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All posts by Andy Jacobs

Not just another “G”, how 5G is Already Disrupting the Communications Industry

In the early days of any transformative technology, there’s often an interesting mix of hype, anticipation and confusion.  At risk of exposing my long tenure in telecom, I’ll ask if anyone else recalls ISDN?  In a 1994 article in the Los Angeles Times, the author presciently said that ISDN “is the first thing that’s going to come along that begins to give people a taste of what the future will be like.”  For those of us on the inside (I was at MCI at the time), ISDN stood for “I Still Don’t Know”!

Fast forward to 2019 and what’s different is not only the technical advances themselves, but the pace of disruptive change.  And yes, there is still confusion.  If you have an AT&T phone in the US, and have noticed a 5G E symbol, you know what I’m talking about.  But hey, this is not a post about confusion (that would be too easy for me).  I’d like to focus on 5G disruptions, but not the disruptions that you have likely heard about.

The “disruptions” that come to mind for many industry observers when it comes to 5G are faster speeds, significantly lower latencies, a dense communications matrix for IOT, mmBand spectrum, etc.  Sure, there will be many headline benefits from 5G.  What I find more intriguing about 5G is its role as a catalyst for change reaching far beyond the radio network.  Let’s briefly explore some of these.

Interested in knowing more about Capacity Management for future networks?

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The whole world is starting to look like a data center – Historically, operator networks are full of dedicated telecom equipment rack-mounted in central offices, wire centers, and customer points-of-presence.  This contrasts with Web scale companies like Amazon, FB and Google who operate their networks from vast data centers full of commoditized hardware.  There will come a time soon when the two worlds merge, and 5G is helping to accelerate this.  A couple of key influences are 5G edge clouds and the emerging popularity of cloud-native applications.  These are prompting operators to rethink their networks and where they locate compute, storage and network equipment to enable the super low latencies of 5G.  Under the auspices of ONF, there is an project called CORD (Central Office Re-architected as a Data center) and the sub-project M-CORD which are loci for 5G virtualization and cloud-based initiatives like vRAN and vEPC.

“Where ever you are on your 5G journey, Subex is an essential partner to help you plan, operate, secure and optimize your network.  Our solutions will grow with you and guide you into the more open and automated future network.”

Open everything – Speaking of open source, 5G and open source software are tightly intertwined.  I recently attended the Linux Foundation Open Networking Summit and many of the sessions were devoted to community projects focused on establishing 5G infrastructure and enabling 5G use cases.  At the recent Big 5 Event in Denver, the first day was devoted to an open source track.  5G is the engine behind many early implementations of SDN and NFV.  “Open” doesn’t just mean software—so called “white boxes” start as bare metal hardware with operator or community-sourced software & firmware that turn them into routers or CPE or even ROADMs!  Why this trend?  Operators are looking to community-driven innovation to accelerate delivery of advanced use cases, lower costs and avoid vendor lock-in.

Start with use cases – Well, that’s a novel concept!  With 3G and 4G, there were clear expectations that simply enabling faster and more reliable mobile data would lead to various applications which leveraged that data.  The industry has taken a different approach to 5G.  At the Denver Big 5G Event, Ibrahim Gedeon, TELUS CTO, described 5G as “the first ‘G’ to be driven by use cases”.  These include AR/VR for factories, industrial automation, massive IOT sensing, connected cars and telemedicine.  5G is creating a rich mobile communications fabric with various speed and latency requirements that align with the specific needs of each use case.  Network slicing is another buzz-worthy aspect of 5G that allows operators to allocate portions of their networks to specific customers and use cases.

Break it apart, then put it back together – In industry parlance, this is called disaggregation and convergence.  Step 1: Take key network functions like PCRF, HSS and MME and peel them from the monolithic platforms on which they are currently hosted.  Step 2: Apply NFV to virtualize the functions into VNFs and make them portable. Step 3: Host the VNFs within converged platforms like COMAC, which is an ONF project that combines mobile, access and core networks under one umbrella.  This is part of a broader industry trend to package many telco functions and infrastructure components into massive all-in-one platforms.  Another good example, of course, is ONAP.  For many of these initiatives, the race to enable 5G is a driving force.

I’ve only scratched the surface of network and software trends that are precipitating extraordinary change in the communications industry.  The world is becoming more complex, not less.  Each promising new innovation usually has unforeseen issues that can increase costs and pose operational challenges.  Early NFV implementations offer such a cautionary tale.  Where ever you are on your 5G journey, Subex is an essential partner to help you plan, operate, secure and optimize your network.  Our solutions will grow with you and guide you into the more open and automated future network.

As for ISDN, I guess we do know now.  It really did help usher in the modern data-driven era.

To understand more on capacity management for future networks!

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Assurance by any other name… reflections on RAG Sydney

In my role leading business solution consulting for Subex Network Analytics, I traverse a lot of time zones.  People assume I have sage advice and perhaps an elixir to cure jet lag.  Sadly, I slog through the transitions like everyone else, employing a variety of coping strategies.   I just read about an intriguing approach that some members of the US ski jumping team will use at the Winter Olympics.  They are embracing jet lag, purposefully showing up just days prior to competitions.  Why?  For them, it is best not to think too much as they soar into the abyss.  Being in a foggy state may be an asset for some, but the rest of us still need to find ways to stay on our game as we trot the globe!

Fortunately, I managed to keep my edge for the Risk and Assurance Group (RAG) conference in Sydney, after traveling 18-time zones to get there.   It was a very worthwhile event, held on the Optus campus, with a good mix of operators and vendor partners.   Anamitra Mukherjee (Optus) delivered the keynote and provided material examples of how his team is challenging the traditional boundaries of RA, branching into areas such as handset assurance and network assurance.  Members of his team, Sujith Dissanayake and Gihan Samarawickrama, provided more insights on handset assurance during their talk later in the conference.   Anamitra explained that Network Assurance enables operators to determine whether they are spending the “right dollars” on the network.  Are there opportunities for cost savings such as harvesting unused assets and redeploying them?   He went on to describe the benefits of reconciling the fixed asset register against the physical network.  Payoffs include better asset visibility, more accurate depreciation schedules and efficient tax strategies.  Calculating the profitability of cell sites is another area his team is exploring.

From Anamitra’s talk one got the sense that it is time for operators to ask: “Is there more to assurance than RA?”  The consensus at the event was a resounding “yes”.   This was a major topic of discussion.  Eric Priezkalns, one of the event organizers, expands nicely on this theme in his blog post about the event.   Jayne Hunter of Vodafone Hutchison Australia explained that her role has migrated from RA to Margin Assurance.   Darren Rinaldi of Foxtel described how his team performs “entitlement reconciliation” within the broader context of process assurance.   Geoff Ibbett from RRM Solutions chimed in with the importance of contract assurance during a panel discussion.  I could go on but you get the idea…

To the list of assurances, I joined the party and added device assurance.  Subex is observing that usage-based frauds have been in decline (although IRSF continues to be popular) and there has been a sharp uptick in device and equipment issues.  Device/equipment frauds, thefts, reverse logistics breakdowns, etc. are becoming endemic.   During my talk, I pointed out that such issues are not limited to mobile handsets.  CPEs, set top boxes and even small cells can be considered devices and all have their own risks to mitigate.  To this mix you can add vCPEs and the need to control for excess license costs.

There certainly is a new world of assurances to contemplate.  In my book, there is only one missing.  Any takers for jet lag assurance?

Subex at RAG Sydney Conference 2018

RAG Sydney Conference 2018 : G’day! The upcoming Risk and Assurance Group conference takes place next week in Sydney at the height of the Aussie Summer.  For me, it will be an excuse to trade the snowy landscape of Colorado for Bondi Beach and fun in the sun.  Only kidding—won’t be hitting the beach but am looking forward to a great opportunity to interact with industry professionals and thought leaders in the business assurance domain.

On Day 2 of the conference, there will be two-part talk on the emerging discipline of handset and device assurance.   Sujith Dissanayake and Gihan Samarawickrama from Optus will share their journey managing handsets risks, including use cases they have tackled.  I have the privilege to speak next and provide an industry perspective.  Operators have always been challenged to control costs and reduce risks related to network edge devices.  While mobile handsets are certainly top-of-mind, devices can also include customer premises equipment (e.g. routers, set top boxes, DSL modems, ONTs), small cells, connected smart devices and even virtual assets.   A comprehensive device assurance program requires controlling for revenue, fraud and complex supply chain risks.  I will cover drivers and strategies for establishing a device assurance program.

Unchecked device frauds and mismanagement cost global operators billions annually.  Our industry is just now beginning to pay proper attention.  Let us help you ride the wave (ok, a Bondi Beach inspired metaphor!) to getting your device costs under control.  If you are attending the conference, I look forward to seeing you there.

The Steady Decline in Operating Cash Flow for Telcos

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%!

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.

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 = (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.

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!

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

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.

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.

A Weekend Warrior’s Guide to Capex Reduction

As a recreational athlete, I’m by default a numbers guy.  Being a wee bit past my prime competitive years, those numbers don’t look quite as good as they used to.  For example, I know that my rate of decline in a 10K running race is approximately 4 seconds slower per klick per year.  This motivates me to become more efficient.  With my training.  With my nutrition.  With my body mechanics.  I want to get as much from my aging athlete’s body as I can!

You’ve probably guessed where I’m going with this.  Operators universally strive to “sweat” as much from their networks as possible.  Consider a key metric found in many operator financial statements: Capex-to-Sales ratio.   It’s an indicator of how efficient an operator is at translating network investments (approximately 80% of overall Capex) into revenue.   From my reviews of operator financials, I typically see this number in the 13-20% range, with a mean of ~15%.  Compare this to Retail (4%), Transportation (8%) and Pharma (6%).   The Communications sector leads the pack.

Sure, we all know that Telecom is Capex-intensive.  This just puts a number on it.   But there are further pressures on operator balance sheets.  Most operators cannot maintain the required investments in their networks with cash from operations alone (as evidenced by declining EBITDA margins), so they pile on debt.  This becomes a vicious cycle.  Proceeds from bond sales yield more working capital,  but debt service requires free cash.   What’s the best way for an operator to increase free cash flow in the business?  Reduce Capex!  And around and around we go.

Hence it becomes imperative for operators to seek innovative ways to address seemingly contradictory goals  – reducing their Capex burden, while supporting increased bandwidth demands and new product/service rollouts.   For this I advocate turning to the numbers.  For example, do you have a metrics-driven understanding of:

  • Your asset utilization rate?
  • Which deployed assets have not carried traffic in the past 60 days?
  • Mean time from asset purchase to revenue contribution?
  • Sparing levels vs. industry best practices?
  • Detailed asset movement history for assets in your mobility RAN?
  • % alignment between your fixed asset register or ERP and your network?

An asset assurance program addresses these questions and many others to drive measurable improvements in Capex efficiency.  One final point—there is change looming on the horizon in the form of large scale network transformation programs.  These programs are only accelerating Capex pressures on operators.  I will explore this topic in my next post.  Right now I’ve got my running shoes laced-up and I’m headed out the door.  I’ve got to get my numbers back on track!

Introducing ROC Asset Assurance

Your network has a story to tell you about wasteful Capex practices which are likely reducing your Return on Capital.   If you are like most Operators, you may not be listening.

Much of the Telecom Industry’s recent focus has been placed on CEM and related analytics.  Certainly, customer acquisition and retention programs are critical as these drive revenue.   Network augments and migrations to new technologies are an unavoidable “price to pay” and the lion’s share of management’s attention is placed on squeezing as much revenue traffic onto pipes and spectrum as possible.

Trouble is, EBITDA margins are being squeezed for reasons that I’m sure you are all too familiar with.  Amongst many Operators with whom Subex has spoken recently, there is a growing recognition that network costs must be better managed, but also a frustration that lack of visibility and insights undermine the ability to do so.

As I said, your network has a story to tell you—in fact, many stories.  What’s more, it will give you critical information that your ERP or Asset Tracking system simply can’t.  Without this information, your ability to optimize Capex throughout the asset lifecycle can be significantly eroded.

Can you answer:

Where are my assets?

ERPs are important for managing vendor relationships, driving supply chain process and tracking warehouse inventory. Once an asset leaves the warehouse, responsibility for tracking and managing the asset typically shifts to technical OSS’s (e.g. Network Inventory).  Data quality within technical OSS’s is notoriously poor.  As a result, assets can become stranded, under-utilized and/or lost.   Consequently, Operators spend Capex that could otherwise be avoided if existing assets were effectively harvested and redeployed.

 

The Asset Lifecycle and Relative Positioning of ERPs vs. Technical OSS

When are my assets generating returns?

A critical capital management objective is minimizing the cash-cash cycle.  This is the interval between paying cash to a vendor, and receiving cash from a customer once an asset becomes productive (i.e. carries revenue traffic).   Each extra day in the cycle increases your cost of capital.  Reducing the cycle requires that you know the answer to:

  • How much time elapsed from the purchase of an asset until deployment in the network?
  • How much time elapsed from deployment of the asset until it became productive?

Equipped with such time-to-value analytics, finance can better hold Network Operations accountable for any excessively long intervals.  Network Operations also has the actionable information it needs to identify and correct inefficient deployment and service delivery processes.

Where did my assets go?

A very common dysfunction is mismanagement of assets once they are decommissioned or retired.  Some assets remain powered but unproductive, contributing to excessive energy costs.  Others simply disappear (whether moved, shelved or pilfered) and are no longer available for re-provisioning or salvage.  A recent PwC survey found that “one half of wireline operators and over one-third of wireless operators indicated that less than 50% of their assets are currently catalogued and managed.”  Network Intelligence enables Operators to track movement of assets in the network and provides an early alert when an asset has been removed and does not reappear elsewhere.

What assets do I need?

A critical component of avoiding unnecessary Capex is having accurate and timely Network Intelligence to guide the budgeting, forecasting and planning process.  This is especially important for portions of the network which are most sensitive to traffic growth.  It is essential to monitor resource utilization and equip planners with metrics and trending to ensure assets are purchased when needed, where needed and for the right purpose.

Introducing ROC Asset Assurance

Drawing on our industry leadership in Data Integrity Management, Capacity Management, Network Discovery and Analytics, Subex is launching ROC Asset Assurance to harness Network Intelligence throughout the asset lifecycle and do for Asset Assurance what Subex has famously done for Revenue Assurance and other business optimization areas.   Look for more exciting details on ROC Asset Assurance in the days and weeks to come.

Chasing the Elusive Business Case

Let’s say that you’re ready to take the plunge and  launch a business optimization project to make the world a better place.  You’re convinced that the benefits of the project will be quite compelling.  Who could argue the value of reducing revenue leakage, mitigating fraud risk or recovering stranded network assets?   There’s only one thing standing between you and your dream of making a significant impact to the bottom line—a winning business case!

In times past, the decision to pursue a new project was generally driven by a combination of need and budget.   If there was a manifest need, and appropriate budget had been allocated, then it was generally a matter of stack-ranking solution alternatives and picking a winner.   Ah, for the good old days…  today’s reality is that Opex and Capex are tightly managed and projects need to sink or swim based on rigorously scrutinized financial metrics such as NPV, ROI and Payback Period.    Business optimization projects that remove costs from operations, improve the leverage of Capex dollars or manage risk more effectively tend to score quite favorably against these metrics compared to many other candidate projects competing for enterprise budget allocation.

Which brings us back to the business case.    Years ago, when I worked for a major North American operator, the business cases I developed to get IT projects over the line were founded on “guestimates”.  Remember those?   They were cool because everyone knew that once the budgeting exercise was done, and the project approved, no one was going to come back and hold you accountable.   Remember what I said about the good old days?   In today’s business climate, defending a business case is akin to defending a master’s thesis.

In our Managed Services practice, I have spent a lot of time coaching clients on their business cases.  Before you read this as “here’s how to overstate the case to bump it to the head of the line,” think again.  Executives and finance departments are too savvy.  Plus, overstating a case ultimately serves no one’s interest.  My approach is to gather the best possible information to produce a solid and realistic case.  Look at the business case as a tool—it can help ensure that you are pointing scarce resources in the right direction and may indicate that your original direction needs to be changed.

Based on my experience, a well-constructed business case should:

  • Illustrate not simply costs and benefits but the expected timing of each.   It may be just as important to understand how long the project will be generating negative cash as the 3-year NPV.
  • Garner buy-in.  No, not just from the executive committee who will evaluate the project, but from the impacted stakeholders.   Do the groups most impacted by your projected Opex or Capex savings agree with your assumptions?  When they line up behind you, they can be a powerful force to help promote the benefits of the project.
  • Avoid “MBA math”, i.e. a small percentage of a large number is still a large number—look what we can save you!   Benefit calculations need to be specific, as granular as possible and have defensible and traceable assumptions– ideally using data sampling techniques or a limited-scope assessment.
  • Use a WACC (Weighted-Average Cost of Capital) that is approved by Finance for calculating discounted cash flows.
  • I could go on, but you get the idea…

Once you have completed a draft of the business case, there are other questions I suggest you consider, including:

  • Do I have Opex or Capex dollars to spend?
  • Does the project need to be self-funded?
  • How is the case improved if there is limited up-front investment or if I spread out my payments?
  • Do I need an operational assessment to derive my business case assumptions?
  • Will my solution and/or services partner stand behind the numbers in the business case and offer to put some “skin-in-the-game”?

Admittedly, these are leading questions.  Managed Services can influence the answers to these questions in a significant way and may just give you the flexibility you need to get the business case, and your project, over the line!

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