Partnering to Provide Process Optimization Solutions

For Telecommunications Service Providers

Reducing Costs and
Improving Service Using
Quality Management Tools

Process Analysis A Guide for
Telecommunications Service Providers



White Paper

Presented by:
John Tomik - Director of Business Consulting
Vertek Corporation
www.vertek.com
www.iGrafx.com
www.minitab.com
2003 Vertek Corporation
2003 Corel Corporation
2003 Minitab Corporation

Advancing the Business of Telecommunications
Reducing Costs and Improving
Service Using Quality
Management Tools

Abstract

Telecommunications Service Providers, driven by
competition, legislation, and increasing customer
requirements, need to continuously search for new ways to
improve productivity and quality, while simultaneously
reducing costs in order to remain competitive in the
marketplace.

To address these issues, many management teams have
turned to Quality Management techniques to solve specific
problems that they encountered, such as Six Sigma for
process stability and defect reduction; TQM for Continuous
Improvement; and ISO 9000 and TL 9000 for
documentation and process standards. Most recently,
executives must face the requirements of the Sarbanes-
Oxley legislation and the emphasis on controls and financial
accountability as a result of the ethical issues introduced by
accounting misrepresentations. Since there are so many
major quality initiatives that sometimes overlap each other,
it is easy to become confused about how to implement a
process improvement program that provides real
measurable value.

This paper describes a fundamental tried and tested
approach for instituting quality into everyday processes,
and it introduces a set of quality and process management
tools that help facilitate the implementation of a quality
management program. It provides an introductory
framework for quality improvement initiatives to address
cost, performance, and quality control issues that all
Telecommunications Service Providers face today.
Furthermore, this paper describes results that can be
expected through the implementation of process-specific
tools for business analysis.

We, at Vertek, can attest to the success of this program.
Our consultants have delivered dramatic results to our
clients through the use of the statistical methods and quality
control techniques outlined in this paper. These
improvements can add up to millions of dollars in annual
cost savings, not to mention cycle time improvements,
efficiency gains, rework reduction and, most importantly,
customer satisfaction.
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
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2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
2
Introduction


Cost reductions and off-shoring
As technology advances and pressures from competition
continue to drive how services are delivered to customers,
prices plummet to near commodity levels. Service providers
that are not automating the service delivery process and
looking for less expensive methods of delivering services to
customers will be driven out of the market. In addition, as
MCI and Global Crossing emerge from bankruptcy, another
price war with the remaining debt-heavy carriers could drive
further cost pressures.

Dramatic changes to the process, such as outsourcing whole
portions of the process to offshore groups, introduce large
risk and uncertainty into already fragile environments.
Understanding the impact of such dramatic process changes
is critical for informed management decision making.

Consolidation

Since divestiture, service providers have been looking for
ways to build up service offerings in order to provide
complete solutions to their customers. Some service
providers built these capabilities and increased IT
investment in past years to support new offerings. Other
carriers are pursuing mergers and consolidations with other
service providers to obtain these capabilities. Either pursuit
involves large-scale change and requires significant
information about the impacts on the existing organizations,
processes, and procedures.

Legislation, technology and service
expansion

Legislation (e.g. wireless number portability) and new
technologies are forcing dramatic changes to sales and
Customer Care processes. Process owners supporting
these groups need a place to construct, house, and
collaborate on processes, methods, and procedures in order
to keep up with the rapid pace of change. No longer can
individuals work in silos and stay connected.

Few industries have faced as many technical, operational,
legislative, and cost issues as the telecom industry faces
today. Pressures to reduce staff, to outsource resources to
off-shore suppliers, and to conform to legislation continually
push the envelope for delivering higher quality services in a
highly scrutinized and competitive environment where
existing service providers struggle to stay in the game.
Advancing the Business of Telecommunications
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
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Necessity of stricter controls

The Sarbanes-Oxley requirements to outline control points
and performance of key processes, especially those directly
tied to financial measures, are stimulating executives to
team up process and quality control associates with financial
managers and auditors to ensure that the integrity of
financial statements are infallible.

This paper will present an approach that provides process
managers with tools for more effective process
management. The following topics will be discussed:
Attributes of a successful quality control program
Tools that facilitate the quality improvement process
Available software that simplifies the job
Benefits from the quality improvement process

Background

Many of the concepts and tools presented here are familiar
to quality managers in the telecommunications industry. In
fact, many of the core tools (e.g. Pareto charts, Cause &
Effect diagrams) originated from the statistically focused
teams at Bell Labs. Within the general Quality Industry,
there have also been some large-scale initiatives like TQM,
ISO 9000, and the more recent Six Sigma movement that
have stimulated energy around quality practices. Before
implementing these initiatives, however, it is very important
to understand that these projects can easily fail unless they
are adopted completely into the culture of the organization.
A strong team with a strong statistics foundation, armed with
the proper tools is instrumental in achieving breakthrough
levels of success.

As consultants within the Telecommunications industry, we
at Vertek have delivered dramatic results using the
techniques and procedures outlined in this paper. One
process simulation project reduced a major service
providers ordering cycle time by 10 days, which translated
into over $6.8 Million in annual savings. We have also used
process simulations to coach our clients on projects that
should be avoided. One client, after reviewing our
simulation results, stopped a costly development project that
was not returning the right value back to the organization.

Given the intense scrutiny on the practices of telecom
carriers, those corporations that incorporate and invest in
quality tools and methods will hold a significant advantage
over those who do not. It may mean the difference between
survival and failure for many organizations.

Advancing the Business of Telecommunications
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
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Addressing the challenges

Attacking such large challenges is not easy and should not
be underestimated. Some companies have experienced
incredible success using the many quality improvement
techniques that have come into the spotlight over the last
several years, while others have only grown frustrated with
the lack of expected results. Based on successful Quality
Improvement projects, four critical elements need to be
present in order to maximize the probability of success:
Dedication, Planning, Diligence, and Patience.

First and foremost, the organization must be dedicated to
the success of the program. Dedication comes in the form
of executive sponsorship, resource commitment, time
allowances, and the relentless perseverance in uncovering
the true causes affecting performance regardless of
political implication.

Second, the organization must spend a significant amount of
time planning for the program to ensure that it is executed
and communicated properly. Quality is contagious and
when improvement results become publicly known,
additional resources and support will be made available.

Diligence is critical when working with processes and
investigating special causes. Teams need to be trained
properly in the use of quality management tools. Control
charts, cause & effect diagrams, Pareto diagrams and
simulations with what if scenarios are all tools that need to
be used meticulously throughout the process. Additionally,
the corporation must objectively attack any special causes
identified no matter how they occurred. Feelings, pride,
and politics must not impede the improvement process
otherwise the project will fail.

Finally, the organization needs to have patience with newly
initiated quality programs and allow them time to produce
results. Too often, organizations look for that breakthrough
improvement and implement process changes, one on top of
another, without any regard to their consequences. Rapid,
haphazard process change introduces confusion and noise
into the measures and erases any evidence of
improvements that may have been uncovered.

These four attributes, while they wont guarantee success of
your quality improvement program, will significantly improve
the probability of producing positive results and will certainly
create a supportive environment for the process
improvement teams. Excellent service will not appear
immediately, but with the right environment, it will
continuously move towards the predefined goals.

Key concepts:


Four elements critical to
any Quality Improvement
Program:
1. Dedication
2. Planning
3. Diligence
4. Patience

Quality Improvement Tools
1. Process maps
2. Control charts
3. Pareto diagrams
4. Cause & effect
diagrams
5. Simulations / What if
scenarios
Advancing the Business of Telecommunications
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
5

Tools that facilitate quality
improvement programs

Standard quality tools should not be unfamiliar to Telecom
companies since many of the fundamental principles and
tools originated from Western Electric AT&T Bell
Laboratories manufacturing partner. A number of tools are
available to the process engineer. Five of the most
important quality tools are presented below:

Process maps:

As defined by iGrafx, a process map is a graphical
representation of a process, which is used for
communication, documentation, and visual analysis.
Process maps themselves are powerful tools for presenting
how a process operates. Consultants at Vertek have
improved process performance dramatically by thoroughly
documenting our clients internal business processes. In one
case with a major service provider, Vertek consultants
virtually eliminated ordering methods variation by
standardizing the organizations work steps based on
corporate best practices.

Control charts

Shewhart and other types of control charts are
fundamental to quality control. Their purpose is to measure
variation around a mean and signal when that variation is
due to one or more special causes. Special causes are
those instances where something assignable has occurred
in a process that should be investigated and addressed. Six
Sigma programs utilize control charts and process capability
indexes extensively to signal when issues influence process
variation. Employing control charts to demonstrate how in
control (or out of control) a process is often is enough to
convince an executive team that action is required.

Pareto diagrams

J.M. Juran first published a training document for Western
Electric / AT&T Bell Labs that outlined the Pareto principle,
demonstrating the power of focusing on the vital few rather
than the useful many. This tool identifies and ranks defect
types in descending order (based on either frequency or
value) in order to prioritize the categories that should be
addressed first. In addition to assigning a natural priority for
addressing defects, the Pareto diagram acts as a
mechanism for quantifying contributing factors to problems
identified during the process troubleshooting phases.
30 20 10 Subgroup 0
57
56
55
54
53
52
51
S
a
m
p
l
e

M
e
a
n
Mean=54.28
UCL=56.91
LCL=51.65
4
3
2
1
0
S
a
m
p
l
e

S
t
D
e
v
1
2
2
S=1.843
UCL=3.850
LCL=0
Xbar/S Chart for Data
38.00
60.00
80.00
90.00
100.00
Pareto Diagram
#

E
r
r
o
r
s
Percent Total
Insufficient
Number
Limited Access
to Customer
Information
No
Performance
Measures
Inconsistent Complex
100
50
0
100%
50%
0%
Pareto diagram:
Control Chart:
Process map:
Advancing the Business of Telecommunications
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
6
Cause & effect diagram

Used in conjunction with Pareto diagrams, a cause & effect
diagram (sometimes referred to as fish bone diagrams or
Ishikawa charts) helps a process engineer identify the root
causes associated with an error condition or defect identified
in troubleshooting sessions. Most effectively used in team
environments, the cause & effect diagram takes the
analytics to the next level by using creative problem solving
techniques. When done properly, a cause & effect diagram
becomes one of the most powerful and effective tools
available to process engineers. Vertek consultants have
delivered breakthrough results by using this tool with Pareto
charts, control charts, and process capability indexes.

Process simulations / What if analysis

Among the most exciting and powerful tools available for
process engineers, process simulations assist analysts to
create models of current process performance by using
process maps, activity times, and transaction volume data.
These models can then be manipulated to determine the
impacts that process changes will have on performance
metrics.

Process simulations are powerful tools for a number of
reasons:
Effective modeling of business processes plays a key
role in identifying and correcting inefficiencies
Improved results are achieved through greater
insight into your business processes
Hypothesis testing increases the ability to identify
highest impact opportunities
Full experimentation through simulation increases
accuracy of analysis and chances of project success
Simulations prevent costly mistakes in deploying
process changes that negatively impact performance

We at Vertek can attest to the flexibility and power of
process simulations. We have incorporated the use of
process simulation models into almost every process
engagement that we take on. With simulations, we have
been able to factually answer questions that our clients were
struggling with:
How can I rationalize my organization for peak
performance?
What steps do I need to take to improve throughput,
on-time-performance, cycle time, and overall quality?
Where should I direct my process automation efforts
to maximize my IT investments?
Poor
Customer
Service
Policies
No Performance
Measures
Procedures
Inconsistent
People
Insufficient
Number
Plant
No History of
Correspondance
Inadequate Training Lack of Awareness
Complex
Low Priority
Poor Funding
No Common
Access
Limited Access
to Customer
Information
Not Communicated
Boundaries
Undefined
Process simulation:
Cause & effect diagram:
Advancing the Business of Telecommunications
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
7
Available software to simplify the job

Statistical Process Control has come a long way from
calculating control limits and process capability indexes by
hand. A number of software packages exist for this purpose;
however one of the most complete and powerful solutions
for process management is the combination of tools
provided by iGrafx

and Minitab

.

Statistical analysis using MINITAB

Performing statistical process control can be challenging,
especially when performing multiple calculations using
formulas like:
UCL=
n
C
S
X
|
.
|

\
|
+
4
3 and C
pk
=
( ) ( )
(

3
,
3
min
LSL USL

Statistical software packages now can create control charts
like X , R, S, X - R, X - S and calculate process capability
indexes quickly and with little effort providing the process
engineers with more time to focus on analysis. MINITAB

, a
comprehensive statistical and graphical analysis software
package, is the leading package used in Six Sigma and
other quality improvement projects.

iGrafx

Process 2003 for Six Sigma

This tool allows process engineers to identify, evaluate, and
deliver high-impact Six Sigma projects. With a powerful
simulation engine and seamless integration with MINITAB

,
this product brings a new dimension to process modeling
through advanced techniques such as data fitting and full-
factorial experimentation. The Design of Experiments (DOE)
features reduce time, cost, and risk to any process
improvement project. iGrafx

Process 2003 for Six

Sigma

also facilitates the creation of Pareto diagrams,

cause & effect diagrams, and produces detailed statistics for
simulations. The American Society for Quality (ASQ) uses
this package in their Six Sigma Black Belt training course.

iGrafx Process Central 2003

Collaboration is the key to breakthrough process
improvements. iGrafx Process Central 2003

, a server-
based Process Management repository, is a collaborative
groupware application that delivers true version control,
document security, extensive query capabilities, and a
comprehensive audit capability. It provides enterprise-wide
access to materials and supports best-practice development,
just-in-time learning, and quality management.
Advancing the Business of Telecommunications
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
8
Benefits of Quality Programs

A typical Six Sigma Black Belt project saves a client $230-
350K and usually spans 4-6 months. Telecom service
providers can experience even more dramatic results given
the complexity of processes and systems involved. Some
categories of typical expected results are:

Cycle Time Improvements

Cycle time improvements are critical for service providers
the quicker a customer can be turned up onto a network, the
faster that provider can bill for services rendered. At Vertek,
we focus on cycle times in order to increase our clients cash
flows. In one case, we virtually eliminated the cycle time for
a sales handoff process that was averaging 21 days.

Customer Satisfaction Improvements

Customers appreciate (and demand) quality service. We
have seen where Customer Satisfaction has gone from
Poor (customer leaving the Service Provider because of
billing issues or poor service times) to Excellent (same
customer switching over their remaining business to the
carrier). Providing high quality service will result in retaining
as well as increasing revenues.

Rework Reductions
Failed service turn-ups cost an organization deeply. Most of
them can be avoided with the right processes in place. The
do-it-right the first time principle can be achieved when
quality tools and procedures are deployed throughout the
organizations methods and procedures.

Cost Reductions

The dramatic cost reductions associated with quality
improvement projects usually result from addressing one of
the above categories. An additional area of cost reduction is
resource optimization. The ability to determine optimal
resource levels to support a sales forecast or service level is
very valuable in environments where forced reductions are
viewed as primary ways of reducing expenses.

Other Improvements
There are numerous other benefits attainable from
employing quality improvement programs in an organization.
One that is often overlooked is employee morale.
Associates want to see their teams be successful and if
continuous improvements are visible in organizations, then
companies will find that employee morale and productivity
will improve dramatically.
Advancing the Business of Telecommunications

For more information
contact:

John Tomik
Director of Business Consulting
[email protected]

Vertek Corporation
430 Mountain Avenue
Murray Hill, NJ 07974
908.464.8400
Advancing the Business of Telecommunications
Summary:

Quality programs can dramatically improve an organizations
productivity. It is typical to expect high returns on a project
that focuses on service level improvements, cycle time
reductions, or customer satisfaction. There are many tools
available for process managers to perform process analysis.
These tools, when deployed correctly, will create a powerful
environment for collaborative process improvement. iGrafx

and Minitab

support this environment with their integrated

solution for Six Sigma projects. This solution is used by
organizations such as the American Society for Quality
(used in their Six Sigma Training Program) and by
consulting companies like Vertek Corporation specializing in
process optimization solutions for the telecommunications
industry.








References:

TL 9000 Performance Metrics to Drive Improvement The
Telecommunication Industry takes a new approach to
sector standards, Quality Progress, July 1999.

Ryan, Thomas P., Statistical Methods for Quality
Improvement, Wiley-Interscience, 2000.

Breaking Away: Leading the Telecommunications
Turnaround, Ernst & Young, 2003.

The Road to TL 9000: From the Bell Breakup to Today
The development of TL 9000 caused a revolution in the
telecommunications supplier industry, Quality Progress,
June 2001.

Pande, Peter, et al., The Six Sigma Way: Team Fieldbook,
McGraw Hill, 2002.

ASQ Six Sigma Black Belt training program materials:
http://www.asq.org/ed/sixsigma/blackbelt/materials.html
2003 Vertek Corporation All Rights Reserved
2003 Corel Corporation All Rights Reserved
2003 Minitab Incorporated All Rights Reserved Ver WP1.0 11/4/03
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