CIS9230 GlobalizationandTechnology TeamA

RED HAT GLOBAL SUPPORT SERVICES: THE MOVE

TO RELATIONSHIP-BASED CUSTOMER SERVICING
AND KNOWLEDGE-CENTERED
SUPPORT

Due:September20,2013

@3PM

TEAMA:

1
CIS9230 GlobalizationandTechnology TeamA

ExecutiveSummary
SituationAnalysis
MajorProblem/Issue/Concern(s)
Alternatives
Strategicalternatives:
Technologicalalternatives:
FinalRecommendationandConclusion
References

2
CIS9230 GlobalizationandTechnology TeamA
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.
3
CIS9230 GlobalizationandTechnology TeamA
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
4
CIS9230 GlobalizationandTechnology TeamA
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
5
CIS9230 GlobalizationandTechnology TeamA
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
6
CIS9230 GlobalizationandTechnology TeamA
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.

7
CIS9230 GlobalizationandTechnology TeamA

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
8
CIS9230 GlobalizationandTechnology TeamA
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
9
CIS9230 GlobalizationandTechnology TeamA
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
10
CIS9230 GlobalizationandTechnology TeamA
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]
11
CIS9230 GlobalizationandTechnology TeamA

www.technologyreview.com/news/423159/technologywillmakecollaborationyournextcompetitive
advantage

12
CIS9230 GlobalizationandTechnology TeamA
References

Borden,M.(2000,July24).WallStreetdoesn'tgetthecultofLinux.Retrievedfrom
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

13
CIS9230 GlobalizationandTechnology TeamA
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

14