Linking Business and Technology: 
The Telecommunications Business Decision Sequence

The Telecommunications Business Decision Sequence

•	Step 1: Define the Business Opportunity
•	Step 2: Identify the Business Criteria for the Platform
•	Step 3: Identify the Network Design Priorities and Trade-offs
•	Step 4: Make the Economic Case 

Define the Business Opportunity

•	Run the Business Better: use telecommunications to streamline internal processes and cut costs
•	Gain an Edge in Existing Markets: successfully compete in your core business
•	Create Market and Organizational Innovation use telecommunications to create new opportunities and open new markets

Run the Business Better

•	Manage Distributed Inventories: use EDI to move to just-in-time ordering, manufacturing, marketing, and delivery – shoot for at least 40-50% reduction in inventory
•	Link Field Staff to Head Office: use laptops, cell phones, PDAs, fax machines, and other wireless services
•	Improve Internal Communications: speed up information flow and make it easy for people to contact each other
•	Videoconferencing, Groupware, E-mail
•	Improve Decision Information: provide up-to-date information for quick, informed action – Frito-Lay is the model for rack jobber
•	Reengineer Business Processes and Simplify Organizational Complexity: reduce the number of steps, documents, people, and locations – closely tied to TQM

Gain an Edge in Existing Markets

•	Provide Workstation Access to home, office, street
•	Electronic Cash Management: foundation of banking
•	Federal Express: legendary network access
•	Dell Computers: king of computer service
•	Differentiate a Standard Product
•	Commodity markets differ in only:
•	Price and Convenience
•	Citibank, USAA, Charles Schwab, American Airlines

Create Market and Organizational Innovations

•	Make Preemptive Strikes: rare innovations that change the nature of competition – redefine the basics
•	The competitive edge depends on:
•	The comprehensive technology platform or
•	The business/technology dialogue
•	Create New Services by “Piggybacking” as accomplished by McKesson – pharmacy/insurance claims
•	Use existing infrastructure
•	At low incremental cost to:
•	provide unusually high profit margins

Identify the Business Criteria for the Platform

•	Reach: the locations, people, organizations to which we must link
•	Range: the variety of information and transactions we must be able to share across business functions
•	Responsiveness: level of service we guarantee – in terms of speed, reliability, and security

Reach

•	Within a Single Location: no real need to think about compatibility at all
•	Across a Firm’s Domestic Locations: compatibility between local and wide area facilities
•	Across International Locations: considerably complicates the picture
•	To Customers & Suppliers with the Same Technology Base: take advantage of open systems
•	To All Customers and Suppliers: impossible a short time ago, becoming more of a reality every day
•	To Anyone, Anywhere: could be right around the corner

Range

•	Simple Messages: e-mail, file transfer
•	Access to Data Stores: requires intelligent workstations and terminal emulation
•	Independent Transactions: commonly found, no integration with other transactions and/or databases
•	Cooperative Transactions: services are interdependent – changes in data are reflected everywhere relevant

Responsiveness

•	Non-immediate Response: services are not online and can be processed at end of day, week, or month
•	Immediate Response: transactions are processed online in real time, but only during specified hours
•	On-demand Response: transactions take place immediately 24 hours a day
•	Perfect Service: same as on-demand except there's never any downtime – very expensive, but sometimes needed

Identify the Network Priorities and Tradeoffs

•	Capability: the technical applications and services the network platform provides
•	Flexibility: how easily the network can accommodate growth and change
•	Certification: reliability and level of service the network guarantees
•	Cost: fixed, variable development, and operations

Capability

•	Capability: the technical applications and services specific to the facility. 
•	The design variables are:
•	Variety of applications
•	Degree of integration of services
•	Range of volumes anticipated

Flexibility

•	Flexibility: defines how easily the platform can accommodate growth and change.  
•	The design variables are:
•	Speed of change in adding capacity
•	Ease of increasing reach
•	Ease of increasing range
•	Ease of increasing responsiveness

Certification

•	Certification: reliability of the platform and guarantees of service.  
•	The design variables are:
•	Operating reliability
•	Ease of access
•	Security
•	Response time

Cost

•	Cost: fixed and variable development and operating costs. 
•	The design variables are:
•	Fixed costs of equipment and software
•	Development costs
•	Operations costs
•	Maintenance
•	Support
•	Education

Make the Economic Case

•	Profit Management & Alerting Systems: improve to enable rapid response to changing market forces and to supply and demand issues
•	Traditional Costs: reduce labor, real estate, and information technology costs
•	Quality Premium Costs: improve quality without adding a cost premium or maintain quality while reducing costs
•	Service Premium Costs: improve customer service without adding a cost premium or maintain service while reducing costs
•	Long-term Business Infrastructure Costs
•	Revenue Improvements

Profit Management and Alerting Systems

•	First Principle:  capture information at the point of event
•	Airlines and car rentals: yield management – fullest capacity with the least discounting
•	Retail outlets: point of sale information for more timely ordering and delivery, and to identify trends

Traditional Costs

•	Labor costs
•	Materials costs
•	Real estate costs
•	Administrative costs
•	Expenditures on information technology

Quality Premium Costs

•	You can’t charge extra for quality – your customers expect it
•	“Discount” once meant inferior – now discount retailers sell excellent products
•	Telecommunications helps improve quality by streamlining activities and by ensuring high standards in manufacturing
Service Premium Costs

•	Service is a basic requirement – just like quality
•	charge extra for service
•	pay extra people to provide service
•	use telecomm without adding cost
•	Telecommunications and service are almost interchangeable terms
•	Ease of access and convenience, plus better product support and quality

Long-term Business Infrastructure Costs

•	Telecommunications is a growing fraction of capital investment
•	The telecomm infrastructure must be justified by a convincing long-term analysis of the firm’s opportunities
•	Once again, think in terms of:
•	reach
•	range
•	responsiveness

Revenue Improvements

•	Not the same as revenue growth
•	Refers to opportunities to add revenues using telecomm to “piggyback” services
•	This is a major factor for companies now because:
•	deregulation allows new players in all telecommunications-related fields
•	global competition makes every market and industry segment even tighter
•	new technology enables new tactics and techniques, for instance:
•	built-in overcapacity (dark fiber, for instance) is more common