Imagine breaking the news to your customer that the brand, shiny, very expensive new billing system is not working. In fact the new system is unable to bill customers properly, if at all. If that does not make the palms of your hands a little sweaty, you are made of stern stuff.
Imagine, then, six months on and your customer has lost just shy of 200,000 customers, paid out tens of millions of dollars in compensation and had to issue an apology in the face of understandable hostility from the customers that remain. Let us calculate that the average spend per said 200,000 customers is $50 (actually it is a little more). This means lost revenue of $120 million a year.
And to heap insult upon insult, the bill – which your customer will quite possibly dispute in the circumstances – for said new system – is in the hundreds of millions of dollars.
You might well lose a little sleep.
In which case spare a thought for US Cellular and its vendor who have just gone through exactly that experience. According to the article in FierceWireless, the company “expected a conversion of this size and complexity to have its challenges, but quite frankly, we underestimated them.” This was the company’s statement, or more accurately understatement.
Whether you greet this news with horror or glee, it raises (again) a very serious question about large transformation – or conversion – projects. The details of exactly what the initial objectives of such a large project were and exactly what went wrong will ooze out over time.
The public rationale was that US Cellular wanted to follow Verizon in launching shared data plans, and according to CEO Kenneth Meyers in the article, the carrier’s shared data plans could not have been launched without the new billing system.
Without that specific billing system? Doubtful. Without a new system of some kind? Highly likely. Clearly US Cellular were one of the operators who had no real-time capability for their post paid customer base – the segment which was most affected by the disaster.
The arguments over whether to ‘rip and replace’ or ‘bolt-on’ billing and charging functionality have been going on for a long time. The truth is that there is no generic answer and even when the powerpoint presentations are over and it is decision time, it will depend on the people and the politics of the company.
There are some, a few only, examples of huge transformations working. All of these succeeded because it was a pet project of the CEO or someone very close to him. That, and the people on the ground and in charge on a day-to-day basis, “went fast, got it done and fixed things afterwards,” happy in the knowledge that if they needed back up with awesome fire power it was a phone call away.
Essentially, if you are cautious you bolt things on. You leave customers who do not want to move to new products – or devices that demand new system functionality – on the old legacy products. You move sign-ups to a new service, device or plan to the new system. Until the revenue that you are generating through the old system dips below the cost of maintaining it (or them), you leave things be. When that moment comes you offer the remaining customers an incentive to move onto the new system – or even move away. Then you quietly turn it off.
Conversions – or transformations – of the size of US Cellular – are risky and potentially very expensive on many fronts. And in these days of Facebook, Twitter and the ‘Now’ Generation, they have become more transparent and therefore even more risky.
Unless there are exceptional circumstances, large transformations are probably best left to history.
I like “went fast, got it done and fixed things afterwards,”. Where is the SaaS to enable that fast and no-nonsense approach. After all, Alex your scenario with “bolt-on” is right on the money and there are the vendors on the market that could take that challenge, saving millions in initial investment cycle, along with significant reduction of time-to-service.
Aren’t we suppose to see much more of these implementations? It might be just inner works and vanity of some individuals to have a new, nice and shiny, all singing, all dancing – system?
Keith, you are right of course. I was being simplistic to make a point but there are at least Fifty Shades of Grey on this one. Perhaps we should look at some of them in some detail.
Alex — this assumes it’s an either/or choice; waste time and money re-wiring not-fit-for-the-purpose legacy or replacing it altogether. But there are more than two choices… Keith