Maximising Capex efficiency – introducing Asset Assurance

The fact that 20 percent of a telecoms operator’s assets underperform is startling enough. When you add the scale of capex spending to this statistic – at more than $325 billion in 2011 – it makes you stop, think and realize that we are looking at a $65 billion inefficiency. Given these figures, from a PwC survey, and given that up to 15 percent of assets are completely ‘stranded’, it is not surprising that this is an area of increasing interest to our industry. Not only must a CFO focus on preserving capital, he must regain control of his company’s assets – and maximize the return.

You might now expect a description of a ‘big data’ tool, based on clever analytics and tailored reports to provide a solution. You would also probably be right. But for once analytics is only part of the answer, according to Subex, the revenue assurance specialist who has transferred the principles of revenue assurance to managing assets within telcos. The real solution is communication and a complete view of what assets are in use. And which are not.

The problem, like most problems, is historical. Incomplete records, kept in different places, with a lack of information about the lifecycle of an asset builds into a situation where it is no surprise that 15 percent of assets are ‘lost.’

In an ideal world a company would have a complete view of every asset, how well it was performing, how long and how much capacity it had left and where it could be re-located once it had reached its limit. As well as that, the CFO would be able to buy the replacement ‘just in time’ and make sure that the asset was producing revenue before he had to pay the bill.

It is worth noting, too, that assets are not just about switches and cable and other boxes. Subex has some solid examples of just how effective asset assurance can be. A logical data cleanse for a Tier 1 Internet services company in North America unearthed $10.2 million of stranded assets, which were recovered, redeployed and Subex were rewarded with a bonus. In a similar sized fixed and mobile player, the focus was to find unused cards and to investigate service activation inefficiencies. The result was the recovery of some $36 million of unused assets.

The reason that analytics, dashboards and reports are not the real solution is that, like everything, communication is actually the key. Inside a telco, like any other large corporation, lives a world of politics and empires. Some companies make life on Capitol Hill seem like a day off. Even if there is little or no tension, different departments and different managers have different priorities. And when their focus is on the same thing – network assets for example – then the potential for conflict is huge.

A CFO stays awake at night wondering how to preserve capital and grow cash in the business, whether and when assets are generating revenue, how best to purchase assets when needed and would it be great to have a complete, network-wide view of those assets. A CTO on the other hand, worries whether he is using his network assets in the most efficient way, are his pre-deployed assets in the most efficient location, are all his assets in the inventory and whether he even knows about every asset.

That is why straightforward reports are not the best solution. A dashboard where the information is kept and into which each manager can look, with the questions and the focus he needs, is the right approach, according to Subex.

It is a fact of life that network planning is never completely efficient. According to the PwC survey, 64 percent of respondents admitted to the fact that capex planning is driven by technology and not business objectives. Half of the survey group admitted that there was a lack of sufficient accountability and incentives. It is widely accepted that once the purchase has been made, and the asset is in place, the accountability for it slips away. 32 percent believed that new projects are taken on without reviewing lessons learnt from previous ones and 19 percent think that they are drowning in paper, without any insight into how to be more efficient.

As with revenue assurance and fraud management, a key factor is to have a policy and vigorously enforce it. Obviously the first step is to perform an audit and collect a view of all a company’s assets. Once that is done, Subex sees three stages to the asset management process. These include the pre-purchase phase, where inventory and network pre-checks are carried out. Once purchased, the critical factor is time to value, or making the asset work for you in the shortest time possible. Once operational, the focus turns to asset optimization, where prioritizing revenue, reducing the number of stranded assets, re-homing or selling assets is made an integral part of the process.

Like analytics and big data, two of the most common areas of focus for our industry, how tools are used is key – not the tools themselves – and generally based on common sense. We tend to get overwhelmed by the scale of what our industry does and common sense can slip away. Yet solutions such as the one from Subex is designed in such a way that it is not about generating reports but allowing managers and stakeholders to get at information in the way they need it. That is common sense, and it is a theme that is now being actively discussed within the TM Forum, spearheaded by Subex.

Communication and collaboration for the communications industry must be a good thing.

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Alex Leslie
About Alex Leslie 400 Articles
Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet.

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