Quality and Business Excellence in

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Quality and Business Excellence in Telecommunication Sector: A Case Study Zora Arsovski, Slavko Arsovski Goran Markoviè, Igor Milanoviè, Maja Dabetiè

1. Introduction Telecommunication service embraces many areas, including landline and mobile phone services, data and multimedia distribution via regular, cable or satellite links. The main characteristic of telecommunication sector is a relatively small number of big companies. It requires big investment, particularly for the introduction of new services and technologies. In telecommunication sector creation and improvement of strategy in following areas is important: x Strategic goals achieving, with emphasize on: – consolidation of existing markets for telecommunication services, – convergence of the landline and mobile phone services, – introduction of value-enhancing projects, x Operational excellence, including quality, BE, innovative products, etc. European telecommunication sector is still growing at the steady rate. Mobile phone services have become the largest segment in telecommunication services with share of 49%1. In Tab. 1 is presented selected top telecommunication operators in EU in 2003. Table 1. Telecommunication operators in EU in 2003. Range Operator Country Turnover 2003 (mile) Staff 1 Deutsche Telecom Germany 55,838 251,000 2 Vodafone UK 48,597 60,109 3 France Telecom France 46,121 221,657 4 Telecom Italia Italy 30,850 93,187 15 OTE Greece 4,914 17,169 18 Telecom Austria Austria 3,970 13,890 Source: Trends and drivers of change in the EU telecoms sector: Mapping report, Foundation for the improvement of living and European Working Condition, Dublin, 2005. www.eurofound.eu.int 1

Trends and drivers of change in the EU telecoms sector: Mapping report, Foundation for the improvement of living and European Working Condition, Dublin 2005. www.eurofound.eu.int

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Zora Arsovski, Slavko Arsovski, Goran Markoviü, Igor Milanoviü, Maja Dabetiü

Share of EU telcom sector in world turnover was nearly 25%2. Increasing of business relationships and falling prices is broad recognized trend that leads to growing of telecommunication services and integration of telcom providers. Therefore, Deutsche Telecom has share in 15 EU countries, such as Austria (T-Mobile, T-Online), France (T-Online), Netherlands (T-Mobile), UK (T-Mobile), etc. Through analysis, the following drivers of change are recognised: x regulation, x impact of the crisis in 2001, x entry of new operators into the market, x technology and standardization, x increase in employment of computer support specialists, x increase in employment of computer software engineers, x increase in employment of information systems managers, x increase in employment of marketing and sales managers, x increase in employment of computer services employees, x increase in employment of Þnancial specialist, x increase in quality managers and quality engineers, x increase in IMS managers and engineers, x decline in the number of telecommunication equipment installers and maintenance workers. Telecom Austria Group offers communication solutions that seamlessly integrate into people lives, with slogans: x innovation: innovating with You, x quality: importing with You, x diversity: sharing with You, x responsibility: caring with You3. Enhanced competitiveness in telecommunication sector needs new approaches involvement, as quality and business excellence. Quality, as degree of satisfaction of customers, is evolved in satisfaction of all stakeholders. Therefore, Quality Management Systems (QMS) evolved through Integrated Management Systems (IMS), which consists from different Standardized Management Systems (SMS) related to ISO 9001, ISO 14001, ISO 18001, ISO 26000, ISO 28000, TL 9000, etc. In design of IMS, some very famous methods are included as well as techniques and tools from Total Quality Management (TQM) approach. It is link to the new paradigm known as Business Excellence (BE). Basis for implementation of quality and BE paradigm in telecommunication sector are processes and integration of all stakeholders needs related to those processes, especially when companies are challenged with higher competitiveness in global telecommunication market. Telecommunication companies have to be competitive in both, landline and mobile phone services with lower prices. Under these circumstances, telecommunication companies need to improve productivity, quality and operating efÞciency that are essential for business success, in accordance to BE model presented below. In this paper, basis of quality and BE paradigm are presented, as well as actual state of Serbian telecommunication sector with emphasis on new approach to the one Serbian Telecommunication Company which is aimed to achieve higher level of competitiveness. 2 3

Trends and drivers…, op. cit. Future, Telecom Austria Group, Annual Report, 2010. http: //ar2010.telecomaustria. com

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2. Design of IMS for telecommunication companies Because of increased competition, increased technological complexity, shorter innovation cycles and fast changing of customer needs, management of telcom needs to make decisions faster in order to stay ahead of competitors. Strategic foresight of one telcom has following four elements: x technology intelligence, x political and environmental foresight, x competitive intelligence and x customer foresight4. Integrating elements among the Þrst and other three elements are: x actors, x methods and x systems. Each telcom must Þrst identify the parts of their current systems that need transformations, including: x management (organization, processes and systems) and x services (wireless, wire line, data/IP, TV). In next step telcom have to develop and deploy own strategy for achieving the goals, with approving and prioritizing projects for: x system consolidation, x operational efÞciency, x operational readiness (introducing new technologies such as mobile TV, etc.), x aspects related to risk5. In this paper emphasize is on the second and third element, i.e. methods and systems related to quality. American Society for Quality (ASQ) identiÞed seven key forces that will inßuence the future of quality: x globalization, x social responsibility, x new dimensions of quality, x aging population, x health care, x environmental concerns, x twenty Þrst century technology. All seven key forces are important for very complex and frequently changeable telecommunication companies. Some key forces have extension of basic quality concept with other dimensions and needs6. 4 5

6

J. Kelada, Integrated Reengineering with total quality, ASQC Quality Press, Milwaukee, Wisconsin, 1995. Transforming Telecom Management – facing the challenge of next generation networks, White paper, Ericsson, January, 2009. J. Kelada, op. cit.; N. Slack et al., Operations and Process Management: Principles and practice for strategic impact, FT-Prentice Hall, London 2009; J. Oakland, Oakland on Quality management, Elsevier, Amsterdam 2004; R. Garvare, P. Johanson, Management for Sustainability: A stakeholder theory, “Total Quality Management & Business Excellence” 2010, Vol. 21, No. 7-8, pp. 737-744; S. Karapetroviü, J. Jonker, Integration of Standardized Management Systems: Searching for a Recipe and Ingredients, “Total Quality Management & Business Excellence” 2003, Vol. 14, No. 4, pp. 451-459.

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Previously, management theory and practice have been changed rapidly, which results in existence of many management concepts, whose acronyms are unknown to the experts of particular areas (e.g. TPM, MBO, HRM, etc.). During growth of quality and environment movement in 90cs, concepts listed in addition have appeared – environment management system (ISO 14000), occupational safety and health management (OHSAS-ISO 18001), risk management system and some others management concepts are still in preparation phase (Fig. 1). Figure 1. Integrated management system resolves problems in telcom sector.

RM Risk Management

OHSAS ISO 18001

Problem in Telcom sector

EMS ISO 14001

Other management systems

QMS ISO 9000 Resolving

Appearance of many dissimilar management systems, with different and sometimes divergent demands, needs optimal strategies reconsideration in introduction of standards in national quality policies and emphasize question of their integration through integrated management system. Quality management system (ISO 9000), environment management system (ISO 14000) and occupational safety and health management (ISO 18000) appeared in the last decade of 20-th century. They give partial answers on above-mentioned questions and particular quality demands. Therefore, there is high level of similarity and overlapping between them (e.g., between ISO 9000 and ISO 14000), but there are also speciÞc demands for every mentioned management system. Actually, there is a possibility of changing identiÞed relations between them afterwards, which could result in their integration. The Þrst question is which integration elements are keys for the above-mentioned area. The answers could be: x same stakeholders, that is interest groups (employees, management, business associates, population, state, stakeholders) and interested parties, x same organization and environment processes, x same methods and techniques, theory and management practice, x similar resource management,


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x equal measuring, analysis and improvement concepts, x same top management responsibilities, x same vision, mission and business policies in organization. These common elements are obtained after observing company from different aspects. Besides common IMS elements, we noticed speciÞc elements for every partial management system too. Next important question that we try to Þnd an answer is which of mentioned integrated systems should be “the core” of integration. Answer on this question depends on: x type of already implemented management system, x business area and category of documented business processes, x predominate stakeholders requests. However, QMS implementation in accordance to ISO 9000 standard gives us two important beneÞts – process approach and documented and structured procedures that imply that in a most cases “core of integration” should be QMS. Besides that, the other solutions for “core of integration” should be considered in accordance to speciÞc stakeholder requests related to adequate business process types. Management integration procedure based on already implemented ISO 9000 is basis for possible integration of other management systems, starting from identiÞcation and deÞnition of: x market state and needs, x policies and goals, x resources and resource management, x management systems, x communication systems, x process management (including actions and operations too), x measurement, analysis and improving systems, x management systems reconsideration. As a given example in one Serbian telcom company basis for integration is strategy plan and key business processes. Based on existing state, in next phases will be incorporated strategic and stakeholder’s needs related to key business processes, and after that, request of 12 chosen standardized management systems. Integration of different management systems has strategic and tactical component. Strategic component refers to decision about management system integration, “core integration” deÞnition, integration deÞnition and procedures, with obligatory determination of goals and system integration management strategy. Tactical component refers to making the plan and program integration, surveying management system integration procedure, making decisions in particular control points and reporting for strategic level. The concept role, impact end other characteristics of broader quality paradigm are explained in cited references7. For telecommunication companies, the most of them started with implementation of QMS according to ISO 9001 standard, and after that with: 7

D. Sumers, Quality, Fifth Edition, Prentice Hall, Boston 2010, p. 20; J. Kelada, op. cit.; N. Slack et al., op. cit.; J. Oakland, op. cit.; R. Garvare, P. Johanson, op. cit.; S. Karapetroviü, J. Jonker, op. cit.; M. McDonald, T. Mors, A. Phillips, Management System Integration: Can it be done?, “Quality Progress” 2003, 36, pp. 67-74; A. Zutshi, A. Sohal, Requirements for successful integrated management system: The experiences of Australian organizations, Faculty of business and economics-Monach University, Australia 2003.

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x x x x x x x x x

ISO 14001 (Environment Management System), TL 9000 (Quality Management in Telecommunication), ISO 20000 (Service Management), ISO 27000 (Security Management System), ISO 18001 (Occupational Health and Safety Assessment Systems), ISO 31000 (Risk Management), ISO 26000 (Social Responsibility), ISO 28000 (Security Management Systems for Supply Chain), ISO 12207 (Software Engineering Life Cycle). In process of design and introduction of IMS in telecommunication sector with different management systems basis are processes in each telecommunication company. Each process is reviewed from aspects of all stakeholdercs needs and requests. In Fig. 2 is presented process map for telecommunication companies according eTOM speciÞcation. Figure 2. eTOM process map. environment of telcom

Enterprise management Enterprise effectiveness management

Stakeholders & internal relationship management

HRM

Operation support & readiness

Product life cycle management

Infrastructure life cycle management

Billing & revenue management

Operations

Strategy, infrastructure & product Strategy & commitment

Knowledge & research management

Assurance

Financial and assets management

Enterprise risk management

Fulfilment

Strategic and enterprise planning


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Each component process in macro process (strategy, infrastructure and product) is decoupled from four perspectives: x marketing and offer management, x service development and management, x resource development and management and x supply chain development and management. Redesign and introduction of all stakeholders’ needs and their transformation into processes in Telecommunication Company is complex project. For realization of this project, it was necessary to develop following project infrastructure (Fig. 3). Figure 3. Project infrastructure.

CEO

Project Council

Central team: - Project manager - Team managers from side of consulting and telcom - Project principal

Team 2

Team 3

Team 4 Team 1

Central team Team 5

Team 8

Team 6 Team 7 Legend Team manager - Subproject manager Leading consultant Consultant Team manager from telcom Team members from telcom project principal

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Methodology of project management is developed in accordance to ISO 10006 and PMBOK Guide, from following aspects: 1. Project integration management is realized through consequent applying of process approach and project organization. On central team meetings are resolved all non-conformance interfaces among subprojects (P1 – P8), 2. Project scope management is necessary for achieving the following project goals: x enhancing the level of business processes standardization, x designing of business processes from aspects of Balance Score Cards, x monitoring of process effectiveness using appropriate Key Performance Indicators (KPIs), x business performance improvement for strategic decisions, x improvement of strategic decisions, x enhancing the corporate culture, x enhancing of employees know-how, x improvement of corporation values. 3. Managing the project time, 4. Managing the project costs, 5. Managing the project quality, 6. Managing the human resources, 7. Managing the communication, 8. Managing the project risks, 9. Managing the purchasing. DeÞned outputs and outcomes for this project are: x project results book, x integration of the processes model in corporative process model, x effective strategy deployment, x deÞnition of the strategy, policy and quality goals, x business improvement, x increasing the telecommunication company value, x developing the prerequisites for implementation of integrated management systems (IMS). For each observed telecommunication process, it is necessary to realize the following: x analysis of existing state, x analysis of strategic needs related to processes, x identiÞcation and decomposition of processes, x analysis of stakeholdercs needs, x analysis of interfaces, x processes modelling and mapping, x conceptualisation of desired processes, x deÞning of process metrics and x creation of procedures for process management. Outcomes for each process are: x procedure(s), x process model, x decomposed process model as a system for supporting the Information Communication Technology (ICT),


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x higher process transparency and x process goals enhancement. As a result, quality and performance are linked, which lead as to the concept known as Business Excellence (BE).

3. Business excellence in telecommunication sector Business excellence in telecommunication sector depends on business excellence performance of each telcom (Fig. 4). Figure 4. Relationships among telcoms and telcom sector in Serbia. Global world wide telcoms

...........

Telcoms in Serbia

Leadership

Organizational benefit

Product and service quality

Competitiveness

Customer satisfaction

Level of each telcom

Three telcoms operate in Serbia: x Telekom Srbija, x Telenor and x VIP mobile. Currently, dominant position has Telekom Serbia, with more than 10.000 employees. Quality has high impact on business performance. Fig. 5 shows closed loop between quality and business performances.

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Figure 5. Closed loop between quality and business performances. Reliability Overal satisfaction On-time delivery Product and service Errors or defects quality Rework

Customer loyalty Customer satisfaction Complaints Factor feedback

Product recall

Leadership for continous improvement

Competitiveness

Market share Profit

Costs Cycle time Quality system and employee involvement

Organization benefits

Employ ee turnover Employ ee satisfaction Safety and health Productivity

x x x x x x

8

Quality impact to corporate performance is achieved in four different areas8: employee relations, operation procedures, customer satisfaction and Þnancial performance. Sources of competitive advantage can be reduced to: low cost and differentiation.

Y. Chung et al., A study of business value of Total Quality Management, “Total Quality Management & Business Excellence” 2008, Vol. 19, No. 3-4, pp. 367-379; G. Kanji, Architecture of business excellence in the public and service sectors, “Total Quality Management & Business Excellence” 2008, Vol. 19, No. 4, pp. 399-416.


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Quality has high inßuence on both sources9 through: x superior products and services design, x outstanding services, x high agility, x continuous innovation, x rapid response and x higher resilience. Like the Malcolm Baldridge, the European Foundation for Quality Management (EFQM) model recognized processes as kern for achieving business excellence. The EFQM model consists of enablers and results (Fig. 6). In this EFQM model, major role has leadership. Figure 6. The EFQM Excellence Model. Enablers

People results

Policy & Strategy

Processes

Leeadership

People

Partnerships & resources

Customer results Society results

Key performance results

Results

Innovation & learning

Source: D. Sumers, op.cit.

In telecommunication sector in EU many companies have already achieved high level of BE. As example, Deutsche Telecom achieved responsible corporate governance in 200910 with incorporating all stakeholders: x staff, x supranational organizations, x media, x science, research and education, x NGOs and residents, 9

10

N. Slack et al., op. cit.; Evans J., Quality Management Organisation and Strategy, South Western, Cengage Learning, 2008; H. Khanna, S. Laroyia, D. Sharma, A Survey on Indian experience on Integrated Management Systems (IMS), “International Journal for Quality Research” 2009, Vol. 3, No. 3; S. Arsovski, Z. Punoševac, D. Rajkoviü, Integration of Management System QMS/EMS/OHSAS/FMS/LMS in Water Supply Organization, “International Journal for Quality Research” 2009, Vol. 1, No. 4, pp. 313-322. M. McDonald, T. Mors, A. Phillips, op. cit.

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x x x x

customers, analysts and investors, suppliers and business. Besides corporate responsibility, other aspects of telecommunication business have high impact as input from different management system. Fig. 7 shows inßuence of respected management systems. Figure 7. Translating of KPI into eTQM-processes and responsible management standard in area of CR in Deutsche Telecom Group.

KPIs

PROCESSES 1

MANAGEMENT STANDARDS

Leadership

QMS

Purchasing

TL 9000

Resource mgt & operations

EMS

14001

SC development & management

OHSAS

18001

6

Operation fulfillment

SMS

27001

7

Enterprise risk management

SCM

26000

Resource development and retirement

SM

20000

9001

2

3

CR

4

5

8


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For other business areas, analogy could be created. Consequently, in each telecommunication company business is managed through more than four different management systems. Some of them are standardized and realized through certiÞcation process, and the others are non-standardized, but well structured, developed and managed, as it is in the case of CRM in Deutsche Telecom Group.

4. Case study According to previously done analysis, one of Serbian telcom starts with design and introduction of quality and business intelligence, based on complementary projects of strategy development, project management, reengineering of existing ICT, Balance Score Card and Reengineering of Business infrastructure (Fig. 8).

Level of competences

Figure 8. Actual and planed state in one Serbian telcom.

ess excellence quality and busin rds balanced score ca ent ym plo nt and de strategy deve lopme nt me project manage

Reengineering of business infrastructure including ICT 2010

2011

2012

2013

2014

year

2015

In 2011 project named “Establishment of ISO Quality Management Standards” started with dynamics presented in Fig. 9. This project in Þrst phase covers eight key processes and training teams with following topics – leadership, process modelling and process mapping.

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Figure 9. Key processes in Þrst phase of project in one Serbian telcom. MANAGEMENT STANDARDS RM (ISO 31000)

MANAGEMENT STANDARDS

PROCESSES

QMS (ISO 9001)

1. Selling 2. Design and improvement services 3. Management of conflicts in CRM Hrouble ticketing, etc.

CM (BS 25999) SR (ISO 22000) SCM (ISO 28000) PM (ISO 10006) Other mgt standards

4. Management of compliants

EMS (ISO 14001) OHSAS (ISO 18001) TL 9000

5. Assets management CRM

6. Human resource management 7. Purchasing management

Other telecom standards

8. Strategy design and deployment

SM (ISO 22000) ISMS (ISO 27001)

After completition of this phase, next four are planned for complete project realization (Fig. 10).

Level of competences

Figure 10. Project plan.

5. Establishment of new strategy supported with IMS 4. Preparing for EFQM award 3. Improvement of nextt 8 key processes 2. Serbian quality and BE award (FQCE) 1. Improvement of first 8 key processes 2011

year. 2012

2013


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End of the project is establishment and certiÞcation of IMS with 12 component management standards. After this, Serbian telcom will be competitive on global market. Accordingly, this project has high inßuence on business performance. Fig. 11 shows strategic map11 with target values. After realization of this project, telcom could expect respectable competitiveness improvement in amount of cca 25%. Figure 11. Strategic map in one Serbian telcom. Financial Perspective Long - Term Shareholder Value Revenue Growth

Productivity

Customer Perspective Product / Service Atributes

Relationships Image

Internal Process Perspective Manage Operations

Manage Customers

Manage Inovations

Manage Regulatory and Social Processes

Learning and Growth Perspective Human Capital

11

Information Capital

Operation Capital

R. Rohrbeck, H. Arnold, J. Heuer, Strategic Foresight in multinational enterprises: A case study on the Deutsche telecom laboratories, ISPIM-Asia conference, New Delhi 2007, p. 4; D. Sumers, op. cit.; J. Kelada, op. cit.

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5. Conclusion The following conclusions can be drawn: x processes in telecommunication companies are unique and they represent support to the development of corporate strategy, x developed strategy have to be reviewed and improved, x IMS is high inßuential factor on business performance of each telcom, x there are relation among each telcom and telecommunication sector related to competitiveness and business excellence, x business excellence is long-term goal for each telcom. After applying the proposed concept, achieving of following short-term indicators and longterm goals for analysed telcom in Serbia is expected: x improving the business performance: 1-5%/year, x increasing the company value: 1%/year, x increasing the level of customer satisfaction: 5% year, x increasing the loyalty: 8%/year, x increasing the value for customers: 5%/year, x improving the level of business processes standardization: 25%/year, x the design of business processes from the aspect of applying BSC – increasing the scope of application of the BSC (5%/year), x increasing the effectiveness of applying the appropriate KPI process: 10%/year, x increasing the effectiveness of strategic decision-making: 15%/year, x promoting the corporate culture: 15%/year, x improving the know-how: 8%/year, x improving the organization: 5%/year. With achieving those goals, the company will be much more competitive in the market of telecommunication services.

Bibliography 1. Arsovski S., Punoševac Z., Rajkoviü D., Integration of Management System QMS/EMS/OHSAS/FMS/LMS in Water Supply Organization, “International Journal for Quality Research” 2009, Vol. 1, No. 4. 2. Chung Y. et al., A study of business value of Total Quality Management, “Total Quality Management & Business Excellence” 2008, Vol. 19, No. 3-4. 3. Evans J., Quality Management Organisation and Strategy, South Western, Cengage Learning, 2008. 4. Future, Telecom Austria Group, Annual Report, 2010. http: //ar2010.telecomaustria. com 5. Garvare R., Johanson P., Management for Sustainability: A stakeholder theory, “Total Quality Management & Business Excellence” 2010, Vol. 21, No 7-8. 6. Kanji G., Architecture of business excellence in the public and service sectors, “Total Quality Management & Business Excellence” 2008, Vol. 19, No. 4.


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7. Karapetroviü S., Jonker J., Integration of Standardized Management Systems: Searching for a Recipe and Ingredients, “Total Quality Management & Business Excellence” 2003, Vol. 14, No. 4. 8. Kelada J., Integrated Reengineering with total quality, ASQC Quality Press, Milwaukee, Wisconsin, 1995. 9. Khanna H., Laroyia S., Sharma D., A Survey on Indian experience on Integrated Management Systems (IMS), “International Journal for Quality Research” 2009, Vol. 3, No. 3. 10. McDonald M., Mors T., Phillips A., Management System Integration: Can it be done?, “Quality Prepress” 2003, 36. 11. Oakland J., Oakland on Quality management, Elsevier, Amsterdam 2004. 12. Rohrbeck R., Arnold H., Heuer J., Strategic Foresight in multinational enterprises: A case study on the Deutsche telecom laboratories, ISPIM-Asia conference, New Delhi 2007. 13. Slack N. et al., Operations and Process Management: Principles and practice for strategic impact, FT-Prentice Hall, London 2009. 14. Sumers D., Quality, Fifth Edition, Prentice Hall, Boston 2010. 15. The 2009 Corporate Responsibility Report, Deutsche Telecom Group, 2009. www.telecom. com/cr-report 16. Transforming Telecom Management – facing the challenge of next generation networks, White paper, Ericsson, January, 2009. 17. Trends and drivers of change in the EU telecoms sector: Mapping report, Foundation for the improvement of living and European Working Condition, Dublin 2005. www.eurofound. eu.int 18. Zutshi A., Sohal A., Requirements for successful integrated management system: The experiences of Australian organizations, Faculty of business and economics-Monach University, Australia 2003. Acknowledgment: Research presented in this paper was supported by Ministry of Science and Technological Development of Republic of Serbia, Grant III-44010, Title: Intelligent Systems for Software Product Development and Business Support based on Models.