Five key reasons why telcos need to focus on Margin Assurance
Digital disruption, technology innovation, and the hyper-evolving telecommunication market influence a CSP’s ability to maintain long-term profitability.
Margin assurance is a field that draws on many streams to balance costs and spends. It includes handling a complex mix of service offerings, defining a holistic view for cost allocation, enabling real-time visibility, margin automation, etc.
What makes margin assurance a key ask for CSPs today? Here are five reasons:
1. Unidentified contributory costs in a multi-partner ecosystem
With the rise in debt collection, depreciation, and other activity costs, it is becoming increasingly difficult to optimize gross regulated margins. The proportion of different direct and indirect expenses increases as the number of partner systems increase. Improper cost allocation models, in addition to the bundling of network and business costs, increase the complexity of costing.
2. Deficient view of capacity, utilization, and profitability across network elements
While operators dedicate significant spend on planning and capacity optimization, they also need to keep an eye on profitability. Profits, too, must grow along the network value chain. This is done by analyzing multi-channel provisioning behaviour to determine the best way to improve margins and optimize utilization.
3. Absence of granular level visibility into costs and revenue parameters
Technology advances are encouraging product innovation for next-gen communication needs. CSPs must identify different product costs and map them to revenue to fully understand the total cost for each product, customer, and business segment. With limited insights into the cost and revenue segments, CSPs struggle with cost allocation parameters. Telecom employees need the right skillsets in cost accounting and telecom knowledge to map the cost of individual products or bundled segments of voice and data traffic. Discrepancies in profit increase with the inability to determine the accurate price of a particular product or technology.
4. Lack of real-time insights into new-age product profitability, pricing, and performance
With data on the rise, CSPs must bridge the gap in data reconciliation across various sources such as networks, partners, and products. Dearth of insights into the real-time performance of products can negatively impact the organization’s profit and loss. Strong data management increases efficiency in identifying and tracking the profitability of services, devices, and other entities, cementing the need for margin assurance.
5. Bundled Products & technologies results in complex cost allocation models
Operators are trying to merge/bundle multiple services and technologies, resulting in the creation of complex cost allocation models. This leads further product complexity and revenue differentiation due to the bundling of multiple products and technologies. It is important to give a strong consideration to the product line and build cost allocation models in line with industry-leading practices support to arrive at near real cost allocations for profitability computation.
Margin assurance enlists the metrics to handle the bottom-line complex mix of service offerings defining the holistic view for cost allocation, real-time assurance, margin automation, etc. This helps to achieve the benefits in terms of ‘profit computation,’ ‘flexible cost allocation,’ and ‘effortless cost modelling,’ which further lead the operator to widen its scope of work with a massive increase in the number of cost line items
Margin Assurance To Ensure Profitability For New-age Telcos
Roshan Pandey is currently working with Subex’s Product Marketing team. He is a postgraduate in management from Symbiosis Institute of Digital and Telecom Management with Marketing as his majors. He has work experience across Marketing and sales in the IT and Telecom industry. He is a passionate public speaker and enjoys reading about technology and marketing.