Support as a Strategic Weapon

StrategicWeapon_Jan07.pdf Or review the white paper in web browser format below.

Customer Interface as a Strategic Weapon for the Small FirmDownload:StrategicWeapon_Jan07.pdf
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CU S T O M E R IN T E R F A C E FOR THE S T R A T E G I C WE A P O N SMA LL F IRM AS A Turn Client Support into a Value Creating Process T H E S M A L L F I R M 'S D I L E M M A The Actio n Point SQI views the client interface as the critical event point that determines the fate of your products and your firm. And, SQI believes that effective management of client interface events is a Strategic Weapon. This white paper describes a framework supporting that position, and a road map to guide your actions leveraging this point for increased success. SQI maintains that, in comparison with large firms, small firms are inordinately responsible for creating innovative products. In general, these products are capable of delivering significantly better economic returns than they ultimately do. It is at the Client Interface where the potential value of an innovative product is dissipated thought a series of costly end user problems. The Problem Small Firms with Technology Rich Pro ducts The growth of the American economy is now fueled by the entrepreneurship of small firms. In many market segments small firms lead the way with technology-rich products. These innovative products are capable of penetrating huge markets made up of large, demanding clients. But, while an innovative product can gain entry into these markets, a resource constrained small firm quickly struggles with the accompanying service and support expectations of large clients. When a small firm's product is sophisticated and technically rich (knowledge centric), the demands of large clients quickly overwhelm the firm's support systems. Herein lies the crux of the problem: often the product's economic potential is greater than its Page 1
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impact on the market because its value is lowered though unmet user needs for support services. Small firms with large, demanding clients must quickly become extremely good at support in order to realize success from innovative products. Eco no mic Return - or Clients D o n't Really Buy Produc ts All innovative firms share a build it and they will come attitude about their products. However, clients don't really buy products. They buy a solution to a problem that produces an Economic Return. They buy a product or service because they believe it will increase their own firm's profitability. Thus, products are really judged on a very simple metric does the product deliver the expected economic return. Economic Quality All firms strive to produce high quality products. However, the intention to create quality products is often difficult to turn into action because Quality is a complex concept. Does high quality mean few bugs or the best feature set or the most complete documentation or the lowest cost or all of these? And, with the often limited resources of a small firm, how can the right mix of these be identified and instituted? The answer comes by focusing on Economic Quality; a client-centric concept. Economic Quality is delivering the client's expected economic return. If a firm meets the client's economic expectations, they have a high quality product with the accompanying high levels of customer loyalty. If not, the quality of the product falls short and the client will make changes. What is really striking about using Economic Quality as a measure is that it lacks any edicts about the product being bug free or fully documented or meeting required support level response rates. It just focuses on the client and their success. This focus delivers a definition of quality that executives clearly understand pure economic return - and, a measurement that can optimize resource allocation across engineering, documentation, application engineers, support, training and other enabling components. However, the client focus on Economic Quality is not all good news for the small firm because Economic Quality is determined by the effectiveness of the solution. And, when the product is sophisticated, much is needed to turn it into a solution. Fro m Pro duc t to Solution: The Role of Enabling Components Economic Quality is delivered by a complete solution. The gap between the product offered by the firm and the solution required by the client is bridged by enabling components. Sophisticated, knowledge-centric products require enabling components to provide the end user with a solution. For example, installation and configuration services, user training, application notes for special usage, and support services are always required to create the right solution for the client. These enabling components are diverse and situational. Many can't be anticipated. The path from product to solution is a joint process between a firm and its' clients. For a small or emerging firm, producing and delivering all the enabling components is costly and most likely outside of its financial resources. In addition, for innovative new products it simply may not be clear what enabling components are required. Frequently the requirements are only known once the early-adopter profile is established and the product is stressed by use. Whatever the cause, any gap between the product the firm is selling and the solution the client is buying will quickly diminish the economic returns to the Page 2
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client and thus impact both the perceived Economic Quality of the product by the client and, ultimately, the economic return to the firm. numerous enabling components required to complete a solution taxes limited resources of a small firm. In fact, the firm usually has an imperfect understanding of the enabling components required for a specific solution. Summary: Small Firm's D ilemma Although small firms create some of the innovative technical products, when selling to clients, they face difficult tasks in meeting client's needs that can be summarized in statements: most large their two Customer Economics Clients buy solutions that deliver Economic Returns. Any gap between the firm's product and the desired solution, as supported by enabling components, reduces the client's Economic Return. Limited Resources and Imperfect Understanding of Solution Requirements Addressing If not anticipated, the potential economic return of an innovative product can quickly be swamped by the client's demand for a complete solution. If not carefully managed, the cost of development and delivery of the enabling components can cripple a firm. Or, at the other extreme, the lack of required enabling components can kill the product. For the small firm, successfully selling an innovative product is clearly a high wire act. The challenge is great. However, there is a new way for small firms to successfully compete in large-client markets. the T H E S M A L L F I R M 'S A N S W E R A n Adapti ve User-Feedback S trategy Innovative small firms can respond to the demands of delivering a solution to the client and optimizing resource allocation internally by implementing an Adaptive User-Feedbackstrategy. This strategy leverages the end user's real-world experience with the product. By using processes based on todays web technologies, small firms can respond, analyze and evolve in order to address events at the client interface with economically sound judgment. reactive. It can not form an anticipatory strategy of trying to do everything right. A powerful alternative strategy is to let real-world product usage determine the areas requiring additional resources. Let the users within a client environment identify enabling components and product functionality issues. And, plan to have resources ready to quickly respond to the users' input. D i rect Focus on Economic Quality Usage D riven Resource Allocation An adaptive user-feedback strategy focuses the firm's resources on client-centric, user-identified issues. Thus, the clients directly tell the firm how to improve Economic Quality for them. Having limited resources and imperfect understanding of which enabling components are required for a solution, the small firm is purely By focusing on real-experience issues and by assessing the impact on Economic Quality across all clients, the resource allocation of the firm is improved by: Page 3
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Analyzing the Outcomes of Usage Patterns How a product is used differs in each market segment. The features accessed, the user skill level, etc. effect what parts of the product are stressed and which enabling components are required. Tracking user problems with a product and the associated enabling components produces knowledge. We now know as opposed to think which events are generating Economic Quality issues. Rank Issues by Economic Impact By analyzing the economic impact and frequency of issues, an actionable metric is established. The economic cost of each issue allows us to rank-order issues across all aspects of the required solution product and enabling components. This makes it possible to answer the allocation question. For example, once the economic impact of each issue is known, a decision can be made on whether to fix bug A or improve documentation B or add feature C. Simply work on the one with greatest economic impact. This is a revealing, powerful strategy, but how does the firm capture the issues from direct user input? Fortunately users within the client's environment provide detailed issues to the firm every day. All we have to do is pay attention to the events happening at the Client Interface. Moni toring the Client Interface Interaction between a firm and its clients' users, particularly when the firm's products are complex, generates a wealth of information about the product, its quality, the desire for enhancements, and the way it is used. The interaction, by its nature, identifies weaknesses in training, documentation, and the user interface. It often contains invaluable nuggets of competitive information. And, by its nature, it represents a real and significant cost to the firm. Once a client is signed and the product is sold, most, but not all, of the interaction occurs in the context of support. The data is enormously valuable, especially for new firms with new products. Yet it is often inaccessible hidden in private e-mails or lost in unrecorded phone calls. This is mainly because the cost of creating and supporting a process to capture, manage, and analyze this information is economically out of the reach of small firms. The reality is, this information is key to developing products and enabling components that deliver economic quality. To support the delivery of optimal Economic Quality this data must be available to be analyzed on an objective basis. This implies a systematic mechanism that holds the data in a format that is accessible and organized. Knowledge- Ce nte red Support SM The flow of events at the Client Interface can overwhelm any organization that does not have a well structured support environment. But this is more that just adding automation technology. It is a question of having processes that capture the value created during client/firm interaction. The Consortium for Service Innovation is an important and innovative organization that has developed a comprehensive set of theories and practices to support the advance of customer support methodology. SQI embraces their work, and uses the concepts and techniques in their KnowledgeCentered Support document (KCS). KCS is a business methodology to capture, structure and reuse support experiences that results in reduced support costs and improved customer satisfaction and capability. Though the work of the consortium has tended to center around the needs of large organizations, their theory supports the work SQI has been doing centered around the needs of small organizations. Solve and Evolve To survive, your firm must effectively solve client issues as they arrive. To increase client satisfaction and retention precursors to business growth you must systematically reduce the issues clients experience. Page 4
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Harvesting the knowledge capital created in the process of crafting solutions to a client's issues is a powerful strategy for creating a process to reduce client issues and increase your product's economic value. Using a knowledge-centered support paradigm, this harvesting is described by the Consortium of Service Innovation as two process cycles Solve and Evolve. The Evolve Cycle focuses on engineering out any repetitions of specific events. This is a process of continual improvement of the product at every release cycle. The goal is to address items of significantly negative Economic Quality and reduce the costs to zero with the next generation of product and enabling components. Summary: Small Firm's Solution Sol ve Cycle Your users contact your support or field engineering to request and receive a solution i.e. the specific knowledge about how the product can meet a specific set of their needs. The small firm, with innovative products selling into large clients, can craft a winning strategy with these key points: The process of solving your user's issue by drawing on experience combined with formal documentation produces tactical knowledge. The Solve Cycle methodologies and processes capture this tactical knowledge in a reusable form as part of the normal set of tasks. achieved by many entrepreneurial small firms. Leverage is obtained through a system that captures these individual solutions generated at the user interface and makes them available for reuse by first the support organization, then as client self-server solutions on the web and finally by product engineering. This allows support to harness the knowledge power of its staff, clients to improve both Economic Quality and efficiency, and the firm to scale while effectively managing costs and resources. This can be summarized in a simple mantra Solve once, use often. Evol ve Cycle The Solve Cycle focuses on effectively and efficiently responding to a Client Incident, reducing the Economic Costs of the incident to both the client and firm. Page 5 Innovative Product This is the starting point Focus on Economic Quality Understand the Economic Return of the client's solution enabled by the product. Track all issues that are negativity impacting the return and systematically remove them. User Driven Resource Allocation for Enabling Components Let real issues drive the resource allocation across enabling components support staff, documentation, field engineering, etc. Use the Client Interface Monitor the feedback at the client interface to systematically address the above Leverage Emerging Web Business Models The world of instant, low cost communications and on-demand infrastructure are leveling the playing field. Capabilities once only affordable to the Fortune 500 are now becoming available to the small firm.
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T H E S QI C O N T R I B U T I O N Your Strategic Support We apo n SQI Inc. is the world-leading open source integrator serving small firms that develop and sell complex products. SQI integrates best-of-class open source technologies and applications into business processes addressing the operational requirements driven by the support of complex or knowledge intensive products. Leveraging the open source revolution dramatically reduces SQI's development costs and accelerates its solution cycles. Combined with access anywhere at any time on-demand Internet delivery, SQI is able to provide world class systems for the small firm at dramatic new cost points. The Client Interface Environment (CIE), the SQI flagship service, focuses on the operational interface between clients and a firm. CIE's processes and services including direct support, knowledge transfer and business intelligence analytics manage results and improve effectiveness in your client/firm interface - an area were costs can easily spiral out of control. With CIE capabilities, you can improve the Economic Quality of your product by increasing clients' ROI while, at the same time, reducing your own operational cost. The Nexus SQI provides affordable state-of-the- art technology and business processes because it is at the nexus of three industry trends (see Appendix for description of each): The Open Source Revolution Software as a Service (SaaS) or On- Demand Support as Knowledge Management SQI creates a new technology-infrastructure price point for small firms by combining an open source application strategy with web-based On- Demand delivery. And, SQI enables new efficiencies in the small firm's support processes by integrating Knowledge Management capabilities into CIE. Ope ratio nal Framework The nexus of this three-pronged approach gives SQI the ability to deliver powerful technology to the small firm. What ultimately distinguishes the SQI solution is its synthesis and adoption of two operational concepts that establish the vision of how firms can best use the technology nexus. The guiding operational concepts are: Unified Theory of Software Quality econometric model of Economic Quality. - an Capability Maturity Matrix a model describing progressive levels of capabilities and incremental improvement. SQI crafts the operational framework for your use of CIE from the fusion of these concepts. The resulting framework provides the operational detail that systematically moves small firms to the structured Client Interface Environment and then incrementally maturing, over time, the firm's capabilities to deliver Economic Quality. CIE - 360 Focus on Client Inte rface The Client Interface Environment (CIE) is an OnDemand service that captures value from every aspect of your firm's interface to your clients. Your firm must respond to and manage the incidents at the client interface. There is also the potential to evolve what is captured here into an asset that can inform, and, to use the knowledge to remove product elements that caused the incident in the first place. The benefit is always higher economic value for the client and lower cost to the firm. Page 6
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From Crisis to Quali ty Respond Inform Respond is the high- cost tactical action to solve a client issue. Inform is the low-cost knowledge transfer alternative for solving a client issue. Running a support organization is an exercise in crisis management. CIE has a reactive Operational Analytics component that provides information to dynamically allocate staff to the most critical client issues, establish staffing needs and identify your most productive contributors. All of the reactive processes limits a decline in Economic Quality for a given client. Manage - Remove Manage is the high- cost process of provisioning and directing the support staff to meet client demand for support. Remove is the low-cost strategic process of engineering out Economic Quality problems. CIE provides technology and processes that systematically migrate high- cost operations to lowcost alternatives. Look at the two examples below. From Tactical to Asset Responding to a client issue creates tactical knowledge (see appendix). The Incident Manager component of CIE provides the functionality to effectively interact with a client, classify the issue state, prioritize across issues and capture the tactical knowledge generated in solving the issue. CIE also provides proactive Structural Analytics that look across all the client issues to identify reoccurring issues that can be engineered out of the product or effectively addressed in the enabling components. Thus, CIE provides both reactive and proactive analytics that enable your firm to manage the present and improve the future. CIE Ope ratio nal Processes CIE provides a mechanism that creates more efficiency and higher Economic Quality for both clients and the firm by preempting any issue with just-in-time knowledge transfer to inform a client's users. The web-based Knowledge Center component of CIE provides functionality to structure, instantly publish and searchable Knowledge Assets, that is, knowledge acquired thought responses at the client interface. CIE also provides technology and process to systematically mature captured tactical knowledge into informing explicit knowledge documentation, how-to recipes, application notes, and other forms of reproducible value. This process transforms a cost into a corporate asset. CIE application technology delivers two excellent goals. The first is enabling User Driven decisions, and, second, becoming focused on Economic Quality. The operational processes of the CIE solution gives the support staff a road map to achieve these goals. CIE provides an enhanced set of business process templates InterfaceBPT - focused on the day-today operations of managing the client interface. The InterfaceBPT templates are a road map for daily operations of the powerful CIE systems. InterfacePBT takes a staff right to the implementation phase, dramatically reducing a firm's investment of time and resources. Ma t ur i t y Le vel Based Imp lementa tion Starting from the crisis management level of support and desiring knowledge-centered support is Page 7
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an important vision for the future. But, small firms need time to implement. SQI fully understands that prefect should not be the enemy of the improved. Focus on Economic Quality From efficiently managing a single issue, just-in-time knowledge delivery to issue structure analysis, all components and procedures are crafted to improve the economic return to the client. InterfacePBT is structured as sets of processes at different maturity levels. Each level is a step toward achieving the full vision that small firms will be able to implement incrementally. User Driven Resource Allocation The Incident Manager component of CIE captures the real time status of support operations and every aspect of every issue. Resulting escalation reports help focus staff on the most pressing open issues. Operational reports calibrate staffing needs, and Structural Analysis identifies reoccurring issues that need to be engineered out of the product and enabling components. Summary: The S QI Co ntri butio n The previous section The Small Firms Answer presented a strategic roadmap for knowledgecentered support in small firms selling innovative products to large, demanding clients. CIE provides technology and processes to implement that strategy. CIE provides: Client Centric Every aspect of CIE is crafted to the care and feeding of your client. No other system, at any price, is so focused on listening to clients' needs and rapidly responding. Leverage of Open Source and web-based services .The combination of integrating open source applications and delivering the software as a service results in dramatic new price points. Small firms can now afford a powerful support infrastructure. CIE enables a small firm to successfully compete for business from large, demanding clients. With CIE firms have the ability to successfully and economically support innovative products and maintain the economic value a product can deliver to a client. Page 8
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APPEN D IX This appendix expands on some key concepts referenced in the whitepaper. The discussion is still at very high level. See the SQI web site - for full coverage of these topics. innovation is lowering cost, accelerating innovation and reshaping the industry. Clients gain from open source standards increasing alternative, broader access to technology and lower costs. Soft w are as a service (SaaS) or OnDema nd Knowledge as Intellectual Capi tal The Quality Corner published a great article title Organizational Improvement Thought a Knowledge Management Approach.1 The article describes knowledge as follows: Knowledge is evidenced in an organization's processes, policies, products and services. It is contextual, ranging in form from explicit (codified) to tactical (know-how). Explicit knowledge can be described as information derived from work products, learning and/or reusable technologies. Tactical knowledge includes techniques for integrating technologies, experiences and relationships. The effective management and appropriate application of knowledge can impact the growth of an organization positively; however, these forms of "intellectual capital" often go unrecognized as institutional assets. Software, in a fundamental shift, is increasingly being provided as a service as opposed to a product. The Application Service Provider (ASP) combines the development and support of an application with managing the hardware to host the application. The client rents access to the application. The client benefits by outsourcing technical staff, avoiding large hardware, software acquisition, installation costs, and always being current with software updates. K no w ledge-centered Support A trend has emerged where support is seen as a knowledge management task. The Consortium for Service Innovation is an example of large firms collectively developing theory, models and best practices for addressing support with knowledge management processes. The o ries of Ope rati o ns Indus try Tre nds The industry trends enabling the Client Interface Environment are described in this section. SQI has a vision - of how small firm can effectively market to large companies that is the framework for the crafting of the CIE. The vision is based on two frameworks or theories of operations. The Open Source Re volut ion Uni fied Theory of Soft wa re Quality Open Source is a paradigm shift in how software is developed and maintained. This disruptive (U TSQ) 1 Quality Corner Fall 1998, New Jersey University Health Sciences, A theory and book authored by Jeff Elpern the founder of SQI, presents a conceptual framework and econometric model for understanding software Page 9
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quality as an all-encompassing measurement of effectiveness for software-intensive systems. UTSQ defines Software Quality as a measure of the actual economic returns compared to the expected economic returns a firm experiences from implementing a software intensive product. SEI Ma t uri t y Ma t r i x The Software Engineering Institute identifies a series of competency level that software organizations progress as they move toward predictable, repeatable results. SQI has extended this concept to the broader business process supporting Economic Quality. Page 10

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