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In Today's World, Efficiency Is Key

12/14/2003 7:00 PM Eastern

If your mandate were to improve the efficiency of business operations across your entire company, where would you begin?

As competition between MSOs, direct-broadcast satellite providers and telecom companies intensifies, it's critical to focus on efficiency improvements, in addition to top-line growth. Given the promise of fiber-to-the-home by the telecom companies, all of these players continue to market new services and target each other's core customers. Therefore, cable operators must continually evaluate their main business processes for efficiency gains — customer care, new customer acquisition, information technology, billing and collections, accounting, provisioning and installation.

One approach to optimizing these business processes is to view each one as being executed by a "center of excellence." Each center of excellence is able to employ ideas, processes, technology, and locate itself at the most strategic location. There are three steps a company should explore to maximize the efficiency of its operations and improve its competitive position:

  • How can every business process be optimized?

  • Where should the operations be performed?

  • Who is most capable of performing the operations?

The first step is to closely and objectively examine each major business process and gauge their alignment to the business objectives. How do they compare with industry benchmarks and direct competitors?

Besides examining the efficiency of each business process, at the second step it's equally important to examine the location where the process should be performed. This refers to determining the best geographic location for the execution of the process, primarily in terms of labor costs.

Finally, the question of who should perform the process examines whether the process should be performed internally or by a third party. When asking who should perform a function, a company should consider competitive advantage, mission criticality, efficacy and maturity of the process, security requirements and level of performance. While competitive advantage helps companies secure the business from their competitors, mission criticality helps service the customer well and retains their business.

If a business process is running at peak efficiency and is not a competitive differentiator, then the company should consider outsourcing the entire process, if an outsourcing provider could replicate that process at a lower cost. If a process is running below industry standards, the company can consider re-engineering the process and then either outsourcing the entire function to a third party, or outsourcing pieces.

Cable operators have a huge incentive to capture the benefits of the distributed enterprise model — reduced costs, improved operational performance and the ability to sharpen their competitive edge.

In order to leverage their $75 billion in recent plant rebuilds, they need to not only introduce new offerings, but also maximize operational efficiency to compete with the direct-broadcast satellite providers who are also seeking to improve margins as they price aggressively and offer subscriber services, such as digital video recorder technology.

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