Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Quote to Cash
On a wall-length whiteboard in one of the hundreds of conference rooms at MCI headquarters, Laird takes out a blue marker and sketches a picture of how MCI's systems were organized before the transformation. Laird draws several tall boxes, which he says represent different product lines, such as wholesale, Internet, private line, data products, etc. He draws another box, labeled "customer," far off in the left-hand corner. Under the old system, a customer who wanted to order several different products had to be served by several different unitswhich required human interventioninstead of one seamless, automated process. Orders for voice service were entered differently from orders for data service, which were entered differently from orders for international service, and so on. It was on orders across sales channels into which errors were often introduced, says Gartner's Pultz, eventually leading to some of the company's billing complaints.
On the other side of the whiteboard, Laird takes his marker and draws a rendering of "after." The first three squares in a horizontal layer across the top make up MCI's new Web portal strategy for customers, employees and partners. The company's vision is that, someday soon, customers will be able to place orders for service and access network information through these portal sites. By the end of this year, Laird says, customers will already be able to use this format to report "trouble tickets"problems with service, such as when a circuit is down or the network is slow.
The next horizontal layer encompasses the "quote-to-cash" process, from ordering to accounts receivable. Up until last year, MCI had about 150 various sales and service systems, Gwinn says. In order to give quotes, salespeople would sometimes have to log on to two or three different systems to find out whether certain services were available, and at what cost.
MCI hired IBM Business Consulting Services to come in and sketch out a road map for their business and IT transformation. "MCI recognized they had a series of disparate systems, and they embarked on a project that will ultimately allow them to understand what their cost structure was for these applications," says Fran Exley, a partner in IBM's business consulting services organization.
MCI also worked with Deloitte Consulting to develop a brand new financial data systems planone that Deloitte's Kenneth Horner claims has given MCI a jump on Sarbanes-Oxley compliance.
Clearly, MCI will need every advantage it can get from its IT if the company is to emerge from bankruptcy this Aprilas anticipatedand be competitive. MCI is expected to re-enter the market with approximately $6 billion in cash, but $5.8 billion in debt, and face an unforgiving marketplace.
"What revenue source is there in telecom that isn't going to be commoditized? That's the killer question," says Kevin Werbach, an independent technology analyst and consultant based in Philadelphia, and former counsel for new technology policy at the FCC. "Voice calling is going to be free. Data service is going to be free. Long-haul fiber is virtually free because of overcapacity. What is there that can generate sustainable value? We're just at the early stages of asking that question."
Gerwig, at Current Analysis, says she sees promise in MCI's IP strategy. In February, MCI announced plans to upgrade its Private IP network in 48 countries, and to extend its Private IP network in the U.S. twofold. At the same time, Gerwig says, "They're a little behind the curve in announcing a network convergence strategy even though they've had this in mind for some time."
"The other asset MCI has," says Werbach, "is Capellasin that he comes from the computer industry. One overarching theme is that telecom will look more like the computer business. It will be more software innovation, more quickly, for applications on top of commodity platforms. He knows [that] in this type of market, prices drop more quickly."
Sure enough, at the February 2004 Precursor Group Workshop for Technology and Communications Investors in Washington, D.C., Capellas told analysts and investors that MCI was embracing VoIP, despite its potential to undermine MCI's long-distance business.
"I've learned something from Michael Dell," Capellas told the crowd, referring to the man who essentially drove Compaq to merge with Hewlett-Packard. "You better cannibalize your business before someone else does."
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