Cloud-based CRM implementation strategy for Verizon Wireless

Functionality and Delivery of CRM at Verizon Using Cloud Computing

Company Background

Business Problems

Verizon's Enterprise Systems

Detailed Options/Solutions

High-level Implementation Plan

Functionality and Delivery of CRM at Verizon Using Cloud Computing

Verizon's continued growth in consumer and business-based subscriber levels can be attributed to the depth of customer insight and intelligence the company has operated with, in addition to their unique approach to selling services contracts. Cellular and telecommunication services providers must balance a transaction focus to sell more with a relationship focus to keep customers signing up year after year. Many businesses rely on Customer Relationship Management (CRM) systems to manage this balance between transactions and relationship-based selling (Chen, Popvich, 2003). Verizon is a sales-driven company that has grown quickly through mergers, acquisitions and alliances, and as a result, a transaction mentality pervades the company. The combination of the mergers, acquisitions and alliances and the priority put on new business over renewals has made Verizon suffer at building and maintaining relationships with customers. The company has a disjointed, disconnected series of customer processes that need to be unified through a Cloud-based CRM system.

Company Background

Verizon (NYSE:VZ) is one of the leading providers of cellular and telecommunications services globally, operating in 150 countries with 92.2 million customers globally. During their latest full fiscal year (FY), the company reporting $110B in revenues, an increase of 4% of their previous full fiscal period. Verizon attained a $12.8B operating profit in their latest fiscal year, which was a decrease of 12.1%. Net Profit during these two time periods also decreased by 5.7% during these fiscal years as well, with the company reporting $2.4B in FY2011. As with many cellular and telecommunications services providers, Verizon has gone through several reorganizations, each being focused on making the company more efficient at driving top-line revenue growth. The strategy has worked to this point and today the company has two globally-based business divisions, Verizon Wireless and Wireline. Verizon generates the majority of their revenues from the consumer segment, the majority of profits from the business and government sectors. In these latter segments it is more difficult to displace a cellular or telecommunication provider once contracts and service agreements are in place. This strategy of lock-in in the business and government sectors have compensated for the exceptionally high churn with consumers and small businesses, a problem hat a CRM system could solve.

Business Problems

Verizon today operates in 150 nations has partnerships in place with Cellco and Vodafone globally at the service provider level of their business. Verizon also has hundreds of partnerships with local cell phone, cellular equipment and enterprise networking companies as well. The two dominant divisions, Verizon Wireless and Wireline, rely on a procurement and supply chain management system that has over time been customized to the unique requirements of the company. The procurement and supply chain management systems are disconnected form the over two dozen CRM systems in the company as of 2012, which makes it nearly impossible for sales representatives, managers and senior managers to see what equipment they have available for sale. Instead, Verizon has integrated their procurement and supply chain management systems to their catalog management systems first. This is ideally used in a more inventory-based approach to selling which does not take into account customer needs first. Instead, Verizon sales reps are told to sell the products and services that are the most profitable without regard to customer needs. While this approach has been exceptionally successful in driving top-line revenue growth it has not yielded a high level of customer satisfaction. One of the most critical success factors of a CRM system is designing its many attributes to reflect what customers expect to be a successful interaction and relationship (Hsin, 2007). Verizon has today created the integration of their procurement, supply chain and catalog management systems to their many CRM systems for transaction efficiency first. Designing a CRM system for customer satisfaction first and transactions second or even third is critical to meeting and exceeding customer expectations on a consistent basis (Adalikwu, 2012).

Not only is the Verizon CRM system focused more on transactions than relationships, the sheer diversity of them and their lack of integration also has led to the company experiencing an exceptionally high level of customer churn. Estimates as high as 67% of customer churn pervade the cellular and telecommunications industry and Verizon is at the upper end of this scale (McKay, 2008). The CRM systems inside Verizon typify worst practices in relationship management in that they are designed to drive transaction size and velocity, not create more effective relationships throughout each of the three dominant customer bases of the company (Sanchez, Sanchez, 2005).

High-level Solution

As Verizon is a globally-based cellular and telecommunication service provider and they have over two dozen CRM systems installed as of 2012, the lack of integration across these many platforms is causing the company to churn customers. Second, the lack of integration of procurement and supply chain status to the business and government sales teams is causing significant cost overruns in sales as the sales teams are quoting products that are not in stock and often must be expedited. The lack of supply chain and catalog management integration to these enterprise sales forces is slowing down the largest sales in enterprise and government accounts.

At a strategic or high level, Verizon needs to concentrate on creating a unified CRM system that can span across the over two dozen existing legacy CRM systems in place that today aren't connected to each other. Verizon also needs to take into account the enterprise customers' needs for quotes and bids that elect accurately that the company can provide. The quoting process, typically part of a CRM system, is not present in the Verizon system architecture at this point. The quoting and bidding process needs to also see the procurement and supply chain status including inventory so that only those products in stock and that can be profitably sold can be included. It is a best practice to move beyond just quoting pricing on bids and quotes to include available-to-promise and delivery dates with high levels of precision, especially for enterprise and government customers (Hsin, 2007).

These two high-level solutions of a unified CRM system architecture and the real-time integration to procurement and supply chain management both need to share a common data platform. This common data platform must also have real-time integration to procurement and supply chain management systems as well, to support a more effective bidding and sales quoting process. Of the many approaches to accomplishing this, the most cost-effective will be using a Cloud-based architecture were each of these applications can be delivered as a service using the Software-as-a-Service (SaaS) foundation inherent in cloud computing. Cloud-based CRM systems have progressed to the point of providing a highly effective platform for consolidating previous generation CRM systems while also providing the integration support for procurement, supply chain and transaction-based Enterprise Resource Planning (ERP) systems (Hsin, 2007).

Approach

A Cloud-based CRM system provides Verizon with the flexibility to create a single, unified global system of record with regard to customer relationships, while also being able to tailor the system to specific requirements in the 120 countries it competes in. A SaaS-based CRM system also solves the most difficult problem for any CRM system, and this is how to gain greater adoption (Limbasan, Rusu, 2011). Conservative estimates of the cost of CRM implementations indicate that nearly 80% of their cost is associated with adoption and tailoring the system to the specific needs of users (Hsin, 2007). The Cloud-based architecture supporting the CRM also provides Verizon with a stable platform for integrating their procurement, supply chain management and back-office ERP links to ensure bidding and quoting workflows are accurate and only providing the most profitable, in-stock products on enterprise and government quotes. (Hsin, 2007). Verizon must concentrate on creating a highly reliable knowledge-based CRM system if they are going to be able to stop the customer churn and gain greater profitability (Lin, Su, Chien, 2006)

Verizon's Enterprise Systems

Verizon relies on the following CRM and ERP systems today to operate their global enterprise. It is significant to note that the majority of these systems are not integrated with each other, and many are on-premise, residing on servers in their Verizon it department:

1. Siebel CRM -- Verizon invested heavily in Siebel CRM as a means to integrate their business divisions during the early 2000 timeframe. Today they have 10,000 seats active and are now paying maintenance to Oracle, who purchased Siebel shortly after the implementation as complete at Verizon. Oracle has been very slow to keep the Siebel CRM systems current and as a result they are not well designed to support cloud computing at this time. In late 2012 CEO Larry Ellison finally defined the cloud computing strategy of the company at their annual event, Oracle OpenWorld. For Verizon, these 10,000 seats have become a symbol of all that is wrong in their CRM strategy. Oracle charges 22% maintenance fees a year, hasn't delivered a significant upgrade in three years, and is slowly moving the CRM suite of applications to the cloud. The one redeeming factor of these systems that comprise the Siebel CRM platform is the data portability and opportunity to move the data into a SaaS-based platform.

2. Microsoft CRM and Sales Force Automation - the consumer business is running the latest edition of Microsoft Dynamics CRM. The problem with this CRM system is the lack of mobility options as Microsoft lags behind SaaS-based CRM system providers with support for the Apple iPad and other tablet and smartphone devices.

3. SAP -- the procurement and supply chain management system in use by Verizon today, in addition to their centralized Enterprise Resource Planning (ERP) system, is an SAP R/3 instance located in their corporate headquarters in New York, New York. Verizon designed the system to be multi-instance so each operating division would have the opportunity to customize procurement, supply chain and pricing to their specific needs. The problem is that the Siebel CRM and Microsoft CRM systems can't integrate to the R/3 system reliably. The it team at Verizon is resorting to the use of shell scripts written in the PERL programming language to ensure reliable communicate between systems. This is incredibly time consuming and error-prone, and a primary reason why the company can't produce accurate bids and quotes for enterprise-class systems quickly enough. The SAP system of record for products and transactions is also in ABAP format, a highly proprietary data structure which has been problematic for the Siebel system to even understand. SAP and Oracle, now the owner of the Siebel applications, have an adversarial relationship which further makes this integration difficult for Verizon to achieve.

4. Network and infrastructure -- Verizon relies on a network infrastructure that is based a series of T1 lines from their network headquarters to each regional procurement and supply chain center, followed by leased lines to its top 15% of suppliers across each region they source from. The company has created fault redundant data centers throughout North America and Europe, and has two in Asia. These data centers are unified through the use of Cisco All-in-One Routing Systems, in addition to the customized platforms for managing large-scale cellular and telecommunications switching platforms. Verizon also relies heavily on the Sun Solaris operating system to support the fault tolerant nature of its data centers, within Microsoft Windows Server 2008 running on the servers supporting the front-office functions.

5. Website -- Verizon has a highly complex series of websites and supporting servers, with the majority used for automated customer service and Web-based self-service. One of the factors that have led to Verizon being so successful with its consumer business, despite the high churn rate, is the ease of online payment and contract renewal. Verizon uses a series of advanced e-commerce systems and platforms to streamline online payment processing. There are also customized websites for the enterprise customers and government accounts, which are today not linked to the procurement and supply chain management systems. This is a major problem for sales teams calling on these account, as they must manually log into the SAP ERP system to complete bids and quotes where competitors can do this in real-time.

High-level Implementation Plan

For Verizon to effectively implement a global Cloud-based CRM system, they will need to balance significant changes in technology with a comprehensive change management program. Both are defined below.

Changes in Technology

Beginning with their most expensive systems, which are the 10,000 seats of Siebel CRM they have running today, Verizon will need to define a sequenced migration, department by department, to Salesforce.com. The underlying databases that are running the Siebel CRM systems are running Sun Solaris, with Oracle 9i being the most recent database in operation today. The transition to Salesforce.com's CRM systems will begin with an integration to the Oracle 9i databases and a series of pilots completed first in North America and then across each of the consumer, business and government segments of Verizon's business. Following this integration will be the development of the Cloud-based integration to procurement and ERP systems, and the roll-out globally of a distributing bidding and quoting system. These systems will be tested across the Verizon Wireless and Wireline businesses followed by the development of tablet-based clients that all sales representatives can use globally. One of the greatest advantages of having a Cloud-based system is the ability to deliver a mobility-based strategy across all sales forces at the same time (Limbasan, Rusu, 2011). Verizon will be able to do this across all sales teams, giving enterprise and government sales representatives the opportunity to complete bids and quotes in real-time from anywhere eat any time via 3G and 4G support back to the Cloud-based systems that will be running the configuration, pricing and quoting applications.

Change Management

The costliest and most time-consuming aspect of any CRM implementation is the development of effective change management strategies and programs (Hsin, 2007). For Verizon with over 193,000 employees the challenge is even more significant. The focus on how to create a more effective series of strategies for each of the business units needs to guide this change management initiative. The value of a cloud-based system is that the user interfaces are exceptionally more agile and flexible in meeting the unique requirements of the Verizon sales force.

Conclusion

The goal of this proposal is to provide Verizon with the flexibility and agility necessary to get out of the transaction-based mindset that has taken hold in their sales teams. Concentrating too much on transactions can be extremely detrimental to the future of the company. While the company is doing well financially today, too much of a focus on churn will eventually directly affect the levels of customer satisfaction that its customers attain (Adalikwu, 2012). To focus on transactions will also lead to less and less knowledge being used to enrich and strengthen relationships overall as wlel (Lin, Su, Chien, 2006).

The proposed system will re-center Verizon on providing an exceptional customer experience first. This is critical for their growth as a trusted cellular telecommunication services provider, as they need to concentrate on enriching every interaction with each customer as much as possible (Wang, Feng, 2012). If Verizon can accomplish this, they will be well on their way to reducing the 67% churn rate that is typical in their industry and a major source of revenue and profit drain.

Summary of Recommendations

Verizon needs to immediately begin an audit of its existing CRM systems and concentrate on the most difficult process areas first, quantifying how slow time-to-respond to customers.

An entire series of benchmarks need to be created to measure how the lack of coordination across CRM systems is leading to customer attrition, churn and lost profitability. By having this baseline figure Verizon will be able to selectively start to tune up areas of their company to be more effective.

Once this audit is complete Verizon needs to pilot Salesrforce.com in each of their three businesses and benchmark performance over time. This will serve as the basis of measuring ongoing efforts to further refine and strengthen overall performance.

Integration of the Oracle 9i databases next needs to be accomplished, followed by the development of a test region for evaluating SAP integration to Salesforce.com. This testing will continue with the integration of procurement, supply chain, pricing, bidding and quoting workflows.

Roll-out of the Salesforce.com system of record based on the database integrations needs to happen next along with the selective roll-out of the CRM system across more regions.

Testing and evaluation of the configuration, bidding, quoting and pricing workflows needs to next be completed and measured against benchmarks. Once this is complete live transactions need to be completed.

The change management program needs to be completed and implemented, complete with systems training and development. The training program will also have to be sequenced across all geographies to make the adoption of the new CRM system as high as possible.

Overall launch of the new CRM system and cut-over needs to be accomplished across all divisions and measured for result, from a customer satisfaction and user adoption metrics perspective.