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Growing Market Share in a Highly Competitive Financial Services Industry

Setting business sights on end-user experience of premium value-added services: The key to customer acquisition and retention

Executive summary

As today’s financial services organizations strive to retain existing customers and attract new ones, many are introducing new, enhanced products and services over the Web. For such offerings to be successful, companies must structure new applications to provide optimal performance and service— while closely managing the total cost of ownership (TCO).

To do so, many financial services organizations are turning to the practice of service-level management (SLM), a set of management activities that helps companies ensure that online customers receive the best possible experience through e-business applications that perform consistently and outstandingly—all while managing critical cost structures.

Keynote Systems—the Internet Performance Authority—focuses its SLM philosophy strictly on the end-user experience, taking into account all of the factors that affect the end-user perception of a given Web application—always with an eye toward operational cost. Leveraging a neutral, independent third party such as Keynote, financial services organizations can resolve intra-organizational tensions related to service-level issues. Consequently, these financial services customers can:

  • Protect revenue streams and retain existing customers through Web applications that perform exceptionally—every time
  • Attract new customers and grow revenue with enhanced performance for innovative, value-added online services, prioritizing those offerings and clients for optimal customer service
  • Take advantage of an outsourced service delivery model to prioritize issues that impact the end user, resulting in effective management of operational costs and an increase in shareholder value and the overall bottom line

Center the organization around customer needs

Today’s financial services institutions often find themselves walking a tightrope. They are expected not only to retain existing customers in order to maintain steady revenue streams, but also to up-sell new services to existing customers and compete vigorously to attract new, high-worth clients away from the competition to grow revenue. Many firms do so by introducing new value-added products and services.

For example, many trading firms have chosen to implement optional premier services such as value-added online research or even enhanced trading execution speed for premier customers. Residential mortgage companies are offering online credit management and underwriting applications. And insurance firms are giving brokers access to online risk management and processing applications to help them manage client applications.

At the same time financial institutions are offering these new services, however, these companies face strong pressures to boost shareholder value and the overall bottom line through the aggressive management of operational costs. Adding new products and services can require substantial capital investment. Will offering premier online research or new account services fly in the face of cost-cutting initiatives?

Leading financial institutions today know that success requires a balance of all of these critical initiatives. Not only is it paramount to structure new applications optimally to provide the right tools and services at the right place and the right time—it is also equally critical to do so without incurring exorbitant infrastructure or staff costs. Even more importantly, it is critical to ensure that all of this is accomplished while delivering the best possible performance for new and existing Web applications.

Fortunately, there are solutions available to help financial services firms accomplish this balancing act. Doing so means embracing fresh business models that not only emphasize operational efficiency to yield real, sustainable value, but also perform one critical function: centering the organization around customer needs. This approach requires focusing on the end-user experience and streamlining underlying operations processes to maximize end-user impact—all while managing TCO. In this manner, financial services organizations can maintain existing customers and revenue streams— while unlocking untapped profit potential from new and current customers.

At the heart of this customer-oriented approach is the concept of customer satisfaction via quality e-business application performance. Consistently high levels of customer satisfaction are critical to protecting an existing customer base from the ever-present competition as well as luring potential new customers away from that same competition.

Forming a foundation for customer satisfaction

For many financial institutions, keeping a finger on the pulse of customer satisfaction is a tricky task. The concept of customer satisfaction is, by definition, somewhat intangible and therefore difficult to measure. How does a firm know exactly how happy its customers really are? How does it go about increasing their satisfaction? How does it measure its success or failure in pleasing customers?

Today, many organizations are answering these questions by setting their sights on SLM. From a business perspective, SLM is defined as a set of management activities designed to ensure that e-business applications consistently meet or exceed desired levels of customer service. From an IT perspective, SLM includes creating, tracking, and modifying applications, delivery environments, and supporting operational processes to meet pre-defined service-level objectives. And from all perspectives, SLM emphasizes the optimal management of cost structures.

In short, SLM can provide financial services organizations with a means to ensure that online customers receive the best possible experience through e-business applications that perform consistently and outstandingly— all while managing and maintaining critical cost structures. And because an effective SLM strategy balances cost with customer satisfaction, it can help financial institutions navigate the fine line between aggressively managing cost structures and introducing new value and customer satisfaction.

A three-tiered approach to successful SLM

IT and e-business groups alike know that successfully launching a new online service or product is no mean feat. Once an application is designed, it must not only be tested and proven, it must be constantly monitored for performance and customer impact. For this reason, effective SLM strategies encompass three critical stages:

Setting competitive yet reasonable performance expectations

Once a financial services organization decides to offer a new tool or enhanced service online, it must set performance expectations and standards for that application in order to define how its success or failure will be judged. For example, an online brokerage might conclude during this phase that an acceptable transaction time for its online trades is two seconds or less.

It is extremely important that both e-business and IT teams work closely together at this stage to define competitive—yet reasonable—performance standards and problem resolution clauses in the form of concrete service-level agreements (SLAs) for new applications. In the past, SLAs have been defined somewhat differently by IT and e-business groups, often resulting in unrealistic or unmet expectations. For example, IT groups have traditionally defined SLAs in relation to the performance of network components, servers, CPUs, and network usage while e-business groups have set them without completely understanding actual infrastructure capabilities. Ideally, SLAs should be defined competitively within the context of industry benchmarks while also taking into account historical data and the capabilities of an institution’s IT infrastructure.

Preparing for a successful launch in light of performance expectations

This stage goes hand-in-hand with the service-level planning stage for new applications, or, for enhanced applications with available historical performance data, following the planning stage. When the service-level expectations for a new or enhanced e-business application have been determined and the application is ready for launch, application deployment teams must ensure that the underlying technology infrastructure is capable of delivering upon the desired service-level expectations given the expected user load. To do so, applications support teams must test and assess the application’s readiness and plan for the required capacity. If testing reveals any issues or problems that prevent the application from being launched, further determination activities must be used to pinpoint exactly where failures are occurring so that issues can be quickly resolved and the application can brought to market.

Delivering on expectations in the midst of constant change

From an operational perspective, this stage involves delivering consistently on the service-level expectations set in the planning stage while keeping exceptions to a minimum. Following the capacity-planning exercise, when the application is launched, traffic patterns often deviate from the expected load used for the readiness assessment. Moreover, unplanned server and application outages occur, leading to constant changes in the application infrastructure that can impact the end-user experience. To manage quality service levels in the midst of constant change, application support teams and e-business application owners need to manage performance from the end-user perspective. To do so, application support and operations groups must detect service-level violations from an end-user perspective, work effectively to triage problems, determine associated root causes, and resolve issues. In addition, it is also critical that operations groups validate all fixes to ensure that they have actually resolved issues with the end goal of improving user experience. In this manner, the delivery phase of SLM can ensure that SLAs are met and customer experience remains consistently above par.

Keynote Systems: orienting SLM around the customer

Some SLM solutions today focus only on the IT resources—servers, networks and applications—that deliver end-user services. Others monitor application performance solely within the data center. Only Keynote Systems focuses its SLM philosophy strictly on end-user experience. Keynote’s approach towards SLM starts with the end user and takes into account all of the factors that affect his or her experience of a given Web application.

No two users access a Web site or e-business application in the same way. Users utilize different backbones, different geographies and different access speeds. To take all of these variables into account, Keynote has built a global monitoring infrastructure to provide customers with the most accurate Internet perspective on Web performance available.

Keynote bases all of its services on an unsurpassed global infrastructure comprised of over 1,600 measurement computers in 50 cities worldwide that take more than 40 million Internet performance measurements every day. Keynote can measure, monitor, diagnose, test, and improve the performance of Web applications in real time, including those built using Web services, from inside and outside the firewall, and can deliver easy-to-interpret performance metrics through a Web portal or daily e-mail reports.

Through an outsourced-services delivery model that helps customers manage cost and lower their total cost of ownership, Keynote offers an SLM solution that encompasses all three phases of effective SLM:

Service-level planning

To be successful, enterprises need to define service levels that reflect both IT capabilities and customer expectations. Keynote offers a complete service-level practice engagement to help customers develop realistic and competitive SLAs and devise a methodology to monitor ongoing compliance. This engagement uses Keynote products such as Performance Scoreboard® to help customers define service-level standards within the context of historical system usage, application infrastructure, end-user impact, and competitive benchmarks to achieve:

  • Superior service levels
  • Improved customer satisfaction
  • Top-line revenue enhancement

Keynote effectively bridges the gap between IT and e-business groups by enabling them to create service levels that reflect application capabilities under varying traffic conditions. Moreover, by providing industry indexes that reflect the relative performance of e-business leaders in the financial services industry, Keynote allows e-business owners to define service levels to achieve market leadership. By combining these two perspectives, enterprises can set more realistic service levels and ensure that performance targets are in line with business goals. In fact, financial services institutions can actually use service-level definitions to competitively position services to attract new customers away from the competition. To enable new customer acquisition, Keynote also offers a competitive analysis engagement to provide deep insight into application components and their impact on various user groups relative to specific competitor applications, thereby enabling enterprises to enhance their competitive positioning.

E-business readiness and capacity planning

Keynote offers a comprehensive capacity planning solution to ensure that customer Web infrastructures are prepared for expected user loads and mixes. Keynote’s approach blends performance testing and tuning expertise with realistic traffic simulation and intelligent root-cause detection technology so customers can:

  • Pinpoint which parts of a system require tuning
  • Eliminate application slowdowns and crashes
  • Allocate IT dollars where they are truly needed
  • Improve online user satisfaction

While Keynote’s capacity planning solution is used primarily before a new application launch, the performance tune solution enables organizations to periodically diagnose critical issues and tune them for superior ongoing service quality. With innovative arrival rate methodologies and real-world traffic, both solutions above use products such as Keynote LoadPro® to allow customers to simulate the complexity of the Internet and the behavior of actual end users. Using these solutions, organizations can pinpoint performance bottlenecks before they impact their end users and the organization’s bottom line.

Service-level delivery

Keynote service-level delivery allows IT and e-business to collaborate and manage application performance from the end-user perspective while leveraging existing IT investments. Keynote’s service-level delivery solutions are based on products such as Keynote Application Perspective® and Keynote Transaction Perspective that precisely emulate end-user transactions from global locations and from within the firewall to provide end-to-end visibility into user experience (Figure 1).

Service Level Agreement

Figure 1 Real-time, end-to-end visibility into service-level compliance

For applications focused on a known set of high net-worth users, Keynote products like Traffic Perspective can provide invaluable insight into actual end-user interactions with the application and the associated user experience. In addition, performance insight from any of the Web monitoring products is seamlessly integrated into a highly visual Performance Scoreboard console that empowers application support and operations teams to monitor compliance with end-user SLAs.

To help accelerate the trouble-ticket allocation process and associated mean time to response, should an application performance issue arise, the appropriate operations or application support personnel can be notified automatically via alerts triggered by component metrics such as DNS, network latency, first-byte, and more. The appropriate contact can then use the diagnostic information provided in Keynote’s operational consoles (Figure 2) to instantly triage and diagnose issues that affect end users and swiftly bring them to resolution. Moreover, Keynote integrates outside- and inside-the-firewall performance diagnostics directly into existing systems management frameworks to help prioritize amidst several events based on customer impact, maximizing returns on existing IT investments.

Service Level Agreement Details

Figure 2 End user experience-driven issue resolution

Achieving business goals through effective SLM

Managed effectively, a comprehensive SLM approach can help financial institutions successfully address all four of the core challenges introduced at the beginning of this paper:

Retain existing customers to maintain steady revenue streams

Customers today expect consistent and exceptional levels of service from online banking and trading applications. If slow performance and service outages force them to wait for access to their critical financial resources, online customers will take their business elsewhere. And smart banks know that it is more expensive to acquire a new customer than to it is to keep an existing one.

In order to retain valuable existing customers, financial institutions must ensure not only good quality of service from critical Web applications, but also consistency in that performance. Customers will not remember the ten times an application worked perfectly—they will remember the one time that it failed.

For this reason, banks and online trading companies must constantly monitor customer experience from an end-user perspective. It is not enough to simply ensure that Web servers are operating at reasonable capacity levels, therefore assuming that customers are being serviced sufficiently. Companies must look holistically—to the end-user experience—to ensure that customer needs are consistently met and exceeded.

Only Keynote has a global network of 1,600 agents worldwide to monitor the performance delivered by key applications from an end-user perspective—anywhere in the world. Keynote can identify when the end-user experience is being compromised so that companies can take action to immediately correct the issues and minimize the number of impacted users. Moreover, monitoring from the end-user perspective and utilizing private agents allows operations teams to easily separate external Internet service provider (ISP) network issues from application issues behind the firewall. Performance exceptions provided by an independent third-party authority such as Keynote enable organizations to collaborate with ISPs, helping them better manage their ISP service-level contracts. Ultimately, managing service levels across the end-to-end network empowers organizations to deliver consistently good performance to their end users and, in doing so, maintain constant revenue streams from their existing customer base.

Grow revenue through new value-added products and services

Offering new products and services raises the performance stakes. In order to grow revenue, new content and applications must perform at the same or better level of performance as existing applications. For this reason, companies must undergo two important steps when launching a new product:

First, prior to launch, they must carefully plan infrastructure capacity to make sure applications can handle expected user load and mix. For instance, trading companies choosing to offer premium trading execution speeds can utilize Keynote’s capacity planning solution to ensure that the application infrastructure can support promised trading speeds.

Second, because new applications are more prone to issues that those that have been operating for months, companies must be at the ready to respond quickly to performance issues arising in freshly introduced products and services. For example, a brokerage firm offering new premier research applications can utilize Keynote’s service-level delivery solution to not only rapidly detect performance issues arising with the new service, but also prioritize those issues amidst a shared operational pool. Handling new application issues with relative priority can help ensure that a new offering is not diluted by poor service quality and that, during the important initial stage of a new business initiative, customer satisfaction is protected and enhanced.

Attract new customers away from the competition

When dealing with new customers, the bar for application performance is set even higher than it is for existing applications—and sometimes even existing customers. For this reason, some companies choose to offer tiered service levels, ensuring that new high-net-worth customers receive the very best possible levels of service. When doing so, a company is interested in obtaining more details on the quality of the end-user experience for a certain subset of customers.

For instance, for a brokerage offering new premier research, Keynote service-level planning can offer a unique opportunity for e-business executives to perform competitive benchmarking and offer time-critical content even faster than the competition. In fact, this differentiation can be used as an advertising tool to help attract new and existing customers to the service.

Once a service is launched, the Keynote service-level delivery solution—using Traffic Perspective— gives companies the ability to monitor a specific subset of its customer base and provide a much deeper level of granular vision into the experience of certain customers. Keynote can help brokerages guarantee that they are delivering on their advertised promises, giving their high-net-worth customers the very best care and service possible—and thereby justifying the higher premiums charged.

Boost shareholder value and overall bottom line through effective management of operational costs

Built over years of process development using industry best practices, Keynote’s approach to SLM encompasses all of the activities required to ensure that e-business applications meet and exceed customer expectations. Key to this approach is effective application management—which also includes cost structure management. Keynote’s SLM approach fosters effective cost management in two ways:

First, Keynote prioritizes all issues surrounding the most important factor: end-user experience. In short, Keynote monitors what matters. Rather than wasting time analyzing low-level data that may not be relevant to customer experience, Keynote’s philosophy advocates prioritizing issues that impact the end user, so companies spend precious operational resources where they are needed.

Second, Keynote’s outsourced service delivery model provides customers with all of the data, support, insights, and alerts they need to meet customer expectations—with none of the headaches and investment requirements of purchasing and managing the hardware, software, and tools involved. And this can add up to very significant savings. Thanks to the outsourced delivery model, Keynote customers can focus on providing the best possible online experience to their customers—the ultimate goal of e-business application management—and not on the ongoing expenditure of maintaining and managing software.

In addition, Keynote also allows customers to leverage their existing investments in systems management frameworks, thereby bridging end-user intelligence to their own enterprise management systems (EMSs). Using Keynote adapters to EMS frameworks such as HP OpenView, BMC Software, IBM Tivoli, and Computer Associates Unicenter, companies can place customer-experience alerts side by side with resource and network metrics. In this manner, they can make better use of the rich resource of metrics from their EMS system, achieve a better return on investment from EMS investments, and streamline the operational resolution process even further.

Setting business sights on the end user—and future success

By orienting themselves around the customer with a single-minded focus on end-user experience, financial institutions can not only protect existing revenue streams, but can unlock great potential returns on new online products and services from existing and new customers. Keynote Systems, an independent, neutral industry authority on e-business performance, provides financial institutions with a comprehensive SLM approach to meet and overcome the ever-changing challenges of the financial market—today and in the future.

To learn more about SLM solutions from Keynote, visit www.keynote.com.

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