Most communications service providers invest a great deal of resources in managing their core offerings of video, data and voice services. Yet cable operators and wireline telcos alike seemingly waste tens of millions of dollars each year in the purchase, upgrade and obsolescence of the network assets that deliver these offerings.
In this paper, Accenture presents a model for managing an operator’s network assets from end to end, the goal of which is to make it simpler to reduce costs and sustain a rationalized network. This model, called asset complexity management has three key pieces: organization, process and technology.
The greater an operator’s asset complexity—the number of different models deployed in the network—the greater the operating costs required to maintain and support these assets. Clearly there can be tremendous value in reducing this complexity and in managing the lifecycle of all network assets.
However, managing such assets can be incredibly challenging. At any given moment, most communications service providers will have millions of customers with hundreds of different models of cable modem, for example, along with multiple head ends, switches, nodes and other equipment.
Further, true to the Pareto rule, 80 percent of model types may make up only 20 percent of the deployed volume, unnecessarily boosting complexity. Even the best-managed operator may not have the tools and data necessary to manage this complicated and often invisible aspect of its business.
In fact, Accenture found that many operators make hardware decisions based primarily on “gut feel,” using past purchases as a reference. Such decisions may not be optimal, however, as they tend to focus on purchase costs, ignoring the costs to be incurred throughout the asset’s lifecycle. In addition, operators often make decisions in silos: procurement, planning, finance and network operations, each with its own budgetary pressures, may optimize costs based on the department’s own view rather than looking across functions or creating a comprehensive fact base—a “single source of truth”—to guide the organization.
The asset complexity management model manages an operator’s network of assets, enables a reduction in costs and creates a sustainable rationalized network. It comprises organization, process and technology.
Organization: A dedicated team is created solely to help address asset complexity, first on a project by- project basis and eventually throughout the business. Once configured, the team supports all aspects of the operator’s asset lifecycle, from design to obsolescence. The team can therefore be positioned in a way that allows it to influence critical decisions—with direct links to engineering, product management, finance and marketing.
Process: The asset complexity management team defines the project as precisely as possible, clearly articulating the issue and objectives at hand and putting boundaries in place to avoid the project growing beyond its original scope.
A key part of this effort will be the identification of the working team, including stakeholders across the company who will be involved in the final decision making process.
Technology: This aids in the decision-making process, from an enterprise-wide asset database to a set of reusable cost models. The asset database serves as the single point of truth for the entire organization. It would contain functional and performance attributes for every asset, on demand and in real-time, which can better position the asset complexity management team to answer questions and support decision-making with fact-based analysis and also allow the organization to monitor performance trends proactively and to help mitigate risks.
Asset complexity management should not be viewed as a one-time effort. The methodology should become part of an operator’s everyday strategic decision making process, with scorecards developed for ongoing measurement and continuous improvement. Developing a single source of truth—one that takes into account the information and needs of functions all across the business—can help provide decision makers with a more comprehensive view of the issues along with the support of fact-based analysis. And using iterative processes and tools to make decisions based on the full asset lifecycle will provide a framework for the most important capital and operational decisions, translating into significant near-term savings and benefits. Finally, asset complexity management can become a core function within the enterprise, designed to be responsible for updating the database, keeping watch on asset trends and contributing fact-based, objective recommendations whenever a significant asset decision must be made.
Leah Goldman is a senior manager in Accenture’s Management Consulting practice. Goldman specializes in helping telecommunications and technology companies take advantage of innovative supply chain and product development operating models to compete more effectively. Goldman is based in Boston.
Aniruddha Kohok is a senior manager in Accenture’s Operations Consulting practice. Kohok has an extensive background in product complexity management, Innovation and product development, and supply chain transformation both as a practitioner and as a consultant. He has worked across the automotive and communications industries. Kohok is based in Dallas, Texas.