OSS ROIC (part 3) – Four divergent solutions

As Figure 1 (below) shows, global capex levels have soared from just over US$50 billion to about US$325 billion in real terms over the past 30 years…Yet this massive investment isn’t producing the returns the industry requires… the telecoms industry is at an inflexion point. It’s spending lots of money on new infrastructure, but it’s not optimising returns. Most telecoms executives admit as much; they say the process of allocating and managing capital is both deeply flawed and deeply frustrating. Yet very few companies did anything to tackle the problem during the good times. It’s only now, as the markets mature and the quick wins on operating expenditure dry up, that a small but growing number of operators are trying to ‘crack the capex code’.
Report entitled, “We need to talk about CAPEX – Benchmarking best practice in telecom capital allocation.”

As discussed in the previous two blogs (part 1 and part 2) and highlighted in the graph above, the telecoms industry is coming under increasing pressure to deliver returns on the (increasingly) massive amounts of CAPEX it consumes. By correlation, as a large consumer of CAPEX (and OPEX) within most large telcos, this pressure is likely also mounting on the OSS industry as a collective (carriers and vendors) [even if we’re not directly seeing it yet].

Reports that OSS returns (on investment) are too hard to measure and are largely just cost-out business cases would align with executive views that “allocating and managing capital [on OSS projects] is both deeply flawed and deeply frustrating.”

As an industry, we have to do better at justifying our existence. I believe this comes in four forms:

  1. Delivering OSS-driven revenues – not just cost of business justifications, which will be through OSS services that customers are willing to pay extra for that they can derive commensurate value from (eg data, APIs, portals, platform/ecosystem plays)
  2. Looking beyond cost-out within operationsOSS business cases must be more than operations tools and greater efforts must be made to make the intangibles more measurable. A few are mentioned in my OSS Business Case Builder white paper
  3. Operationalising other technologies – highly promising new technologies like network virtualisation can only be monetised if operational tools like OSS / BSS can deliver operational efficiency gains such as service automation, new revenue models, etc
  4. Measuring returns of other projects – part of the current CAPEX problem (beyond OSS) is that other projects find it equally difficult to measure / manage outlays and/or returns. A broader-scoped OSS potentially provides this due to its inherent strengths of data collection, processing and decision-making. OSS has to step up to help “crack the CAPEX code” for other projects and not just within traditional OSS circles

Would your organisation benefit from being coached through the details on any (or all) of these four concepts?

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