating toward the fundamentals: consistent delivery on earnings and performance targets; clear, credible strategic direction consistently communicated to the Street; strong operating performance; and solid and stable return on invested capital. Few have the culture and capabilities to deliver consistently on these expectations or the desire to make the tough organizational decisions to compete effectively. Those who do have a clear and marked advantage. What Booz Allen Brings Booz Allen Hamilton has been at the forefront of management consulting for businesses and governments for more than 80 years. Booz Allen combines strategy with technology and insight with action, working with clients to deliver results today that endure tomorrow. With over 11,000 employees on six continents, the firm generates annual sales of $2 billion. Booz Allen provides services in strategy, organization, operations, systems, and technology to the world s leading corporations, government and other public agencies, emerging growth companies, and institutions. To learn more about the firm, visit the Booz Allen Web site at To learn more about the best ideas in business, visit the Web site for strategy+business, a quarterly journal sponsored by Booz Allen. Raul Katz is a Vice President in Booz Allen Hamilton s New York offi ce. He has eighteen years of experience specializing in business strategy, consumer and industrial marketing, and the management of international telecommunications companies. He can be reached at (212) or by at katz_ Paul Kocourek is a Senior Vice President in Booz Allen Hamilton s New York offi ce. He works with senior managers and boards of directors to address key issues affecting the near and long-term performance of their fi rms. His work covers both strategy development and active involvement in implementation planning and assistance. He can be reached at (212) or by at Decio Mendes a senior associate in Booz Allen Hamilton s New York offi ce, where he is a member of the fi rm s Organization and Change Leadership team. The primary focus of his work is helping clients to improve organization effectiveness and operational effi ciency. He can be reached at (212) or by at Gary Neilson is a Senior Vice President in Booz Allen Hamilton s Chicago offi ce. During his twenty-two years with Booz Allen, he has focused on organization model design, organization restructuring and leadership of major change initiatives for companies across industries. He can be reached at (312) or by at Also contributing to this report were Booz Allen s Dominic Endicott Eric Riddleberger and Bharat Sarma Downloadable digital versions of this article and other Booz Allen Hamilton publications are available from
12 Worldwide Offices Abu Dhabi Charles El-Hage Buenos Aires Alejandro Stengel Göteborg Bengt Johannesson Malmö Ingemar Bengtson Paris Panos Cavoulacos Stockholm Kenny Palmberg Amsterdam Peter Mensing Caracas José Gregorio Baquero Helsinki Kari Iloranta McLean Martin J. Bollinger Philadelphia Molly Finn Sydney Tim Jackson Atlanta Joe Garner Chicago Gary Ahlquist Hong Kong Reg Boudinot Melbourne Tim Jackson Rio de Janeiro Paolo Pigorini Tampa Joe Garner Bangkok Tim Jackson Cleveland Les Moeller Houston Joe Quoyeser Mexico City Alonso Martinez Rome Fernando Napolitano Tokyo Eric Spiegel Beirut Charles El-Hage Colorado Springs Glen Bruels Jakarta Ian Buchanan Miami Alonso Martinez San Diego Foster Rich Vienna Helmut Meier Berlin Rene Perillieux Copenhagen Kenny Palmberg Lexington Park Neil Gillespie Milan Enrico Strada San Francisco Bruce Pasternack Warsaw Reg Boudinot Bogotá Jaime Maldonado Dallas Tim Blansett London Peter Bertone Munich Richard Hauser Santiago Alejandro Stengel Wellington Tim Jackson Boston John Harris Düsseldorf Thomas Kuenstner Los Angeles Tom Hansson New York David Knott São Paulo Letícia Costa Zurich Jens Schäedler Brisbane Tim Jackson Frankfurt Rainer Bernnat Madrid Mercedes Mostajo Oslo Haakon Bjertnaes Seoul Jong Chang /4/03 PRINTED IN USA 2003 Booz Allen Hamilton Inc.
Outsourcing Trends in the North American Telecommunications Market Booz Allen Hamilton recently conducted a major study on the evolution of the value chain and the potential impacts of outsourcing on the
by Marty Bollinger, Senior Vice President firstname.lastname@example.org Joshua M. Boehm, Associate email@example.com Moving Toward a Faster and More Predictable Process of Licensing Defense Articles and Services
by Stefan Eikelmann firstname.lastname@example.org Dr. Michael Fritsch email@example.com Monique Oudijk firstname.lastname@example.org Michael Stomberg email@example.com Outsourcing trends in the European
Outsourcing and the CFO The Balanced Delivery Model for Finance and Accounting The role of the Chief Financial Officer (CFO) has evolved dramatically, moving far beyond the responsibilities the title suggests.
by Stefan Stroh firstname.lastname@example.org Jürgen Ringbeck email@example.com Christian Plenge firstname.lastname@example.org RFID Technology: A new innovation engine for the logistics and automotive industry?
Perspective Amit Gupta Seamus McMahon Ashish Jain Kumar Kanagasabai Redefining the Mission for Banks Call Centers Cut Costs, Grow Sales, or Both Contact Information Chicago Ashish Jain Principal 312-578-4753
Opportunities for Action Achieving Success in Business Process Outsourcing and Offshoring Achieving Success in Business Process Outsourcing and Offshoring The list of companies that have launched efforts
by Mike Connolly email@example.com Vinay Couto firstname.lastname@example.org Gil Irwin email@example.com Karl Kellner firstname.lastname@example.org Aiming for Outsourcing Excellence The New Knowledge-Based Outsourcing
CyberCarriers: Enablers of the Networked Economy by Barry Jaruzelski, Vice President Frank Ribeiro, Senior Associate Thomas Ripsam, Associate Robert Madeira, Consultant Introduction Today s voice and data
by Lisa Fabish email@example.com Stuart Groves firstname.lastname@example.org Robert Oushoorn email@example.com Otto Waterlander firstname.lastname@example.org Pulling Up Your SOX Companies Can Gain from Compliance
Opportunities for Action in Consumer Markets Paying for Performance: An Overlooked Opportunity Paying for Performance: An Overlooked Opportunity Every time a sales representative considers which customers
Opportunities for Action in Financial Services Transforming Retail Banking Processes Transforming Retail Banking Processes The retail banking environment is undergoing major change. Retail banking customers
Leading Research Paul Hyde Frank Ribeiro Ashish Jain Kumar Kanagasabai Building a Customer-Centric Operating Model Aligning Segments, Products, and Channels Financial Institutions can expect to compete
Leading Research Paul Hyde Ken Favaro Ashish Jain Samuel Bloustein Small Business Banking Customers An Attractive Segment for Organic Growth Small Business Customers Are Among the Most Profitable Segments
Shining the Light on Shadow Staff Understanding and Minimizing Hidden Staff Costs Booz & Company is a leading global management consulting firm, helping the world s top businesses, governments, and organizations.
Opportunities for Action Shared Services in Operations and IT: Additional Complexity or Real Synergies? Shared Services in Operations and IT: Additional Complexity or Real Synergies? In recent years, many
Perspective Eduardo Alvarez Vinay Couto Ashok Divakaran Outsourcing and the CFO The Balanced Delivery Model for Finance and Accounting Booz & Company is a leading global management consulting firm, helping
Opportunities for Action in Industrial Goods The Price Is Right: Optimizing Industrial Companies Pricing of Services The Price Is Right: Optimizing Industrial Companies Pricing of Services Industrial companies
Opportunities for Action in Financial Services The Business-to-Business Race Is On The Business-to-Business Race Is On Financial institutions have the chance to play leading and profitable roles in shaping
Power struggle: Making the most of generation assets in turbulent times A thorough review of a power generation portfolio informs decisions about how to reduce costs, raise revenues and make broader strategic
Opportunities for Action in Financial Services Sales Force Effectiveness: Moving Up the Middle and Managing New Prospects Sales Force Effectiveness: Moving Up the Middle and Managing New Prospects Good
Opportunities for Action in Consumer Markets The Antidote to Mismanaged CRM Initiatives The Antidote to Mismanaged CRM Initiatives Most companies don t know who their best customers are. They enjoy the
Perspective Patrick W. Houston Robert Hutchens Procurement s New Operating Model Contact Information Florham Park, NJ Patrick W. Houston Partner +1-973-410-7602 email@example.com New York Robert Hutchens
Opportunities for Action in Operations Production Excellence: Unleashing the Power of the Shop Floor Production Excellence: Unleashing the Power of the Shop Floor Many companies today have lost sight of
Capturing the Promise of Shared Services Excerpted from Optimizing Overhead: From Cost Center to Competitive Advantage, published as a strategy+business Reader by Booz Allen Hamilton, July 2007. Capturing
Opportunities for Action in Consumer Markets To Spend or Not to Spend: A New Approach to Advertising and Promotions To Spend or Not to Spend: A New Approach to Advertising and Promotions Trying to outshout
IBM Global Business Services Services for the CFO Financial Management Consulting Financial Management Chief financial officers (CFOs) are currently in a highly visible, highly influential position. They
Opportunities for Action in Health Care Unleashing Managerial Advantage In Pharma R&D Unleashing Managerial Advantage In Pharma R&D Over the past 15 years, R&D productivity has fallen and the number of
wealth management FS 09/01 9/13/01 1:41 PM Page 1 Opportunities for Action in Financial Services Untapped Riches: The Myths and Realities of Wealth Management Untapped Riches: The Myths and Realities of
Global Penetration: Growth and Competitive Advantage Health Care Viewpoint Number 6 Bain health care expertise As the year 2000 approaches, the health care industry is still turbulent. Customer requirements
Using Mergers and Acquisitions to Secure Strategic Position and Profitable Growth Health Care Viewpoint Number 11 Bain health care expertise As the year 2000 approaches, the health care industry is still
Opportunities for Action in Industrial Goods Asset Productivity: A Potent Lever for Competitive Advantage Asset Productivity: A Potent Lever for Competitive Advantage With economic growth stubbornly elusive,
Interview Jon Katzenbach Zia Khan A Conversation with Jon Katzenbach and Zia Khan, Authors of Leading outside the Lines Contact Information New York Jon Katzenbach Senior Partner +1-212-551-6115 firstname.lastname@example.org
Introduction to Strategic Supply Chain Network Design Perspectives and Methodologies to Tackle the Most Challenging Supply Chain Network Dilemmas D E L I V E R I N G S U P P L Y C H A I N E X C E L L E
Freight Forwarders: Thinking Outside the Box Given its size, profitability, and expected growth rates, freight forwarding is among the most attractive segments in the North American transportation services
Perspective Jai Sinha Saving Sell-Side Research Booz & Company is a leading global management consulting firm, helping the world s top businesses, governments, and organizations. Our founder, Edwin Booz,
The Retail Track The Omni Channel Retail Supply Chain Indian E-Retail Congress 2013 Subhendu Roy Principal Consumer Industries and Retail Practice 15 February, 2013 Disclaimer This document is exclusively
Accenture 2014 High Performance Finance Study Capital Markets Report GROWTH REALIGNMENT INTEGRATION INTRODUCTION Capital markets institutions have been hit hard by the financial crisis, and face the challenge
A HISTORICAL PERSPECTIVE ON THE TELECOMMUNICATION SERVICES INDUSTRY: WHITE PAPER by Xavier Van de Lanotte President, VXTConsulting, Inc. Miami May, 2002 The telecommunication industry landscape has significantly
Opportunities for Action in Industrial Goods Winning by Understanding the Full Customer Experience Winning by Understanding the Full Customer Experience The old adage What gets measured gets done is fine
The Real Supply Chain Challenge Leadership and Talent Management The best supply chains appear to be complex, precise machines with millions of moving parts that mesh efficiently and function flawlessly.
Strategic Key Account Management Page 1 How Economic and Technological Changes Have Made Key Account Management a Strategic Imperative In the 1970s, companies like Xerox and IBM started to address their
3-02-70 INFORMATION MANAGEMENT: STRATEGY, SYSTEMS, AND TECHNOLOGIES CUSTOMER RELATIONSHIP MANAGEMENT Ken Liang and Houston H. Carr INSIDE Customer Relationship Management; Information Technology and CRM;
Digital Infrastructure and Economic Development An Impact Assessment of Facebook s Data Center in Northern Sweden executive summary The Boston Consulting Group (BCG) is a global management consulting firm
Perspective Ramez Shehadi Dr. Walid Tohme Jad Bitar Fit for Purpose Developing Enterprise- Wide Electronic Medical Records Contact Information Beirut Ramez Shehadi Partner +961-1-985-655 email@example.com
Chapter 3: Strategic CRM Overview Topics discussed: CRM perspectives The components of strategic CRM Steps in developing a CRM strategy Case Study: CRM implementation at International Business Machines,
10Steps to Optimize Retail Operations A guide to enable, deliver and drive store value Achieving Excellence in Retail Operations (AERO TM ) Enable store value Use customer and market insights to set strategic
US Business Services 2015 Executive Summary CMR Market Research May 2015 Reproduction without permission 1 The contents of this report represent CMR s analysis of the information available to the public
IGG-06252003-01 S. Nelson Article 25 June 2003 Management Update: The Eight Building Blocks of CRM Customer relationship management (CRM) represents the key business strategy that will determine successful
ROLE SPECIFICATION for the position of with GENERAL COUNSEL INTERNATIONAL FINANCE CORPORATION AMSTERDAM ATHENS ATLANTA BARCELONA BEIJING BERLIN BOGOTÁ BOSTON BRUSSELS BUDAPEST BUENOS AIRES CALGARY CHICAGO
From the Back Office to the Corner Office Offshore Services Next Leadership Challenge The last two decades have seen a dramatic evolution in Global In-house Centers (GICs), as their value proposition has
Manfred Schmitz, Patrick Hung Fai Ma Competitor or Partner? Equipment vendors are getting more and more involved into the telecom operators business via Managed Services Vendors are expanding their service
Opportunities for Action in the Automotive Industry How Electronics Will Revolutionize Innovation in Autos How Electronics Will Revolutionize Innovation in Autos The Age of Electronics has hit the auto
Opportunities for Action in Operations Working Capital Productivity: The Overlooked Measure of Business Performance Improvement Working Capital Productivity: The Overlooked Measure of Business Performance
Winning is no accident Proven assessments of performance and potential to improve organizational leadership at every level To fill the critical gap between strategy and execution plan and performance you
Goodbye Spokesperson, Hello Steward The Transformation of Corporate Communications Once heralded as the seat held by the best storyteller in the company, corporate communications is no longer about amplifying
Opportunities for Action in Financial Services The Three Golden Rules of Cross-Selling The Three Golden Rules of Cross-Selling Most banks and insurance companies recognize the value to be captured from
Consumer Products 2010: Insights for the Future in Asia Patrick Medley, Distribution Sector Leader, Asia Pacific IBM Business Consulting Services 2005 IBM Corporation Agenda for today s discussion 2010
WHITE PAPER OCTOBER 2014 Unified Monitoring A Business Perspective 2 WHITE PAPER: UNIFIED MONITORING ca.com Table of Contents Introduction 3 Section 1: Today s Emerging Computing Environments 4 Section
Supply Chain Q4/2012 A better way to engage with suppliers p. 24 [QUARTERLY] Standardized software: Eroding your competitive edge? From many, one: IBM unifies its supply chains www.supplychainquarterly.com
The Data Center of the Future: Creating New Jobs in Europe New data centers will create hundreds of thousands of new jobs for Europe by 2020. But there is work to be done to capture this opportunity fully.
Leading Research Christopher Vollmer Karen Premo Campaigns to Capabilities Social Media & Marketing 2011 Selected Insights October 2011 Facebook, Twitter, and YouTube are the cornerstones of most social
Human Resources Specialty Practice www.stantonchase.com Established in 1990, Stanton Chase has grown to be ranked among the leading global executive search firms as rated by all major industry market research
Embracing SaaS: A Blueprint for IT Success 2 Embracing SaaS: A Blueprint for IT Success Introduction THIS EBOOK OUTLINES COMPELLING APPROACHES for CIOs to establish and lead a defined software-as-a-service
Building the Digital HR Organization Accenture and SuccessFactors on the changing nature of HR More than ever, HR has to contend with changing business demands and an evolving workforce. At the same time,
Drive to the top The journey, lessons, and standards of global business services kpmg.com The new normal for global enterprises is about doing more with less while at the same time driving the top line
MRO on the Move Outsourcing maintenance, repair and operations To improve quality in certain critical operations and reduce costs in others, many industrial manufacturing companies are turning to integrated
IT Cost Transformation Getting the Biggest Business Impact From Your IT Organization For many IT departments, costs have been climbing steadily as demand and complexity grow. The rise in complexity has
VOLUME XVIII, ISSUE 12 Growing Revenues Through Commercial Excellence Companies engage in a battle every day to create value. L.E.K. Consulting helps companies succeed in this battle by focusing on the
Perspective Roman Friedrich Peter Weichsel John Miles Ashish Rajvanshi Outsourcing Network Operations Maximizing the Potential Contact Information Beirut Mohamad Mourad Principal +961-1-985-655 firstname.lastname@example.org
Accenture Human Capital Management Solutions Transforming people and process to achieve high performance The sophistication of our products and services requires the expertise of a special and talented
284 23-3115 Uen MANAGED SERVICES IMPACT ON THE TELECOM INDUSTRY March 2007 White Paper By adopting the Managed Services concept, operators can reduce their costs and increase their competitiveness. Contents
Mortgage Apr 03 4/23/03 8:44 AM Page 1 Opportunities for Action in Financial Services Making the Most of Mortgage Markets Making the Most of Mortgage Markets In much of the industrialized world, mortgage
Opportunities for Action in Industrial Goods Curing Supply Chain Indigestion Curing Supply Chain Indigestion The pressure to improve supply chain performance has never been greater. The rise of e-commerce
Customer Service Analytics: A New Strategy for Customer-centric Enterprises A Verint Systems White Paper Table of Contents The Quest for Affordable, Superior Customer Service.....................................
Accenture Technology Consulting Clearing the Path for Business Growth Mega technology waves are impacting and shaping organizations in a profound way When a company s executive management team considers
Finding Opportunity in Disruption: Driving a New Era of Value Growth in the Cable Industry Introduction The cable industry has generated impressive growth over the last half decade, building on its traditional
Perspective Enrico Strada Paolo Lasagni Dr. Tim Habermann A Pragmatic, Business-Focused Approach to SOA Contact Information Milan Enrico Strada Partner +39-02-72-50-93-00 email@example.com Paolo Lasagni
Perspective Martin Reitenspieß Peter Weichsel Niels Rosenhäger LTE: Delivering the Future of Wireless Contact Information Düsseldorf Peter Weichsel Partner +49-211-3890-231 firstname.lastname@example.org Niels
Surface Transportation Factoring Risk into Transportation and Logistics Sourcing In the face of continued economic uncertainty and heightened cost and margin pressures across all industries, many shippers
INNOTAS EBOOK The Transformational CIO The Change Agent That Drives Business Strategy Table of Contents Introduction.... 3 Shifting the Focus to Strategic IT Projects.... 4 Adding Value Through IT Operations....
CONSULTING SERVICES Business & technology consulting and managed services SUNGARD CONSULTING SERVICES Leveraging global delivery to help drive operational efficiency while reducing IT cost Companies face
AVANTGARD Hosting and Managed Services AVANTGARD HOSTING AND MANAGED SERVICES SunGard meets its customers diverse set of requirements by not only bringing to market scalable, flexible, and industry leading
Creating HR Service Delivery Success HRO Today Forum Europe 2012 By Brad McCaw, Senior Consultant, London 2012 Towers Watson. All rights reserved. Setting the context Businesses are going through significant
Operations Excellence: Supplier Relationship Management SRM How to maximize vendor value and opportunity 27th November 2014 Zagreb DDr. Michael Strohmer, Partner, A.T. Kearney email@example.com
Build or Buy Assessing the Gaps, Risks & Opportunites Introduction Companies today face a significant challenge in growing sales and squeezing out more margin across multiple sales and distribution channels,
IBM Global Process Services Thought Leadership White Paper December 2011 Today s shared services operating models: The engine behind enterprise transformation Leveraging the power of globally integrated
Prescription for cutting costs By Fred Reichheld Loyal relationships In the current downturn, many companies are tightening belts. But too many are missing their biggest opportunity to keep costs down:
Your consent to our cookies if you continue to use this website.