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Related Expertise: Service Operations, Operations, Digital Transformation

Service Delayed Is Service Denied

By Olaf RehseGeorge StalkVaishali RastogiStefan Hoffmann, and Delf Schumann

Real time is the new just in time in digital transformations.

Companies are all too conscious that time is money, but they usually stick to managing the money. In a digital world, businesses will be much more successful by managing time instead.

Digital technologies are turbocharging companies’ clock speeds. Recent increases in processing power, decreases in the costs of data capture and storage, and ubiquitous connectivity are allowing companies to gather data in real time, analyze it, and act using data-driven insights—quickly. That has made time-based competition—a concept that Boston Consulting Group introduced more than three decades ago—more relevant than ever before.

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Companies around the world are having to manage time better, but it’s most critical in the service industry. Service businesses can’t create inventories in advance, yet they must deliver their offerings on demand, the moment consumers ask for them. Only service companies that successfully execute digital transformations and learn to deliver their offerings in real time will succeed in gaining an advantage over rivals.

Curiously, time doesn’t play a guiding role in the digital transformations that many companies have recently launched. They tend to use other indicators—such as cost-reduction percentages, customer satisfaction ratings, and the percentage of processes automated—to gauge success. But that doesn’t make executing digital transformations easier or increase their chances of success. A recent BCG survey of about 800 companies revealed that while more than 80% of the respondents wanted to accelerate their digital transformations, 70% struggled to demonstrate results from them.

Service companies need one overarching performance indicator that they can use to assess, track, and manage digital transformations—and it should be real time. Although it may be a familiar concept, real time isn’t easy to define, measure, or use managerially. In this article, we describe the advantages of focusing on real time, provide a novel typology of time, and unveil the digital time score, a metric that companies can use to measure and manage time. We use telecommunications companies as examples, but the article applies to all service businesses.

The Advantages of Real Time

Analog incumbents are losing out to born-digital service companies that operate in real time. Creating an account at a commercial bank can take up to five working days, but in ten minutes, anyone can sign up and start trading at Trade Republic or Robinhood. Book retailers will deliver hard copies in two or three working days, yet consumers can download a book in seconds at Amazon. Cable companies ask for 30 days’ notice to cancel a subscription, but Roku does so the moment it is demanded. Even digital services with an analog component are becoming faster: grocery chains, such as Gorillas and Flink, deliver groceries in ten minutes in several European metro areas. And Belgium’s Tadaam—Telenet’s second brand—competes by promising to deliver mobile and fixed equipment for broadband and TV services in one hour, and it throws in a free pizza as well.

Service enterprises benefit from operating in real time by gaining market share. Many consumers prefer to access services the moment they want them, so they reward companies that can provide real-time service with more business. In fact, a service company’s competitive edge hinges on response time more than on any other factor. To cultivate a reputation of being a real-time enterprise, it’s important to operate in real time not only for a few standard offerings but also for all, or almost all, customer interactions.

Getting it right the first time is critical if companies wish to operate in real time; they are two sides of the same coin. If companies don’t get it right the first time, execution time will increase. Operating in real time requires limiting mistakes, reducing process variance, and eliminating other kinds of waste, such as rework and follow-up. The enhanced efficiency reduces transaction costs, and less complexity decreases overhead costs. The combination—in real time and right the first time—drives customer satisfaction in the short term and customer loyalty in the long run. Moreover, real-time digital offerings usually reduce companies’ carbon footprints by reducing resource consumption.

Being a real-time enterprise requires a high degree of process automation, data- and AI-driven digitization, and, where necessary, self-service. In addition, the organization needs skilled professionals who have been trained to handle all manner of requests in order to ensure that customers enjoy rapid and high-quality experiences. The bionic combination of powerful technology and smart humans is bound to boost organizational productivity.

Internally, a real-time enterprise’s systems support it end to end, gathering customer data, providing the ability to identify problems, and sending the organizational functions triggers that they can use to manage the problems easier. The systems improve operational effectiveness and provide the flexibility to adapt to customers’ changing needs in a complex, volatile market. Real time is, undoubtedly, the most clear and comprehensive indicator for setting targets, measuring performance, and benchmarking.

Consider, by way of illustration, a large telecommunications company in Europe that took more time to execute processes than its rivals did. Sending out a quote required 30 days, and it took more than 200 days to provide internet connections to businesses. The interfaces between its sales and billing departments were where the telco usually lost 20% of booked revenues, and billing was backlogged from two to three months. Bills were seldom right the first time, and customers’ satisfaction with the telco’s performance was falling.

Several factors—such as the lack of end-to-end accountability, the fragmentation of decision-making roles across 11 teams, the lack of visibility into the downstream impact of decisions, and more than ten IT legacy systems trying to work together—contributed to the telco’s woes. As the organization tried to deal with them, it became clear that using a time-based indicator to guide its digital transformation would enable better solutions and ensure transparency. Indeed, adopting one helped the telco shrink the time needed to create a quote to about two hours and reduce order-processing times by 80%. In addition, as the company increasingly got things right the first time, employees were able to take on additional responsibilities. As the telco’s time-based performance improved so did customers’ satisfaction. (See Exhibit 1.)

A Typology of Time

The first step to becoming a real-time enterprise is to define what operating in real time means for each process in the context of the company’s industry. Before trying to accelerate all processes at the same time, companies should use the following typology to classify them in terms of time. This step will allow companies to set the appropriate time-based objectives and monitor progress. (See Exhibit 2.)

From the customer’s point of view, a company can execute a process in one of three ways:

  • Before Time. A company can provide a service before the customer realizes the need for it. That happens, for instance, when a telco conducts preventive maintenance in order to ensure that it provides a customer with uninterrupted broadband service.
  • Real Time. A company can deliver a product or service almost the moment the customer requests it. This occurs, for example, when a bank receives an online loan application, and it almost immediately evaluates and approves or denies the request.
  • After Time. A company can start acting on a customer’s request after receiving it, and the process requires follow-up actions that take time. This happens, for instance, when a cable company promises to mail a customer a signed contract and takes weeks to do so, requiring follow-up by the customer.   

Understanding which category applies to each customer-facing process and benchmarking each process against rivals’ comparable process allows a company to set targets that go beyond the goals that various functions in the organization typically use—goals that are unlikely to be customer focused.

Time, our studies show, is a driver of both customer satisfaction and dissatisfaction in the global telecommunications industry. Still, most telcos haven’t started optimizing their ability to compete on a real-time basis. Consider, for instance, the typical telco’s customer-facing processes, which originate in six functions: marketing and advertising, lead generation and sales, order fulfillment, customer service, customer retention, and billing and collections. Most telcos execute some processes in real time, conduct most on an after-time basis, and perform only a few processes—typically, checking credit ratings, conducting credit checks, and measuring customer churn—on a before-time basis. By using real time to measure its digital transformation, though, a telco could execute 60% to 80% of its processes in real time and about 30% before time, leaving just a few to be done on an after-time basis. (See Exhibit 3.) That is bound to result in higher customer satisfaction.  

The same holds for many other service industries, including banking, energy, financial services, insurance, media, and even education. For instance, a bank in Europe executes more than 90% of its customer-facing processes on an after-time basis. If it initiated a digital transformation and used time to gauge its success, our studies show that the bank could operate up to 80% of its customer-facing processes in real time, allowing it to catch up with rivals.

Measuring Time-Based Execution

What’s measured gets managed is a timeless aphorism, but it has never been truer than in the case of real time. In the absence of a suitable measure, some top management teams find that it is difficult to decipher how they’re faring or how their company compares with rivals in terms of real time. Other teams tend to take operating in real time for granted or assume that consumers don’t notice or even care about it.

To enable companies to measure the clock speeds of their processes, we’ve created the digital time score (DTS). Akin to measuring customer satisfaction, a company can calculate its DTS by assigning each customer-facing process a score that reflects the time it takes to execute that process. (See “Determining a Company’s Digital Time Score.”)

Determining a Company’s Digital Time Score

In addition to helping companies compete better on time, the DTS is a handy management tool to track the progress of digital transformations. It can be universally applied to any process and easily aggregated across functions and departments. Using it will help curtail the endless discussions about tracking input-driven metrics—such as the number of software applications used or the number of development hours spent—to evaluate the results of digitization projects because the DTS is an output-driven metric.

The DTS is easy to understand, allowing executives to track projects over time, evaluate success, and pinpoint the areas for improvement. Using it to review the progress of digital transformations will result in greater transparency, better cross-functional collaboration, and easier communication. The DTS allows executives to set ambitions on the basis of benchmarks within the company, within the industry, and even across industries. (See “Accelerating a Transformation Using Time.”)

Accelerating a Transformation Using Time

It’s possible to rethink digital initiatives by considering the drivers of a DTS, such as how important an interaction is from the customer’s point of view, how satisfied customers are with their interactions with the company, and how frequently a process is executed. Companies will do well to periodically track customers’ points of view on real-time processes, but companies can also use internal data to ascertain how many customer interactions are taking place in real time. In the case of large transformation projects, executives can use the DTS to support an improvement that should be made in a customer-facing process and prioritize the processes with the highest resource-return ratios. Doing so will create the most efficient path to providing customers with real-time services.

In the Industrial Age, time was one of the bases on which companies competed; in today’s Digital Age, time has only become more critical. Time may be a free resource, but its value is enormous and keeps increasing, so only companies that compete wisely on time today are likely to win tomorrow.

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Service Delayed Is Service Denied