Should telecoms be OK with losing $90B per year on waste?
Over 50% of a telecom’s annual capital expenditure is invested in acquiring expensive network assets that are the foundation of their services for the customers. This capex number globally is $350 billion, which is a painful hit to the bottom line. What’s even more staggering is how much of that capex is wasted.
According to a 2015 TeleManagement Forum survey, asset managers reported an average asset accuracy rate of only 74%. This means $90 billion dollars per year is wasted due to purchasing duplicate equipment, inefficient reuse of excess inventory and spare equipment, theft, fraud, hoarding, inaccurate warranty tracking and more.
In any other industry, this would not be tolerated. In the telecom asset and infrastructure world, however, it has become commonplace to assume a systemwide failure to accurately track these critical assets. Validating this, the same telecom executives who only had visibility, insight and control of 74% of their assets, said an 84% level of accuracy would be “acceptable.” Making it more painful is that the asset losses are avoidable with an asset lifecycle management software and services solution in place.
The problem started in 1984, when the Bell system was broken up into 29 different operators. These operators were suddenly faced with P&L responsibilities they previously didn’t have to worry about. They all recognized the need to track and manage their expensive network assets, but all 29 tackled it in 29 different ways. They made various types of notes and lists on every visible asset. Those notes and lists gave way to ledgers, and ledgers gave way to spreadsheets. Some of these spreadsheets then rolled up into a variety of operating support systems, business support systems, ERP and network polling solutions, which produced an asset database of record considered “good enough” to track the full ALM.
Many telecoms today still attempt ALM through paper trails, spreadsheets, ERP, OSS or BSS. The problem is these solutions have one common weakness – a significant delta between what happens with assets in the real world and what is reflected in the asset-tracking database. To have accurate visibility, insight and control of your assets from end to end, you have to have ALM in the center of multiple systems. This improves the accuracy of the data by means of data reconciliation as well as data collection. A great ALM solution can reconcile and verify any and all asset data regardless of the source(s), to provide every connected system with the most accurate data possible, at either a high or low level. This ensures the integrity of CSP asset information, reduces the need for physical audits and serves as the database of record for all assets.
Because infrastructure costs are so significant, stakeholders (and shareholders) are starting to demand an accuracy rate closer to 100%. Network operations, engineering executives, CFOs, accounting, finance managers and supply chain executives are all starting to test better ALM for a number of reasons:
–It reduces or eliminates the purchase of duplicate equipment.
–It allows for the efficient reuse of excess inventory and spare equipment.
–It gives visibility into invoiced equipment to provide an understanding of what has really been received and if it matches the purchase orders.
–It gives visibility into the status of equipment going through the return and repair process.
–It reduces theft, fraud and hoarding.
–It gives communication service providers an accurate picture of what is actually in use (as well as where the inventory and assets reside) to allow for accurate tax payments.
–It supports internal controls to allow for compliance, which greatly reduces organizational and regulatory risks.
–It removes excessive repair and replacement expense through accurate warranty tracking.
–It also allows field technicians to locate spares quickly, with visibility into network information, revision numbers and updates.
The ability to use ALM to reduce and optimize capex becomes a telecom’s biggest strategic advantage in a fiercely competitive global marketplace. ALM is the complete end-to-end management of network equipment through each of the many lifecycle stages – from acquire to retire. These stages include, among others, receipt of shipment; warehousing and spares management; picking and shipping; “minimum/maximum” settings; transfers; assembly; installation; deployment; maintenance; upgrades; repairs; returns; audits; cycle counts; and decommissioning.
A complete solution takes ALM a step further, adding a mobile solution to provide accurate, real-time information that allows you to keep track of where every asset is – across the field, warehouse, datacenter or back office. It can be configured to let any worker scan 1D, 2D or micro PDF barcodes with the least number of attempts required, capturing data as it flows organically throughout its lifecycle. The right solution should work on any major scanner or smartphone scanning platform in any environment. Of course, this mobile solution should also require enterprise-grade security, ensuring the data you collect remains uncompromised. This includes a secure logon, user limited permissions, and encrypted password protection to safely connect to any integrated system through a secure transport layer behind your own firewall.
ALM mobile solutions allow any field technician to collect the information needed when and where changes occur. These updates are captured in real time and communicated to the systems that rely on different types of asset information.
Implementing initial planning, multiple-step processes could be configured for different types of users, ensuring intelligent, directed decision support and visibility into all inventory at every step, whether the field tech is offline or online. Intelligent decision support tools would allow you to see and control everything you need to accomplish your job, no matter who you are, what mobile platform you are using or where you are located.
A full ALM solution includes software, services, asset tags and mobile hardware to make sure your solution brings you the highest possible asset assurance. From a best-practice perspective, a productive ALM suite tailors and customizes its routines to match your specific business processes.
The many departments within a telecom that work with network assets do so in a variety of ways. This requires initial business analysis and consulting around the needs of all departments, and involves the implementation of holistic process improvements to maximize operational efficiencies.
As part of the set-up process, there is a data clean up and preload of legacy asset data into the ALM database, which may require an audit of all network and warehouse sites. When that’s completed, the full software solution can be deployed, which includes integration between the ALM application and other key enterprise applications. To ensure successful adoption, a proper and thorough training of ALM system users also happens up front.
The fact is, telecom equipment and other assets move around frequently during their lifecycle – whether it’s due to regular maintenance, the upheaval of mergers and acquisition activity, or the technology cascade that occurs when new equipment is deployed and old equipment is reassigned to new locations or retired. Successful CSP organizations use ALM to get visibility, gain insight and take control of their assets, with the ultimate goal of driving the accuracy score up towards 100%.
Brian Hodges is the director of marketing at Fulcrum Technologies. With more than 20 years experience in software solutions, Hodges is a frequent speaker on telecom software, capex optimization, asset lifecycle management and supply chain management.
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