Attempt all the problems.
problem1) Comment on usefulness of queing theory to service organizations. describe the applicability of a queuing model to collage library.
problem2) Describe the SERVQUAL model for measuring service quality. How does it help marketers to deliver quality service?
problem3) What does “inventory” mean for service firms and why it is perishable?
problem4)(a) What gaps could occur in service quality and what steps could service marketers take to prevent them?
(b) Describe how could use of technology help in reducing these gaps.
Ericsson, the largest supplier of mobile systems in the world, was facing changing market conditions that prompted management to review the operational model and transform the processes supporting its business.
Technical challenges with availability of (3G) third generation services, and the resultant volatility in the market, led to many operators postponing investment in 3G infrastructures or slowing down development of 2G networks. Almost overnight, the market went from having been very exuberant to becoming highly conservative.
Ericsson’s innovative role, at the heart of an industry allowing operators to provide mobile Internet services like video clips and high-speed access, was under threat. And Ericsson’s sales were in the front line of attack! Ericsson’s very survival hinged on a business model that needed to be highly adaptive and flexible to be able to face the challenges head-on.
Ericsson announced strategic decisions that would affect both its business and operations and forge a path to return to profitability. A core element was to consolidate non-core activities of local companies to a standard platform. A study across the region Europe, the Middle East and Asia (EMEA) revealed underlying processes for Finance & Administration and Purchase-to-Pay characterized by Standard Global Applications. Having already derived substantial process cost reduction, the Business Support Centre (BSC) facilitates a blueprint to transform Ericsson’s support processes, world-wide.
Ericsson EMEA decided to consolidate activities in both process areas and to re-engineer ways of working. A key element of the strategy was to establish a BSC for Western European countries to facilitate: service efficiency and productivity to derive substantial process cost reduction, quality, consistency and transparency in business processes and information, Organizational flexibility to establish a change agent to drive standards.
The decision, affecting local companies in 17 countries, demanded one of the biggest transformations in Ericsson’s long history. Recognizing the value of partnership, Ericsson started looking for a range of skills, in strength and depth, in a partner. Capgemini had a global profile coupled with local presence in affected markets and expertise in process and technology consulting. Capgemini won the confidence of Ericsson management to assist with the design, set-up and operation of a BSC for Finance. With credentials of Shared Services projects in complex global organizational structures, Capgemini was selected as business partner to help Ericsson design and implement the BSC initiative.
BSC will provide Shared Services to involved businesses, re-engineer and standardize business processes, and support deployment of global, enabling business applications. Capgemini led strategic visioning phase. The target market was for in-scope services in Ericsson’s EMEA organization with initial customers being Market Units in Western Europe. Ericsson decided to standardize in-scope systems and processes and integrate them into a common Market Unit Solution (MUS) based on SAP R/3, and incorporating an eProcurement solution to facilitate a seamless Purchase-to-Pay (eP2P) process. Capgemini co-ordinated the design of the BSC service delivery model with functions consolidated in four hubs. During the set-up phase, it was decided to consolidate in two hubs across three locations serving the 17 countries, with each hub organized in a matrix structure. Process-oriented teams would provide the services, with Service Managers assigned to Market Units managing customer relationships. The model facilitated front-office culture in the back-office.
Experts from Ericsson and Capgemini collaborated in a single, cohesive team to derive a current state analysis. Based on information gathered, the team refined the Business Case, developed the service scope in detail and designed a future-state organization. Service Level Agreements (SLAs) were established after negotiation with demand managers of hub countries. Within six months of project start, the BSC was formally established.
For customer units in hub countries, the BSC commenced service delivery from Day One with existing staff transferring to the new entity. Transition activities focused on achieving a change of mindset towards a service centre culture. The team derived a baseline against actual performance, refined SLAs and set new performance targets.
For customer units in other countries, all aspects - service migration, people and system transition - had to be considered. Strong relationships with local management were critical to address the people issue, a key challenge of major transformation programmes. Effective change management at a local level facilitated awareness of the strategy and its impact, and secured buy-in.
The migration strategy of the collaborative team linked service migration to implementation of the MUS and eP2P. The BSC will become responsible for service delivery at a defined stage prior to system implementation and manage the process in-situ. A local management team in each country was responsible to secure sponsorship, plan the migration, manage change and support communication. Service migration was organized using a consistent methodology. Key tasks were adaptation of future-state processes, recruit and train new hub-based staff, knowledge transfer, cutover to hub and post-migration support. Each deployment was managed as a project via defined ‘tollgates’ and supported by steering groups. Readiness was jointly agreed by the BSC and local companies based on pre-defined criterions.
Capgemini supported BSC local service management in all countries. It also managed the first large-scale service migration to set stage for subsequent rollouts. With transitions for remaining countries complete, BSC turned its attention to stabilize services, optimize resource utilization and bed down all elements of a Service Management Framework. Service Managers now deliver services to each customer according to agreed principles and procedures. The BSC programme delivers standard systems and processes to support Market Units in Western Europe, thus helping Ericsson to re-establish its profitability.
Benefits include direct reduction of process costs managed by the BSC - about 30% in Finance and Administration, as well as in Purchase-to-Pay, service consolidation deriving process and systems standardization, process-oriented teams focused on service efficiency to facilitate continuous improvement, Organizational flexibility to changing business priorities, allowing Ericsson to adapt its shared service model without compromising stability and competency levels.
One ex of benefit was evident during first year-end closure following the launch, when the BSC successfully managed 14 countries via a common systems platform and controlling area. The result was on-time service delivery at high quality.
BSC has initiated several improvement projects that have been adopted at group level. With its cross-border service orientation, the BSC has enabled Ericsson to drive changes in support processes and thought leadership in local companies. Management is confident that worldwide transformation of Ericsson’s support processes has started in earnest via a proven model of Shared Services. Effective partnership with Capgemini has helped Ericsson to face challenges in a volatile environment.
problem5)a) “Ericsson, the largest supplier of mobile systems in the world, was facing changing market conditions that prompted management to review the operational model and transform the processes supporting its business.” Describe the steps carried out by Ericsson in transforming processes supporting its business.
b) “Ericsson was facing challenges from changing market conditions.” In this regard, analyze and suggest different approaches of strategic positioning.