OSS ROIC (part 2) – Four justification attempts

Are your colleagues in Marketing, IT, Networks or Finance frustrated with how your company’s capex is allocated, how that capex is controlled or the performance it delivers?”
Report entitled, “We need to talk about CAPEX – Benchmarking best practice in telecom capital allocation.”

In Friday’s blog, I posed a series of questions about OSS and whether they pull their weight in terms of providing a Telco with a return on capital (ROIC). Questions included:

Does your organisation build OSS business cases around ROI? Does it then measure how it’s tracking to that ROI (on a project or collective basis)? Does it understand the current rate of return provided by existing OSS tools? Or how revenues change upon investing in a new OSS? Is it just a cost of doing business? An insurance policy to ensure the key asset (the network) continues to deliver service for customers? Are anything resembling “returns” as a result of an OSS just too intangible to bother measuring? If it’s too intangible, do you have any metrics that you do measure your OSS (and OSS projects) by?

I received some great responses from some people that I respect highly in our industry. The general consensus so far has been the same as I’ve observed across many clients to date, namely:

  • Business cases tend to be built around cost-out (eg automation and reduced head-count) models
  • OSS are a simply a cost of doing business
  • OSS primarily give intangible results, so benefit of measuring outweighs the cost, so it’s not done
  • Individual OSS projects are often “small” spend so not deemed to warrant the effort of ROI calculation (see previous point). For example, $20M on a single vendor in a best-of-breed OSS approach doesn’t warrant the effort to measure, even if the collective OSS has incurred $500M

If you have a look at the report (see link above), you’ll see that it highlights the need for IT and networks ops divisions of large telcos to be more accountable for the CAPEX they consume. In turn, I believe OSS has to be more accountable than the points listed above. Not necessarily on the spend side of the equation (that too) but on the return side.

This isn’t a criticism of vendors or carriers but highlighting the need for a new way of thinking in OSS. More on those new ideas tomorrow!

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