Many years ago, when I was still handsome and slim (or at least, when I was less ugly and fat), I had a conversation with an engineering guy about how his telco bought network assets. I cannot remember it word-for-word; it was a long time ago, when I hardly knew anything about the mismanagement of real businesses, and would often ask simple questions, not expecting to get ridiculous answers. However, the conversation went something like the following…
Eric: So I see, on this piece of paper that I’m holding in my hand [waves paper], that you had signed approval for buying a fuzzy-me-jig. The piece of paper says the fuzzy-me-jig will cost £15K. But in the end, you spent three times as much on a more expensive kind of fuzzy-me-jig.
Eric: That’s more than was originally approved.
Eric: I want to understand if you needed permission for the overspend.
Engineer: We had permission. You’ve got the piece of paper in your hand.
Eric: Yeah, but that was for the original, cheaper fuzzy-me-jig. You ended up spending a lot more on another fuzzy-me-jig. I want to understand if anyone approved the increased expenditure.
Engineer: We needed the fuzzy-me-jig, so we installed it. What’s the problem?
Eric: It cost more. Does anybody go back and ask if there is a need to spend more?
Engineer: Of course we needed it. We wouldn’t have installed it, if it wasn’t necessary to deliver what the customer needs.
Eric: I wondered if anybody else – somebody different to you – has to approve the extra spend, if there’s an overrun compared to the original amount. Perhaps this occurs when the actual spend is a certain amount more than the amount stated in the original approval?
Engineer: They did approve the spend. You’ve got the piece of paper in your hand.
[Eric leaves, shaking his head, trying to console himself that sometimes accountants really are more worldly-wise than engineers.]
Based on that conversation, and all my experience since then, I have reached a simple conclusion: telcos waste a lot of capex on poor decisions about network investment. The problem is not that people are stupid, corrupt or immoral (although some people really are stupid, corrupt and/or immoral). The problem is that people are wonderful at justifying all sorts of decisions to themselves, if somebody else has to pay the price for those decisions, but nobody else is checking if money is being wasted. Without oversight, some people will still make the right decisions. Maybe there really is a need for a more expensive fuzzy-me-jig. Maybe the engineer should have spent even more, by deploying a whirly-me-wotsit instead. But if we trusted everyone to do the right thing, pretty soon everybody would be out of work, because every business would be bankrupt. And when it comes to investing in networks, very few people seem to know what is the right thing to do. So I am glad, and heartened, that one vendor is now focusing its development efforts on creating tools to support network capex decision-making. And so, I spoke with Ashwin Chalapathy, Subex’s Vice-President for Managed Services and Global Support, about their Asset Assurance offering.
Eric: Ashwin, I’ve seen Subex’s marketing materials for Asset Assurance, and I can honestly say you don’t need to sell the concept to me. Telcos literally spend hundreds of billions of dollars on network capex each year, and the big consulting firms have long made money by running projects designed to improve the efficiency of capex spending. I can also see that Subex’s offering encompasses a range of services and features to address a series of specific challenges. For instance, you can provide network discovery so the telco can find what is already has, you can do the data integrity piece so that management systems are updated to give an accurate account of all the network assets, you can provide analytics on how the assets are used, you can implement controls over new network purchases, your software can manage workflow, and provide alarms to ensure that assets do not become stranded, and so on. Sometimes, when you’re pitching a new idea to an unfamiliar audience, it’s tempting to give a long list of what can be done, when first people need a really succinct summary of what is being offered, explaining the idea in just a few sentences. Whilst I like and get the idea of Asset Assurance, I can’t summarize what it is, in a way that covers all the work that Subex is doing in this space. I may be asking you to do the impossible, but you can you try to provide that summary for me?
Ashwin: We think of Asset Assurance as the equivalent of revenue assurance, but for network assets. The same kind of challenges arise, but in this case the problems relate to linkages between two different silos: Network Operations, and Finance. We want to enable a smooth ‘handshake’ between those silos. To do that, Asset Assurance encompasses three modules. First comes Network Intelligence, where there is reconciliation of data between the network and the management systems used by the company, including those used by Finance. This module enables the recovery of ‘low hanging fruit’, by revealing such things as stranded assets. The next module is Capacity Analytics. Once the data is reliable, management can shift focus to analysing what network elements are used most, where the network is generating highest returns, what parts of the network are underutilized, and so on. The analysis will support their strategic decision-making about investment in their network. The final module is Lifecycle Analytics. With this module, the benefits become more operational, as the module looks at things like the probability of failures. For example, this will improve decisions for stock levels of spare parts, and the best geographical location, when storing them.
Eric: Three modules – that explains what you’ve included in the Asset Assurance envelope. It also explains what the upgrade path is. You have to start with reliable data before you can improve decision-making, for example.
Ashwin: Yes. You can think of three modules like evolving steps in terms of maturity. Also, from our experience, we know that sometimes the customer has not attained the level of maturity that they think they have. With one of our customers, the initial focus was on helping them with capacity management, but we soon had to tell them about the need to cleanse their data.
Eric: Would you say that Subex are currently the leaders in the field of Asset Assurance?
Ashwin: Just like the early days of revenue assurance, there are many smart people working in operators, dealing with network capex and finding their own solutions. This problem is not new, and we are not alone in working on it. What we want to offer is better support for those businesses that have identified the opportunity to improve returns through better decisions about network capex expenditure.
Eric: That does sound a lot like the early days of revenue assurance. In RA, there were different individuals scattered around the world. Whilst they dealt with similar problems, they had little contact with each other, they worked independently, and they implemented solutions that were totally unique to their telco. Things changed dramatically when vendors, like Subex, started supplying off-the-shelf tools. That allowed the pace of work to accelerate greatly. But coming back to my question, I was wondering if you’re leaders when it comes to the supply of Asset Assurance tools.
Ashwin: Other businesses provide relevant services. The Big Five consulting firms are major competitors in this area, and collectively they have a lot of experience of working on network capex projects. But a consultant’s strength is in providing advice. Subex offers a comprehensive suite. We believe this sets us apart. There are other software vendors that can mine data and provide analytics, but we feel we have a major advantage in terms of our knowledge of networks. That stems from Subex’s acquisition of Syndesis.
Eric: I was going to ask you about that, specifically. The purchase of Syndesis wasn’t that happy for Subex, because of how things worked out, when it came to financing that particular deal. But I always thought that the acquisition of Syndesis should have delivered one particularly obvious synergy with Subex’s core expertise in assuring revenues. As you now identify, by adding Syndesis’ knowledge of networks to Subex’s knowledge of assurance and data integrity, you have a significant advantage when it comes to developing products and services of the type you now brand ‘Asset Assurance’. And yet, little was said about this kind of offering, for quite a long time. Can you explain why that is? Is this an area where Subex could have sold more aggressively, sooner? Or is it a case that customers have not known they wanted help with network capex, until recently?
Ashwin: The Big Five consulting firms have been doing network capex projects for a while, and like I said before, people were working in the operators, dealing with these kinds of issues. What I think has changed is that some operators used to believe their ERP systems would satisfy all the relevant requirements. They had the data, so they thought they could make the decisions. What they didn’t realize is that there was a need to assure the data they had. Some of that comes back to the basics of data integrity. For others, the data is reliable, but they find it hard to use it, in ways that improve decision-making.
Eric: Because the wrong people were looking at the data?
Ashwin: Because the right data wasn’t getting to the right people. It’s not very surprising that the people working in networks ops may have a strong day-to-day focus on keeping customers happy. That is natural. The difficulty is that if you only aim to keep customers happy from one day to the next day, nobody may find the best strategic answers to questions about how to spend limited capex. There is a need for strategic insight, and oversight. To achieve that, the CFO and the CTO should have an informed conversation about network capex. Assurance is a key enabler, informing that conversation.
Eric: So what you’re saying is that, even if a telco has good data, it may not have the process discipline to arrive at the optimal decisions for how to spend capex. Even so, I would have thought Subex might have moved earlier, to educate its customers.
Ashwin: The other thing that has changed is that we have seen a lot of upgrading of networks in recent years. For example, we saw 2.5G operators rolling out their 3G networks, and some operators were making decisions about their LTE purchases before they finished their 3G roll-out. The focus has been on rapid execution. That speed of change has not helped us to secure attention for the benefits of Asset Assurance. Now, though, we find that operators are having something of a hiatus in their spending. As a consequence, they are much more willing to spend time talking to us about how Asset Assurance can help them.
Eric: Has this translated into a noticeable upturn in enquiries from customers?
Ashwin: Yes it has, at all levels. This year we are receiving RFPs and are being asked about pilots, at a rate we have never experienced before. I do not want to reveal too much publicly, but we are very positive about the growth prospects for Asset Assurance.
Eric: I can understand why, based on some of the numbers in Subex’s marketing literature. Not only are hundreds of billions spent on network capex each year, but there is enormous potential for recovering assets. I see that in one project you recovered USD10mn of stranded assets, whilst in another you recovered USD36mn of value, by identifying underutilized assets. Those are big numbers, and they are just the initial gains, without factoring in the forward-looking returns from better decision-making. So I like the way the proposition already embraces the concept of quick wins that deliver immediate value to the telco, whilst also having a clearly proactive side, which will boost future returns.
Ashwin: Most management attention is drawn to new projects. The result is that a lot of network spending is on ‘auto-pilot’. This is definitely an area where we believe we can assist management through supplying them with superior information and analytics. The aim is to make all decision-making proactive, by constantly comparing current investments with current and future needs.
Eric: Yes, and I’ve spoken to some of your colleagues about how Subex can be proactive in educating the market. Somebody needs to accelerate progress in this area, because I guess that a lot of money is being wasted through poor decisions about network capex. With that in mind, I want to thank you for sharing your insights with the readers of talkRA.