Maher Maso, Mayor of the City of Frisco in Texas was seen knocking every door with a slogan ‘’10/10’’ for the last few months in the Collin County. It takes 10 minutes to do the 2010 census of the United States of America. Maher was passionate, committed to seek responses from as many citizens as possible and extremely persistent on this subject. Many of the citizens didn’t even pay attention to census let alone bother.
Census comes from the Latin word – ‘’Censere’’- when the Romans were the first to start counting the number of adult males fit for military service. The story of census is as old as the history of every country and thus every 10 years, every country in the world counts. I used to love Mathematics because numbers involving Math were always close to reliable as anything as could be, transparent, clean and immune to debate. For some of us numbers are lucky, they are even, they are prime, they are real and they are odd.
Does Census matter? One resident asked Maher. ‘’Yes it does’’ he replied. According to him, in 1790 it cost the United States USD 45,000, 650 field marshals and took a year to count 3.9 million people. Two hundred and twenty years later, it is costing USD 338 million dollars in advertisements in 28 languages and the vital thing is what follows the census, about USD 500 billion per year in federal aid for everything from jobs , to libraries, to streets, to roads.
The campaign by everyone in American public services forced me to open the census form. Two questions caught my attention, Question 1 relating to the head of household or person 1 (me or my wife in an era of equality!!), the second one is question 9 relating to my race (it is like the caste in India) – Black, American, African-American, Latin and many more. The census – a very important part of counting and profiling the citizens of the USA didn’t get my value vote.
Numbers in the end wouldn’t have been reliable as the questions were misleading.
Performance metrics are a measure of an organization’s activities and performance. Performance metrics normally support a range of stakeholder needs from customers, shareholders to employees. More often than not, just like the census numbers, the performance metrics need to provide end user value.
In the world of business process outsourcing, the measures that actually focus on day to day operations have no relevance to the end reality. They are transactional just the way I filled the census form. Employee perception surveys, customer satisfaction surveys and voice of customers have a plethora of questions that don’t drive the real value. They are undertaken because it is a process. The questions generally are outdated or not relevant to present times or they didn’t mean anything. So, the person filling the form gets bored and gives a very un-reliable rating. The end result, the top management acts upon it just the way federal aid pours into the wrong areas. Performance metrics need to focus on the core areas that affect the organizational performance.
"For with what judgment ye judge, ye shall be judged: and with what measurement ye mete, it shall be measured to you again”- The Bible
"Good Information" to 'Informing good results'
The biggest challenge for any organization is on how to focus on those aspects that create real value. More often than not, both the supplier and the customer focus on schedules, on-time delivery, go live dates and many non-value added metrics. Meeting deadlines is not a metric that needs to be measured, it has to be done. At one of the largest retailers in the US, the culture to move away from date’s measurement to value creation took 20 months. Today, after 20 months we have a long log of value creation projects with priority to implement. Every quarter, the teams at the joint team of Wipro and the retailers retained finance organization recommend projects that really create value with a defined dollar benefit and they go through a prioritization chain. Every such project goes through the steering committee and the impact of these projects is studied. Such focus on value creation enabled us to focus our energies on the right measurements and helped us create a valuable partnership (E.g.: the retailer’s pharmacy ran receivables of 45 million consistently, one of the value creation projects is to reduce it and we successfully reduced it to 33 million USD).
“It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality.”- Harold S Green
Time to value
Any transition from a current state to a future state tends to be sequential in the world of outsourcing; Transformation always came last after the lift and the shift. Service providers only focused on transformation after the entire process was transitioned to their organization. The transitions were long, laborious and intense. During this time, the customer gets frustrated; feels that the service provider doesn’t provide value and the relationship becomes bumpy. The biggest challenge is the mindset of the service provider that he is successfully transitioning the work into its organization and thus maintaining the stability of the customer’s business. According to the customer, it is given. Further, the customer’s retained organization launch several transformation initiatives during the outsourcing transition and the service provider doesn’t have the resources to support or play a part in these initiatives. E.g.: At one of the leading telecom companies, the retained organization launched a one day order to bill project (that is the time an order hits the system, it gets provisioned and billed to the customer in a day), whilst the Wipro organization was lifting the processes from the customer locations.
Here again, both the customer and the service provider focused on wrong measurements and the expectations were different.
‘’Time to value’’ is a key metric that needs to be measured from the first day of the partnership. This will enable both the service provider and the customer to separate operational activities from transformational activities. It also enables the separation of operations from transforming organizations. Such a metric enables upfront resource allocation to transformation activities by the service provider, right budgeting, program investments and early focus on value.
‘’Bullfighting is the only art in which the artist is in danger of death and in which the degree of brilliance in the performance is left to the fighter’s honor.’’ – Ernest Hemingway
The quantity and the notion of what gets measured get done
Often, the service providers’ contracts and project communication are full of service levels viz: application availability, down time, up time, error rate, kilo lines of code (we measure this too!), project schedule, on time, within budget, attrition rate, ramp-up, ramp-down, span ratios, call volumes, accuracy of forecasts and many more. And, if one goes through the entire service provider’s organization’s customer contracts the SLA’s tend to be common and similar across customers.
Service providers should understand that every customer organization is unique irrespective of their business, industry or markets. The complexity of customer organization is unknown. It is important that the metrics (SLA’s) are unique and differ from customer to customer depending on the profile of the customer, the nature of the work and the customer organization’s focus. It is important that the service provider and the customer review their metrics every year if not every quarter. These need to be a few that drive value and they need to be decided depending on the changes the customer expects in its organizational business.
Moving away from metrics that don’t provide value
In the world of customer services, “average handled time” (AHT) is the key metric that every customer takes his vendor at gun point. But, AHT doesn’t provide the reality according to a few customers; it only calculates the speed of a transaction. The average handled time is used directly to determine staffing needs, employee performance, and average call cost. If the average handle time is five minutes then you can predict how many employees you need to handle the expected call volume, you can define the average labor cost per call and the measure for employee performance: which are below average in their performance to identify them for further monitoring or training. Very internal isn’t it?
What happens if the customer was happy but the AHT was longer? What happens if the customer is giving a larger order, therefore the call took longer and hence the AHT was longer? What happens if the quality of the transaction that the agent processed is poor but he consistently achieved a good AHT?
So, if we externalized and changed the metric to “Customer Attrition”, the entire gamut changes.
In 2006, at one of the largest telecom providers in Europe, Wipro BPOp was consistently over-achieving the targets that were set by the customer relating to average handle time. But the customers’ customers were suffering and were always unhappy about the service that they received. In every business review the customer team complained about the growing unrest of customers. Further, the customer was running a huge back log of orders as the customers were calling BT on the same order and the orders were taking much longer to provision. The customer ran approximately 40 million GBP in order back log due to a wrong metric measurement and there was a steady increase in back log, reaching a staggering 22% of sales. The heat was on Wipro although Wipro was consistently achieving its operational metrics that were set in its contract. There was also another challenge that the order to bill cycle was increasing, it had gone up to 70 days thereby impacting the billing and hence the revenue flow. All in all, there was a huge impact on the brand, sales and customer satisfaction.
The Wipro BPO team and the customer did a root cause analysis and changed the metric measurement to “First time resolution” – i.e. doing it right for the first time. The first time resolution metric enabled us to improve and focus on various aspects of the order to bill cycle viz., same day launch for clean orders, improving upstream data quality to reduce downstream impacts, improving the productivity of individual agent by hiring the right talent with subject matter knowledge (previously we were recruiting data entry people for order entry… now we recruit telecom order management knowledgeable agents), reducing the errors and delays on reallocation of ports for rewind orders. The first time resolution metric forced us to have fixed SLA’s with suppliers for delivery times and communicate with suppliers before actual provision date for confirmation. Such supplier management helped us in customer communication and predictability. This has helped us to focus on customer experience providing flexible and predictable lead times, improving the revenue flow and fulfilling the order in a predictable cost base.
The end result was that the order to bill cycle has improved to 32 days and helped early revenue recognition to the tune of USD 32 million. Telemark services recognized the customer for delivering the best ever customer satisfaction amongst the European telecom providers.
Finally, metrics measurement needs to emulate the tailoring profession. The tailor reviews our measurements every time we give a new set of clothes. The tailor is always in line with our age, fashion, reality, growth and the belly size. He frequently improves his stitching methods to be at par with the fashion trends.
There is a constant drive to focus on one metric, “the fit”.
“The only man who behaved sensibly was my tailor; he took my measurement anew every time he saw me, while all the rest went on with their old measurements and expected them to fit me.” – George Bernard