IBM Manages the Customer Experience for Telecom Firms
IBM's Tivoli division has debuted Netcool Customer Experience Management (CEM), a portfolio of quality assurance solutions for the telecommunications industry. Netcool is currently being piloted by IBM customers in that vertical, but no deals have been signed as yet, according to the company.
CEM, a technology subdomain that is adjacent to CRM, is not ordinarily associated with IBM, which made its CRM bones as an infrastructure partner for Siebel. Still, recalling IBM's acquisition of Cognos
earlier this month, the debut of Netcool marks another step for Big Blue in its move toward becoming not only an application-infrastructure giant but also, in select niches, an application provider.
According to Karen Edwards, manager of service provider solutions for IBM Tivoli, the transition is a logical extension of IBM's existing presence in the the telecommunications -- or "telco" -- space. "Telco customers of ours are very concerned about assuring the quality of customer experiences," she explains. "Churn is a big problem, and the underlying infrastructure is getting very complicated for service providers."
Netcool CEM plans to address these issues by monitoring all the services that go out over a network -- including traditional voice, voice over Internet Protocol (VoIP), wireless, etc. -- so that telcos can react to problems more quickly and also implement predictive analytics for damage control and trust-building purposes. Edwards offers an example: "You might have [a service-level] agreement with a corporate customer and learn that you are approaching what counts as 'too many dropped calls' for this important customer." In cases like this, telcos can create notification systems and workflows designed to mitigate the impact of service deterioration. Even if nothing can be done about an outage, telcos might win a customer's goodwill by issuing a pre-event alert.
While Netcool is designed to be a bread-and-butter monitoring service for telco operations managers who are tasked with meeting agreed-upon service levels, it also has interesting marketing applications. For example, telcos can use Netcool's monitoring capabilities to examine the habits of existing customers. This can help in creating user profiles and generating marketing intelligence -- determining, for example, which handsets are most popular, where certain buyers groups are geographically based, and where access problems occur. These models can feed back into sales and service strategies. It's all part of getting to know more about the customer
, which is one of the most pressing strategic tasks confronting direct marketers today.
IBM believes that the value proposition in managing and monitoring network service is based on:
- Lower churn. As service levels improve, fewer customers will leave.
- Less complexity. Offering multiple services requires companies to be more diligent about managing each service.
- Getting closer to the customer. Learning more about individuals and groups of users empowers marketing, sales, and service to improve retention, acquisition, and revenue per customer.
However, both independent telecommunications analyst Jeff Kagan and Insight Research Corporation President Robert Rosenberg believe that churn is not the industry's biggest problem. "Churn was never much of an issue with wireline," Kagan explains, "and churn is less of an issue in wireless as carriers get better." Rosenberg tends to agree that churn's impact is currently circumscribed: "Right now in telco, churn is typically cellphone-service churn."
Rosenberg's view offers an argument on behalf of the idea that service monitoring and management isn't necessarily the leading way for telcos to make more money these days: "Pricing will be a bigger issue than reliability," he contends. If this is right, telcos might not need to go the extra mile in guaranteeing service availability and reliability. Instead, they may be better served in simply trying to beat their competitors' prices. A telco with this strategy in place might not be the ideal candidate to invest in Netcool.
Kagan, on the other hand, believes that churn will become more, not less, of a problem as customers buy bundled services. "When customers buy a bundle of four services, you risk losing the customer if even one of those services doesn't work well," he says. "The bar has risen: It's more important than ever before to offer quality service."
The truth is that, in the volatile telecommunications world, no one -- not even IBM -- knows just how customer behavior will play out over the coming decade and beyond. But telcos are already placing their bets -- on either price or service as a differentiator -- and would do well to model different customer-churn scenarios into their business assumptions.
Long-term, Netcool's highest strategic value may end up being what IBM Tivoli's Edwards identified as the one-to-one marketing proposition. Network monitoring is not just about service; it's a way to gather intelligence on how customers, all the way down to the individual level, behave. This intelligence, allied to the right marketing approach, can be converted into demand generation. "You want information about what's happening with specific customers," Edwards concludes.
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