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Prone to Failure: Why CRM and Billing Systems Implementations Are High Risk

Dr. Raul Katz, Adjunct Professor in the Division of Finance and Economics at Columbia Business School, Presents Findings from Research on Why Certain Telecom Implementations Are Doomed from the Start

Dr. Raul L. Katz
08/26/2008
Continued from page 3

In the case of the European wireline carrier, the carrier originally planned for a parallel transition for three months but finally decided against it. Around cutover time, the carrier did not have CRM support for one week. Even a month later, there was some unplanned downtime. Because of the initial downtime problems, the carrier allowed users to continue using the legacy applications, which perpetuated data inconsistencies. It is believed that these problems will continue to occur until the system is stabilized.

In the case of the Asia/Pacific wireless subsidiaries, the first phase of the billing and care platform was released 18 months after project start-up. Some reliability problems were discovered in production, which were resolved during a three-month period. The second phase of the project was due to start deployment 12 months later and be completed for all three subsidiaries after 18 months. It actually took another 2.5 years for the first subsidiary and three years to finally complete the project. Part of the delay resulted from a decision to change the deployment approach and to upgrade the hardware and software technology in a separate deployment, thus lowering the risk in the business migration cutover. During the final cutover, the system also did not have CRM support for one week. This meant customers could not check their account balances, set up their phones to roam overseas, add new connections, change plans or pay bills3.

The business impact on all the cases studied was hypothesized along three dimensions: customer acquisition, churn and new service revenue (see figure 2 below).

Figure 2. Type of outcome of five case studies

Case StudyStatusCustomer AcquisitionCustomer ChurnNew Services
Wireless Carrier (Asia/Pacific)ImplementedThe subsidiaries continued to perform at similar rates of growth during the project although the introduction of new services restricted growth over and above what previously had been achieved4Churn remained stableUnclear
Wireless/Wireline Carrier (Latin America)Implemented in wireless; canceled in wirelineCarrier is worst performer in terms of share of net addsCarrier remained worst performer in the industryUnclear
Wireless Carrier (North America)DecommissionedCarrier dropped to distant third in terms of share of net addsCarrier remained worst performer in the industryCarrier's data share of ARPU stayed below industry average
Satellite Distribution (North America)DecommissionedUnclearUnclearUnclear
Wireline Carrier (Europe)ImplementedUnclearUnclearUnclear

While it would be wrong to exclusively attribute these shortfalls in performance to the decommissioning or implementation delay of a billing and/or CRM application, it would be reasonable to assume that this factor played a contributing role in not allowing each of the carriers to improve their business metrics significantly on time.

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