Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Call to Order
In the glass-and-stone lobby of MCI headquarters, a cloth banner hangs from the second-floor balcony above the reception desk, where guests check themselves in on touch-screen computers. It reads: "We Need to Act with an Outrageous Sense of Urgency!"
The imperative comes from President and CEO Michael Capellas, 49, the former president of Hewlett-Packard Co. who took on the MCI turnaround in December 2002. Unsurprisingly, Capellas likes to emphasize what MCI has done right, even during the tough times, such as The Neighborhooda bulk-rate pricing plan for residential local and long-distance calls. MCI was the first to offer such a flat-rate package, and competitors soon followed. The company has also launched a similar program for business users, called MCI Advantage.
Even so, Capellas knows that no one price scheme or clever marketing campaign will solve all that ails MCI. What's more, as a former CIO himself, he's gotten behind MCI's IT transformation in a big way. "Computing and telecommunications are indeed converging," Capellas says. "Somewhere between those worlds is a new kind of company, and that's what we'll be." IT, he says, is not only driving telecom convergence , but also is critical to MCI's improved customer service.
First, though, IT needed to clean house. All of MCI's age-old, incompatible legacy systems, its jungle of software applications, and its scores of different tools used to run various processes, all contributed to a problem that's legion among MCI customers: new-order and billing snafus. These have resulted in FCC fines and class action suits against MCI and, what's worse, given the company a black eye.
In 2000, for example, WorldCom paid $3.5 million in fines to settle FCC charges that it switched customers' telephone carriers without permission, while, in California, the company agreed to pay $8.5 million in penalties and refunds to settle charges that some of the state's residents were charged for long-distance service without permission. Yet another FCC settlement in 2000 required WorldCom to make more full disclosures in advertising its Dial-Around products. (In the interest of full disclosure, I received a $600 payment from a class action suit against WorldCom in 2001.)
"MCI's clients have never complained about the performance of the network," says Jay Pultz, a research vice president at Gartner Inc. "Most of the dissatisfaction of customers is associated with the back office and support functions." In particular, Pultz says, corporate customers complain about both MCI and AT&T when it comes to "placing orders, how long it takes to get something installed, and that the bill is never right and they have to have several people on staff go through each bill."
Just as MCI's multiple IT systems have made it harder for the company to handle orders and billing smoothly, so also have its multiple sales systems cost MCI in terms of its ability to forecast and analyze data.
"One of the questions Michael [Capellas] asked was, 'Hey, what's in the pipeline?' " recalls Bob Laird, MCI's senior director of IT architecture and strategy. "Since we had multiple sales systems, it was not trivial to gather all that information." MCI's problems with multiple systems were notorious among industry insiders. Its systems were so incompatible, says Kate Gerwig, an analyst at Current Analysis, a Virginia-based research firm, "I'm sure some things were faxed and printed out."
The automation of MCI's sales department, now underway with the implementation of Siebel Communications, a CRM package from Siebel Systems, is expected to result in lower costs as order processing is streamlined, the pace of billing accelerated, and revenue increased through product bundling. While MCI would not release its projected savings, Ken Laversin, Siebel's senior district manager in telecommunications, said that his other telecom clients had realized a 13 percent decrease in operating costs in the first 12 months. Laversin also boasted of a 13 percent increase in customer retention and 18 percent improvement in customer satisfaction over a 12-month period.
The first sales channels that were targeted for automation using Siebel's products were global sales and Small Business Direct. Already the system has 6,000 users online. When fully deployed, MCI expects 12,000 to 13,000 users to sign up.
Naturally, the ultimate goal of automating the sales chain is to create more customer loyalty, because it's always cheaper to keep a customer than win over a new one. So far, the plan appears to be working. Rich Sayers, of Martinez, Calif., who operates a consumer Web site called www.bye-bye-MCI.com, said complaints about the company's services have declined of late. "The biggest frustration I've heard recently is that when people try to cancel an account they get routed to long-distance or the bundled packages, like The Neighborhood," Sayers says. But it's nothing like 1999, when, he says, MCI led the pack in complaints about 10-10 dial-around numbers and its former wireless service, the latter of which he said was "one of the worst fiascos for MCIreportedly 40 percent of their bills were incorrect."
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