This question struck me hard because of two things: first, I appreciated the candid of this Manager when he expressed this issue so forth fully.  And second because this type of question is at the heart of little-known but growing concern of those who are part of the knowledge economy: how to manage our human capital resources better?

As we recalled, human capital is one among three types of capital within intellectual capital: human capital, structured capital and relational capital.  While structured capital is what’s associated with the firm (the brand, the history, the tradition that no one can take them away), human capital is rested with the knowledge worker and relational capital encompasses the relationship among institutions, between individuals and so on, so forth…

In some human capital intensive roles (for example, designers of a new operating system or new CPU), since there are only handful of people who can do that successfully, there are not much institutions could do about it besides providing the best environment for them to thrive (both professional, social and personal stimulants) while keep playing music chair.  In other cases, one of the thing organization could do has two folds: first increase the proportion of structured and relational capital (thus reducing the proportion of human capital in that role), and second, do a better job in managing the knowledge resides within that role.

Let’s look at the role of a Customer Care Manager at a telecom service provider.  This role has three parts: receive the complaints from customers, internally working through the complaints, and finally (often forgotten) improving customers satisfaction by identifying common patterns of complaints and working to reduce them gradually.  Because the third task is often ignored thus the complaints may keep rising instead of decreasing; the second task is rarely documented thus new worker could be overwhelmed with what has to be done?

The answer is getting clearer: by having a structural process in handling these customer care issues, the whole issue will reduce proportionately in the long term (which reduces the reliance on the part of this role).  And even in the event of voluntary attrition, new worker could take on this role easier had them been documented properly.  This whole “structural process” is often embedded in something called ”customers relationship management” or simpler, “calls center operation”.

The product could be off-the-shelf (if available), in-house developed or a combination of both.  A good product could do the following things:

a) Keeping a log of who are the customers who call in for issues or complaints?  What are those issues?

b) What are the processes to get these issues resolved?  For example, for out-of-service refund, should it be billing department, sales, or customer care department?  In the case of video teleconference blurred images, should it go to infrastructure team or equipment maintenance team?

c) Finally and most importantly: preventive maintenance.  If common patterns are identified from batches of customers of last quarter of fiscal year, could these issues be identified and treated upfront so that new customers shouldn’t have called?  For example, blurred images video conference calls, was it configuration issue or installation or equipment vendor issue?

So the answer to question of how to manage human capital better does not have an easy answer.  In simple case like the Customers Care Manager, by utilizing structural and standardized processes plus employing analytical tools could reduce the number of complaints itself (which reduce the reliance of organizations on this role), while strengthening structured capital and relational capital proportions compare with human capital proportion so that the organization won’t be facing a crisis situation should this role leave the organization voluntarily.

What are those critical and not-yet-answered questions?  Questions such as:

a) What are the most profitable lending products that are responsible for a majority of bank’s profit?

b) Which group of customers or customer tiers primarily consume these most profitable lending products and who are they, demographically?

c) What market areas (geographically) have more potential for profits with manageable risk?

These questions could go on and on.  Providing both the foreign bank and the local bank have considerable resources (capital funding), the question then become: how do they go about finding the answers for these questions quickly, provided that they have no less than 5 years of customers data?

The answers for these questions, obviously, could not come easily or quickly unless they possess advanced and sophisticated business tools called business analytics (other time is referred as business intelligence–with minor differences).

Traditionally, a group of business analysts and information technology professionals could get together and supply the answers to management.  However, it’s an unstructured process and could take a long time to come (often weeks or months), and sometime at the expense of the OLTP system (unless they are willing to work off the hours).

However, techniques that have been used successfully in the past 20 years such as enterprise data warehouse, ODS, data marts, etc…and technologies which have been developed in the past 10 years such as business analytics (BI) could help to solve this issue in a matter of minutes or hours instead of days and weeks.

Better yet, as market trends could change quickly (from high inflation of late 2007 to fear of recession in late 2008) which affect macro economics and thus banks lending practices, these tools (BA/BI) could help companies (such as bank in the above example) understand the changes in corporate and consumers behaviors and adjust or adapt to them quickly.

Currently, there are several vendors and tools out there that are affordable to many businesses in Vietnam.  We say this because we believe that a medium size company in Vietnam with revenues in the range of $US 20 million and up, with profit margin of 10% or higher (or wish to have that kind of profit margin) should seriously consider using this technology which costs as little as $US 100K or no more than $US 200K (for medium size company) and potentially pay back within a year (in case it helps to boost annual revenues by 10%).

In next post, we will discuss available technologies, strength and weaknesses of each, how applicable each one is in certain situation.  What factor should be considered when company (such as bank XZY) considering implementing such a business analytics (BI) solution.