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To Boldly Go Where None Have Gone Before
Television retailer ShopNBC explores the enterprise solution galaxy with Oracle 11i.
For the rest of the October 2001 issue of CRM magazine please click here
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Migrating to a state-of-the-art e-business suite is not without its challenges, especially if you're one of the first companies in the world to implement that suite. With any new technology, there will be a couple of curve ball bugs that enliven even the most well-planned implementation. The job can be further complicated by the introduction of new breeds of technology--CRM, for instance--to a set of business processes built around back office silos. Though it is not completely finished with deployment, television shopping retailer ShopNBC recently braved the uncharted waters of enterprise technology and is already reaping benefits--particularly in the front office--from its implementation of Oracle's much discussed 11i solution.

"Things don't fall through the cracks anymore since the paper-based systems are gone," says Mark Billitteri, senior vice president and chief information officer at ShopNBC.

"We can see the customer interactions, we can age them, we can escalate them automatically, so there's a huge opportunity to improve the level of customer service overall."

Managing Success
Based in the small town of Eden Prairie, Minn., ShopNBC (formerly ValueVision) is the third-largest television-shopping broadcaster in the United states, reaching approximately 42 million homes. With 700 employees and annual revenues of $386 million, the company distributes its programming 24 hours a day through cable and satellite systems and online at shopnbc.com.

Three years ago, ValueVision was an $80 million company. This year, it expects annual sales to reach half a billion. As the company grew, it became apparent that its systems couldn't handle much more growth. Since it was founded in 1990, the company has been using a COBOL-based system that had been modified significantly over the years. However, some areas of the company were still relying on paper-based systems. "We've seen a tremendous amount of transactional growth and increases in revenue that require a more scaleable solution than we currently had in place," Billitteri says.

According to Billitteri, the company searched for a new transactional system, but one with a CRM component. "We had very comprehensive customer data, but the elements CRM brings into play were not being satisfied by our existing systems. The most important thing for me to be able to do on a real-time basis is to know who's calling, when they called, why they called and the disposition and resolution of that call. Our existing systems left a lot of gaps in filling those requirements."

Because the company's continued success hinges on repeat business, ShopNBC puts a premium on service. While it outsources order taking, a staff of 100 handles customer service internally, relying on green screens and paper to respond to customer issues. Because ShopNBC often receives repeat calls, the company knew it wasn't dealing with the interactions as effectively as it could. "A customer calling twice is not an acceptable solution," Billitteri says.

Finding the Right Solution
With this in mind, the search for replacement applications began with top-tier CRM vendors. However, as members of the ShopNBC technology selection team researched how difficult it would be to integrate a CRM solution to a new back-end system, the search stalled. "When [we started] looking at the complexity and price tag of taking a brand new CRM solution and bolting that onto a brand new ERP solution, the cost ended up being fairly prohibitive," Billitteri says.

Looking for other solutions, the selection team learned that Oracle was planning to release its 11i e-business suite of applications, which at the time, was purported to be the only Web-based suite with a fully integrated CRM solution. "A lot of our decision making was based on the fact that with Oracle, we'd have a fully integrated CRM to ERP solution that ran on a state-of-the-art database that would allow us to scale and support a vastly growing business," Billitteri says. "We felt that the technology Oracle had built with the Web-based methods was the leading edge of where we needed to be."

With an integrated suite, the company's data could reside in a single location and flow seamlessly from one application to another without costly interfaces. "Typically, if a customer buys applications from several different vendors, they have to pay a systems integrator to integrate the applications," says Jeremy Burton, Oracle's senior vice president of product and services marketing. "However, if one application is upgraded, the integration has to be redone. And, the data can be in several different formats, thus making it difficult to pass data between applications."

Though the company determined it would need to spend millions of dollars on a more robust solution, Billitteri says its ROI calculations weren't based necessarily on traditional methods. "For us, there was a clear need to move to a more stable, more scaleable platform, so we hinged a lot of our decision making on the impacts to our future capabilities without it. If we didn't have the ability to scale to a certain level, what would that mean to the company?"

The Plan
To help with implementation of the new system, Billitteri brought in Orion Consulting. Deployment began in June 2000, with the entire project expected to be complete in early 2002. "They're covering a lot of business areas and functionality, so it's a large complex project," says Jeff Soderholm, senior director and general manager for Orion's Minneapolis office. "We've worked with them to phase in some of the implementation rather than to try to do it all at once, which generally helps the success of the project and also helps in change and transition." Since they're a retail operation, the company also wanted to avoid a large systems change in the middle of a holiday season.

While a phased implementation minimizes risk, it does create additional challenges, according to Soderholm. "In many cases, information needs to be entered in one system, but shared across both for a period of time until all the old components get replaced. That requires work to translate and convert information and move it from one system to another," he says. "There's certainly a cost to do that, but the offset is that the business can start to see value sooner on the new solution."

Financials was the first of the old components to be replaced. In August 2000, the company went live with general ledger, accounts payable and purchase order systems, self- service purchasing and self-service expenses. Work began on the CRM and ERP pieces in February 2001, with the call centerpiece up and running in June. At press time, the e-mail center and computer-telephony integration (CTI) modules were scheduled to be online. The rest of the ERP components, including inventory and order management, are slated for early 2002. When fully implemented, about 175 of the company's employees and up to 100 of its outsourced order takers will use the applications daily.

The Challenges Begin
Despite the fact that it was a very new release and only the fifth implementation of Oracle 11i worldwide, deployment of financials came together with hardly a hitch. "We had a very smooth process implementing financials," Billitteri says. "Business process change was minimal. Systems changes were non-existent. So, basically, it was training and implementation time."

That changed, however, as they moved to the customer care piece and began encountering software problems. "We certainly weren't surprised that we ran into more quality issues with some of the CRM suite, given how new it was," Soderholm says. "We planned for it, but at times it was perhaps more than we thought we might run into."

Software bugs caused delays throughout the project as ShopNBC waited for Oracle to issue a patch or sub-release of the product. Customization work couldn't be completed until the base software was functioning properly. "The wildcard for us has been the instability of the software," Billitteri says. "Because we were an early adopter, we found ourselves in a very significant patching role. I probably would have planned differently had I known we were going to have to put so much time and resources into that effort." Even so, Billitteri says, Oracle has done a reasonable job assisting them through the process.

Gaining Support
Billitteri tried hard to effectively communicate information throughout the company on the changes that were occurring. Consequently, he says, support for the new system has been very good throughout the organization. "I'm very pleased overall with how people have responded to the additional work effort it's taken to get these systems in place," he says. "The people who work here recognized the need for improved solutions. We needed to make decisions faster and react quickly to any issues within the business. So I think there was a pent-up demand for these types of tools."

Even so, the company has done extensive amounts of training. It used its in-house call center training facilities to bring people up to speed. "Some of the logistics behind training were solved already by having these facilities available to us," Billitteri says. "The rest of it was a time and resource commitment from management and employees."

For the call center staff, training started in January of this year with PC and Internet basics. Since they had been using only green screens previously, reps were taught how to use a mouse and search the company's own Web site. "Everyone was fairly computer literate by the time we implemented this module back in May [2001]," says Mitch Cook, director of customer service operations. "I think at first they were a little hesitant just because it was a new system to learn," Cook says. "Now that they've been using it, they see that they can provide a better level of service to the customer."

Benefits to call center employees centered around empowerment. With the new system, reps would now have the information they needed to deal effectively with customers. Capturing customer call information would be much more convenient and meaningful, and they would finally eliminate the manual, paper-based tracking processes.

The Payoff
The feeling of empowerment enjoyed by call center staff members also extends to the financials group, which has been using the system for a year. "For them it's been great," Billitteri says. "They've embraced the system, and they've been very pleased with having a tool set available to them they didn't have before."

The company has been able to reduce the time it takes to close its books from 25 days to 11 days. The plan is to take it down to five days. Even small things, such as printing checks, can be handled independently, whereas before it required a joint effort with computer operations. The finance department also has a new tool to help them move budget information more effectively throughout the organization, which Billitteri expects will help the company control overall costs.

While they don't have hard and fast numbers, Cook says the software is giving them exposure to management reporting they'd not seen before. "We're able to categorize our work requests and make sure we've got the right people working the right problem," he says. "We know we are turning them around faster, and it's eliminating the duplicate requests of a customer calling in to us and asking for a status." As the company grows, that increased productivity will translate into fewer new-hires.

ShopNBC's ability to effectively track calls will also allow staff to potentially solve problems before customers call. "A call to the customer service center can be viewed as a failure at some point in the business process," Billitteri says. "Perhaps we didn't communicate effectively about delivery dates, or maybe we missed delivery dates, shipped the wrong product or any number of problems that we're now capturing. If we can get to the root cause of those things, we can eliminate them, improving our service and reducing costs, which has the benefit of top-line growth potential. Good customer service will transform itself into repeat business."

Once the CTI and e-mail centerpieces are in place, call center reps will be able to respond even faster to customers, whether they're contacting them via the phone or the Web. "We're finding that a significant portion of our business is now becoming multichannel," Billitteri says. "We'll be able to blend those interactions all within the same customer records, which will be a great thing for us."

Being able to handle those multichannel demands is just another reason ShopNBC's choice of an integrated suite is a good one, according to Burton. "Any person who interacts with the customer will have the most up-to-date information," he says. "If a customer buys an item through a Web store and then calls the call center with a question, the call center agent will have all the information about the customer order because all the data is centralized."

Implementation of Oracle's order management piece will only add to customer satisfaction as consumers increasingly choose to place orders via ShopNBC's Web site. Using order management as the thread, demand is captured from all possible sources. When a customer orders a product online, the system will automatically check inventory levels. "This eliminates the frustration customers often experience when they order a product and then find out later it's not in stock," Burton says.

The Road Ahead
Even with the financials and the customer care piece in and running, there's still a long implementation road ahead for ShopNBC. "They've still got a large amount of new functionality to be implemented and delivered," Soderholm says. "Where to date, we've sort of implemented components and pieces of this, the significant full-scale integration of this is yet to come. There will be a significant point where all the dots get connected in the solution yet to come, including some of the components that have been implemented to date. That's going to be huge."

Soderholm expects more software challenges ahead for some of those components yet to be implemented. While the inventory piece is something Oracle has had for some time, there are some new aspects of it, particularly for retail merchandising environments.

Software quality challenges have already arisen with the order management product, which Oracle rebuilt from the ground up with this release. "We've already been working with it," Soderholm says. "The continuing stabilization of that will be very similar to the need for stabilization in the CRM suites."

Even so, Billitteri is convinced the company made the right decision in choosing Oracle and its e-business suite. "We are still of the opinion that the Oracle solution is the best strategic solution for ShopNBC, despite the trials and tribulations we've experienced in dealing with some immature code," he says. "We're confident that Oracle will resolve the code problems and that we will ultimately see the expected value from the applications."

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