Process Redesign Helps Telecom Giant Integrate Operations and Reduce Operating Costs by $2.5 Million

Process Redesign Helps Telecom Giant Integrate Operations and Reduce
Operating Costs by $2.5 Million

Overview

Company Profile
Cox Communications is among the nation's largest cable television operators, with more than 3.3 million customers and annual revenues topping $3.5 billion. The company owns and operates 16 cable systems throughout the United States. Cox operates a small number of large systems in a decentralized environment to enhance operational efficiency and responsiveness to its customers. Eighty-five percent of the company's customers are serviced by nine stand-alone systems. Cox Communications emphasizes customer service, and has repeatedly received industry awards recognizing its excellence in customer service.

Situation
In 1995, Cox Communications acquired a large cable television provider that operated four cable television systems in two states serving 1.3 million subscribers. In one stroke, the acquisition nearly doubled the company's number of subscribers. Cox found substantial variation in the operating methods of its existing and newly-acquired systems that involved differences in information technology, organizational structure and management philosophy. The company wished to integrate operations, establish best practices to improve customer services, and contain operating costs.

Objectives of the Process Redesign

Integrate operations of multiple systems
Develop best practices for customer service and technician operations
Contain operating expenses in the face of intense competition
Improve quality of customer service
Position Cox Communications for growth in subscribers, acquisition of new systems, and addition of new services

Business Solution
Aegis InterWorld redesigned Cox's core business processes using its Customer-Driven Process Design Method. The redesigned processes comprise best practices and support ongoing enhancement of the value of Cox Communications' services to its customers. The redesigned business processes are scalable and transferable to new systems as the company grows.

Benefits
As a result of the process redesign, Cox Communications' $390,000 investment in consulting services yielded a $2.5 million reduction in operating expenses (a return of more than six to one) in the first year alone.

Improved customer satisfaction:

Increased ability to resolve problems via telephone, without service visits
Faster service response times and tighter appointment windows

Enhanced customer service skills and capabilities:

Training in communication skills for customer service representatives
Improved access to customer history for customer service representatives
Coordinated activities of customer service reps and service technicians

Improved process management capabilities:

Improved ability to meet variable staffing requirements for call centers
Improved technician fleet management

Decreased operating expenses:

Eliminated unnecessary and redundant business activities
Applied best practices across multiple operations
Reduced operating expenses 35% in first year ($2.5 million)

After years of rapid growth the cable television industry has entered a period of consolidation in which large system operators have swallowed up smaller competitors, annexed new geographic service areas, and swapped whole systems with competitors in an effort to consolidate their positions. The challenge to telecommunications companies is to seamlessly integrate new systems into existing operations while maintaining high-quality customer service and containing operating expenses.

The Industry Solution
In the telecommunications industry customer service drives two critical factors: customer satisfaction and operating expenses. In the business process redesign project, Aegis InterWorld focused on establishing best practices to streamline operations and improve customer service using its Customer-Driven Process Design method. This approach improves business processes from the customer's point of view and establishes an on-going cycle of process improvement. The redesign project included the following elements:

Understand and Document Core Business Processes

The customer's perception of the value of service is derived from the customer's experience with many functional areas of the firm: the customer service call center, the technical service, the accounting department, and others. It is the customer's overall experience that molds the customer's perception. To analyze the current business processes, Modus Operandi's customer-centric approach broke services down not by functional area, but by cross-functional processes that directly involved the customer.
Develop Baseline Measurement for Current Process Performance

The cross-functional process analysis helped Cox establish measures relevant to the customer's perception of value of the service. For example, while the average length of time of a customer service telephone call is not relevant from the customer's standpoint, the ability of the technician to show up within a two-hour appointment window certainly is of interest. Once appropriate metrics were established, the core business processes of the company were documented and baseline measurements were made. Later, the baseline measurements would be compared to measurements of the redesigned processes.
Redesign Business Processes

The customer viewpoint is central to Modus Operandi's approach to redesigning business processes. Modus Operandi facilitated an exchange between Cox and its customers regarding the customers' expectations about the delivery of Cox's services. The customers' expectations were then compared to the Company's actual performance. This knowledge was used to determine the scope of the process redesign project, prioritize business activities, integrate cross-functional business activities, and refine Cox's business strategy.
Evaluate Potential Solutions

Aegis InterWorld consultants examined the potential impacts of the redesigned business processes in relation to performance measurements established at the beginning of the redesign process. Here, Cox Communications had an additional requirement to limit its investment in new information technologies to support business processes.
Communicate and Implement Change

Aegis InterWorld developed a solid business case for the redesigned business processes, implemented the redesigned processes, and transferred process management skills to Cox personnel. The redesigned processes support a high-involvement, learning relationship between Cox Communications and its customers. This relationship contributes to the on-going enhancement of value of the company's services.