ITU / BDT Workshop Cairo, Egypt, 19 – 22 December 2005 Corporate Strategic Management

1. ITU / BDT Workshop Cairo, Egypt, 19 – 22 December 2005 Corporate Strategic Management Lecture 14 The third perspective of the Balanced Scorecard Method: INTERNAL PROCESSES ITU/BDT/ HRD Corporate Strategic Management

2. Process definition A process is any operational or administrative system which transforms inputs into valued outputs. A process is typically a sequence of tasks arranged into a procedure or set of work arrangements perhaps involving various machines, departments and people. Core processes • Order • Customer services • Network services • Network development • Network construction • Network management Supporting processes • Internal services • Human resources • Financial control and planning • Accounting • Information processing ITU/BDT/ HRD Corporate Strategic Management

3. Examples of processes • Provisioning service for the first connection of a new subscriber • Troubleshooting of a fault after a customer complaint • Clearing a billing complaint • Setting up the cost-based tariffs (for interconnection, or traffic segments for local, long distance and international) • Installing a data communication equipment in the office of a business customer • Negotiating a contract of the collocation of the technical equipment of a competitor in our technical building ITU/BDT/ HRD Corporate Strategic Management

4. Internal business process perspectivegeneral examples Operations Management Customer Management Innovation Regulatory & Social I4 I1 Optimize asset utilization Best in class service New service offering, provide VAS Improve environmental,health, safety performance I12 I8 Understand drivers of customer value I9 Cross sell services I5 I2 Continued cost management Develop segment strategy I6 Understand customer profitability Manage regulatory processes I10 Align cost structure with segment strategy Build brand strength Increase existing capacity I13 I3 I7 I11 ITU/BDT/ HRD Corporate Strategic Management

5. Examples of initiatives Optimize asset utilization • To ensure that the allocation of resources reflects the strategic priorities. • To postpone the investments by a better use of existing assets, e.g. to increase the occupancy rates of switching and transmission systems, cables, etc. • To improve demand forecasting methods for a more efficient dimensioning of local loops • To update computer tools for designing and managing local loops • To improve the spare parts management ITU/BDT/ HRD Corporate Strategic Management

6. Examples of initiatives Costing and budget • To implement ABC (Activity Based Costing) capable to provide all data requested to set up cost-based tariffs • To know the costs of each service segment and to set up costs based tariffs. • To develop financial control with a more detailed and relevant reporting system, to analyze the deviance between the forecasts and the actual values. • To set up a zero-based budget • only depending on impact on objectives • taking into account lessons learned from the past year ITU/BDT/ HRD Corporate Strategic Management

7. Examples of initiatives Customer management • To implement BPR (Business Process Reengineering) for the most crucial processes: • Service provisioning (new main lines installation) • Faults repairing. • To improve the internal processes provided by the supporting units (commercial and technical) to front-line units, • Front desk to register the demand and to collect information about the applicant • Back office for administrative tasks with the commercial file; • To set up procedures to ensure performances of the end-to-end process, with the point of view of final customer ITU/BDT/ HRD Corporate Strategic Management

8. Service offering and innovations • To study the impact of the substitute effect of some new technologies regarding the use of basic services (e.g. Voice over IP, mobiles vs. fixed lines, mail vs. fax). • To study the impact of potential competitors on the market shares. • To determine the profitability of each service segment through costing model and business plan. • To stop delivering service segments that are not profitable enough during a given period (think long term). ITU/BDT/ HRD Corporate Strategic Management

9. Service provisioning for new lines Objective : to speed up service delivery to improve cash-flow an the customer satisfaction as well. Many types of units are involved in the process and must be coordinated : - administrative tasks for the commercial file - allocation of a pair in the main cables - open-wire to be installed and connected in the distribution - MDF (main distribution frame) to be updated - CPE to be installed and connected - customer care - charging system in the switching unit - billing file to be activate ITU/BDT/ HRD Corporate Strategic Management

10. BPR (Business Process Reengineering) Dramatic change in the organisation of tasks by using today's technology: • Existing routine practices are solutions to past problems, but they may no longer reflect core business concerns nor what the customer may actually want • Focusing on what is important for the end customer and discarding what is less important • Reconstructing team structures in order to decrease the number of persons involved in the chain through different units • Using more powerful and more integrated information systems enabling sharing of information by all involved employees, without hierarchical transit • Training employees in such a manner that they can perform more various activities and more complicated tasks with less interaction with other colleagues ITU/BDT/ HRD Corporate Strategic Management

11. Working positions before BPR Each unit has a separate information system and personal computers are used as typewriters, There is no LAN, no server, no common data base Manual transferof documents between positions No information sharing Duplication of data typingwith risks of errors Individualism Time consuming tasks ITU/BDT/ HRD Corporate Strategic Management

12. Working positions after BPR There is a LAN, a server and a common data base for all units concerned by the same processes. Cross-functional organisation, which is more complicated to design and to implement Unique data collection, no duplication I I N N T T Team work, E E R R N N E E Firewall T T - - Server witha unique data base for a process Responsibility Immediate information sharing,no manual transmission by paper ITU/BDT/ HRD Corporate Strategic Management

13. Workflow before BPR Information between two working positions go upward and then downward through the hierarchy in a bureaucratic organisation for routine day to day activities. The role of managers is not to be a transit for operational information. ITU/BDT/ HRD Corporate Strategic Management

14. R d b a c Workflow after BPR Direct relationship between working positions are established. The role of managers is to define the process and to control the results. Electronic mail and Intranet are used to speed up the transmission of information between working positions. ITU/BDT/ HRD Corporate Strategic Management

15. Optimizing processes with Intranet • To communicate with individuals as well as with groups, • To share information and documentation • To learn with a e-learning system • To achieve a procedure for the core activities of the company (sales, production) or for the supporting activities (accounting, reporting, logistics,…) or even for a personal activity (information about vacant positions, application for a new job, ads, ..) ITU/BDT/ HRD Corporate Strategic Management

16. Advantages of Intranet • Communication between people working in different units are easier with Intranet, and therefore transversal organization with multi-disciplinary teams are more efficient. • Information is standard when centralized, validated and published on the corporate internal web. • Heterogeneous computer applications can be interconnected and automatic transfer of data among them are yet possible. • Intermediary working positions can be avoided, and the number of people required for a process can be decreased. ITU/BDT/ HRD Corporate Strategic Management

17. I year >50% employees V year All employees § 300mln. Investment § 800mln. digitalization Internal business processes perspective Selected Strategic Selected Strategic Measure Measure Target Target Initiative Initiative Objectives Objectives I1 I1 Optimize Asset Utilization Optimize Asset Utilization I2 I2 § § Employee productivity Employee productivity § § decrease cost by decrease cost by § § Contribution improvement Contribution improvement Continued Cost Management Continued Cost Management I I improvement improvement 10% 10% I3 I3 Align cost structure with Align cost structure with § § Lowest operating cost ratio Lowest operating cost ratio segment Strategy segment Strategy in comparison group in comparison group N N I4 I4 § § Customer satisfaction rating Customer satisfaction rating Best in Class Service Best in Class Service § § 100% 100% § § On On - - time market research projects time market research projects I5 I5 § § Billing system improvement Billing system improvement Understand drivers of Understand drivers of T T customer value customer value full information I6 I6 Develop Segment Strategy Develop Segment Strategy § § full information § § Implementation new billing Implementation new billing E E >90% I7 I7 § § >90% system system § § Promised delivery Promised delivery Build Brand Strength Build Brand Strength I8 I8 § § additional revenue additional revenue § § New service implementation New service implementation New service offering New service offering § § New product growth rate New product growth rate R R increase by 10% increase by 10% § § Digitalization development plan Digitalization development plan provide VAS provide VAS Revenue from new products Implementation Implementation I9 I9 & services § § 100% in urban area 100% in urban area Gross sell services Gross sell services § § Revenue from new products N N § § Mobile Investment implementation Mobile Investment implementation & services Expand network by digitalization § § 70% in rural area 70% in rural area I10 I10 Understand Customer Profitability Understand Customer Profitability § § Expand network by digitalization Expansion of the mobile GSM § § 85% coverage of 85% coverage of I11 I11 Increase existing capacity Increase existing capacity § § Expansion of the mobile GSM A A network country country network I12 I12 Improve environmental Improve environmental § § Employee health improvement Employee health improvement § § Health observation program for Health observation program for women women L L health & safety performance health & safety performance I13 I13 § § Regulatory body satisfaction Regulatory body satisfaction § § Implementation Investment Program Implementation Investment Program Manage Regulatory processes Manage Regulatory processes ITU/BDT/ HRD Corporate Strategic Management