Production theory identifies two extremes – one-off and mass production. Of course, the theory also includes a continuum between these poles, but essentially we are led to the conclusion that customisation is incompatible with mass production. That is, if we deliver products to a large consumer group, we cannot individually tailor them to their needs. Certainly, this thinking must underpin some of the comments in this interview about SaaS business models. The implication is that the cost of delivering software to so many different customers creates huge upfront costs with no guarantee of near-term payback.
At Gintel, we happen to disagree with that contention. Here’s why. First, though, some theory. Although it is accepted that mass production leads to uniformity, with endless rounds of identical goods being stamped out on the production line, it is generally recognised that not everyone will accept this. People increasingly want customisation in the goods that they purchase. There is an emerging literature on this subject, but a useful reference is this paper, written by Qiao, Lu and McLean. As the authors write, “The emphasis on increasing product variety and individualisation has created a strong demand for a new strategy of Mass Customisation Manufacturing (MCM). A competitive and flexible manufacturing system must be developed to respond to small batches of customer demand”.
We couldn’t agree more. Although this was written in the context of manufacturing physical goods, we think this can equally apply to services. The problem has been that it hasn’t been economic to customise services that are deployed en-masse. Service customisation has been dependent on traditional software development models, with a limited pool of resources capable undertaking development.
Take hosted telephony services, for example. If a customer buys a PBX for deployment on their premises, there is probably the expectation that the product that is delivered has some degree of customisation, even if only in the range of services that they choose to select. But traditional Centrex solutions have depended on providing a much smaller range of options and essentially expecting users to select from the menu of available features. It doesn’t have to be like that.
Qiao et al describe a model in which various levels of MCM can be defined. The ultimate realisation of an MCM approach is Level 2, in which production strategy derives from two fundamental ideas:
- We cannot accurately predict who our customers will be, and
- We have the ability to provide demanded services
In other words, we don’t necessarily know what people want, but we can deliver it. This sounds an unattainable goal. In fact, that’s just what we have done. Gintel’s Easy Virtual PaBX solution allows operators to deliver hosted telephony services to enterprise customers across any network. But it also includes a toolkit that allows service customisation and creation; the Easy Designer suite.
However, in contrast to previous service creation models, Easy Composer can be used by front-end staff, not core network engineers. This means that services really can be tailored for individual customers. We have seen this actually happen in live networks. At the recent SDP conference in Prague, Network Norway, which uses the Easy Virtual PaBX and Composer platforms, commented that they had tailored services for each of the major customer segments that they identified, and has continued to supply customer specific enhancements since the launch of their mobile office solution. That is really mass customisation in action, achieving the Level 2 status defined above.
The dream of creating new services cheaply and quickly has been around in telecoms for quite a while, but has never really been achieved. Reducing the economic impact of service customisation to such a level that an operator can deliberately use this capability as part of their strategy to win business in a service with thousands and thousands of customers is quite an achievement, and we – and Network Norway – are obviously very proud of this, But it also illustrates the fact that you really do have to move away from old ideas to compete in today’s fast-moving world. If some people don’t believe in SaaS models, then perhaps that’s because they have monolithic software solutions that don’t lend themselves to an MCM approach.
One more thing. Qiao et al go on to make a very interesting point regarding logistics management. In traditional approaches, the input, operations and output all come BEFORE sales and marketing and customer service. So, the customer appears to be at the end of the chain. In their new conceptualisation of an MCM system model, sales and marketing are at the start of the model, indicating that customer preference, expression and desire are key inputs into the process, as this diagram from their paper illustrates.
What’s really intriguing is the presence of a design tool with input from sales BEFORE the operations system comes into effect. We couldn’t have drawn a better representation of what we enable. That is exactly what Easy Composer offers. Sales people can work with prospective and existing customers to design a service that can then be deployed in real time.
Changing the process in this way represents a dramatic shift in thinking. The customer really does get to be first in line, something that will change the relationship forever. And also, something that might just do the trick to build a profitable future – worth thinking about in these challenging times. Gintel’s Easy Composer really does deliver the power to achieve mass customisation effectively. Talk to us – and we will show you how.
Tore Saeter, October 2008
Qiao, G. Lu, R. and McLean, C. “Process Control and Logistics Management for Mass Customisation”, National Institute of Standards and Technology.