red hat global

CIS9230 GlobalizationandTechnologyTeamA

RED HAT GLOBAL SUPPORT SERVICES: THE MOVE TO RELATIONSHIP-BASED CUSTOMER SERVICING AND KNOWLEDGE-CENTERED SUPPORT

Due:September20,2013

@3PM

TEAMA:

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ExecutiveSummary

SituationAnalysis

MajorProblem/Issue/Concern(s)

Alternatives

Strategicalternatives:

Technologicalalternatives:

FinalRecommendationandConclusion

References

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Executive Summary Red Hat was founded in North Carolina in 1993. Initially, Red Hat created a name for itself by

distributing its own version of the Linuxbased operating system alongside offering related book material

to retail consumers. A decade later, it was considered the worlds leading opensource provider. The

company expanded its portfolio by offering additional products and services such as middleware

applications, a variety of management solutions and consulting services. Today, Red Hat operates on a

largeglobalscalebybeingpresentinmorethan33countriesworldwide.

Nonetheless, a rapid and significant global expansion presents new challenges of serving the

growing clientele and living up to their expectations. Newly appointed VP of Global Support Services

(GSS) at Red Hat, Marco BillPeter, is concerned with the companys ability to successfully confront

the growth as he identifies several significant issues that need to be dealt with. The most vital issues were

related to the companys lack of communication, support coordination and technological integration

across divisions and regions. This deficiency contributed to the lack of companywide best practices,

redundant work and frustration amongst staff as well as customers. BillPeter recognized the need for an

overhaul through adopting a consolidated data management system and centralized customer support

portalacrossGSS.

One of the most significant results of this new structure was the ability to take advantage of

being a global company to a larger extent. With support locations spread throughout a variety of time

zones, the new unified system automatically routes tickets to the available support center, operating in

10 different languages. The new process is designed from a customer perspective, focusing on how to

optimize efficiency and quality. Given the overall positive outcome in relation to the core metrics of an

increase in customer satisfaction and account renewals along with an increasing operating income in

relationtorevenue,itisfairtostatethatBillPetersactionsreflectedpositiveresults.

Going forward, it is recommended that Red Hat should focus on further developing their

support channels and help content. User education can be facilitated through product forums, help

centers containing FAQs and Known Issue sections to generate proactive solutions, combating

bottlenecks, filtering out common user errors and selfsolvable issues before reaching the 1:1 support

channels. Moreover, it is crucial that an emphasis is placed on the need to continuously maintain

updatedsystemsoftwarethatiscapableofhandlingagrowingcustomerbase.

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Situation Analysis

Red Hat traditionally embraced opensource ideology/technology. The companys platform is

based upon Linux, a freely distributed (via the GNU license) Unix based operating system. Through a

supportcentric business model, Red Hat established itself as an IT leader. Red Hat sold its version of

Linux for a nominal fee but obtained most of its revenue from customerservice support packages

(Borden, 2000). Red Hat Linux won the 1997 Info World Product of the Year and Red Hats August

1999 IPO was the eighthbiggest firstday gain in Wall Street history (Red Hat History). Its IPO

success demonstrated that while opensource software itself cant be sold for a profit, an important

newindustryisspringinguptoserviceit(Roush,2000).

The open source industry demanded new business models and practices. Ideologically, Red Hat

embraced opensources culture of collaboration and focus on the sharing of knowledge. Commercially,

Red Hats support based business model offered companies to expense IT costs, rather than accrue

them as capital investments. Customers were attracted by Red Hats ability to offer a high return on IT

investmentalongwithawellpacedlifecycletransitiontocurrentreleasesofproducts.

VA Linux was Red Hats first major competitor and developed its own opensource oriented

business model: generate revenue from selling Linux based hardware and consulting services (Borden).

Despite a record breaking IPO, VA Linuxs business model was unsustainable and the company

floundered. Red Hat is now challenged by companies outside the opensource realm. Microsoft and its

Windows OS platform have been Red Hats fiercest competitor during a 1999 trial, a Microsoft lawyer

exhibited a copy of Red Hat Linux to refute charges of Microsoft monopolizing the OS market (Red

Hat history). Oracle markets its own brand of Linux featuring a complete Linuxbased solution

stack...applications, middleware, database, management tools, operating system and hardware, along

withasinglepointofsupport(OracleLinux).

This stack of support was originally Red Hats key selling point. Central to Red Hats

customersupportwasGlobalSupportServices(GSS).

By 2005, the company had embraced the global marketplace. Red Hat partnered with MIT and

AMD in an effort to bring low cost computers to poor countries (Pontin, 2005). Red Hat also

developed Global Desktop a product that sought to help spread Linux usage to new markets and is

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initially intended for ...customers in emerging economies (Courtney, 2007). Yet, GSS was hardly

globally integrated. Additional flaws included an ineffective ticket system, poor customer satisfaction

metricsandastructurethathinderedtheflowofknowledge.

Marco Bill Peters became V.P. of GSS in 2008. He immediately began an initiative that sought

to rebuild the entire structure of GSS. Peter directors council was established, resulting in a better integrated Red Hat vision across regions. Computer systems were restructured, centralizing some core

processes resulting in the ability to track ticketing history globally. As key measurements were unified,

they now have the ability to link the new processes to core metrics that were identified during the

transformation.

Major Problem/Issue/Concern(s) The goal of most businesses is to make profit, but not just in the short run longterm sustainable profit.

Red Hat Global is not the exception. To achieve this, worldclass companies need to implement an

effective strategy. A companys strategy embodies its vision, mission and values. These elements are

reflected in Red Hats business model which has always been customerfocused. It is evident in the way

the company chooses to differentiate itself by using a software subscription delivery model. An

approach most rivals were not utilizing at the time. Their rationale was based on analysis of procurement

methods used by client firms. They discovered how best to derive value, from a totalcostofownership

perspective, for their customers while generating revenue for the company a symbiotic existence. Red

Hat had to actively manage customer satisfaction in order to avoid attrition, because of the subscription

modelemployed.

Macro BillPeters, VP of GSS, a visionary man with a longterm direction could see the big picture. He

knew the companys current competitive advantage would not last if action was not taken quickly. At

the corporate level, GSSs was diversifying across countries. Its business strategy needed to be aligned

with its corporate strategy. There arose the need for a more Global organization to foster high

coordination, and low local customization or configuration. The primary driver being, the need to better

servemultinationalcustomers.

Red Hat was not operating like a global organization it was functioning as a multidomestic comapny

(Jain, 2013). Decisionmaking power was distributed regionally, leading to replication of infrastructure

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and processes across countries. As such higher operational and maintenance costs were incurred. While

this mode of operation promoted autonomous local subsidiaries, the downside was that it fostered

negative competition between regions. This lack of collaboration and cooperation across regional

centers,countriesandculturesappearedtobetheunderscoredtheproblemRedHatGSSfaced.

The structure, technology and growth strategy employed by the organization served as contributing

factorsandtheirimplicationsareexplainedbelow:

Structure: The structure of an organization facilitates day to day operations within an

organization. The lack thereof led to the absence of welldefined workflows. Regional locations

maintained different problem ticketing/tracking systems and stores resulting in local wikis and

knowledgebasefunctionalsiloing(Parker&Byrne,20072010).Implicationsinclude:

Knowledge gained from successful problem resolution was not stored in a centrally

accessible location so could not be reused, leading to redundancies customer problems

weresolvednumeroustimesbydifferentgroupsacrossdifferentregions

Inability to match personnel expertise to address a particular issue sometimes meant that

a problem ticket was passed around the organization, from one support center to the

other, wasting staff time and frustrating the customer. In addition, customers would also

enduprepeatingthemselvesinanefforttoresolveaproblem.

Disparate performance measures between headquarters and regional locations made it

difficulttoanalyzecustomersatisfactionandidentifyprocessimprovementsoptions.

Technology: Technology is typically an enabler, but cannot by itself affect change. The use of

wrong technology could hinder or limit productivity this was the case at Red Hat. The company

was not fully leveraging the potential of its labor force with the use of archaic support tools like

Oracle iSupport. Also, customerfacing support tools were also not integrated with the

backend support systems employed for level3 support and tracking software defects creating

asignificantcodedevelopment/reviewchallenges.Consequently,therewas:

Loweremployeemorale/motivation

Limitedpersonneldevelopment

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Slowerresponsetime.

Growth Strategy: Red Hats corporate diversification strategy resulted in product and market

extension. There was a more complex stack of technical product offerings not just operating

system and books. Also, Red Hat targeted more mainstream customers in addition to its existing

customer base. However, these new adopters were not able to articulate their problems clearly,

due to lack of technically knowhow. More time was spent with a customer diagnosing in

additiontoresolvingaproblem.Thus,a(n)

Needforhighlyskilledversatileemployees

Understanding that certain customers were more equal than others, but Red Hat

personnel was unable to make that distinction leading to lack of prioritization when

dealingwithcustomers.

For GSS to remain a worldclass company, it needed an approach that would scale well and also

effectivelyandefficientlyexploititsworkforce.

Alternatives The alternatives which Redhats management had to apprehend in designing and executing a new vision

for the GSS group can be organized along two axes: realizing a core strategy to better address the

needs of its customers, and implementing the new technology which would complement and actually

enable that organizational change. We can illustrate this by considering a stylized analysis from the field

ofcorporatedesign.

Figure:Visionaryalternativesdefinedbytwoaxes:needsbasedstrategyandtechnology.

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An additional challenge for management is executing the organizational changes in a fashion which aligns,

Red Hats core values and culture. Overall, we identified four strategic alternatives to address the

customersneeds,andthreetechnologicaloptions.

Strategic alternatives: 1. Become a betterrun more integrated global organization, which still delivers the tiered model.

This represents the choice to evolve systems, and perhaps improve communication, while

keeping the fundamental structure of GSS (i.e. develop a global knowledge base or a modern

ticketing system, while still utilizing L1, L2, and L3 service tiers). The drawbacks of this

alternative were pointed out earlier. A tiered support model is ultimately inefficient in addressing

the customers needs. The reactive break/fix mindset is characterized by limited opportunities

for knowledge sharing, and a likelihood of redundant work, which both translate into significant

waittimesforthecustomers.

2. Red Hat can borrow best practices from a partner specializing in customer service like SAP or

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IBM: Red Hat has relationships with partners that offer worldclass enterprise service. They can

explore ways to leverage those partnerships to better understand winning strategies in service

delivery. However, in the service and consulting based economy which has emerged in their

industry, service can be a differentiator and a source of competitive advantage. Therefore,

partnersmaybereluctanttogiveRedHatthekeystothekingdom.

3. Traditional topdown organizational change to the new relationship support model is a possible

approach for Red Hats management. That is, having identified the need to replace their tiered

service strategy with a better relationshipbased model, management can elect to drive this

vision down through the organization by using the power of traditional topdown authority

structures and chains of command typically defined by orgcharts. In certain companies, this

may in fact be the most efficient way bring about change. According to their website, the Who is

Red Hat page explains: While open source began as a way to describe software source code

and a development model, today it's much more. It defines the characteristics of a culture, this

approach is likely to encounter significant push back. Also, top management is typically

oblivious to the issues of day to day operations, and may not be able to effectively communicate

thistoelicitpositiveresponsivenessfurtherdownthehierarchy.

4. The alternative which Red Hat implemented: a bottomup driven organizational change to their

new knowledgecentered support model, which was developed with input from the

notforprofit Consortium for Service Innovation, was the closest to ideal in the context of their

business.

Technological alternatives: 1. Red Hat can procure modern 3rd party enterprise software to manage service delivery. For

example, update their oracle iSupport implementation to the latest industry leading product. On

one hand, this minimizes execution risk. However, to the extent that this technology has become

a commodity, Red Hat will derive relatively little competitive advantage from rolling out a

product other large firms have easy access to. Further, service is essentially their business, so

this should be an area where they strive to innovate and differentiate themselves, in order to

build a moat that protects them from competitors with deep pockets. In 2008, Dow Jones

News wrote that Red Hat faced stiff competition from Oracle and a partnership between

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Microsoft and Novell: Oracle [was] essentially copying the companys business and offering a

lowerprice

2. Red Hat can turn to a software as a service (SaaS) approach to provide this platform. Again,

thisduplicatestheweaknessesofthefirstoption,butmaydeliveradditionalcostsavings.

3. Red Hat can build a proprietary enterprisewide support platform, perhaps incorporating

existing open source code as an acknowledgement of their ecosystem. In time, they can even

choose to offer spinoffs of this product for sale, or incorporate the software into a spectrum of

consulting services which they offer. There is evidence that they implemented something along

these lines. The case describes a universal ticketing system, which enabled sharing of problem

information and status (Kesner, 2011 p.67). If explicit content was unavailable for the

workers use, the ticketing system provided ready escalation to experts within the organization

with the appropriate tacit knowledge to carry the job forward. This allowed them to effectively

utilizetheirhumancapitalandbetterservetheircustomers.

Final Recommendation and Conclusion There's a constant need for modernization and innovation. The original Red Hat support

infrastructure suited the company well until time passed. Over time, the flaws of the system were

exposed. If not already implemented across all support channels, Red Hat needs to establish

multichannel integration in order for agents to have access to all customer interaction history.

Moreover, agents across the different support channels must be trained equally to provide consistent

answers.

Establishing and maintaining an uptodate FAQs page is also an effective way of weeding out

simple issues customers might be encountering. Additionally, keeping a Known Issues section with

uptodate information on possible workarounds and ETAs of fixes also serves a great purpose. An

extra tweak would be to take advantage of an automated tool bumping the most popular links to the

top. Furthermore, a forum is also a useful platform where users can communicate amongst each other,

educate each other, share tips and tricks and workarounds/solutions for current issues (Leggett, 2011).

This should be monitored and automatic alerts should be implemented to notify GSS about threads that

arereceivinglargeamountsofcommentswhereescalationisneeded.

Feedback from users is also crucial to understand what areas of the support process that needs

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to be focused on. Automated surveys should be sent out after each unique interaction with a user as a

ticketisclosed.

As Red Hat continuously grows larger, it is vital that the resources dedicated to support need to

grow with it. The support repositories will grow bigger and bigger. Without proper maintenance, the

knowledgebase will become too large and unorganized for an employee to effectively work. A company

whose support issue was once a deficit of knowledge is now faced with the issue of overabundance and

bloat. Therefore, continuously investing in maintaining updated IT systems is crucial to a company like

Red Hat, whose main source of income is generated from providing a service. Hence, their ability to

deliver this service in an efficient, seamless and satisfactory manner is vital to customer retention and will

significantlyimpactthecompanyseconomicresults.

One financial metric that the case alluded to on p.3 is the ratio of operating income to revenue. This can

serve as a proxy for analyzing the profitability of the business, which is ultimately based on managerial

decisions like the organizational change within GSS. Therefore, in hindsight we can conclude that the

plan to reorganize GSS was successful as measured by the longer term financial success of Red Hat.

[source:IMetrixbyEDGAROnline]

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www.technologyreview.com/news/423159/technologywillmakecollaborationyournextcompetitive

advantage

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References

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http://money.cnn.com/magazines/fortune/fortune_archive/2000/07/24/284626/index.htm

Brown,S.,Lamming,R.,&Bessant,J.(2013).StrategicOperationsManagement.Routledge.

Courtney,M.(2007,May10).RedHatbuildsthirdworlddesktopOS.Retrievedfrom

http://www.computing.co.uk/ctg/news/1861732/redhatbuildsworlddesktopos

Jain,R.(2013).IntroductiontoGlobalization[PowerPointslides].Retrievedfrom

https://bbhosted.cuny.edu/webapps/portal/frameset.jsp?tab_group=courses&url=%2Fwebapps

%2Fblackboard%2Fexecute%2Fcontent%2Ffile%3Fcmd%3Dview%26content_id%3D_1448

2204_1%26course_id%3D_867953_1%26framesetWrapped%3Dtrue

Kesner,R.M.(2011).RedHatGlobalSupportServices:TheMovetoRelationshipBased

CustomerServicingandKnowledgeCentered.London,Ontario,Canada.

Leggett,K.(2011,December6).7WaysITCanImproveCustomerService.Retrievedfrom

http://www.informationweek.com/globalcio/interviews/7waysitcanimprovecustomerservic

e/232200646

Parker,S.G.,&Byrne,S.J.(20072010).CiteSeerXFunctionalSiloing?TowardsaPractical

Pontin,J.(2005,October13).Thehundreddollarman.Retrievedfrom

http://www.technologyreview.com/news/404814/thehundreddollarman/page/2/

RedHatHistory.(n.d.).Retrievedfromhttp://www.redhat.com/about/company/history.html

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Roush,W.(2000,January1).Softwarefrontier.Retrievedfrom

http://www.technologyreview.com/article/400615/softwarefrontier/page/2/

OracleLinux.(n.d.).Retrievedfrom

http://www.oracle.com/us/technologies/linux/overview/index.html

UnderstandingofOperationalBoundariesUsingCriticalSystemsHeuristics.Retrieved2013,

fromhttp://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.92.8664

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