OSS ROIC (part 6) – Oops. I forgot one… Sort of

The second question to ask is: can existing assets be reused or recycled? In other words, can the investment be deferred? One of the most common claims used to support an investment case is that the investment is necessary because the network is congested. This is often correct; capacity upgrades are a fact of life for all operators. But it’s also true that operators regularly have hidden capacity masked by incomplete, inaccurate or unconnected databases.”
Report entitled, “We need to talk about CAPEX – Benchmarking best practice in telecom capital allocation.”

This is the sixth and final part of my deep-dive into how OSS tools can help with the capex conundrum that many service providers find themselves in. It has opened up some interesting discussions with various colleagues of mine, so hopefully it has been a discussion-starter for you and your team too.

One colleague pointed out that one of the largest carriers in our region, who we’ve both done work for in the past, makes you jump through hoops to justify a business case before any capital is allocated to a project. I agreed, but pointed out that they barely perform any post-spend analysis on what value the project has delivered. “Yep, you’ve got me on that,” he had to admit.

The name itself, RETURN on Invested Capital (ROIC) implies some form of feedback loop. But if you’re taking great pains to justify spend (eg with business case approval processes) but without quantifying the return then there is no feedback mechanism to learn and improve from.

Today’s post is a partial admission of guilt, for sort of overlooking an important fifth factor for deriving a return in “part 3 – Four divergent solutions.” That fifth factor is the discovery of stranded assets.

The reason I left this out is because it’s hard to justify an OSS business case on the cost benefits of discovering and re-utilising stranded assets. Why? Because you don’t know what you don’t know. You don’t know whether or not you’ll find any stranded assets until you go looking for them. This fifth factor can be the cherry-on-top benefit of seeking the other four types of returns (but only if you design your project to include going looking for it!).

Read the Passionate About OSS blog for more.

2 thoughts on “OSS ROIC (part 6) – Oops. I forgot one… Sort of

  1. One comment on the last paragraph: That is actually the problem with audits. Audits do not save cost. They provide trust that the audited entity is well managed. That has value by itself. Financial audits are mandated by law. But one could also imagine that technical audits are imposed by the shareholders to validate that capex is used wisely. Although this does not necessarily lead to cost savings (a well managed operations will not have any stranded assets), but it could contribute to shareholder value and share price.

  2. Wonderful insights as usual Roland!
    Thanks for your helpful contribution.

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