CUSTOMER MANAGEMENT SOLUTIONS FOR VOICE OVER INTERNET PROTOCOL (VOIP) SERVICE VERONICA BINTI CLEMENT BUYUT UNIVERSITI TEKNOLOGI MALAYSIA

Transcription

1 CUSTOMER MANAGEMENT SOLUTIONS FOR VOICE OVER INTERNET PROTOCOL (VOIP) SERVICE VERONICA BINTI CLEMENT BUYUT UNIVERSITI TEKNOLOGI MALAYSIA

2 Dedicated to my beloved family and fiancé. iii

3 iv ACKNOWLEDGEMENT First and foremost, I would like to express my gratitude to God for His abundant grace that I am able to be what I am today. I also wish to express my sincere appreciation to my thesis supervisor, Associate Professor Wardah Zainal Abidin, for her precious guidance, encouragement, critics, advices, knowledge and motivation. Without her support and interest, this thesis would not have been the same as presented here. I would love to express my thank you to all my fellow postgraduate students who have been going through the thick and thins during the development of this thesis. My sincere appreciation also goes to all my colleagues and friends who have provided assistance at various occasions. Last but not least, a very special appreciation goes to my fiancé, my beloved parents and also The Coolest Boss for their continuous supports, loves and cares.

4 v ABSTRACT Voice over Internet Protocol (VoIP) is a family of technologies that enable voice communications using IP networks like the Internet. Inventive developers and entrepreneurs have created an industry around VoIP technology in its many forms: desktop applications, telephone services, and corporate phone systems. VoIP is the core technology that drives everything from voice-chat software loaded on a computer to full-blown IP-based telecommunications networks in large corporations. VoIP is a single technology investment with many revenue streams according to many business analysts. To the enterprise network engineer, it's a way to simplify the corporate network and improve the telephony experience for users of the network. To the home user, it's an alternative way to save money on the old phone bill. Due to the high potential of VoIP in generating revenues, small and medium enterprises (SMEs) begin to embark in setting up their own VoIP business. However, most of these enterprises do not have proper customer management solutions which enable them to better manage their customers besides equipping the business with billing solutions that is crucial to the business. This is where this project comes in; to help SMEs in VoIP Services business to have a customer management solutions as a value-added service to their customers and also as a management tool for them to better manage their customers and business. Evolutionary prototyping has been selected as the system development methodology for this project. The system is built using PHP 5.0; MySQL as the Database Management System and Microsoft Windows XP Professional as the operating system. This project has come out with a Customer Management Solutions for Voice Over Internet Protocol (VoIP) Services. It is hoped that this project can provide benefits to the SMEs of VoIP business.

5 vi ABSTRAK Voice over Internet Protocol (VoIP) merupakan salah satu teknologi yang membolehkan komunikasi suara menggunakan rangkaian Protokol Antara Rangkaian seperti Internet. Pembangun aplikasi yang kreatif dan inventif serta usahawan telah membuka industri baru di sekitar teknologi VoIP dalam pelbagai bentuk seperti aplikasi komputer, perkhidmatan telefon dan sistem telefon korporat. Bagi para jurutera rangkaian perusahaan, ia merupakan salah satu cara untuk memudahkan rangkaian korporat disamping meningkatkan mutu kualiti penggunaan telefon. Bagi pengguna domestik di rumah, VoIP merupakan salah satu cara yang paling baik untuk menjimatkan wang dan mengurangkan kos bil telefon. Memandangkan VoIP mempunyai potensi yang tinggi di dalam menjana keuntungan, banyak usahawan kecil dan sederhana memilih VoIP sebagai pilihan perniagaan. Walau bagaimanapun, kebanyakkan daripada usahawan-usahawan terbabit tidak mempunyai sistem pengurusan pelanggan yang baik dan sesuai dimana ia adalah penting untuk membantu para usahawan untuk menguruskan pelanggan-pelanggan mereka. Disinilah projek ini muncul untuk membantu usahawan kecil dan sederhana di dalam perniagaan VoIP supaya mempunyai sistem pengurusan pelanggan sebagai khidmat tambah-nilai untuk pelanggan mereka disamping berperanan sebagai alat pengurusan bagi mereka untuk mengurus pelanggan dan perniagaan mereka dengan lebih baik. Projek ini dibangunkan berasakan metodologi pembangunan sistem evolusi prototaip. Sistem dibangunkan dengan menggunakn PHP 5.0; MySQL sebagai sistem pangkalan data dan Microsoft Windows XP Professional sebagai sistem pengoperasian. Projek ini telah menghasilkan prototaip Sistem Pengurusan Pelanggan untuk Perkhidmatan VoIP. Projek ini diharap dapat memberi manfaat kepada pengusaha kecil dan sederhana perniagaan VoIP.

6 TABLE OF CONTENT CHAPTER TITLE PAGE TITLE DECLARATION DEDICATION ACKNOWLEDGEMENTS ABSTRACT ABSTRAK TABLE OF CONTENT LIST OF TABLES LIST OF FIGURES LIST OF ABBREVIATIONS LIST OF APPENDICES i ii iii iv v vi vii xi xii xiv xv 1 PROJECT OVERVIEW Introduction Problem Background Problem Statement Project Overview Project Scope Importance of Project Chapter Summary 5 2 LITERATURE REVIEW Introduction 6

7 viii 2.2 Voice Over Internet Protocol (VoIP) VoIP Termination Call Accounting Call Detail Record (CDR) VoIP Billing E-Business Model Products & Services Infrastructure Management Customer Relationship E-CRM in VoIP Service E-CRM Perspectives and Definitions VoIP Business Challenges Case Study Gafachi Communication Voxee Pte Ltd Varphonex Comparisons Between Case Studies Conclusions 33 3 METHODOLOGY Introduction Project Methodology Planning Phase Analysis Phase Design, Develop & Testing Phase System Development Methodology Evolutionary Prototyping Planning Phase Analysis Phase Design, Develop & Testing Phase Methodology Justification Object Oriented Approach UML Notation System Requirement Analysis 47

8 ix Hardware Requirement Hardware Justifications Software Requirements Project Schedule Chapter Summary 51 4 INITIAL FINDINGS Introductions Current System User Requirements Functional Requirement Non-Functional Requirements Proposed System To-Be Process and Data Model Use Case Diagram Use Case Documentation Class Diagrams Sequence Diagrams System Architecture Prototype of the Proposed System Conclusions 77 5 DESIGN IMPLEMENTATION AND TESTING Introduction Database Development Program Development Database Connectivity Adding Data Updating Data System Testing and Evaluation Black Box Testing Integration Testing User Satisfaction Test Conclusions 88

9 x 6 ORGANIZATIONAL STRATEGY Introduction Implementation Roll-Out Strategy Conversion Type Changes in Management Business Continuity Plan Expected Organization Benefits Impact towards Organizations Impact Towards Customers Marketing Strategy Chapter Summary 95 7 DISCUSSIONS AND CONCLUSIONS Introduction Achievement Constraints and Challenges Aspirations Future Enhancement for the System Chapter Summary 100 REFERENCES 101 Appendices A-F

10 xi LIST OF TABLES TABLE NO. TITLE PAGE 1.1 Identified Problems with the Existing System Feature Comparison of Selected Case Study Activities in Evolutionary Prototyping Workflows of Phases in Evolutionary Prototype Hardware Specifications Software Specifications System Improvements Functional Requirements Non-Functional Requirements Description of Sequence Diagrams Result from Black Box Testing Rating Scale for User Satisfaction Questionnaire User Satisfaction Questionnaire Result Conversion Strategy 91

11 xii LIST OF FIGURES FIGURE NO. TITLE PAGE 2.1 Literature Review Structure VoIP Process VoIP Termination Process Retailers using the VoIP Billing System E-Business Model Framework Product Innovation Infrastructure Management Customer Relationships E-CRM Architecture for VoIP Service Project Methodology Framework Project Development Workflow Evolutionary Prototyping Method Existing Business Model Proposed Business Model Use Case Diagram Login Use Case Logout Use Case View Customer Usage Use Case View Customer List Use Case Generate Call Detail Record Use Case Price List Use Case Fraud Control Use Case Credit Management Use Case 70

12 xiii 4.12 Manual Payment Use Case Profile Management Use Case Register Use Case Class Diagram System Architecture for Proposed System Database Connectivity Code Extractions for Adding Data Code Extractions for Updating Data Average Mean of User Satisfaction Score 88

13 xiv LIST OF ABBREVIATIONS B2B - Business to Business B2C - Business to Customer BSS - Business Support System CDR - Call Detail Record CPU - Central Processing Unit CRM - Customer Relationship Management DSL - Digital Subscriber Line E-CRM - Electronic Customer Relationship Management GSS - Gafachi Softswitch ipbx - Internet Protocol Private Branch Exchange ISP - Internet Service Provider LAN - Local Area Network NCSS - Net-Based Customer Service Systems OSS - Operational Support System PBX - Private Branch Exchange PC - Personal Computer PDA - Personal Digital Assistant PSTN - Public Switch Telephone Network SMDR - Station Message Detail Recording SME - Small Medium Enterprise SOA - Service Oriented Architecture VoIP - Voice over Internet Protocol

14 xv LIST OF APPENDICES APPENDIX TITLE PAGE A Gantt chart Project B Gantt chart Project C Sequence Diagrams 110 D Prototype of Proposed System & User Manual 126 E User Satisfaction Questionnaire 183 F Customer Management Solutions Pre-Release 186 Brochure And Feature Matrix

15 CHAPTER 1 PROJECT OVERVIEW 1.1 Introduction VoIP stands for Voice over Internet Protocol or normally known as Internet Telephony. It is a technology for making phone calls using Internet Protocol. It is already being embraced by carriers as a way to cut traffic costs on international and long distance calls. It is also expected eventually to replace the public switched telephone network (PSTN). It is for now typically promise buyers of telephone service a smaller phone bill, virtually wiping out charges for long distance and international calls. As popularity of VoIP grows among consumers, so does it among business people. Many companies have started their own VoIP Service business, and they are from different backgrounds. Some are with IT backgrounds, and some are not. And the problem normally comes from companies who are not an IT-based company, but would like to be a VoIP service provider, knowing that it has high earning potential.

16 2 1.2 Problem Background VoIP comprises of two major parts; technical part and management part. Technical part involves tasks such as setting up servers, managing servers and setting up networks for VoIP implementation. The second part involves tasks such as customer management, credit management, and Call Data Record management, and this is where this project comes in. It aims to solve the problem faced by verytechnical-based companies that are able to setup their own VoIP service, but has no expertise in developing a system to manage the service. It also targets small companies who are embarking in the VoIP business through a big carrier or wholesales provider, but the small companies do not have a proper system to manage their service. One of the most popular business models in VoIP business is reselling services. Most VoIP Wholesale Provider provides the service for customers to become a reseller of their service using their own private label. Most of the resellers are taking this advantage to generate revenue by becoming the middleman to the VoIP Wholesale Provider. Reseller will search for customers, and once found, reseller will sign up for an account on behalf of the customer with VoIP Wholesale Provider, and will handle everything on behalf of the customer. Customer does not have direct access to the account, and has no idea that they are actually subscribing to a different provider instead of directly to the Reseller. One major weakness among Reseller is they do not have proper customer management solutions to manage their business. The development of this system will be able to cater for the high demand for a VoIP management and billing solutions among small-to-medium sized VoIP service provider. Table 1.1 shows the identified problem with the current system.

17 3 Table 1.1 : Identified Problems with the Existing System Problems with existing system 1. Customer has no web access to view their account. 2. Customer has to wait for payment to be sent by Reseller to VoIP Wholesale provider before payment will be credited to customer s account. 3. Customer has to send request to Reseller to view Call Detail Records. 4. Customer has to send request to Reseller to update their account profile. 5. Customer experiences downtime due to delay in activating or updating customer s account credit. 6. Customer is not able to set their account s credit limit. 7. Reseller has no ability to mark up their price list. 8. Reseller has no ability to control fraudulent calls. 9. Reseller has to log in to customer s account on Wholesale Provider website one by one to view customer s usage, call volume, credit balance and expenditure. 10. Reseller has to do redundant task to manage different customers accounts via VoIP Wholesale Provider website. 1.3 Problem Statement There are many small businesses that are providing VoIP services and they are of different visions and missions. Realizing the fact that target market is from various backgrounds, the following research questions have been derived: 1. How to develop a system that would meet the requirements of different users? 2. How to develop a system that would fully benefit the VoIP business provider? 3. Will the system be able to contribute in maximizing the profitability of the VoIP business?

18 4 1.4 Project Objectives the following: There are a few objectives of this project that has been identified which are as 1. To study different solutions for Customer Management Solutions in VoIP. 2. To build a prototype of a Customer Management Solutions for VoIP Service. 3. To build a system that allows customers to access and manage their online accounts: e.g. credit management, Call Detail Record management and account management. 4. To build a system that allows administrators to access and manage customer s online accounts: e.g. customer management, credit management, Call Detail Record management, price list management, fraud control, account registrations. 5. To propose strategic implementations and organizational strategy for SMEs in using the proposed system. 1.5 Project Scope The project scopes that have been identified are as follows: 1. The system will be a web-based system. 2. The system will use a client-server based database. 3. The system will use test data to simulate real data in making data access, data analysis and implementation of the system. 4. The system will focus on VoIP termination service only. 5. Main users of the systems are administrator of the VoIP termination provider and their customers.

19 5 1.6 Importance of Project This system will benefit VoIP businesses ranging from small to medium enterprises. It will be their main business tools that will enable them to monitor their business and manage their customers and focus on providing reliable service. This system will also allow them to run their business around the clock which will definitely contribute in maximizing profitability. The proposed system has significant functions that will benefit the business. Immediate account activation upon payment makes it convenient for customer and business owner without having the need to wait for account activation, which actually contributes to down time on behalf of the customer. Besides, business owner is also able to view customer call volumes, expenditure and usage and perform certain analysis on the business to further improve the business performance. Functions such as fraud control are also beneficial and important in order to control fraudulent cases that are rather inevitable when dealing with online payment. Companies could end up losing thousands of dollars to fraud cases, and this could have been minimized with the implementation of certain control and monitoring. 1.7 Chapter Summary VoIP Management & Billing System will meet the demand of many companies who wish to have an automated system to manage their VoIP termination business. Analysis, objectives and the importance of the current system has been identified in making sure that the system that will be built will achieve the main objective as what has been expected. The scopes have also been identified so that the project will meet the requirements that have been stated.

20 CHAPTER 2 LITERATURE REVIEW 2.1 Introduction This chapter covers the areas that are of interest to the research study. Deep knowledge and understanding on research area will let the researchers conduct and present the research study more easily. All sources are obtained by doing literature review from various sources such as books, journals, conferences, research reports and theses, the internet and so on. The aim is to broaden the understanding of the details of the uncovered areas in literature which the study attempts to make a useful contribution. The essentials that are covered in this topic are shown in Figure 2.1.

21 7 Figure 2.1 : Literature Review Structure 2.2 Voice over Internet Protocol (VoIP) Voice over Internet Protocol (VoIP) is a technology that allows you to make voice calls using a broadband Internet connection instead of a regular (or analog) phone line. Some VoIP services may only allow you to call other people using the same service, but others may allow you to call anyone who has a telephone number - including local, long distance, mobile, and international numbers. Also, while some VoIP services only work over your computer or a special VoIP phone, other services allow you to use a traditional phone connected to a VoIP adapter. Figure 2.2 illustrates VoIP process.

22 8 Figure 2.2 : VoIP Process A voice call is initiated between two points. One or both of these points can be normal telephone or Public Switched Telephone Network (PSTN) lines. One or both of them can be Computers as well. If both ends are normal phones, it is called a Phone to Phone call. If the origination end (caller party) is using a PC and the receiving end is a PSTN line, it is called a PC to phone call. If one or both of the legs are on conventional PSTN lines, a gateway is required to convert calls from Internet to PSTN or from PSTN to Internet. A VoIP provider usually has two business models: i. Origination ii. Termination

23 VoIP Termination All VoIP calls need to be terminated to normal PSTN lines. A VoIP terminator refers to on who takes VoIP calls off Internet and delivers them to PSTN phones. VoIP Termination is usually done on two business models. i. Small home based termination - Home based terminators normally use their DSL or cable based Internet connections and analog lines to do VoIP termination. Users connect Internet into one end of the gateway and the phone lines into the other end. ii. Carrier class co-location facility based termination - A co-location is a facility provided by data centers or large telecom for putting in equipment into their highly advanced premises. Usually the Telco data centers have multiple digital lines and high end redundant Internet bandwidth available. A user co-locating his gateways in a data center usually puts in digital gateways. A terminator earns his income from taking calls off the Internet and delivering them onto PSTN numbers. He does termination arrangement with different people who have origination traffic to his supported destinations. The gateway generates the Call Detail Record (CDR) which are then used by a billing solution to calculate the bill for each originator.

24 10 Figure 2.3 : VoIP Termination Process Call Accounting Call accounting is a telecommunication software or hardware application that captures, records, and monetizes telephone usage events. Internationally call accounting systems may be referred to as call logging systems. Call accounting systems detect outbound and inbound calls, call ring outs, call routings, abandoned calls, and other activities. Call accounting systems may provide packaging, pricing, provisioning, billing, and posting or presentment of telephone services for purposes of revenue generation. Professional services firms utilize call accounting software for account code or client based billing of their phone usage. The hospitality industry uses call

25 11 accounting to resell phone services to visiting guests and groups. These call accounting systems often provide accessible application-specific rating and provisioning capabilities found generally on carrier-level operational support systems (OSS) and business support systems (BSS). The more recent approach to call accounting when using VOIP enabled phone portals and devices are to embed call accounting information into your telephony devices as part of service oriented architecture (SOA). This is not to be confused with embedding an entire call accounting software package into your voice solution but instead as embedding integration to a centrally hosted call accounting web service with your overall telephone solution. Web services is generally a very inexpensive way to get customized access to sophisticated call accounting features and eliminate the need to manage technology to get that capability. Generally, call accounting systems collect data from a key system, a Private Branch Exchange (PBX), Internet Protocol Private Branch Exchange (ipbx), or Voice over IP (VOIP) gateway generated by service activity on all or selected phone extensions or devices. The system attaches costs and possibly revenues to that activity. More sophisticated call accounting systems will actually provision services on the PBX's and communications servers. Traditional PBX's and send calling activity information out of a serial port or via a proprietary TCP/IP network service. The call accounting system has a capturing module or a capturing hardware device that is then able to store the data and feed data to and from the rating engine. More recent ipbx's provide access to information by retaining it in online data bases for extraction by external systems. The voice related data collected usually includes calling party, date, time, duration, destination party and authorization or account code. This data is sometimes called Call Detail Recording (CDR) or Station Message Detail Recording (SMDR).

26 Call Detail Record (CDR) In telecommunications, a Call Detail Record (CDR) is a record containing information relating to a single call or session. The format of CDRs is not fixed and therefore varies between networks. CDR is generated by telephone provider switches, while SMDR are generated by enterprise PBX. Traditionally, CDRs were output from a serial port on a piece of telecom hardware. More recently, CDRs are stored in a file, which is regularly downloaded to the call accounting software by a polling job. The call accounting software then processes the CDRs, rates (prices) each call and amongst other things, produces bills for customers. Some mobile/cell operators even operate an immediate CDR collection process that allows call charges to appear on customer account pages of their website within minutes of call completion. Where CDRs are stored by a telecom service provider, the records for a particular account can sometimes be downloaded at the request of the subscriber who holds that account. If the telecom provider supplies users with itemized bills, CDRs are represented by each itemized line on the bill. Call accounting software is generally used to retrieve and process CDR data. Call Detail Recording uses CDRs to record recent system usage, such as the identities of sources (points of origin), the identities of destinations (endpoints), the duration of each call, the amount billed for each call, the total usage time in the billing period, the total free time remaining in the billing period, and the running total charged during the billing period.

27 VoIP Billing A billing method starts billing a call at a time point where the called party answers the call. A extension subscriber connection processor of the calling party's VoIP gateway determines whether a called party responds to a call from the calling party, and upon receipt of the response, informs the VoIP trunk connection processor of receipt of the response. A VoIP trunk connection processor receives the response information from the called party at the extension subscriber connection processor, assembles a response packet, and transmits the assembled response packet to the calling party's VoIP gateway through a VoIP call channel. The calling party's VoIP gateway checks the response packet out of the packets received through the call channel, and transmits the checked response packet to the VoIP call processing central controller. The VoIP call processing central controller records a call start time for the corresponding VoIP call using the response information received from the VoIP trunk connection processor. CDR will be generated by server and stored in the database. Call accounting system will then use the CDR to generate billing, and charge calls to orginators. Figure 2.4 shows how billing system is being used by a retailer. 2.3 E-Business Model In the most basic sense, a business model is the method of doing business by which a company can sustain itself or to generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain. As explained by Petrovic, Kittl and Teksten (Petrovic et al., 2001), a business model is not a description of a complex social system itself with all its actors, relations and processes. Instead it describes the logic of a business system for creating value that

28 14 Figure 2.4 : Retailers using the VoIP Billing System lies behind the actual processes. Figure 2.5 shows the e-business model framework proposed by Osterwalder and Pigneur (Osterwalder, Pigneur, 2002) that highlights the relevant e-business issues and elements firms have to think of, in order to operate successfully in the Internet era.

29 15 Figure 2.5 : E-Business Model Framework (Osterwalder, Pigneur, 2002) The proposed e-business model ontology by Osterwalder and Pigneur, (Osterwalder, Pigneur, 2002) is founded on four main pillars: i. The products and services a firm offers, representing a substantial value to the customer, and for which he is willing to pay. ii. The infrastructure and the network of partners that is necessary in order to create value and to maintain a good customer relationship. iii. The relationship capital the firm creates and maintains with the customer, in order to satisfy him and to generate sustainable revenues. iv. The financial aspects, which are transversal and can be found throughout the three former components, such as cost and revenue structures.

30 Products and Services The main elements are the value proposition a firm wants to offer to specific target customer segments and the capabilities a firm has to be able to assure in order to deliver this value. This is being illustrated as in Figure 2.6. Figure 2.6 : Product Innovation i. Value Propositions. This element refers to the value the firm offers to a specific target customer segment. ICT has created many new opportunities for value creation on the one hand and more efficient value creation on the other hand. Osterwalder and Pigneur believe that this opens up trajectories of differentiation from competitors. In VoIP Termination business among Small and Medium businesses, by having a customer management solutions of their own is enough to keep the business one step higher than businesses that do not have any solutions specially cater for the customers to manage their accounts. This is a proof that shows low call rate and service reliability is not the only factor that will attract customers, neither do they guarantee 100% customer retention.

31 17 ii. Target customer. A firm generally creates value for a specific customer segment. The definition of the market scope (Hamel, 2000; Afuah et al., 2001) captures the essence of where the firm does and does not compete which customers, which geographical areas, and what product segments. A firm can market either to businesses and/or individuals, commonly referred to as business-to-business (B2B) and business-to-consumer (B2C). In VoIP business, target customers are coming from different part of the world. This makes the competition real tight among providers especially small and medium providers in attracting customers to use their service. iii. Capabilities. To deliver the value proposition to different customers, a firm must ensure that it possesses the range of capabilities that underpin the proposed value. Capabilities can be understood as repeatable patterns of action in the use of assets to create, produce, and/or offer products and services to a market (Wallin, 2000). In VoIP Termination business, excellent and reliable customer service is important in customer retention and ensures continuous profitability Infrastructure Management The infrastructure management element, describes the value system configuration (Gordijn et al., 2000) that is necessary to deliver the value proposition. This comprises the activity configuration of the firm, in other words the activities to create and deliver value, and, the relationship between them, the in-house resources and assets and the firm s partner network as shown in figure 2.7.

32 18 i. Activity configuration. The main purpose of a company is the creation of value that customers are willing to pay for. This value is the outcome of a configuration of inside and outside activities and processes. In VoIP business, efficient customer response is very important especially when the service is involving call centers and telephony companies that require VoIP Service to be available all the time. When the service is down, this is when the efficiency of the customer response is put to test. In activity configuration, the process of providing response to the issue will be identified. Figure 2.7 : Infrastructure Management ii. Partner network. The partner network outlines, which elements of the activity configuration are distributed among the partners of the firm. Management literature defines these strategic networks as stable interorganizational ties which are strategically important to participating firms. In VoIP business, smaller provider normally has a business agreement with bigger or wholesale provider to get cheaper call rate. Bigger provider will also have agreement with smaller provider to have reseller or referral system to benefit both parties in generating more revenue.

33 19 iii. Resources and assets. In order to create value, a firm needs resources (Wernefelt, 1984). Grant (Grant, 1995) distinguishes tangible, intangible, and human assets. In VoIP business, the main resources that will generate income for the business is the VoIP service itself. A reliable and high quality service with low rate is highly sought after by many customers. Besides, good customer service is also a very valuable asset to the company Customer Relationship Through the use of ICT firms can redefine the notion of customer relationship. First, they can get a feel for and understand the customer by outlining an information strategy. Second, firms can exploit new ways to deliver value and expand reach by covering new and multiple channels. Third, companies must understand that trust and loyalty has become one of the most important elements in a business world that is increasingly virtual and has less face-to-face contact. Figure 2.8 shows customer relationship in e-business model. Figure 2.8 : Customer Relationship i. Information strategy. The objective of the information strategy is threefold. First, the defining of the strategy of gathering customer information and second the outlines of how to use this information it in order to excel in customer relationship (e.g. through personalization and

34 20 profiling). The third goal refers to the exploitation of customer information in order to discover new and profitable business opportunities and to ameliorate customer satisfaction. ii. Feel & Serve (distribution channels). This element refers to the way a firm goes to market and how it actually reaches its customers (Hamel, 2000). This means a company must define its channel strategy and outline through which channels - either indirect or direct channels, operated by the firm or provided by a third party (e.g. agent, intermediary) - it wants to deliver the companies value proposition. The purpose of a channel strategy is to make the right quantities of the right product or service available at the right place, at the right time to the right people. iii. Trust and loyalty. It is essential to establish trust between business partners when the business environment becomes increasingly virtual and the implicated parties do not necessarily know each other anymore before conducting business. Customer loyalty can be understood as the outcome of the customer s trust and satisfaction. To establish loyalty and relationship capital (Tapscott et al., 2000) the firm has to create positive relationship dynamics (Hamel, 2000), where emotional (such as e- branding), as well as transactional elements in the interaction between firm and client play an important role.

35 E-CRM in VoIP Service The shift from a product-oriented business strategy to a customer-focused has been a major change factor in companies recently. Many companies have invested heavily in technologies enabling a customer focused relationship marketing strategy. High-technology markets can be characterized by continuous and rapid change of the markets and short life cycles of products. In high-technology companies, technology is a key element of the business. The objective of a strategy is to deliver value to the customers in order to provide required returns to the shareholders and employees. Frequently, the organizational structures of high technology companies are complicated, as these organizations must be capable of developing new products and services that can be produced at reasonable cost (Heikki, 2002). The development of information and communication technology provides many companies with a convenient environment to collect detailed data about their individual customer. With the data in hand, a firm can build a relationship that is profitable, stable, and perennial between it and its targeted customers. Such a firm can take advantage of the relationships to improve its marketing policies and measures to attract new customers or retain old customers, and thereby increase its profit dramatically. The fundamental idea of CRM has been embraced and the potential benefits of relationship marketing based upon individual characteristics are generally accepted (Blazar, 2001) Satisfying today s technically savvy consumer has become increasingly challenging. Customers expect easy access to data anytime, anyplace without any extra fees for more service. And if one company fails to meet customer expectations, a competitor is waiting to accommodate them. In addition, the cost of bringing a new customer to the same level of profitability as an existing one can be as much as five times higher, making each contact with a customer tremendously valuable (Barsky, Jonathan D, 1995).

36 22 Just like any other business, there is a crucial need for VoIP Service Provider to deploy a good e-crm within their business. VoIP is a technology to transport voice communication over IP network such as internet, providing the capability of making phone calls over the packet switched networks instead of traditional circuit switched networks. Because of the low cost feature of the internet usage, VoIP can greatly reduce the telephone call costs comparing with the traditional PSTN system. Therefore VoIP is attracting more customers from the traditional telephone communication area, and more and more companies prepare to invest in the development and utilization of the VoIP systems. It is even expected that the VoIP will completely replace the circuit switched PSTN system in the future (Heikki, 2002). Reducing operating costs and boosting customer service are activities that top the to-do lists of today s best-known businesses. Fortunately, these twin goals can be achieved by pairing VoIP with CRM. More VoIP Service Providers are including CRM in the service they are providing to enhance customer experience. CRM products and services attempt to produce a better connection between businesses and their customers. These tools are being employed in all fields of business and information technology industries (Dick, Alan S., Basu, Kunal., 1994) E-CRM Perspectives and Definitions CRM stands for Customer Relationship Management. It is a strategy used to learn more about customers needs and behaviors in order to develop stronger relationships with them. Customer Relationship Management (CRM) is a term for methodologies, processes, software, and systems that assist an enterprise in managing customer relationships in an organized and effective manner. To support these customer-centric processes, a set of CRM software and systems is typically implemented which has traditionally supported four main corporate functions:

37 23 Automating and streamlining sales and customer support functions Managing the flow of information in and out of the departments that handle customer transactions Analyzing customer data gathered throughout the enterprise Planning and managing marketing and sales strategies and campaigns The idea of CRM is that it helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. If it works as hoped, a business can: provide better customer service make call centers more efficient cross sell products more effectively help sales staff close deals faster simplify marketing and sales processes discover new customers increase customer revenues CRM is defined as a strategic posture that calls for iterative processes designed to turn customer data into customer relationships through active use of, and learning from, the information collected. To implement CRM, organizations adopt a broad range of technology. Net-based customer service systems (NCSS) deliver service to a customer either directly (for example, via a browser, PDA, or cell phone) or indirectly (for example, via a service representative or agent accessing the system). The most visible instance of a NCSS is a Web site. For CRM, Web site personalization software provides navigational aids and keeps records of customers past transactions. Internet-based recommended systems provide personal advice by using adaptive filters both content filters and collaborative filters to deliver customized information and personal recommendations based on evaluations of users with similar interests (Dick, Alan S., Basu, Kunal., 1994). NCSS are supported by

38 24 database and data-mining tools used to analyze data to identify customer segments, match products to customer profiles, and better understand target demographics and psychographics characteristics. Customer service representatives may use customer intelligence to up-sell or cross-sell products and services. CRM success is defined in three dimensions: increased profit, improved customer satisfaction, and enhanced customer loyalty. With such a broad range of outcomes, it is not surprising there are multiple orientations of CRM; different orientations have different approaches toward examining and leveraging customer data. Profit-centric orientation to CRM focuses on capturing and analyzing historic transaction and preference data for existing customers. Data is primarily used to identify the most profitable customers who are expected to continue to contribute to the firm s bottom line in the future. No investment is made to retain unprofitable or marginally profitable customers. Customer-understanding orientation to CRM strives to understand the needs and preferences of current and potential customers and uses this information to better service them. This perspective allows the firm to benefit not only from those customers already providing revenue, but also includes customers who have future potential to do so. Customer-relationship orientation focuses on managing individualized relationships with customers. The premise is that a relationship is something a customer values, and this relationship contributes to creating switching costs that aid in customer retention. The organization and the customer mutually benefit from the close-knit relationship that develops from the successful practice of CRM. Electronic customer relationship management (e-crm) emerges from the Internet and web technology to facilitate the implementation of CRM. It focuses on Internet- or web-based interaction between companies and their customers. Above all, e-crm enables service sectors to provide appropriate services and products to

39 25 satisfy the customers so as to retain customer loyalty and enhance customer profitability. With the advent of the Internet, the growth of electronic e-commerce, and the trend toward online services, customers desired the ability to serve them without having to interact with a corporate or call center employee. To address this demand and to provide enhanced capabilities to their customers, vendors began to provide the ability for customers to access the same features and functions that internal employees received. For Internet access, Windows-based proprietary client applications were replaced with a Hypertext Markup Language (HTML) interface that was accessed by standards-based thin-client, Web browsers. In addition, the CRM applications expanded in functionality to handle, track, and record transactions across the multiple channels that a customer could utilize to contact a corporation. For example, an application could support and track all interaction-related information as a customer purchased a product through an automated phone line, tracked the shipment on a Web site, and requested installation information using text chat or instant messaging on a customer service Web site. This new generation of CRM products is called e-crm, because it supports the multiple electronic channels that are now available to customers. Since these products allow customers to directly access services, they are classified as outward-facing or customer facing as opposed to the previous inward-facing CRM products E-CRM encompasses all the processes needed to acquire, build and maintain customer relationship through e-business operations. Important CRM concepts such as customization, personalization, making the customer less passive and more active, many-to-many marketing are either enabled or made easier to implement with e- CRM tools. In fact, CRM remains just a philosophy devoid of concrete actions if not for these enabling tools. For instance, it is hard to imagine how to make it possible for customers to interact with each other without an online community. In addition to its enabling role, e-crm is also believed to be more convenient, more interactive, more efficient and providing a higher degree of customization. More importantly,

40 26 the online channel is cheaper than the regular channels for both the firm and the customer. The main driver for e-crm adoption seems to be a commonly shared belief that it improves customer loyalty and retention (Fredericks, Joan O. and Salter II, James M., 1995) through the enhancement of customer satisfaction. Researchers and practitioners alike are claiming positive effects of e-crm on customer satisfaction. However, no empirical evidence has been provided for these claims. In fact, a survey conducted by InfoWorld suggests that 77 percent of e-crm projects fail to meet company goals and numerous studies cite the low rate of success of e-crm applications. Even worse, Gartner predicts that by 2006, more than 50% of e-crm implementations will be considered as failures from a customer s point of view. Feinberg and Kadam s survey suggests that e-crm failure may be due to the implementation of features that executives believe affect customer satisfaction, but in reality do not have any effect at all (Hepworth, Michael and Mateus, Paula, 1994) VoIP Business Challenges While Voice over IP (VoIP) adoption has not yet achieved critical mass, it is expected to grow at double-digit rates for several years. Since many consumers and businesses already have ready access to the IP-based networks needed to deploy VoIP through their existing broadband connections, the technology promises to be a disruptive force for service providers that could significantly alter the competitive dynamics in the telecommunications industry Because of the prevalence of the Internet, and because IP is the protocol connecting almost all devices, VoIP is a powerful service platform for nextgeneration application. Voice over IP (VoIP) uses the Internet Protocol (IP) to

41 27 transmit voice as packets over an IP network. Therefore, VoIP can be achieved on any data network that uses IP, like the Internet, Intranets and Local Area Networks (LAN). Here the voice signal is digitized, compressed and converted to IP packets and then transmitted over the IP network. Signaling protocols are used to set up and tear down calls, carry information required to locate users, and negotiate capabilities. VoIP introduces the actual method of transmitting voice over an IP network and IP telephone. It describes telephony devices that use IP as the native transport for voice and call signaling. IP telephony needs VoIP to send calls over the network. IP telephony will bring about a dramatic change in the way IP services are planned, provisioned, managed, and billed. In order to build and retain a strong customer base for these new services, service providers need to meet, if not exceed, the customer expectations set by today s traditional voice services. Acceptance of IP telephony will depend on the quality and efficiency with which service providers offer, deliver, and manage IP services. Installation, configuration, and activation must be rapid and error-free. Furthermore, customers will want direct control over the reconfiguration of services and real-time visibility into the impact change has on their operating costs. Once the service is activated, customers will want the provider to guarantee service quality as defined by industry standards. Corporate customers in particular will need to be assured that the provider is proactively monitoring performance to avoid problems and providing them visibility into the performance data collected. There are, however, potential pitfalls surrounding the union of VoIP and CRM. Factors such as substandard voice quality can easily frustrate customers and prompt them to take their business elsewhere. Warned Greenberg, dropped calls, poor sound quality and downtime are going to affect a customer s experience no matter what. After all, he added, VoIP alone doesn t increase customer loyalty or create customer advocates. A combination of CRM excellence and a high-quality VoIP system, however, can easily clear a company s to-do list.

42 28 Turnover is of concern to online service providers for several reasons. It is expensive to sign up new customers. There are costs associated with identifying potential customers and, once signed up, new customers typically need more service than existing customers (Knight, 2000). Also, if customers depart due to dissatisfaction with the service provider, there will be negative word of mouth effects that make it more difficult to attract new customers. In short, high turnover rates can have an adverse impact on business performance and have thus attracted of management attention. Telecommunications companies have found that there are seven market drivers that are forcing the capital investments and rethinking of how they are doing business: Rising customer expectations Deregulation Consolidation Convergence Technology Innovation Economic Viability Accelerating demand for bandwidth Customer expectations are rising and a company must differentiate itself from the competition by delivering a superior customer centered experience. With new telecommunications deregulation laws, service providers are forced to upgrade their networks and distinguish their offerings in order to avoid cutthroat price competition. The convergence of telecommunications and computing is forcing expansion of markets to achieve economies of scale and to be capable of offering new services and bundled product offerings. Likewise, technology innovation presents the opportunity to spend significant capital investment; i.e., cable companies upgrading their networks to provide digital capabilities so new products can be offered creating more value to the consumer. While at the same time, companies are searching for