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SIT775W09

Developing and Managing Customer Expectations
by

Gang Li

on 8 May 2012

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Transcript of SIT775W09

SIT775 Lecture (Week 09) Developing and Managing Customer Expectations Looks familar?
Let's over-promise and under-deliver
Let's under-promise and over-deliver Customer Expectations Manager performance is judged by how well expectations are met
Managers must explicitly set expectations
Service-level agreements spell out commitments and expectations
Managers must choose valid measurements of service levels
Failure to attain service levels must force the organization to look for process improvements and address planning / production issues Let's Start to Get Realistic! The Disciplined Approach problems, defects, or faults in operations that are causing missed service levels and additional resource expenditures must be corrected. system-wide changes must be controlled because mismanaged changes create problems and impair service. plans for recovering from the service disruptions that inevitably occur due to system performance or defects or uncontrollable outside events must be made. batch and network workload must be scheduled and processed, and the results delivered to client organizations. Batch processing refers to grouping together or accumulating transactions for processing. system performance or throughput must be maintained at planned levels to meet service agreements. capacity needed to meet workload demands must be planned, but this requires that disciplines 1 through 6 all function properly. Disciplines are management processes consisting of procedures, tools, and people organized to govern important facets of a computer systems’ operations Those operations are located in the IT organization or in client organizations within the firm.
The goal of the disciplined approach portrayed is to establish and meet customer expectations. This is accomplished when computer center performance is judged against specific and quantifiable service criteria.
Expectations are set in service-level agreements
Management reports are essential tools for operations managers Service-Level Agreements A standard tool to establish and define customer service levels
SLAs help to reduce conflicts between users and suppliers and establish user expectations
With outsourcing, IT has been forced to create SLAs in order to compete to keep operations internal
Creating these agreements requires negotiation and discussion SLA negotiations are an iterative process
Requirements evolve as discussions become focused
New technology can offer benefits to the parties
The end product of SLA discussions is a written document
Costs
Services
Other contingencies (uptime, throughput) What the SLA Includes Service-level agreements typically begin with administrative information such as the date the agreement was established, its duration, and its expected renegotiation date. Schedule and Availability An SLA schedule describes the period when the system and its application programs are required to operate.
The schedule should describe the availability throughout the day.
It must also outline the conditions for weekend and holiday availability.
During especially critical periods for the client, it may be attractive for user departments to negotiate exceptionally high service levels.
On the other hand, both parties should also consider reduced availability or reduced performance during off hours, if these considerations yield cost savings.
Negotiators who clearly understand system capabilities, limitations, and special user needs produce the most effective agreements. Timing One of the key measures of service performance is timing,
but different types of service have different timing factors. Turnaround time is the time that elapses between the initiation of a job and the delivery of customer output.
The input of data for one job may have been created by results from several other jobs making the timing and sequencing of jobs crucial. Response time is the time that elapses from the moment a “program function” or “enter” key is depressed to when an indication that the function has been performed first appears on the display screen. Response times should be specified by service type.
For online activities, response time is the most critical timing parameter. Trivial transactions require so little processing they appear to occur instantaneously.
When trivial transactions incur delays, productivity drops substantially, and the system becomes a source of annoyance to the user. E-business operations dramatically change the firm’s IS infrastructure and add new dimensions to system management
ERP systems form the heart of e-businesses, They integrate critical data from the beginning to the end of the value chain
Supporting systems are also critical: E-mail, security, funds transfer
All of the above systems must be always on and have high expectations of availability E-Business
Customer Expectations Contracts SLAs used within a firm are called agreements.
Wen a firm obtains IT services from an outside organization, the documents specifying the service are called contracts. In addition to items in SLA, the contract must include
an unambiguous description of the services provided and the duration of each service.
key metrics for each service: reliability, availability, and performance, the amount of system throughput or its performance based on transactions rates and volumes
payment terms
termination conditions
Remedies and Indemnification Typical service contracts extend from 1 to 3 years. The contract should include requirements for adding or changing services, increasing volumes or adding users, or other changes that might need to be renegotiated within the contract period. What the Contract Includes When developing a contract, managers must deal with two conditions of reliability:
Mean Time Between Failure (MTBF) : amount of time system is operatioinal and without failure. In highly redundant systems this is zero
Mean Time To Repair (MTTR): amount of offline time before system is operational again
Money flows outside the firm in exchange for services
Stipulates measurable rights and obligations
Give parties legal recourse Network Contracts cover the telecommunication link between the firm and its service providers.
The important performance data associated with these contracts include reliability, availability, and capacity. cover third-party services provided by an ASP.
You should review these contracts if you engage an ASP who is subcontracting computer operations to a third party.
The firm will negotiate this form a contract if it relies on a hosting firm to operate the firm’s hardware. In this case, terms and conditions related to operation, maintenance, and eventual upgrade or replacement of hardware must be outlined. Hosting Contracts it engages an outside supplier to handle a firm’s problem, change and recover management.
These contracts may also provide for specific training for certain members of your firm’s personnel.
Problem resolution and trouble ticket turnaround times are detailed in this contract. Customer Help Desk Contract Application Service
Contracts The ASP agrees to deliver one more classes of service, orders performance parameters, measures application performance levels and reports them, and provides measurement transparency to the customer.
This contract defines penalties to the ASP for non-performance.
It’s important in this contract to identify who specifically owns the application because if your firm decides to disengage from the supplier, the software, software upgrades, or license arrangements may complicate matters. Workload Forecasts Accurate forecasts are critical to meeting internal SLAs and purchasing appropriate levels of external services
Contracts must address workload fluctuations
Seasonal peaks must be anticipated
Unanticipated demands often occur when new applications or services are more successful than planned
Structural changes in the firm (mergers, etc) make invalidate previous forecasts Accurate workload forecasting is important when outsourcing
Outsourcing firms generally have contingency clauses that stipulate charges for incremental demand
In cases where demand is significantly underestimated, these charges can exceed the initial contract price
In cases of underestimation, monthly charges inflate final application service cost Measurements of
Satisfaction Suppliers and users must agree on explicit, transparent, and credible metrics
Accurate data creates trust with clients and builds a relationship
Suppliers should measure performance from the client’s perspective
Metrics should be gathered from across a client’s network, so that site specific problems can be identified and overall performance accurately reported Aside from meeting SLAs, providers must gather data on user perceptions of service
Well crafted surveys help to detect problems sooner
Unsatisfactory results must be addressed and the roots of the difficulty found: Focus groups, targeted surveys, etc
This becomes another method to strengthen communication between users and providers User Satisfaction Surveys E-Business Satisfaction Measurements Customer satisfaction is critical for success in e-business
Objective measures must be found to track customer satisfaction
Anonymous data must be collected in a timely manner that allows participants to opt-out
In B2B ventures, issues such as trust and competition can cloud users perceptions
B2C e-commerce is even more difficult with branding, advertising, and marketing affecting results Sometimes SLA performance does not meet expectations
Inability to meet SLAs allow an organization the opportunity to re-engineer, conduct strategic planning, or consider outsourcing of the function
The utility of this approach is that previously hidden problems are formalized, measured, and addressed Congruence of Expectations and Performance
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