Mega-Mergers and Great Service: An Oxymoron?
Author: Stewart Hill
In recent years, we have all witnessed the rapid convergence of technology and its impact on our day-to-day lives. The use of smartphones and tablets to surf the internet, make video and voice calls, craft emails, snap photographs, stream movies, and to engage with customers – all using one device – is now commonplace. So is watching and streaming movies, surfing the internet, and using Skype via the TV. And then there’s the ever-present and reliable home PC or laptop that is also capable of the same multiple uses of technology and media. In fact, it’s now hard to think back and remember the time when using a device for a single – dedicated – service was the norm.
And this creates challenges for Communications Services Providers because those that are unable to provide a complete service – wireless, TV, and Internet – will continue to find themselves at a competitive disadvantage. This is effectively where DISH Network Corporation (aka “Dish”) finds itself today: lagging behind AT&T and Verizon with “wireless” being a notable gap in its portfolio. This is a key reason behind their proposed merger with Sprint Nextel Corporation (aka “Sprint”). Financially however, a combined Dish and Sprint organization will remain significantly smaller and more challenged than the industry’s dominant competitors despite Dish having apparent plans for growth, post-merger, that will “blur the lines between televisions and cellphones.”
As expected, a merger of this nature raises some eyebrows and the value to the consumer is naturally questioned but the opinion appearing online seems to have a somewhat upbeat – but cautious – undertone: “The broader its product portfolio, the more attractive Sprint might be to consumers choosing a carrier” cites Dan Rowinski, Mobile Editor at ReadWrite. “Subscribers who bundle Sprint and Dish services would likely be able to cut a few dollars off their monthly bills” claims Andy Vuong at the Denver Post. And from Mark Davis and Kevin Collison at the Kansas City Star – and Sprint employs over 7,000 people in Kansas so there’s some skepticism from the Kansas City Star about job security – “An immediate payoff of a merger would allow Dish to market its satellite TV and other products to Sprint’s customers and Sprint’s products to Dish’s customers.”
From a product portfolio perspective, all therefore seems reasonably well however, there is a potential problem that is starting to receive attention and this comes straight from Dish’s press release: “The proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings.” It is this brief mention of cost savings that has Davis and Collison unsettled because there’s no elaboration of where – and how – this magnitude of cost saving would be realized.
Bringing together two technology-focused giants who operate in rather discrete industries does introduce many areas of duplication where some of this vast cost saving can be realized: customer contact centers and their workforces, and the mobile engineering workforces. And from a workforce management perspective this is the crux of the issue because any duplication may not run deeply throughout the business. The contact center teams have different product and knowledge sets, and the engineering teams have differing technical skills and are unalike: Dish employs many thousands of engineers and some contractors whereas Sprint employs few engineers and outsources most engineering services instead to Ericsson. So how do you bring together two dissimilar businesses and make changes in this obvious area without screwing up your customer service? After all, consumers have a choice and any changes that affect the service they receive – such as installations, repairs, or good-old reliability – can quickly have them switching over to more dependable competitors.
The answer lies in conducting accurate demand forecasting and resource capacity planning for the new combined business entity and to avoid making arbitrary changes that are simply the result of numbers calculated on a spreadsheet. The new business wants to grow, and such growth will generate more service calls so accurately modeling the business in terms of skills, geography, service event type, the mix between employed engineers versus contractors, call center volumes, and a world of other factors is critical to being successful. But this requires some investment at a time when Dish would be looking to remove costs but sometimes you need to spend to be able to properly save.
Sensitive and precise management of the workforce – contact center, mobile, and contracted – is fundamental because Dish already has a reputation as being a difficult place to work with a challenging culture and the last thing they need here is for mistakes in the business forecasting and planning to spill over into the workforce who can then directly affect the consumers’ experiences. And that could ruin it all for Dish.
Is it possible to seamlessly combine two technology giants while still excelling at customer service or is this just a contradiction: an oxymoron? For Dish, only time will tell.
Note: Graphic courtesy of USA Today.
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