You can tell the state of our industry by the number of three letter acronyms that are doing the rounds at conferences. Right now, our industry is in fine fettle. M2M, SDN, NFV are all being actively discussed, and still new ones come along – LDO, for instance. All of which is excellent.
And then the music stops. Operators return from the conference or trade show brimming with ways of revolutionizing this or packaging that. And hear the words of doom.
“Bring me the business case.”
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The fundamental problem is that “the ROI of the modern telco is measured in months and a large billing project can take years. It is therefore impossible to build a business case that management can sign off on.” Thus spake an IT Director, inadvertently re-enforcing the truth that large transformations generally only succeed if they have the highest level of support.Without vision and authority there is likely to be trouble ahead.
Business cases are generally built on how much an investment will save the company over a given period of time. Or how much extra, measurable, revenue the investment will bring, or to what extent it will optimize operations – a term that should be consigned to the bin, according to Peter Cochrane. Events in our world, according to Cochrane at the recent Subex User Conference, are moving too fast for us to have the time to optimize anything. Make it good enough, and move on.
This justification of a business case on basically negative sets of values is what needs to change. Real-time functionality is a classic example of something that was justified for one function and grew from there. It started life as a way to control prepaid spending, became more useful as BillShock became an issue and is beginning to find its real value in enabling value based pricing. It has taken over 10 years to be used for what we all thought it should be used for.
The problem with changing the approach from a ‘cost saving’ model to an ‘extra revenue’ model is that you immediately enter the realms of guesswork.
“So how much extra revenue will this new system generate?”
“Er.”
You see the problem.
Given that large companies cannot innovate, and will find it hard to change this fundamental way of thinking, has so far produced two solutions. One is to buy successful start ups, who have taken the risks and have proven revenue. The other is to fund your own start up – which Telefonica Digital has done, with great success.
There is, however, a third way. In the Age of the Survey it has become commonplace – and very useful – to ask customers whether they would use something. On the back of this, extremely bright people at consultancies such as Northstream, can produce models that can tell you how much revenue you missed by not implementing something. Although this is another stepping stone and not the grail that would be an Accurate New Revenue Generation Modeller, it is nevertheless compelling.
Recently AsiaInfo Linkage, the relative new boy in Europe and known for its huge implementations in Asia, commissioned Northstream to find out how much money was being left on the table (well, OK, in customers’ pockets) by operators not implementing Real-Time Self-Service.
The answer in Western Europe alone is €4.7 billion a year. That would get the attention of any CEO. After all, you could buy a cable company in Germany with that kind of cash.
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