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Category Archives: Asset Assurance

..but that’s not my responsibility!

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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The legacy network is dead, long live the legacy network!

I was recently asked by a Tier 1 client in North America if Subex can use our network discovery technology to retrieve information from D4 channel banks.  I honestly had not crossed paths with these relics of the voice network since my days doing central office engineering in the late 80’s.  So you may be wondering, in a day-and-age when the buzz is about SDN/NFV, IoT and everything in the “Cloud”, why is someone worried about the humble channel bank?

As it turns out, there’s plenty to worry about.  End-of-life technology can be a significant Opex drain.  Operators incur costs for energy (power, HVAC), maintenance and real estate to keep such equipment in place.  Compounding the problem is that much of this old equipment typically sits racked, stacked and powered… and idle (no traffic).   Channel banks are just one example.  Arguably, the entire fixed-line TDM network is retirement-age (I’m talking about SONET/SDH DACs and ADMs, voice switches, local loop equipment, etc.) and needs to yield to IP/MPLS and VoIP.

In a previous blog post, I wrote about what operators need to consider when planning a transformation from legacy technologies to future state.   For this post, I will stay grounded in the present and focus on this question: What strategies can operators employ to reduce their Opex and Capex burdens when operating a legacy network?   For starters:

  • Use network discovery techniques to determine the operational status of your actively deployed network assets.
  • For all unutilized assets, apply a deliberate strategy to disposition everything.  Too often, because operators don’t have adequate visibility to operational status and utilization of assets in the legacy network, they default to what I call a “rust-in-place” strategy.  Since they lack the visibility, they ignore the problem.  Equipment sits idle or underutilized and costs add up.  My suggestion is to proceed with purpose—if an asset is carrying adequate revenue-producing traffic, fine.  If not, do something about it!

Asset Program Diagram

For assets with reuse potential, then the options include:

  • Harvest and reuse elsewhere in the network.  Benefit: Avoid Capex for new purchases.
  • Perform grooms to more densely pack some assets and free up others for reuse or end-of-life monetization.
  • Allocate as spare.  Benefits: Reduced maintenance costs when spares are optimized in terms of count and location.   Customer experience is improved and exposure to SLA penalties is reduced when spares are well managed.

If there is no reuse potential, then consider:

  • Reselling on the secondary market if there is still industry demand for the asset.
  • If not, then recover and sell for salvage value.
  • In both cases, remember that the NPV of averted monthly energy and real estate costs may actually exceed any direct cash received when the asset is sold or salvaged.
  • Don’t overlook other possible financial benefits from disposing unneeded assets such as tax write-offs and reduced insurance premiums.

Most importantly, seek an asset management and logistics partner who can help you squeeze the most value from legacy assets.  Elements of a legacy network cost reduction program include:

  • Automated audits via network discovery
  • Asset evaluation and disposition recommendations
  • Capacity utilization trending and related analytics
  • Asset tracking
  • Turnkey asset recovery services
  • Resale valuation and brokerage services
  • Eco-friendly recycling
  • Analytics for sparing level optimization
  • Spares management
  • Warehousing and related logistics services
  • Warranty and annual maintenance contract management
  • Test, repair and engineering services

Subex provides industry-leading asset management solutions and services.  With our forward and reverse logistics partners around the globe, we can help you to establish a turnkey and highly effective legacy network cost reduction program.

Getting Closer to a Reliable FAR

OK finance teams, time to come out of the shadows.  At most operators with whom I have worked, the focus of enterprise data quality efforts has been on optimizing network operations.  Misalignment between the network and data in systems that support planning, provisioning, activation and service assurance adds friction and cost to essential telco processes.  No new insight here.

Lately I’ve been spending more time with the finance guys.   Despite stereotypes to the contrary, they’re not just number crunchers.  They care about what’s in the network- where it is, how old it is, the condition it’s in, where it’s been, where it’s going and what happens at end of life.  Complicating their lives, the financial database of record for network assets, the Fixed Asset Register (FAR), typically suffers from the same data issues confounding the Ops teams—if not worse.

Sounds bad, but Finance doesn’t have to worry about delivering or supporting new services.  So what’s the harm?   Based on the earful I’ve received from finance organizations, including a Tier 1 CFO—plenty.  This diagram provides a sampling of corporate functions dependent upon accurate asset records in the FAR:

Mission Critical Role of the FAR

Role of the FAR

Among the potential costs of inaccurate fixed asset records are:

  • Improper calculation of depreciation
  • Failure to identify impaired assets and candidates for accelerated write-downs
  • Overpayment of property taxes
  • Overpayment of insurance premiums
  • Restatement of past financial results
  • Risk of regulatory penalties
  • Exposure to fraud, theft and asset mismanagement cases

Such issues get corporate board-level attention.  I am aware of several recent cases of poor FAR audit results prompting an operator to launch a FAR cleanup effort or even a full asset management program.

To their credit, financial reporting analysts I have spoken with are not blind to their data woes—just typically dependent upon compromises and work-arounds.  They often manage as best they can by mining numerous B/OSS’s to cobble together a view of assets across all network layers and asset classes.  Gaps and inaccuracies in this view abound.

Among the most common methods finance organizations employ to address the situation are manual audits performed on sample sites once or twice a year.   This mostly provides insights on how far off the FAR is from reality.  Generally, such spot audits are too limited and expensive to support systemic and continuous correction of the errant data.

So how do we achieve a reliable FAR (before the Board takes it up as a crusade)?

It starts with determining the impact of inaccurate asset records on financial reporting and planning, corporate governance, taxation and regulatory compliance.  Is the exposure minimal and bounded, or are the risks unacceptable?  Assuming the latter, a FAR get-well plan should include:

  • Data acquisition methods for both active and passive network assets that use the network itself as a source versus other systems
  • Comparison of this data to the FAR and reconciliation of errors
  • A permanent mechanism to keep the FAR aligned with the changing network so the data stays clean
  • Commensurate process enhancements and guardrails to reinforce automated approaches—which can never guarantee 100% accuracy on their own

When tightly aligned with the network, the FAR becomes more than a reporting tool, it can become a strategic enabler for Capex optimization.

Making the Connection

It’s 7AM and I can’t put off getting up any longer, so I look out the window and see there’s a light frost on the grass, which the weather channel warned me about 3 days ago.   An hour later I’m at the train station waiting for the 7:42 which is delayed because the frost has caused the points to seize up in a town 50 miles away, so now the entire South East rail system is completely snarled up. They predicted the weather and probably knew there would be a point’s failure, but still the network crashed. So I need to phone work to let them know I’m going to be late, but I can’t connect. Thousands of other commuters around me are also trying to phone ahead, but the network can’t handle it. It seems to happen every day.

We are surrounded by events which are beyond our control, but often they happen in predictable ways. The points failure was perhaps less predictable than my alarm, but we always knew that when the temperature dropped there would be some kind of failure somewhere that would lead to cancellations and a breakdown of the network. We always knew that rush hour would become an agonising crawl into town on overcrowded trains. The congestion could probably have been avoided if they could have predicted which parts of the network were under the most stress and the impact on the network in the event of failure or congestion at those stress points. Additional resources could then be provided at those points, or alternative routes planned to bypass the congestion and limit the ripple out effect, like a fire break.  The problem is only likely to get worse, and the network more unreliable, as the population increases and more people than ever rely on the rail network to get to work.

With the arrival of LTE and rapidly increasing popularity of Video on Demand then telecoms networks are also facing increasing levels of congestion and instability. Global data traffic is predicted to increase by 10 to 20 times by 2019 (Cisco).   In order to meet regulatory obligations and maintain customer experience Capex is set to spiral upwards. MNOs, who are already facing a year on year decrease in ARPU, will struggle to keep pace with demand and the risk of congestion will be ever present.

As with rail networks MNOs need a longer term strategy in place to understand where and when future choke points in the network will occur so that the risk of congestion can be eliminated for the least cost. Subex Capacity Management provides the capability to predict these points of congestion by monitoring and correlating metrics from across the network to provide detailed forecasts of network utilisation. Additional factors can be brought into the forecasts, such as the impact of major events or the rolling out of M2M services and different scenarios played out to understand how the network will respond. By automating the forecasting process network managers can be alerted long before issues become critical and congestion begins to occur. They can evaluate different options for either re-homing traffic or augmenting the network for the least possible cost. Stranded or un-utilised assets can even be recovered and re-located to satisfy demand for very little cost.

CFOs need to find ways to keep increasing revenue while controlling costs, and CTOs need to keep network delivering ever greater speeds as volumes of traffic increase exponentially.  Both need to look into the future to avoid a future of network instability, falling quality, crippling network costs and lost revenue.

The Pot of Gold at the End of the Network

Along with a thawing of the ground, March brought St Patrick’s day, a traditional Irish day of festivity in which everything Irish is celebrated. It’s also a great excuse to make green cookies and for the kids to dress up as leprechauns wearing shamrocks. In Irish mythology leprechauns are mischievous characters who love to play practical jokes, and keep a pot of gold hidden at the end of the rainbow. It takes a shrewd person to trick a leprechaun into giving up his gold. The search for the pot of gold at the end of the rainbow has become a popular way of describing the search for wealth and reward at the end of a journey.   In the world of network management there are rainbows everywhere, since networks are often full of stranded or underutilized assets at the far edges of the network.  Assets that are of great value, but hidden from view. The assets are hidden because they have been moved or not properly registered in inventory or Fixed Asset registers, and so they have become unusable since no one knows where they are.   The knock effects of this are felt throughout a service provider.

Finance

Don’t know the value of assets in the network so cannot provide accurate financial statements

Marketing and Sales

Don’t know what services the network can support or predict the cost will be for implementing new services

Network Management

Can’t manage the network optimally because assets cannot be re-purposed to augment network hotspots

Order drop out from inconsistent and unreliable records

These challenges not only affect the individual functional areas, but can result in open warfare between the groups. Network managers feel they must request ever bigger budgets to compensate for the extra demands being put on the network by new marketing initiatives, and finance fear they are being asked to throw money into a black hole with no possibility of understanding the return on investment. Without cross functional visibility of the companies network assets then suspicion and mistrust can develop between groups, which can cripple a company. Finance need to know if the assets they are purchasing are providing value to money, and marketing need to know if they can confidentially sell new services that will bring in extra revenue. Network managers want to know how they can provide the service required with ever tighter budgets.

By utilizing automated network discovery network managers could re-build, or even create, an inventory that would give them a true picture of what was available in the network. A network discovery tool that could also understand how those assets were being utilized, which services were running on them, and how the network was connected together, could provide a way to optimally utilize every asset to provide a robust network for the least possible cost. When combined with an asset tracking and life cycle management tool such as Subex ROC AA then network discovery can give unprecedented level of visibility of where assets are located, how they are being used and what value they are bringing to the company.  ROC AA with network discovery can uncover the pot of gold hidden at the end of your network.

Resources : pot-of-gold on Free pictures

The Capex Snorkel Effect

I just read through an interesting, somewhat validating article from Alex Leslie of Billing Views, talking about operator revenues and margins.  In a nutshell, revenue and ARPU are down across virtually every major operator in Europe, according to their own annual reports, and almost all were down by double digits!

I can’t help but believe that this is true in other regions as well, and the problem continues to be growing year on year.  Are we surprised?  When I moved my family to a new mobile operator, leaving another after 9 years, we leapt into the 4G world with all new handsets, 10x the speed, 10x the data, unlimited everything else, and our price went down.  Only 6 months later they lowered my plan price yet again, as part of a national retention promotion.  So why should dropping revenues and shrinking margins surprise anyone?

The fact is they don’t surprise anyone, but they do worry CFOs and Boards, as shrinking (and in some blog-bottleneck-graphcases, negative) margins are the final result of the trend.

The trend has to stop at some point…through mergers, spectrum purchases, policy controls, or even government intervention…it has to stop.  But how far will it go beforehand, and how does an operator stay strong in the face of an industry trend that seems (for the moment) unstoppable?

The answer may be more straight-forward then you think:  Focus on Capex maximization.  Period.  However this doesn’t mean slash budgets – although that is the current tactic in play across the industry.  What it does mean, however, is sweat the maximum efficiency out of your purchases that you can.  Why can programs like Subex Asset Assurance find tens, and now hundreds of millions of dollars in asset recapture opportunities across an operator’s business?  While there are many answers to that question, the fact remains that we are finding massive sums of Capex that operators can recycle right back to the top line.

Therefore the formula remains, quite possibly, this simple:  Maximizing Capex allows operators to build and transform their networks more completely, quickly, and efficiently, which puts them in a market strength position.  Think of it as having a longer snorkel than your competitors as financial crisis waters are rising…

Network Transformations – From Survive to Thrive

Riding my bicycle near Boulder, Colorado where I live can be a humbling experience.  Not only are there steep climbs and high altitude (over 1600m) to contend with but these are the proving grounds of pro-cyclists and world-class triathletes.  I often feel as though I’m riding a stationary bicycle in a gym as another flash of brightly colored spandex goes whizzing by.  So I decided that it was time to “transform” my ride, and now have a new carbon-fiber bike.  Will this make me faster and more efficient?  Perhaps psychologically!  It’s fitting that transformation has been on my mind in other ways recently.

Transformation has always been part of the telecom experience.  What is interesting to me now is not simply the pace of change, but the fact that it is occurring on so many fronts concurrently.  For starters, operators are transforming their core networks and related transport services.  Legacy TDM technologies such as PDH and SDH/SONET are being replaced by next generation optical.  To get there, many operators are planning to retire “old iron” ADMs and DACs, reaping not only network efficiencies but tremendous cost savings in real estate exits and lower energy consumption.  In mobility, the transformation experience is not only about the 2G-3G-4G upgrade path but about phasing out the traditional separation of voice and data services.  And of course, the compelling economics of commoditization and virtualization are moving to the network and network functions in the form of SDN and NFV.

Regardless of the technologies involved, transformation is almost always a messy endeavor.  Among the questions operators need to ask themselves when planning or executing a network transformation are:

  • Do we know enough about how existing services are routed through the network to confidently move them to the new network?
    • Even one customer outage can be costly
  • How do we best realize value from assets we fork-lifted out of the network?
    • What can be redeployed?
    • What can be sold for reuse or scrap?
    • Can we account for every asset that is decommissioned?
  • How do we assure the significant levels of new Capex investment are generating a suitable ROI?
  • What are the unique Opex and Capex risks when operating a “hybrid” network that is in a transition state?
  • What are the plans for legacy B/OSS?  Will they complement and enable the network transformation or serve as a hindrance?

Riding a bike is certainly easier than transforming a network, so I know my metaphor only goes so far.  However, having worked for many years at operators and experienced such transformations first hand, I know at least one aspect of the metaphor holds.  Falling off a bike and missing business targets for a delayed or failed transformation both hurt!  Fortunately, the Subex Network Analytics portfolio of products is engineered to answer the above questions—and many others—to help ensure a better transformation experience.

Preserving Capex and Improving Network Efficiency – Can both go hand-in-hand?

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.

How to save millions in Network Capex?

Effective capital expenditure and network asset management is rapidly becoming a big boardroom issue for telecoms operators in recent times. With decreasing EBIDTA and ever increasing pressure on margins, operators can no longer afford to keep on spending heavily on capital assets and network projects with no questions asked. Yet telcos are not managing their assets adeptly, and this is something that senior management needs to address with some urgency in order to control their capital expenditure more effectively and efficiently.

At the crux of the problem is the unfortunate reality that operators don’t have an accurate picture of what assets and network inventory they already own, let alone how these assets are being used. These problems have prompted Subex to launch ROC Asset Assurance, a service that combines inventory management with workflow and analytics so that operators can gain visibility into the complete asset lifecycle through dashboards, KPIs and reports. The solution is different from asset management 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. All of which means that operators should be able to and reduce their capital expenditure and manage the capacity needs of their networks with greater precision

Here is an interesting and exciting short video on ROC Asset Assurance which provides you better understanding of the Asset Assurance space, the problems and challenges faced by global operators and how ROC Asset Assurance can help them manage and reduce network capex.

Asset Assurance: Leveraging our Experience, Maximizing the Network

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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