Mapping Strategy to the Balanced Scorecard

CIDM

April 2002


Mapping Strategy to the Balanced Scorecard


CIDMIconNewsletter Angela McAlister, World Wide eService and and Knowledge Technolgies Manager, 3Com

Every army has a battle strategy; every company has a revenue and growth strategy. In 1997, 3Com envisioned a growth strategy that would leverage content and knowledge. Although the networking market was growing exponentially through technical advances, 3Com recognized that continued success would depend heavily on the company’s ability to use and reuse corporate intellectual capital. This capital would take the form of new ideas, patents, and technical creativity.

As a result of its belief in the value of intellectual capital, 3Com launched the 3Com Knowledgebase in 1997 for internal use by customer service engineers. The strategy was to capture the technical support engineers’ technical creativity as they worked to troubleshoot and solve customer problems. Once captured, their knowledge would be used to help other engineers solve similar problems. In 1998, the knowledgebase was made available to 3Com customers through the corporate Web site. Later in 2000 and 2001, as the knowledgebase program matured and as 3Com’s corporate strategy went through dramatic changes, the knowledgebase program moved from a strategy of reusing content to enable internal efficiencies to a strategy of creating revenue opportunities through content.

Be More Connected

In 1999, 3Com focused on increasing revenue by promoting the advantages of being “connected.” To further this goal, our Content Strategy Team focused on using a knowledgebase to increase the use of information by internal and external customers. To reach its goals and articulate a strategy, the Team developed a Balanced Scorecard for the knowledgebase initiative, interrelating cost reduction and revenue growth to customer satisfaction, improved processes to populate the knowledgebase, and increased employee productivity. Realizing that information is critical to a segment of 3Com’s target market-people with product problems but without service contracts-the Content Strategy Team first focused on increasing access to and use of information in the knowledgebase. We wanted to increase the volume of information accessible through the knowledgebase so that our customers would be more likely to have a successful experience. (“If we build it, they will come.”) 3Com rewarded customer service engineers for creating and using knowledgebase information to solve customer problems. Reports were released weekly to communicate activity levels (information creation and information reuse) that tied directly to the Balanced Scorecard. We measured the value returned to the company and communicated it.

Among other measures, we currently track the percent of problems solved using information in the knowledgebase, the number of times the service engineers access the knowledgebase to resolve customer problems, and the number of customers registered to use the knowledgebase.

We learned, for example, that 20 percent of customers using the knowledgebase were able to resolve their problems. The number of customers resolving problems was multiplied by the average cost per call. The resulting total amount represents what it would have cost 3Com to deliver the same service if a customer service representative answered the customer’s question over the phone.

We measured information reuse by counting the number of hyperlinks between knowledgebase articles and CRM (customer relationship management) system cases. The hyperlinks are created when a customer service engineer uses the knowledgebase to resolve a customer problem. The engineer clicks a button in the CRM system to link the CRM case (record of the customer call) to the knowledgebase article. As customer service engineers encounter repeat problems, they use the same knowledgebase content over and over again. For example, a high percentage of the problems solved by customer service engineers for consumer products are associated with customers finding and installing the correct software. Consequently, the information reuse for articles associated with solving software installation problems is high.

High reuse rates translate to high information value. Each time information is reused, the amount of time needed by customer service engineers to solve a problem is reduced. An average of 45 percent of the CRM cases are linked to the knowledgebase. This link rate varies by product, management team, and the level of training offered to the customer service engineers. By reusing information, the company is able to stay ahead of the demand for support services.

Customer adoption is measured by tracking the number of customers registering to access the knowledgebase. Registration increased from about 3,000 to over 100,000 in just a few months.

Simple Sets You Free

The new corporate goal for 2000, “Simple Sets you Free,” provided the Content Strategy Team with a new opportunity to demonstrate the value of information. To deliver on 3Com’s strategy, the Content Strategy Team redefined its mission to focus on delivering “simple, global access to the information and knowledge that customers need to achieve their goals.”

During 2000, the customer service organization changed to an outsourced model. The external customer service engineers used the information in the knowledgebase to solve routine problems. The ease with which the organization transitioned to external customer service engineers was directly related to the information in the knowledgebase. Customer satisfaction remained high, as reported in the Customer Perspective quadrant of the Balanced Scorecard.

3Com focused on delivering products that were easy to use and returned to its core business. Many products were discontinued, although lifetime warranty services continued to be available for these products. The corporate strategy focused on right-sizing the company and delivering value at a significantly reduced cost, the bottom line, which created extreme pressure on profit margins. The knowledgebase’s value, our value proposition, was no longer derived from internal problem resolution but from external call deflection (the time and money saved by customer service engineers who did not have to take a call because the customers found the information they needed in the knowledgebase). Using a combination of solve rate, solutions viewed, and cost per call, we calculated that the knowledgebase program achieved over $16 million of annual savings. In 2001, the call deflection savings grew $2,000,000, or more than 20 percent.

Revenue Generation through Partners and Service Contracts

It’s 2002, and there has been yet another shift in corporate strategy. This time, the focus is revenue generation through partners and service contracts. In 2001, 3Com leveraged the cost savings measured the previous year and focused on growing product revenue, the top line. There are no longer opportunities to demonstrate the value of information based on call deflection. Information contribution is so integrated into the cost and profit model that the savings from knowledgebase use are included in the service products margins. For example, the financial team expects a 30 percent return (margin) on all service products. The call deflection savings are no longer listed as a cost savings initiative but rather as a contribution to the service margin. The value recognized during the company’s cost avoidance strategy period was used to integrate the knowledgebase into the product warranty statements. This integration ensured the role of content as a product service strategy for multiple strategic products.

To achieve the new service revenue goals, the Content Strategy Team once again used the Balanced Scorecard to demonstrate that we had adapted to the new corporate focus. By focusing on increased sales from partners and resellers who leverage the information in the knowledgebase, content value can be tracked. Partners and resellers are able to service larger numbers of new customers because they can resolve issues more quickly and because their customers have access to self-help tools and knowledge. We regularly track gaps between a content request through knowledgebase searches and the content that is available in the public knowledgebase. Changes in the content gap are included in the Balanced Scorecard.

As the value of content was being proven through the Balanced Scorecard, the Content Strategy Team took steps to reuse the content in other troubleshooting or self-help customer service tools. One such tool is 3Com’s Connection Assistant. The Connection Assistant is a diagnostic and repair application for network interface cards that is provided as a value-added tool with 3Com’s consumer products. As the value of content accessed through the Connection Assistant is documented, we are able to use this value to create a greater demand for 3Com’s low-end modem and NIC products. Content has become a driver of revenue.

Like many other companies, 3Com has immense amounts of intellectual capital housed in multiple internal and isolated content repositories. Visionaries within 3Com believe that leveraging existing technical content and enabling technical personnel to create valuable new content will easily contribute to the overall profitability of 3Com’s service business. Through analysis of the types of content demanded and used most often, 3Com has identified the content to reuse and has measured the value of that content. What is the return on that content investment? Over 220 percent… and growing! CIDMIconNewsletter

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