How SOA Boosts Customer ServiceBy CIOinsight | Posted 03-07-2007
How SOA Boosts Customer Service
To get a sense of how important customer service is to Volvo, the $30 billion car and truck manufacturer based in Goteborg, Sweden, look no further than Volvo Cars Belgium, the company's Brussels-based subsidiary. Whereas most IT directors report to the company CEO, president, COO or CFO, Volvo Cars Belgium's head of IT reports directly to the customer service manager. "I am an IT manager," says Michelangelo Adamo, IT supervisor for the 65-dealer network that makes up Volvo Cars Belgium. "But I am also a person that wants to sell more Volvos to customers. We are in the business of selling cars, not IT."
That doesn't discount the importance of information technology to Volvo Cars Belgium's overall mission of selling more cars. In fact, IT is central to that mission. It is so essential that, in 2005, Adamo and Christoph Cordier, Adamo's boss (and the subsidiary's former IT supervisor) completed a nearly three-year service-oriented architecture project that networked together all of Belgium's dealerships, and tied the network back into the Swedish mothership in Goteborg.
The overriding goal of the massive project? Improve customer service by creating a single view of the lifecycle of each car the company sells, tracking it from the moment a customer places an order through the delivery of the car, to ongoing maintenance and customer service. The strategic goal was to enable a complete view of the car, its repair history and maintenance schedule at every dealership in the network, so that customers get the right service, at the right time, regardless of the Volvo dealership they use.
The Belgian subsidiary also needed a way to standardize performance metrics across the whole dealer network, so that headquarters in Sweden could evaluate individual dealerships on their customer services scores, target those dealerships that need improvement, and reward those dealers that excelled.
Volvo Cars Belgium answered this challenge with a new dealer management system that automated several processes that were still paper-based, tied together every dealership in the country, and exchanged information with systems at corporate headquarters. To make the exchange of data as simple as possible, and also to prepare for easy rollout of future features in the system, the company chose a Web-based software package and used SOA as the bridge between Brussels and Sweden.
So far, the strategy appears to be working. The customer-approval ratings for Volvo Cars Belgium showed a jump in 2006 over the previous two years. And 98 percent of all auto parts that Belgian dealerships order from Goteborg headquarters arrive overnight, thanks to the integrated systems that automatically reserve parts the moment a customer schedules an appointment.
But while the project is beginning to show some return, it has not been an easy transition for Volvo Cars Belgium. What it has been is a learning process. Some of the phases of the project that one might have considered most challenging, like connecting all the systems to Volvo Cars Corp. (VCC), the corporate headquarters, were shockingly simple. Others, like selecting the right software and architecture, took years of hand-wringing. Ultimately, it would seem that the story of Volvo Cars Belgium is yet another feather in the cap of the buzzword du jour: service-oriented architecture.
Call to Action
Call to Action
This wasn't the first time Volvo Cars Belgium attempted to boost its customer-service ratings. About ten years ago, the company sought to improve customer service by codifying processes for every step of the customer experience, and created a "process map" for the entire buying and ownership experience. The map was essentially a customer relationship management system, and though it was paper-based, no detail was overlooked: prospecting, sales leads, ordering, delivery, maintenance. The process map was so extensive, and so thorough, that it appeared foolproof. Or so Volvo Cars Belgium thought.
"We thought our customer-service ratings would increase," says Cordier. "But they didn't." For actual service managers, the processes were just too theoreticaland were not widely adopted. After a round of surveys to customers and the dealerships, Volvo Cars Belgium learned that all the pretty processes in the world meant nothing if employees didn't follow them. Adding to the problem was the fact that different process steps were not directly tied to annual Volvo customer surveys, which meant there was no way to measure their effectiveness. The problem dogged Cordier for years. "We really didn't know what was working and what was not," says Cordier.
The big problem was that the dealers found the paper-based processes time-consuming and difficult to manage. They told management they needed tools that were simpler, and more integrated. For instance, the dealers wanted to be able to connect to two of VCC's most prized applications: the car configurator (which allows customers and dealers to customize and order their vehicles online) and the vehicle information and diagnostics system, used for troubleshooting mechanical issues with the cars. "They wanted a tool they could really use," recalls Cordier.
After some soul-searching, Cordier decided it was time to join the digital age with a complete customer-relationship management system. And so began the laborious process of connecting all 65 dealerships together, and then connecting that network back to corporate headquarters. The process began back in 2001, when Volvo Cars Belgium put together a project team of six dealership managers to represent the entire dealer network. It didn't take long before the company realized that dealership managers were not the people closest to the actual problems. Their input into the process was valuablebut it was the mechanics, the sales staff, even the receptionists, who really needed to have significant input in the software decisions.
Cordier anticipated that problems would inevitably arise from incorporating input from so many different constituents, and he created subgroups beneath each of the six dealership managers. It took two years to sift through all of the disparate employee input and locate a software product that could meet the company's needs. Though Volvo Cars Belgium is not insignificant in terms of sizealtogether the company sells about 12,000 cars a yeareach dealership is, in fact, a small business. The top-selling dealers only sell about 400 cars a year. They have limited staffs of roughly 25 people per office. The company needed to find software that would be well suited to a small business, but at the same time was able to scale up to meet the needs of the larger organization.
As it turned out, the company was unable to find one system that did everything it was looking for. But they decided they could build it using a two-phased approach.
For the dealership network within Belgium, Volvo went with a local software vendor, XPower Automotive Software, a dealer-management software specialist based in nearby Beervelde, Belgium. XPower's XDMS product, a Web-based dealer-management system (DMS) specifically designed to tie together multiple dealerships dispersed across a region, took eight months to install and roll out to all 65 dealers. The DMS could handle everything from sales and lead tracking to booking maintenance and repairs to accounting. The biggest hurdle, aside from upgrading a great deal of hardwareincluding the purchase of Linux servers and hundreds of new PCswas manually converting existing data into the XDMS format, which was built upon Bedford Mass.-based Progress Software Corp.'s OpenEdge development platform, a standards-based, service-oriented system. The conversion took the majority of the eight months to complete.
The process of converting data from the old IBM AS/400 systems into XDMS required Volvo Cars Belgium to develop specific programs to perform the translation. In some cases there was more than 10 years' worth of detailed information that needed to be converted. And the conversion needed to be done in such a way that it appeared to the dealers as if the data had always lived inside the XDMS system.
Once the DMS was installed, Volvo Cars Belgium was halfway home. The company was now able to share data on individual cars and customers across dealerships. But a bigger challenge loomed ahead: Belgium now needed to hook up their IT systems to corporate headquartersand this is where SOA really came into play. "We had to hook up to a different world over there," says Adamo. "It's like we were speaking French and they were speaking Chinese." Why? Adamo is referring to the fact that VCC uses Java technology in a Windows environment, while XDMS is based on the Progress platform.
Two Worlds Collide
Two Worlds Collide
In recent years, the term SOA has been alternately overused and abused. Though it is widely cited, it is often misunderstood. Simply put, a service-oriented architecture combines independent services that perform specific processes, without any tie to the underlying platform. Rather than having an application or platform speak the same language in order to interact, services can interact in a standard way, regardless of the application they are attached to.
The move to SOA is fairly straightforward, even intuitive, for the IT world to make. But some experts feel that a lack of understanding about SOA has some enterprises sitting on the sidelines, too intimidated to suit up their systems. "Some companies look at SOA and view it as some big, risky move," says Ron Schmeltzer, senior analyst at ZapThink LLC., an SOA research firm in Baltimore. "But the irony is that there is nothing inherently risky about it. Service-oriented architecture can do four things for you: Integrate systems, eliminate redundancies, address change, or increase compliance. All you have to do is apply it to whatever problem you have. It can be a big project or a really small one." Schmeltzer advocates implementing service-oriented architecture piecemeal, addressing one problem area at a time. "There really should not be a budget for SOA," says Schmeltzer. "Just a bunch of little budgets for projects that will use SOA."
To the folks at Volvo Cars Belgium, the move of hooking up with VCC headquarters felt risky and daunting. It felt like a big project. The thought of a big SOA project had Adamo a little nervous. "It took us two years just to figure out how to implement this thing, and now we were going to hook up to their mainframe system?" says Adamo. "It was going to be difficult, very difficult."
But these are the types of problems SOA was designed to solve. Two weeks is all it took for Volvo Cars Belgium to be up and running, interfacing with VCC, with all systems fully functional. "It was so simple," says Cordier, slightly embarrassed. By using an SOA-based enterprise service bus from Progress Software, called Sonic, the company wasn't required to go through an extensive integration process. Instead, the software essentially brokered the transactions between Belgium and Goteborg, translating data along the way.
XDMS is Web-based and SOA-enabled, meaning it is designed to be modular, and different processes are capable of acting independently as services. For Volvo, the enterprise service bus needed only to connect the proper services from Belgium to the corresponding ones in Sweden. "The processes and services were already there," says Adamo. "We just had to connect them to the new callers, and we were able to use the existing user interface. We combined two different worldsand we didn't have to change a single line of code."
Many Happy Returns
Many Happy Returns
While the last phase of Volvo Cars Belgium's project wrapped up faster than expected, the whole undertaking required three years of painstaking planning and implementation. The entire project cost the company 1.75 million euros ($2.3 million usd), a cost shouldered by the dealerships themselves. Not surprisingly, after the project was complete in late 2005, Cordier was already looking for a return in 2006. So he turned to the customer surveys.
In 2006, customer-service scores at Volvo, which are given on a scale of 1 to 5, inched up to 4.09 from 4.02 the previous year. "That may not seem like very much, but it is a spectacular change for one year," says Cordier. One of the important contributing factors to the increase, says Cordier, is the ability to compare dealerships on a standard set of key performance indicators. Now that systems are all speaking the same language and the metrics are all uniform, there is no excuse for poor customer-service ratings. And like business intelligence software, the dealer-management system allows Volvo Cars Belgium and VCC to drill down and identify specific areas that need improvement.
"Our dealers now have the tools to act quickly to respond to customer and prospect inquiries," explains Cordier. "For example, a customer coming in for a simple car repair will likely communicate with a receptionist, a workshop manager and a parts shop manager, and each of them needs flexible access to the same information so they can track the repair and manage customer expectations."
Perhaps even more impressive is the revenue uptick from auto parts sales seen by Volvo Cars Belgium since implementing the new system. In 2003, new regulations for the automotive industry in Europe, called the Block Exemption Regulation, turned the European auto market upside down. Among other things, the new regulation ended contractual obligations by independent repair shops to buy certified parts through the manufacturer. Even authorized Volvo dealers could buy parts from any parts dealer they wanted if they could get a better price. The change in rules threatened to devastate the parts business for manufacturers throughout Europe, and Volvo Cars Belgium was no exception.
"We had to make sure the dealerships would want to do business with us," recalls Cordier. By linking its systems up to Volvo corporate headquarters, Cordier was able to ratchet up the service the company provides to its own dealers and other independent repair shops throughout the country. Parts are now automatically ordered when dealerships book certain types of repairs, whether it's an 80,000-kilometer maintenance checkup or a brake job for a Volvo XC90. The system identifies the VIN number, reserves the part and ships it out for overnight delivery. That's how Volvo is able to deliver 98 percent of its parts to Belgium overnight.
As a result, Volvo Cars Belgium has increased its total revenues from before the implementation of the Block Exemption Regulation. In 2002, the company was pulling in 30 million euros ($39.3 million usd) a year in parts. By 2006, they had upped the figure to 40 million euros ($52.4 million usd), in the face of withering competition.
Of course, this kind of success hasn't gone unnoticed by Volvo Cars Belgium's corporate parents up in Goteberg. But at the moment there is no movement afoot to push the solution to other Volvo dealerships throughout Europe or elsewhere. Cordier and Adamo are just fine with that. They compete, or at lease compare themselves, against different regions throughout Europe, as does parent VCC. So far, Volvo Cars Belgium seems to have the jump on its European brethren. "We have been watching customer satisfaction scores in other countries," says Cordier. "There is no increase like the one in Belgium."