It’s time to wear another hat – why the Chief Network Officer also needs to be the Chief Financial Officer

25 NOVEMBER 2014

You’ve just spent a few billion dollars building out your LTE network. Now what?

Global CSP capital expenditures are forecasted to total more than US$2.1tn from 2014–19, but margins are getting tighter as revenue increases at a slower pace. In fact, this may become the new norm. In the Infonetics 2014 Global Telecom and Datacom Market Trends and Drivers report, they state that “Intense price competition, commoditization and erosion of revenues from the use of over the top (OTT) applications are impacting operator revenues.” Total revenue for carriers grew 7% in 2011, but it is only expected to rise a mere 2% this year. Even China is slowing down.

Analyst firm Ovum put an interesting twist on it by warning that CSPs must do ‘less with more’; in other words, now that you have made the investment, it’s time to shift the focus from building out your network and do more with what you already have – by leveraging new technologies, network designs, vendors, and operating models to help extend the life of your network in new and creative ways.

Operators have a lot of tools that are available to help them do this; NFV, Small Cells, Wi-fi and other technologies are helping to improve network coverage at a lower cost. But just because you have the right tools in your toolbox, that doesn’t help answer the bigger question- which nail do you hit first? With lots of nails but limited time, resources and budgets, which ones get prioritized?

Steve Jobs is credited with saying, “Deciding what not to do is as important as deciding what to do.” For many service providers, this is where the challenge lies. Similar to the ‘Whack-a-Mole’ arcade game, many network engineers are left running from one problem area to the next, whacking down one mole just to have another one pop up, in a never ending cycle that sucks up time, money and resources. The question we want service providers to ask is- ‘Which moles matter?’ Does it make financial sense to fix this issue at the expense or delay of fixing something else? Maybe so, but without the right information, it’s impossible to say.

This is when the Chief Network officer needs to put on the CFO hat – to help decide what NOT to do, and to look at the network from a business and financial perspective instead of from a purely technological one. But in order to make these decisions, CSPs need access to the right information. They need to understand issues such as:

• Who and where are their most profitable customers?
• Where do services and devices drive the highest margins for their business?
• What areas of investment will provide the most ‘bang for the buck’?

In other words, service providers need to start prioritizing network investments by overlaying business insight on top of network issues to help determine where to focus their limited resources, but this often requires a shift in thinking. It requires capturing, correlating and analyzing data points from across the entire organization in order to make these critical decisions. It requires looking at every transaction to find the real business impact. This is where ‘big data’ and network analytics tools can come to the rescue.

How TEOCO can help
TEOCO’s margin analytics solution provides a granular view of your revenue stream and of your operational, network and business costs. It does so by performing large-scale analyses of every network and business transaction, viewed under a lens that understands network technologies and partner agreements. Since 1995, we have helped over 100 of the largest service providers around the world to make decisions based on what matters most — profitability and margin.