Service providers are in the unenviable position of trying to stay profitable in a highly competitive, capital-intensive market that consistently demands new services, new technologies and lower prices. Business and consumer customers want to pay less for more calls and minutes in their bundles, more data, more speed and more services; and if they can’t get what they want from their current service provider, they will switch to a new one. At the same time, shareholders want to drive more business value.
Not surprisingly, the ability to deliver more of everything has finance and network operations teams scrambling. They need to find the right balance that will provide bottom line profitability and support the top line growth that will be driven by upgrading, renewing and replacing network equipment to support the roll-out of 5G technology and new services around mobile edge computing, the IoT and the cloud.
Clearly, service providers are committed to investing in network upgrades. In fact, PWC estimates that service providers spend $300 billion on capital improvements annually. Interestingly, they also estimate that 20% of that spend – more than $1 billion a week – is wasted.1 But why?
For the most part, it is because it is difficult to make the most of their existing inventory; and that difficulty can be traced to the absence of a proper, technology-literate, system to account for all the network assets being held within a service provider or group of networks.
With better visibility and tracking into what they have, what they need and what they don’t, service providers could more easily afford to introduce new technologies and services without impacting their bottom line. Accessing this information will allow them to ensure that they:
- Hold off ordering new equipment when there are spare parts or equipment in stock that can perform the same function
- Have an accurate estimate of total vendor spending, which is needed when negotiating vendor discounts
- Gain better visibility into end-of-life or recall information
- Chart the performance cycle of each piece of equipment by its network function, which will allow for cost-effective proactive network maintenance rather than the more expensive option of repairing network failures
- Efficiently track tax attributes to streamline capacity management planning for timing and costs associated with network refreshes
Fixed asset tracking, management and accounting within a service provider has traditionally dealt in big ticket items, or at least in ones that are easily identifiable. Clearly, a service provider easily knows how many buildings, vehicles and radio masts there are on the network and how to account for them all within the annual financial report. When monitoring an individual line card within a server; however, things get a little harder to track, value and record accurately.
One of the many benefits delivered by the creation of global mobile technology standards was that the standardization allowed many potential suppliers – big and small – into the marketplace. In turn, this meant that service providers were able to source equipment from multiple sources. With the welcome benefit of choice, came unexpected operational challenges.
Since each supplier has its own product code, it can be difficult to instantly recognize that two components from different suppliers actually perform exactly the same function and are interchangeable. Understandably, traditional inventory management systems find that a challenging concept from a financial, operational and a maintenance perspective.
In the U.S., service providers benefit from a common data system that accurately identifies and classifies network equipment regardless of vendor or product. The system has already been adopted by most of the major service providers, all of whom require suppliers to include the codes on their equipment. The codes easily allow service providers to know the form, function and location (in the network or the warehouse) of each individual item.
Taking that common data system and applying it to the fixed asset management process provides much needed operational and accounting benefits that help support network builds, technology upgrades and operational efficiencies. All of which, help service providers deliver more to their customers and their shareholders.
Recently, Zain, one of the Middle East and Africa’s leading service providers with nearly 50 million customers across eight countries, deployed iconectiv’s common data system to get real-time status of its assets at a granular level. Not only were they able to improve business performance and operational effectiveness, but CFO Ossama Matta described the company’s implementation as “a major competitive advantage” as it looks to continue its expansion of new services across all its markets.
Using a common data system to accurately record, track and share information across the company on what has been deployed on the network and what is held in reserve, can help service providers better manage their network, accurately value their assets, and cut wasted spend. In short, it’s helping the service provider business model make much more economic sense.
¹ Source PWC Global, Telecom Capex https://www.pwc.com/gx/en/industries/tmt/ telecommunications/capex.html
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