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.

Andy Jacobs

Portfolio Head – Network Analytics
Andy has 20+ years of experience in engineering management, business operations and IT, primarily with Tier 1 operators including Level 3, MCI and GTE. His responsibilities included leading IT development teams that built mission-critical network management, provisioning and inventory systems with thousands of users. Prior to joining Subex, Andy was a Senior Manager overseeing a Data Governance organization at a major Internet Services provider. Andy graduated from the University of Pennsylvania with degrees in Electrical Engineering and Economics (Wharton). He holds an MBA from the University of Colorado.