When you need to reduce opex by 20% without diminishing service, Web-based automation of customer interfaces and back office processes look a compelling solution.

Telcos that want to scale up their businesses without scaling up investments are faced with a dilemma: most of their upsell opportunities come through contact centres, and they don't come cheap. Inefficient back office systems mean customers are still frustrated by having to deal with multiple departments when buying services.

Telcos could learn from industries like air transport, where automated sales and processes and customer self-service systems are common. Telecom Italia and Bell Canada are further than most telcos in building a universal customer interface for their products and services. Both have successfully branded these interfaces - Alice and Emily respectively - so they can offer a differentiated customer experience, allowing them to reduce churn, sell more services and link core services to others.

Traditionally, carriers managed services from the core, and their processes followed this model. Network management systems, for example, were run from the network operations centre. But as the core IP network becomes increasingly transparent, services competition is moving to the edge.

"It's now about devices, services, and features at the edge," says Kenny Van Zant, executive vice president, marketing, at Motive Inc. "Systems need to be able to exert control over devices and applications which, when content is considered, could multiply into the millions. You can't manage this centrally due to scale."

Consultants at McKinsey point out the telco dichotomy in a report entitled Automated Service Comes to Telcos. They suggest that telcos that play a key role in automating corporate customers' back offices have been slow in automating their own. To contrast, McKinsey cites software companies who can walk customers through a Web-based trouble-shooting system, while telcos still rely on a FAQ list.

McKinsey says 10% of telco sales go through the Web, compared to 30% of all consumer airline tickets doing so.

But there could be a good reason for explaining telcos' reticence to boost Web-based interaction - McKinsey estimates that customer calls to telcos trigger 85% of all incremental revenues. Call centres are basically sales openings in the minds of telcos - despite a typical call centre transaction costing between $8 to $10 compared to 15 cents to 80 cents for the same service online, according to McKinsey.

Even so, telcos need to create a compelling user experience and overcome the fear that the Internet is a less effective sales tool. As Amazon has proven, personalisation is one route to upselling. Segmenting high net worth individuals via the Web and encouraging them to pick up the phone is another.

And carriers are looking to boost revenue. Eric Weiss, vice president, tele-communications at Macromedia, says he recently heard a service provider CEO spell out the issue. "He said, 'If you're a vendor and you want to talk to me about saving me money, I'll give you five minutes. If you want to talk to me about increasing revenue, I'll give you an hour'," says Weiss.

"Customer service is no longer just about reducing call centre costs," Weiss continues. "It has to be a revenue opportunity through upselling, new features and so on."

For now, telcos are concentrating on automating the activation and support of new services, according to Motive's Van Zant. "We can set up services at the edge of the network and have the end user drive that process with self-activation and installation," he says. "You then need to support that without truck rolls and contact centres - you do this by automating the management process for when things break."

Even this is not simple, though.

"You can't automate your business unless you have your inventory sorted," says Wim Helders, programme director, network information management, at KPN. "No process will work properly."

KPN recently installed Cramer's inventory management system to manage all SDH and DWDM, ATM and fibre optics faster than 2 megabits per second. Helders says this will streamline provisioning.

"We've (got) management for VoIP services, and we're going to put in the management for the new IP boxes where we are looking to do automatic provisioning through these boxes," he says. KPN has not, however, taken self service out to broadband consumers. "It's not in place yet but we want to put the customer in charge as much as possible via Web-based interfaces in real-time," says Helders. "Our IT system deployment will converge on this."

Helders says current management overhead in delivering services needs to be reduced so interfaces aren't changed every time there is an upgrade. "Look at the old PSTN/ISDN equipment," he says. "As soon as you had a new release for a switch you couldn't be sure whether or not the interface into our element management system still worked. We would like vendors to standardise to enable us to grasp control over these boxes and manage them."

For telcos, automating the back office across multiple functional groups - from sales and operations through to support - is a much harder task than automating customer interfaces. But even so, some telcos are having more success at this. McKinsey says one telco that has managed to reduce inter-departmental handovers of the customer transaction from nine to three while reducing order entry by 50%.

Beyond the customer portal

The concept of single customer view is well known from a CRM perspective. The next step for telcos is integrating products and services through a Web-based portal. Bell Canada and Telecom Italia have taken the customer experience further, by branding their respective interfaces and making the brand integral to the customer experience.

"You can see telcos that have self service as a forethought rather than an afterthought when you look at their branding, says Motive's Van Zant. "If they attach a brand to their self-service capabilities they get it."

Van Zant says Telecom Italia has done this with its Alice branding through a set of management tools on its Web sites and client software. "They will be implementing interfaces to the telephone next," he says.

Telecom Italia uses Alice branding across football, reality TV, programming, social networking and chat, and a variety of fixed and mobile services. Its multimedia portal is called "RossoAlice."

"RossoAlice gives a personality and face to a service which at the end of the day is just based on bandwidth," says Weiss. RossoAlice allows users to participate in live video chats with football stars and celebrities and is based on Macromedia's Flash communication server. "It's not about just providing a portal. You need to link the brand to cultural and local ties," says Weiss.

Emily keeps it real

Emily has become the virtual agent across Bell Canada Enterprises. As with most telcos, the carrier still has separate and distinct business units for each of its product portfolios but Belinda Banks, senior associate director customer care, at Bell Canada, says the Emily project is unifying the underlying services. "As we're building out our contact strategy, what we're actually doing is also converging and bringing our business units together," she says.

"Emily is a very large project. It has pieces where it is working well and pieces they are working hard to understand," says Motive's Van Zant. "Structurally they are on the right track. They want a single-unified persona acting as the interface to the customer across all services."

The carrier had previously struggled with its touch-tone IVR system. Bell Canada receives around 85 million calls a year. The system housed around 200 self-serve applications for things like bill management and product information, in addition to information on annoyance calls, calling cards and other services.

These are being consolidated into one. "We're building out one single point of entry so that eventually we can just leverage and utilise 310-BELL as our single point of contact for our customers," says Banks.

Today Emily, which uses SayAnything from Nuance, takes around 35 million of those 85 million calls, predominantly through the 310-BELL customer care line. Even though ISP Bell Sympatico, Bell Mobility and DTH satellite division Bell ExpressVu have their own access numbers for customer services, users have migrated to the 310-BELL, using the voice application to get into the customer service centres. Bell Canada is currently implementing Emily across mobility, prepaid registrations and directory assistance services.

Bell Canada also uses an Emily animation to guide users around its Sympatico ISP. Initially, the carrier found that Web site refreshes every six months started driving costs up, so the Emily persona was only included in certain instructional long term applications - for example, giving novice Internet customers technical support in trouble shooting. Savvy users were encouraged to use another product, Net Assistant. Emily now also prompts users to migrate.

Banks says its use of Emily branding has helped Bell Canada market itself to corporates buying voice applications for call centre solutions. "You gain credibility when you try to migrate their systems from the touch tone into the speech, that you've actually made your mark," she says.

To create the Emily persona, Bell Canada sought cross-divisional support from its brand management, marketing, operations and corporate communications teams. "Marketing is completely engaged in using the tool for revenue generation, for specialised messages for customers, segmentation routing and so on," says Banks.

From the outset the persona had to be "real," she says. "Whether you name the system or not, you are still creating a persona. So it's really critical that you take the necessary steps to focus on the voice tone, the mannerisms, what are the filler words that you want to use in order to create an engaging conversation with your customers?" says Banks.

Banks believes Emily will be at the heart of Bell Canada's developments in self service. "In the Internet business there's a large volume of calls for technical support, so we've got some prototypes of some diagnostic applications," she says. Banks says that while these are not fully functional self-service systems, they will for now collect a lot of information for the contact centre agents to make the interaction more automated.