STUDYCASE:MULTIASISTENCIATJTSE50:GroupAssignment

ElohoIfinedo

MitroKivinenTiinaKoskelainen

MulFasistenciacase:Ourframeforanalysis

•  WedecidedtoanalyzethecaseMulFasistenciausingtheCSOFTmodel(Heikkilä&al2005)–  CSOFTmodelenablesustodiscussabouttheMulFasistenciabusinessnetworkandgivesusstructureforcomprehensiveanalysis

•  WediduseValueModelingwhenweanalyzedhowtheNWwascreaFngvalue

•  WedidassesthedifferentinfluenFalpowersaspotenFalproblemsintheNWusingAgencyTheory

Customers1/2

•  Themaincustomersofthebusinessnetworkarea)insurancepolicyholders,b)smallbusinessesandc)individualpersonsneedingrepairservices–  ForMulFasistenciatherearebothnon‐directendcustomersa),anddirectendcustomersb)andc)

•  Themaincustomersofthefocalcompanyarea)companiesofferinginsurancesandb)smallbusinessesneedingrepairservices–  Groupa)isservedwithdifferentsetofservicesthattheircustomers,whoontheotherhandarereceivingsameserviceasthegroupb)

–  Groupa)consistsofbankingandinsurancecompaniesandCreditcardcompanies.

Customers2/2

•  Secondarycustomersofthefocalcompanyarea)tradeprofessionalsandb)individualpersonsneedingrepairservices–  Groupa)ismainsupplierforthefocalcompany,butthegroupalsoreceivesCCB(Customercareandbilling)servicesfromthefocalcompany,thusmakesthegroupa)ascustomerstoo

–  Groupb)receivessameserviceasnon‐directendcustomers.

•  Curiouslyenough,theend‐customerismostly"owned"bythecompanyofferingtheinsurance,butallCRMisbeingdonebyMA.ThenthecustomerdatabecomestheassetofMAinsteadoftheownerofthecustomer.

Service

•  Themainserviceofthebusinessnetworkistakingcareof(household)repairsoftheendcustomers– Withsetprice– Withaquickdelivery– Withguarantee

•  Themainservicesofthefocalcompany(MA)are–  a)takingcareofarrangingrepairingandrelatedprocess–  b)takingcareoftheclaimingprocess,–  c)loweringfurtherdamageand–  d)CCBfortradingprofessionals

•  TheactualValueModelingdiscussesabouttheserviceindepth

OrganizaFon1/2

NWofTradeProfessionals

Franchise

Franchise

Franchise

MulFasistencia

Insurer1

Insurer2

Claimunit1

Claimunit2

EndCustomer

ClaimantWhitebrand

SmallBusiness

NW1NW2NW1servesMA's

directendcustomers

NW2

NW1

NW2servesMA'snon‐directendcustomersintwodifferentsedng

OrganizaFon2/2

•  Inthe1stnetworkthenwoftradingprofessionalsisdeliveringthephysicalservicetotheendcustomers.MAistakingcareofworkdistribuFonplanning,assignment,managementofworkandbilling.

•  Inthe2ndnetworkthenwoftradingprofessionalsisdeliveringthephysicalservicetotheendcustomers.MAistakingcareofworkdistribuFonplanning,assignment,managementofworkandbilling.Incase1)MAistakingcareofthewholeclaimmanagementandincase2)theinsureristakingcaseoftheclaimmgmt.Theinsurancecompanyownstheend‐customerbuttheMAmanagescustomership.

Finance1/3

•  Focalcompanyrevenues– ThereareatleasttwodisFnctbusinessmodelsinthecase(NW1andNW2)

– NW1case,directend‐customers•  MAassignedworkfromdirectend‐customerstoaTP,itdidchargeroyaltyof10‐14%

– NW2case,insurersend‐customers•  MAassignedworkfromaninsureranddidgetafeeperuserperevent.Thiswasinyear2005inaverage133Europermanagedclaim.Thismodelwasalteringfrom1999to2005

Finance2/3

•  Tradingprofessionals–  Franchisecosts

•  ThesewerenotmenFoned,howeveritisverytypicalthatafranchiseownera)setstheprices,i.e.cover'sitsmargins,b)chargesfortherighttousethefranchisebrandandmodelandc)canchargemanagementfee

– Addedrevenue,morestableincomeflow–  SavingsinCCBcosts,intermsoflesserpaperworkandthusmoreFmetodothebillablework

–  SavedtransacFoncosts,noneedtomarketnorsalesrelatedcosts.

Finance3/3

•  Insuranceofferingcompanies–  Costsavings1996figuresforcorporateclientswere4M€,thecaseisnotspecificifcombinedorperone(MA'srevenue50M€)

–  Costsavingsbecauseofdynamicmobilepicturebasedlossadjustmentassessment60%year2004

–  40%costsavingsinelectronicinvoicingrelatedprocessesyear2004

–  Increasedend‐customerloyaltybecauseofBI(businessintelligence)

–  Increasedend‐customersaFsfacFon

Technology1/3

•  TheNWbusinessmodelintheMAcaseisstronglybasedinunderlyingtechnicaltransacFon,claimandworkassignmentmanagementplalorm–  TheplalormmanagesallvaluecreaFngcoreprocessesandassistsinsupporFngprocessestoo

–  ThecreaFonoftheserviceplalormwasmandatoryforMAtoensuretheNWscalabilityinanefficientway

•  TheplalormisbasedinInternettechnologiesandisthuswidelyavailabletoallmembersintheNW

•  MAofferstheplalormsonwareasaservice(SAAS)andthusactsasthefocalcompanyintheNWastheApplicaFonServiceProvider(ASP)forthewholeNW

Technology2/3

•  Theplalormprovidesalsoaccessviaavarietyofdifferentmethods:eitherthroughaGUIorthroughanAPIandasawebservice

•  Withtheplalorm,MAisabletoofferservicestootherNWnodes:–  CustomerCareandBilling(CCBS)fortradeprofessionals,–  FullorparFalclaimmanagementforinsurancecompanies,–  BusinessintelligenceBIandDWanalysisservicesfortheinsurancecompaniesand

–  Evenwhitebrandserviceofferingforconsumers.

Technology3/3

•  DeploymentofthetechnologydidrequireheavyinvestmentsfrombothMAandtheTP's–  PC'sandMobiledevices–  Training

•  Thenewtechnologydidputpressureontotheinsurancecompaniestomovefrompaper‐basedofficestofullyintegratede‐systems

•  Theinvestmentledeventounexpectedresults:theTP'swereinnovaFveinadopFngnewpossibiliFesandthatledtonewinnovaFons.

ValueModelling1/5

MulFasistencia

TradeProfessionals

CorporateClients

EndCustomers

1

2

3

4

5

6

7

8

ValueModelling2/5

•  #1MulFasistenciatoTradeprofessionals–  customers(intermediateendcustomer’sneedsforrepairservices),i.e.revenue

–  theFranchiseInternetPortal–  adviceonstarFngbusiness–  helpaccessthetechnology(specialoffersforPCsandinternetaccess)

– managementapplicaFons–  billingserviceincludingdirectpayment–  promotedmeeFngs

ValueModelling3/5•  #2MulFasistenciatoCorporateClients

–  CCMSservicedeal–  tradeprofessionals’services–  custom‐designedservices(customercarehelp‐lines,comprehensive

managementofrepairableorcashserlementclaims,managingloss‐adjustersandrecoveries)

–  realFmeinformaFonaboutrepairprocessesthroughInternetPortal–  possibilitytosuperviseServiceLevelAgreements(SLA)–  collaboraFon;digitalsignature,electronicinvoice–  managementoflossadjusterreports(adesk‐topauditoverthe

internetwiththedigitalphotos)–  analyFcalCRMbasedonaDataWarehouse–  comparaFveinformaFon(informaFonrelaFngtothebusinessofthe

clientcompanytobecomparedtotheaverageforthesector)

ValueModelling4/5

•  #3MulFasistenciatoEndCustomers–  intermediaterepairservicesfromtradeprofessionals(i.e.lowertransacFoncost)

–  lesstroubleinfindingsuitabletradeprofessionals(i.e.lowertransacFoncost)

–  pre‐definedprices,qualityassurance,guaranteedresponseFme,6‐monthwarranty

•  #4TradeProfessionalstoMulFasistencia–  householdrepairservices–  networkofprofessionals‐>asufficientnumberofprofessionalstomeetthecontractuallydefinedFmetables

–  commissionfromdirectlypointedoutcustomerdeals

ValueModelling5/5

•  #5CorporateClientstoMulFasistencia–  endcustomers(intermediateendcustomer’sneeds)–  payments

•  #6EndCustomertoMulFasistencia–  payments–  informaFonaboutuserbehaviorthroughvariouscontact

channels(telephone,cellphones,Internetandpersonalcontacts)

•  #7TradeProfessionalstoEndCustomers–  householdrepairservices–  informinrealFme(SMS)aboutstatesofclaim

•  #8CorporateClientstoEndCustomers–  intermediatehouseholdrepairservices

ApplyingtheAgencyTheorytoMulFasistencia1/5

•  Internal/HierarchicalCoordinaFonCosts– TheagencytheoryviewsthefirmasanagencyrelaFonshipbuiltonasetofcontractsamongself–interestedagents(employees).Thedivergenceofinterestsbetweentheprincipal(MAmanagementteam)andtheagents(TPsandCSRs)canbreednumerousproblemswhichiscostlytothefirm(MA)–(VijayGurbaxaniandSeungjinWhang).

ApplyingtheAgencyTheorytoMulFasistencia2/5

•  Agencycost– OneofthemostimportantissuesMAhadsinceitsfoundaFonwashowbesttoincreaseTPloyalty.AnexampleisthelackofcustomersaFsfacFonduetoaqualityissueintherepair,sinceMAoffereda6monthswarranty,ithadtosendanemployeeorTPtoreassesstheproblemandthencarriedouttherightrepairatMA’sexpense.ThisisaclearindicaFonofthediscrepanciesbetweentheobjecFvesoftheprincipal(MAmanagementteam)andthoseoftheagents(TP).

ApplyingtheAgencyTheorytoMulFasistencia3/5

•  MonitoringCost–  CSRevaluatedeachotherinaquarterlypollandthosescoringthehighestpointsreceivedtheadtudebonus.

•  BondingCost– ArevoluFonarysystemcalledthe‘MentalSalary’wasputinplacebyMAtostresspersonalresponsibilitywithoutdirectsupervisionforwhichabonusof20%wasoffered.ThisbonuswasinordertoachieveMA’sobjecFves,employee’sadtudeandprofessionalismintermsofCSRperformancemeasures(waiFngFmes,errorsandFmepercall).

ApplyingtheAgencyTheorytoMulFasistencia4/5

•  DecisionInformaFonCosts–  AlldecisionsaremadebythetopMAmanagersbuttheCSR’sandTP’shavebereraccesstolocalinformaFon.TheassociatedcostofprocessinginformaFonarisesduetotheneedtoprocessinformaFonupwardinthehierarchy.

•  CommunicaFonCosts–  TheCSRsmanagedthetelephoneprocessbybeingresponsibleforthepredicFvecontrolofquality(Thenewcontrolcenter).TheCSRsalsomanagedtheCCMSprocessbyhavingaccesstoinformaFoninrealFmeandthisequippedthemwithgreaterdecision–makingcapacityandhigherlevelofresponsibility.ThisledtoconsiderableincreaseinemployeeandintheendcustomersaFsfacFon.

ApplyingtheAgencyTheorytoMulFasistencia5/5

•  DocumentaFonCosts–  In1990’s,themainstreaminsurancecompaniessFllreliedonpaper‐

basedsystemswhichwasaslowandexpensivewaytomakedecisionsaffecFngpremiumandpolicies.AverageclaimcyclecompleFonwas30dayswhichwasbelowcustomerexpectaFon.ThisresultedintediouscompilaFonofmonthlyrepairorders,invoicingandpaymentissueswhichalsoledtodelayinTPpayment.

•  OpportunityCosts–  OpportunityCostsduetopoorinformaFon:PoorinformaFonranges

fromincompleteorparFalinformaFontoinaccurateorwronginformaFon.In2000(TheGlassCeiling),MAarractednewcorporateclientswhichledtoadramaFcincreaseinendcustomercalls.However,theprocesswasmanual,basedontelephonecontactsandtheirinformaFonsystemwasusedmainlyfordataentry.ThesystemhenceprovidedonlyparFalinformaFonaboutrepairstatustotheCSR.

References

•  Faber,Ballon,Bouwman,Haaker,Rietkerk&Steen.(2003).DesigningbusinessmodelsformobileICTservices.

•  Gordijin,Akkermans&vanVliet.()BusinessModellingisnotProcessModelling.

•  Gurbaxani&Whang.(1991).TheImpactofInformaFonSystemsonOrganizaFonsandMarkets.

•  Heikkilä,Heikkilä&Tinnilä.(2005).TheRoleofBusinessModelsinDevelopingBusinessNetworks.