March, 6, 2018
Again, this is only for my Telecommunications stalwarts. Refer to my previous article on why Access is important in the Cable industry. Also refer to our white paper Understanding the Basics of Transformation in the Telecom Industry.
A quick summary of the previous article – Access (Edge, Outside Plant and CPE) play a significant role in Telecom strategy because 85 – 90% of the yearly CapEx spend goes into Access. As an example, if your yearly revenue is $30B and your capital intensity ratio is 15% – then you spend around $4B on Access every year. Here we are talking about that $4B.
Now that I have your attention – let us talk about dos and don’ts in planning your Access Transformation (yearly $4B investment)!
Before we go too far let me get three things off my chest.
- Investment cycle – Your investment in your core asset (Access Network) is your future currency for success – not an instant gratification. So, let telecommunications cyclical investment play itsmagic in your ROI (Please refer to the white paper for details).
- Collective decision – This is a big deal. Bring your stake holders in one place and make an informed decision – product/marketing (to bring competitive view), engineering (to bring technology capability view) and finance (to bring fiscal responsibility view).
- Optimization is not a strategy – People keep asking me why not optimize the plan for minimal spend. Sorry my good sir/madam – it is not a strategy. You cannot optimize something where you do not have control over your competition strategy, and good understanding on the customer demand growth.
- 5-year planning is too short: If you are used to five-year planning – you better think again. The benefits of technology options such as Full Duplex versus Fiber To The Home are apparent in 10 to 15 year planning. Keep in mind if you want a 10 year view you need to plan for 15 years.
- One-time review is not a solution: There is no silver bullet in planning. It is going to be an iterative review. So, give enough time for consensus building – that is, multiple iterations of strategizing and reviewing.
- Do not expect product and capacity planning to deliver the same results: The capacity planning is based on the current node utilization and customer traffic demand growth; but the product planning is based on adjusting customer take rate at different pricing points due to product offering. The challenge is to satisfy for both needs.
- Know your technology options: Have a clear understanding on the deployment cost versus capabilities of different technology options. Pull the current levers with the long-term strategy in mind.
- Know your competition: Have a clear view on your competition. Once the construction juggernaut is in motion – you cannot change course. Also keep in mind you cannot make this decision at a very granular (like node) level. It has to make sense for pricing strategies as well as for the operational strategies.
- Know your financial boundaries: Align your finance leaders around telecom cyclical investments, where you are in the cycle, impact of your strategy on long term investment and how the current strategy is going to reduce the long-term investment (while meeting product demands).
So, what do I recommend you to do?
- Invest in collaboration – bring the product, engineering and finance teams together
- Let long term strategy dictate short term tactics, and
- Plan, plan, plan and if you are not done yet – PLAN.
You need all the help in bringing the teams together and building the 10 – 15-year detailed plan to make a strategic decision.
In the next article, we talk about how DTS, along with the Jibe transformation planning tool, can solve this multibillion-dollar initiatives that you are venturing.