IBM lands huge Sprint deal

In a deal valued in the billions of dollars, Sprint signed on with IBM Business Consulting Services to revamp its customer care service, a Sprint business unit that up until now has a less than sterling reputation.  

In the multiyear deal, valued at “multibillion dollars,” IBM will redesign key aspects of Sprint customer care, offering both consulting and a complete overhaul of its customer care infrastructure.

The initial agreement will run for five years and Sprint officials are estimating a $550 million reduction in costs over the first three years. Reductions are expected from improved call routing, reduction in average call handling time, higher rates of first call resolution, and better self-service tools.

One industry analyst said that Sprint was willing to turn over what amounts to the core of its business, interactions with its customers, because of poor ratings it continually gets in customer satisfaction surveys.

“The consensus is that Sprint’s customer service record has not been that stellar,” said Dana Stiffler, an analyst at AMR Research.

Stiffler added that the scope of the engagement is very large and that there are few companies other than IBM that could pull it off.

“In some ways Accenture or Cap Gemini Ernst & Young can pull off similar deals, but IBM has the entire product stack. In terms of the technology reach, the others can’t compete,” said Stiffler.

To that end, IBM will create a unique customer care desktop that integrates Sprint’s 17 different customer care applications into a single application, according to Dean Douglas, vice president of IBM Global Services.

In redoing customer care end to end,  IBM  will use what it calls On Demand Customer Interaction Center technology, which is both a product and IP  [intellectual property] that allows for integration of the IVR [interactive voice response] system,  call management, call routing, and call resolution into a single platform.

For example, once integrated, the system can automate the escalation of a customer call from self-service up through a skills-based routing system, which will reach customer care agents with higher levels of technical expertise when needed.

To integrate customer care with Sprint’s other business units, IBM will also place IBM employees in its marketing, billing, and IT units, said Douglas.

“It’s less than 200 people. We are hiring Sprint people and putting them on the IBM payroll.”

This is not the first such win for IBM in an emerging trend called business transformation outsourcing, said AMR’s Stiffler.

“That’s what IBM, Cap Gemini, and Accenture are calling it,” Siffler said.

For IBM’s part, other recent deals include running all the financial administration for BP Amoco and all of Proctor and Gamble’s human resources operations. 

Emerging trend or not, Douglas said IBM has no competitors in this area.

“When we acquired PWC [PricewaterhouseCoopers] this was a key reason, to be in this business,” Douglas said.