Tags Posts tagged with "Capex"

Capex

“A lot of people have been talking about how capex is going to come down with SDN and I’ve said, ‘No, it’s going to stay the same for Verizon’  – Fran Shammo, CFO, Verizon. May 2016

This comment right from the head honcho of one of the largest Telcos in US cannot be taken lightly. Despite lot of talk in the industry about SDN / NFV CAPEX reduction benefits, we’re seeing skeptical questions around smooth transition to virtualization. But I will keep SDN /NFV discussion for some other day. Let us focus on the topic – CAPEX spends. Verizon’s CFO has confirmed its CAPEX spend going to stay, despite network virtualization!

The CAPEX focus could be different for different Telcos. For some Telcos like Verizon, their CAPEX spend mainly focused on future technologies, leading the market, greater customer experience etc. For some other Telcos, their budget constraints force them to think hard and do delicate trade-off between strategical “revenue-growth” projects and tactical maintenance projects to keep up with network growth, retain customers, improve quality of experience etc. With this hard balancing at hand, what if Telcos are equipped with smart tools & methodologies that could help in optimizing their on-going CAPEX? But, is such thing exist? I will get there in a moment. Please bear with me.

First, let us go through few industry trends.  In our recent study from Gartner, we got few interesting insights.

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Here is short summary on the insights:

  • On an average Telco spends 15% – 20% of annual revenue on yearly Capital Expenditure
  • Increase in Capex spends w.r.t revenue (CAPEX Intensity = Capex / Revenue) is not translating into equivalent increase in revenue growth
  • Correlation between CAPEX Intensity and Revenue growth is a weak factor for Telcos mentioned in the regions. This means revenue growth is not linearly correlated with CAPEX spends
  • 5-year flat growth in revenues across geographies is not encouraging. Max 20% 5-year top-line growth in North America region and deep negative for Europe region (-11%)
  • Cost of capital over last decade is higher than RoI on an average across the industry
  • Notable positive point is the margins are maintained in 25 – 35% range across geographies. And it is imperative to maintain this margins to generate free cash to fund next CAPEX cycle but if not completely.

The above stats where CAPEX spends are not reaping substantial revenue growth indicates two major viewpoints:

  1. Strategic capital investments have a slightly long gestation period but not comparable to capital cycles of traditional industries like manufacturing industry.
  2. Bulk of CAPEX go into maintenance projects. That is, to keep-up with current network demand juggernaut, customer retention, quality of service etc.

For instance, a good chunk of leading Tier 1 North American operator’s CAPEX goes into wireless network for densification and getting future ready for 5G deployments. This could be a case for many big Telcos – investing on future technologies. On the contrary, we have also seen majority of Telcos’ CAPEX going in for second type of investment – meeting current network data growth. This is nothing wrong as such and very much required to keep customers happy.

However, if one looks at this fact in light of recent market research findings from one of the big four audit firms, it gives a different perspective. The research reveals that majority of the Telcos not equipped with enough tools or industry best practices to assess the CAPEX spends on projects, evaluate ROI for each such investment and perform sustainable capital allocation. This is a surprising revelation. It simply means that many Telcos are servicing on-going CAPEX without rigorous assessment on actual RoI vs planned RoI, are not taking forward lessons learned from previous CAPEX cycle. Even the Telcos who do have rigorous processes, right incentive structure, accountability of results etc. actually misses a critical point.

What Telcos underestimate?

The critical point is – generally the assets, especially the network assets are viewed from monetary value perspective only in this whole CAPEX scheme of things. The value that can be derived from un-lit or under-used network asset capacities for the CAPEX planned is not given deserved thought or action. This is because of the fundamental reason that financial and network data of assets are lying in silos. This data is never used together to gather useful insights to put the network assets to sweat to furthest possible aligning with ever growing network demand and broader strategic CAPEX – RoI goals. Telcos can do more with their data. It would require collaborative efforts with right partner to unleash the power residing underneath the siloed systems.

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Subex Blog

How does one gauge the financial performance of a telco?   Earnings growth, commonly measured using EBITDA, is favored by many analysts.  But how much of the story does this metric tell?   For a telco, OIBDA (Operating Income Before Depreciation and Amortization) may be a bit more insightful given that it generally excludes income and financial events outside of the core business.   Of course, there are many secondary metrics that often get attention during earnings calls and we know them well: ARPU, postpaid vs. prepaid mix, subscriber growth & churn, etc.   I’m going to make my case in this space for another metric that should be top-of-mind for executives, corporate boards and analysts: Operating Cash Flow or OCF.

Let’s start with a key component of OCF which is Capex Intensity.  This is simply the ratio of Capex to Revenue.   Ideally, it should be normalized to exclude one-time significant events like investments in spectrum.   Subex conducted a study of financial results for 44 large tier operators between 2011-2015*.   One of the interesting, if unsurprising, findings is that Capex Intensity has been rising steadily.  Consider the following chart.  In 2011, the average Capex Intensity was 15.9% for the operators in our study.   In 2015 it was 18.9%.   We also have data going back to 2008 which shows an industry average of 13.3%!

OCF_Chart_1

The chart shows Capex Intensity for Americas and Europe are slowly tracking upward.   In 2015, there was a huge spike for the big groups while there was a dip for APAC.  This is largely explained by inclusion of the big Chinese operators (China Mobile, China Telecom and China Unicom) in the “Groups” category provided by Gartner due to their scale.  Capex Intensity for these three was over 38% in 2015 as China scrambles to build out LTE infrastructure for all those folks using WeChat and shopping on Alibaba!

Now consider the five-year trend for OIBDA.

OCF_Chart_2

Between 2011 and 2015, for the operators in the study, OIBDA margin declined an average of 2.2%

This brings me back to Operating Cash Flow (OCF).   Anyone who runs a business will tell you that free cash from operations is their most watched number.   I ran a commercial kitchen with 5 employees for several years and, believe me, I lost many nights sleep over our cash position.  Then I got back into telecom.  What was I thinking?  But I digress…

My argument is that the influence of Capex tends to get buried in financial statements.   Certainly telcos have to invest in networks to fuel subscriber growth and deliver a rich customer experience.  But the trends in Capex Intensity (up) and OIBDA margins (down) are unmistakable and they compound each other.  Take a look at the next chart.

OCF_Chart_3

OCF = (OIBDA – Capex)/Revenue, or equivalently, OIBDA Margin – Capex Intensity.    So it is a fairly complete measure of the operational health of an operator because it considers Revenue, Opex and Capex.  Anything left over can be used for debt service, taxes and dividends.   Between 2011 and 2015, OCF among operators globally fell 5.3%.   This is a significant observation.

What can reverse the trend?  In the long term, business models that better compete with OTT players is certainly a hot topic of discussion.  Perhaps SDN and NFV will tilt network economics back in the telcos’ favor.   In the near term, it is clear that better Capex governance and controls can at least slow the trend.  Keep in mind that 100% of Capex savings flows to the bottom line, while an incremental dollar of revenue only contributes the margin amount.

I see these industry numbers as a call to action—managing and reducing Capex should be an imperative at the corporate board level for every telco.   Capex governance includes:

  • Giving commercials and finance teams some of the same visibility to asset utilization as the network teams.
  • Aggressively exploiting cases where assets can be reused before purchasing new
  • Proactively selling off excess assets while they still have value to other telcos
  • Keeping financial and technical records of assets fully aligned
  • Placing better controls on high-risk assets at the edges of the network such as CPE, set top boxes, access points, small cells and handsets

I’ll close with this observation— while SDN and NFV bring the promise of reducing Capex via virtualization and commoditization, the economics are not yet proven and the transition will take years.  Early adopters of NFV have found, for example, that it may take multiple Virtual Network Functions (VNFs) to replace the same function performed by one instance of legacy software on dedicated hardware.  This erodes Capex savings from virtualization.  The lesson is that exploiting approaches to reduce Capex in the existing network should not get lost when chasing the promise of virtualization.

If you would like more background on the methodology used for our analysis, and the operators we included, please write to me.

*Raw financial data supplied by Gartner.  Analysis by Subex.

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Telecom operators generally procure IT software in silos. This procurement process gets entrenched into weeks of discussions to arrive at the technical solution required as it needs to go through multiple steps like:

  • Agree upon professional services costs
  • Internal approvals from chain of commands
  • Hardware procurement, solution UAT
  • Finally end up structuring the internal teams to handle projects – commercials, execution, support et al – all coming out of one solution offered by a vendor.

This is how traditional businesses has been running in OSS/BSS space for a while. It gave a lot of opportunities to vendors to flourish and establish themselves. Unfortunately, it has also led to zoning of Telcos’ own data in proprietary systems which can’t communicate or freely share data among the systems to generate deeper insights or to leverage for specific business purposes.

On one hand, Telcos started to look for solutions or platforms to unify the data structures across the silos, derive customer centric insights – operational or strategic –  in order to generate much needed growth, customer retention and operational costs control. On other hand, Telcos are grappling with issues in solving specific business problems with vendor provided solutions which may or may not bear expected result at the end but consumes very bit of time, energy & money.

Many modern enterprises want to quickly evaluate and leverage low cost solutions to solve specific problems, transfer the accountability for the solution and at the same time partner with established vendors to bring value on the table. More importantly, enterprises are looking for low cost evaluation of the solutions and disown them gracefully if things don’t work eventually.

In this software driven world, agility in businesses are getting stressed upon in every business cycle. In the same sense, Telcos need to embrace this change and tryout innovative solutions offered that can bring value propositions, assimilate the value in day-to-day operations with appropriate checks and balances and reap benefits without worrying much on big upfront costs, vendor lock-in, in-house support processes and so on.

There’s way to do this. Many progressive enterprises across industries have already started doing it.

Embrace Cloud based solutions.

Imagine a vendor coming up with structured offering in a specific vertical – Telecom Fraud Management – on a secured cloud platform. Telcos who already have FM systems in place could evaluate new solution offered by the vendor based on new Industry trend without getting into long trenched contracts, evaluate the value quickly and either assimilate the new offering or disown it, with minimal pay-as-you-go monthly costs. For specific solutions like for instance Bypass fraud, Telcos can establish the business value proposition with agility using cloud offering.

Many innovative solutions are coming up in the market for which many Telcos are not sure how to bucket them in the traditional tool book. Such solutions not only promise significant operational cost savings but also influence in CAPEX savings, revenue generation and whole lot of other business drivers. Telecom operators need to be more agile in trying out these solutions, establish the business case with low TCO, lower overheads using cloud offerings and reap benefits on a continuous basis.

 

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Customer Journey Mapping can provide great insights on how customers see a company from their perspective. Insights that can lead to an improved customer experience, trust and loyalty

In the first blog in this series on customer analytics, the technique of Customer Journey Mapping (CJM) was discussed as a way to follow how customers move from one touch point to the next, and track their emotional well-being during those interactions. In the last blog I described how using a persona to represent a group of customers would allow marketing to get a better understanding of customers. In this blog I will explore how Customer Journey maps can be created for persona to visualize an idealized journey for the group represented. This is now becoming a well-accepted technique for not only improving user experience in software design, but also in the design of products, digital and conventional marketing channels, architecture and many other areas.

There are two basic approaches for creating persona. One is to base the persona on in-depth research of the customers within a market segment, and the other is to base the persona on intuition, sometimes referred to as a provisional persona. In reality, it makes most sense to use a combination of research and intuition, and then verify the persona with those who have front line contact with customers. Generally customers belonging to a company’s biggest market segment would be targeted first and a primary persona is created to represent them. If the team creating the persona do not have direct knowledge of the customers in that segment then they will need to conduct research to understand the values and motivations of the group.

Once a persona has been defined then it’s possible to look at how the company would engage that persona in a sale, and the hope is that the persona would follow each engagement at every touchpoint, even long after they’ve made the purchase and are using the product. The framework for this is known as the Customer Lifecycle. There are many versions of this but they all share some basic stages, as described by Jim Sterne and Matt Cutler in a paper called “E-metrics, business metrics for the new economy

  • Reach: Trying to get the attention of the people we want to reach.
  • Acquisition: Attracting and bringing the reached person into the influence sphere of our organization. 
  • Conversion: When the people we reach or have a more established relationship with, decide to buy something from us.
  • Retention: Trying to keep the customers and trying to sell them more (cross-selling, up-selling).
  • Loyalty: We would like the customer to become more than a customer: a loyal partner and even a ‘brand advocate’ Moments of truth

This can be represented either horizontally or in a circular lifecycle type chart

The Customer Life Cycle – Source: E-Metrics Business Metrics for the New Economy by Jim Sterne and Matt Cutler

The persona journey describes how it’s anticipated that a particular persona would move through the lifecycle. It would describe the channels through which it’s expected they are made aware of a product, how it’s expected they would research the product and what would motivate them to make a decision to buy. Key points in the journey where customers decide whether to continue or abandon the process are known as ‘Moments of Truth’, a term coined by Jan Carlzon, the well-known CEO of SAS Airlines who turned the company around in just a couple of years.

Walking in the customers shoes in this way is not easy, and would normally be done as a workshop with representatives from across an organisation, but it’s an exercise that can provide many useful insights. Service quality gaps, cross channel alignment, ways to better engage customers and align internal teams are just a few of the many benefits that come from journey mapping. When idealised journey maps are compared with the actual journeys that customers take then many preconceived ideas about how customers see and engage with the company may get thrown out and fresh ways to engage, retain and acquire new customers be discovered.

In the next part of this customer analytics based series of blogs I will be looking at the security implications of big data and advanced customer profiling, and how regulators around the world are trying to protect an individual’s right to be treated equally by large corporations.

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Telecom companies across the board often crisscross their blades with OTT players. While it’s true that Telcos are trying to find sustainable new avenues – few are succeeding, their current-state CAPEX keeps growing at an ever faster clip. This is mainly due to exponential data demand from customers resulting in increasing investments into network to keep up quality customer services. With ubiquitous mobile connectivity and video traffic demand spiraling-out, it puts enormous amount of stress on the networks. Telcos need to continue investing in this consumer trend [current-state CAPEX] and at the same time figure out alternative growth areas [growth CAPEX].

To invest in new avenues with better ROIs, Telcos need to keep close tabs on their CAPEX that goes into network for present growing customer demand. And follow the traditional mantra – keep the current cash flow as cushion and invest for future. But for many Telcos, the worrying part is large chunk of the cash flow generated is ploughed back into network to meet current demands. This leaves little room to focus on new growth areas. Telcos are forced to raise money via debt or other means, resulting in further stress on balance sheet and reduced returns to investors.

Let’s take a look at a snapshot of financial summary of a public listed global telecom major:

[Figures are normalized]

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On a closer inspection of this summary one could observe,

  • The CAPEX has increased significantly (50%), but contributed only marginal increase in operating income (2%) and revenues (10%) over a year.
  • At the end of three year period, the CAPEX investment grew nearly to 20% of annual revenue but the corresponding incremental revenues seen marginal uptick only.
  • Return on Assets came down to single digit despite spending cumulative CAPEX of nearly half of average yearly revenue for this period.

Without undue speculation and with publicly available data, one could do an educated guess: during this period, most of the CAPEX went into supporting & enhancing existing network infrastructure to keep-up quality services.

This picture is not much different from any other typical Telco in the developed or emerging markets. While Telcos try to figure out the next wave of growth, it is equally important to keep a check on the current-state CAPEX.

Telcos have no dearth of information in their siloed systems. It is just that few of these system’s data need to be unleashed to discover insights that can help in reducing CAPEX. For instance, reusing stranded assets in the network, warehouse and spare stores during purchase decisions would reduce CAPEX drastically. This would require deeper analytical insights generation, with collaboration among operation teams within the Telco towards achieving a common goal.

Telecom operators with better equipped analytical tools to gather operational insights and actionable work flows can reduce their on-going CAPEX, draw more mileage from the pan-network assets and derive better return on assets in the network.

Now that’s something that we’ve all heard at our workplace at some point..and believe it or not, its not entirely incorrect.

Traditionally most organizations have been created with a vertical structure having clear demarcation of responsibilities and identified handoff points for communication and information interchange between verticals. This was thought to be the most optimum way of assigning limited resources within the organization while allowing for specialization within verticals. Think of this organization as an architectural structure with three key layers:

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  • Apex of the structure represented by executive management and strategy layer of the organization
  • Pillars represented by different verticals within the organization
  • Strong base represented by organizational infrastructure which acts as a common foundation

While efforts are made by every organization to eliminate ‘silos’ in functioning, the inherent nature of this structure results in unidentified hand-offs, ineffective information sharing during hand-offs and compartmentalized view of processes leading to challenges in measuring, improving and most importantly identifying ownership of cross-functional processes. In many instances, different verticals end up shifting accountability of such cross-functional processes at the expense of progression. The pace at which technology, markets and customer demands are changing in present times demand a level of agility within the organizations to respond and keep pace with the market and competition. This places an enormous stress on the organizational structure, particularly on the handoffs between verticals.

Managing millions of dollars’ worth of Network Capex within a Telco is a cross-functional process which experiences similar issues of ownership, handoffs between verticals and lack of a common, centralized view leading to ineffectual Capex tracking much less calculating effectiveness of these Capex investments or return on investments. Typically, Finance is the identified owner of Capex investments in a Telco but most Finance teams struggle with deployment of Capex in the network and more importantly tracking and calculating the return on network Capex investments as they are heavily reliant on Operations team for this information.

Solving this Network Capex conundrum calls for a two-pronged approach, creating a cross-functional Network Capex Assurance team and enabling a supporting technological component to create a Network Capex Control framework. Lets have a closer look,

Network Capex Assurance Team

A cross-functional team which acts as the owner of Network Capex investments within the Telco – typically lead by the CFO or CTO. This team delivers critical insights and drives actions to enhance capital management practices in all phases of the business and comprises of representation from Finance, Planning, Procurement & SCM, Deployment, Operations and IT. The key responsibilities of this team would comprise of,

  • Custodians of Capex management processes
  • Capex planning and validation
  • Ensure data integrity across supporting systems
  • Capex tracking and analysis
  • Standardization & Reporting

Network Capex Control Framework

network capex frameworkAn enabling technological component which supports the Capex Assurance team in delivering their responsibilities by providing a centralized end-to-end view enabled by Network intelligence. Key insights from the framework would cover,

  • Centralized view
  • Standardized processes
  • Utilization and effectiveness
  • Capex & Opex optimization
  • Insights & Analytics

Enabling strong capital management practices is much more than operational or process changes in the organization; it is a fundamental change in the outlook of an organization. Embracing this change will enable agility, data integrity and measures for optimization, better equipping Telcos to respond to the rate of change in the industry..and that should be everyone’s responsibility!

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Natural human tendency is to focus more on things that affects our present rather than the future. Coming to things that affect us for which there is a lack of awareness about the “extent” of issue caused, there would be little or no attention from us to resolve them.

Let us look at the priority with which investment decisions are made by telecom service provider on the software systems that they wish to have. Before a service provider can go live with a product offer for their end customers, they need to have the network in place to support the product. The priority for the software systems they should have to support their products are:

  • The first and most important is the billing software. They do not want go wrong in the billing as it would directly affect their revenues.
  • Second is the assurance software to make sure the network and the services are up and running.
  • The fulfillment software to automate as much as possible the order to activation process
  • A software which will help in strategic decision making like a planning software.

Above are the verticals, now let us look at the horizontals which are the domain.

  • The first and most important aspect that is recorded well is that of the end customer. The entire lifecycle of a customer, right from acquisition to end of service to the customer in most operator environments is maintained well.
  • The second would be product life cycle management. This is important to know what needs to be billed based on the product that the customer is using.
  • The next important aspect is the maintenance of service life cycle.
  • By the time Telecom service provider gets all of the above going and fully operational, it is already a mammoth task for them and they tend to lose focus on Resource lifecycle management.

A recent survey that was conducted by TMForum led by Subex revealed the following findings:

  • 1 in 3 operators do not measure returns on CAPEX investment
  • 77% of the respondents believed that inadequate asset utilization leads to increase in costs
  • 55% of the respondents believed that network planning is based on guesses
  • 64% believed that capex planning is driven by technology and not business objectives

From the above findings it is clear that getting the right business process and tools around resource life cycle management is extremely critical for the long term health and efficient operations of a telecom service provider.

In this blog, I would like to discuss about the exciting new world of SDN, NFV and cloud technologies and the relevance of resource lifecycle management in this new world. While a part of the telecom operator community is very aggressively embracing the concepts of SDN and NFV already into their network, there are others who are waiting and watching to see how things progress. I strongly believe, for the telecom industry to break the shackles of “reducing margins” and “increase in the need of CAPEX/OPEX investments” that it is currently facing, the key answers can be provided by SDN, NFV and cloud technologies.

It is obvious that maximum energy is spent by telecom service providers, vendor community and standards bodies like ONF, ETSI, IETF, OPNFV etc. on how the network will work in this new world. Also, what I observed is that a bulk of the energy is being spent on defining standards around next gen BSS and OSS by TMForum, ETSI and ONF are in the following areas:

  1. Orchestrator
  2. VNF Manager
  3. VI (Virtualized Infrastructure) Manager
  4. SDN controllers
  5. Network and Application adapters
  6. Protocols used for communication with the devices and applications
  7. Policy engine
  8. APIs etc.

As we go about defining the standards, let us look at covering the life cycles of all the domains starting from Customer life cycle, product life cycle, service life cycle all the way to resource life cycle. In this new world, resources can be physical compute, storage and network resources or virtual resources like software licenses. Let us not restrict ourselves in defining standards only on the operational aspects of resource life cycle management (OSS inventory) which was done in the eTOM model of TM Forum. Some work is being done by one group under the ZOOM initiate of TM Forum to define standards on onboarding of the software resource. This is definitely good, but we need to cover all aspects of the life cycle right from onboarding till end of life.

So what if we do not do it, the systems will work, be operational and deliver services to the end customer. But we will probably end up being in the same state that we are in today, i.e. not being able to monitor how the CAPEX decisions of the past have fared, optimize on the investments already made, learn and improve in order to make better CAPEX decisions going forward.

I would like to leave you with the following thought before I end my blog. If we ask any telecom service provider on the number of database or web server licenses they currently have deployed in their data centers, they may or may not have an answer. But if we go to the extent of asking how many of these licenses are in use and in how many cases we have a compliance issue, I am pretty certain that almost all of them will not have a precise answer to the question. Going forward, if all the network functions are going to be software running on COTs hardware, the need to have answers to the above questions will be even more important.

Join the webinar on ” Telecom Asset Management in SDN & NFV world” to discuss more.

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While pressures on cost and margins with traditional services remain, fast emerging services are bringing in new risks and demands for new skills to manage them. Telcos are now looking for Managed Services engagements as a key differentiator in the emerging world.

 Telco’s are at the cross roads today – on one side they are pushing boundaries in a saturated and commoditized market to garner revenues and improve margins, whilst on the other they are pressurised to innovate and cater to the demands of the ubiquitous connectivity and data enabled services. Telco’s do not have a choice, but to act, to remain relevant in the market place with the changing landscape, new challenges and competition. With telco’s looking inwards for business optimisation – focusing primarily on the profitability of the business and monitoring the operational state of the business – what are the key trends shaping the industry and opportunity landscape ?

 Opportunities to remain relevant and successful in the new world order are plenty. Some of the initiatives are fairly quick to implement, while others require long term dedication and focus. Let us look at 3 key areas of opportunities in BSS for any telco.

  • OpEx control – Improving margins: The immediate and short-term opportunity for telcos is to control OpEx and improve margins on an already stressed traditional revenue streams. However, how do operators overcome the challenges facing them at two different levels – (a) skills upgrade (b) shortage of talented resources internally, and start improving their margins?
  • CapEx control – Improving RoIC: In the medium term, telcos are going to invest heavily in new and emerging technologies. The common conundrum corporate heads face are related to (a) successfully managing risks that comes with anything new (b) utilising the available critical capacity of technology & resources (c) responding timely & appropriately to market in face of competition and consumer expectations. How does Managed services help in providing the necessary capabilities to improve RoIC?
  • Economy of scale – Fuel growth: In the medium-longer term, telco leaders are going to look beyond their operating boundaries ; Industry consolidation, overseas M&A, new sources of revenue like PaaS/IaaS/SaaS for MVNOs or group op-co’s will be a key ingredient to the revenue growth. Is Managed services a viable solution to manage strategic and compliance risks?

Click here and download our latest newsletter in collaboration with Gartner for answers to the critical questions facing the industry leaders.

 

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As one of the largest capital line items in every telecom operator’s budget, Network Capex continues to drive large numbers every year since network augments and migrations to newer technologies are unavoidable budget items. Today operators are spending huge sums of money on new network infrastructure for advanced telecom services like LTE / 4G, IPX, etc. without adequate visibility on revenue growth. A recent survey points out 20% of the assets fail to return cost of capital and 5-15% of these network assets are ‘stranded’.

Hence, effective capital expenditure and network asset lifecycle management are rapidly becoming a big boardroom issue for telecoms operators. This is only possible when all functions work together to maximize the returns from their investments. Both the CFO’s and the CTO’s teams in a telecoms operator should have a holistic and collaborative view on the network asset investment.

The urgent need is to have a strategic approach to asset assurance program which manages and reduces network capex substantially. ROC Asset Assurance is different from ERP services because of its workflow and analytics elements. It can initiate workflow to ensure that all the applicable assets are procured and deployed when needed. ROC Asset Assurance helps the CFO & CTO function within the operator company to tackle the following pain-points:

  • Planning of capital spend vs budget
  • Tracking deployed assets and ROI on those assets
  • What to buy, when to buy, where to buy, and for what reason?
  • Information related to assets
  • Ensuring usage of all available assets at the utmost efficiency
  • Network resource capacity and the need to respond

To learn how an effective asset assurance program will provide complete confidence to operators that their network will grow to meet market demands while also guaranteeing optimal value for every dollar of capital budget spent, download our newsletter: Asset Assurance –  Preserving Capex While Improving Network Efficiency featuring research from leading Analyst firm Gartner.

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Over the years we have gained a deep understanding of the culture within telcos. We are best known, through the ROC, as specialists in Revenue Assurance and Fraud Management. As such, we know how to deliver different views of the same data.

Having successfully done this in the BSS world, we have turned our attention to the networking side of the business. Controlling costs and optimizing network capital investment are priorities for the business and managed by the CFO’s office. Optimal usage of the network assets and manage traffic effectively are under the control of the CTO’s office.

Both offices need access to the same information but in different ways. With different priorities, sharing the same information without interpretation or tailored analytical choices would make communications between the two entities very difficult.

A CFO needs to know how many assets are stranded and therefore not producing revenue. Right now, the status and whereabouts of only 75 percent of a telco’s assets are known. Knowing where assets are, knowing how long an asset is in place before it is revenue producing and knowing that delaying an investment for a month makes financial sense is of huge importance to a CFO.

Understanding which assets can be re-used in other parts of the network, or which need to be retired can help the CTO with his priorities. Some assets can be effectively re-sold, so what is a retirement to the CTO becomes a possible source of revenue for the CFO.

We believe that creating a view into network assets will benefit both offices and create a better collaboration between them. Revenue Assurance can provide a financial view of IT assets, which adds a new and effective dimension to that craft. So, too, Asset Assurance adds the tools to the network capex side of the business to actively manage it. We not only believe it, we know it. Working with one of our customers we found $17 million of stranded assets in a single week. Better yet, Asset Assurance also benefits the customer.

Talk to a Telecoms Manager about what he would like from his telecoms provider and he will not say more accurate bills as a priority. He accepts that billing is complex and accepts that his comms bill will never be 100 percent accurate. What he would like more than anything is to know what inventory is in place in his organization, where it is, whether it is still live and whether he is paying for it. This can be discovered with Revenue Assurance tools, but now the communication providers can actively manage the whole inventory issue with the new Asset Assurance solution.

By leveraging our experience in Revenue Assurance and Fraud Management in the OSS world, we are now proud to be able to offer solutions and expertise to operators in all of the vital parts of their business, including network. And we are already proving that this concept of asset assurance is important in managing assets more effectively and efficiently.  We also believe, like many such solutions, that we will discover uses for Asset Assurance that we cannot quite see yet. We will keep you up to date with the story as it unfolds.

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