Measuring Telecom Service-to-Cost Performance: Increasing Business Value and Reducing Unnecessary Cost

This Industry Viewpoint was authored by Timothy C. Colwell, SVP Efficiency First Adoption, AOTMP

Your fixed and mobile telecom environment serves a vital role in conducting business. It is the vascular system for communications with customers and prospects, with your supply chain, and with internal staff. Buried within your telecom environment are data points that, when mined and correlated to business goals and objectives, can be leveraged to drive desired business outcomes.

Fixed and mobile telecom business analytics is the methodology from which valuable business trends can be identified and influenced. Collectively, technical, operational and financial data gleaned from your fixed and mobile telecom environment can be mapped to business performance results and analyzed to determine cause. This is the practice of fixed and mobile telecom business analytics; and adopting fixed and mobile telecom business analytics practices enables you to improve the perceived and real value of fixed and mobile telecom management practices in the eyes of your business.

There are five key performance indicators that establish an operation baseline and enable businesses to evaluate financial strategies and isolate relationships between the services, and the communications value that those services contribute towards achieving business results.

1. Enterprise Telecom Spend per Employee
2. Ratio of Wireless/Mobile Devices to Employees
3. Telecom Cost as a Percentage of Total Enterprise IT Budget
4. Telecom Cost as a Percentage of Corporate Operating Expense
5. Telecom Cost as a Percentage of Corporate Revenue

Enterprise telecom spend per employee is a critical baseline KPI that establishes a service-to-cost measure allowing organizations to understand communications investments. Ideally, this KPI is segmented by role and evaluated against the degree to which each role leverages communications to drive business results. For example, sales and business development roles are likely to gain a high degree of business benefit from telecom services, while manufacturing roles have less demand for telecom services. As such, investing in telecom services where they are more likely to be used to impact business results is logical. This KPI also enables businesses to identify functional areas that over-enable and over-spend, which supports cost reduction and containment objectives.

Measuring the ratio of wireless/mobile devices to employees establishes a mobility enablement ratio KPI that is essential for businesses to understand as wireless mobility strategy is implemented. It also offers a gauge against which optimization of fixed/wireline infrastructure and services occurs. As organizations drive towards a mobile workforce, demand for fixed/wireline services may decrease and offer opportunity to optimize capacity and reduce costs for these services.

Telecom cost as a percentage of total enterprise IT budget is an essential KPI for evaluating outside-the-wall and inside-the-wall services. It offers perspective on IT services investment and connectivity investment essential for budgeting and forecasting as technology and technology transformation initiatives occur.

Finally, telecom cost as a percentage of corporate operating expense and telecom cost as a percentage of corporate revenue are business-level KPIs that establish the financial foundation for correlating the telecom environment to business objectives. It is important to note that while cost containment and eliminating unnecessary costs is a consistent objective in every business; these KPIs may identify positive business effects gained through technology investment. The principle behind this phenomenon illustrates service value-to-cost performance in which service cost should be optimized to provide the services that deliver the most business value.

The most powerful business analytics relationships that can be established are those with correlation between a business practice and business results. Positive business results concerning revenue, profit, expense, market share and customer satisfaction are most commonly sought. When the correlation between fixed and mobile services and the increase or decrease of business level performance is established, the business will value and leverage those relationships to attain desired results.

Timothy C. Colwell is a telecom management industry thought leader exploring the impact of technology as a business accelerator and social capital enabler.

AOTMP is an information services company that helps organizations take their fixed and mobile environment to a greater level of performance and helps telecom vendors achieve excellence in creating value for their clients. Using information and analytics to drive efficiencies, performance and productivity, business solutions are based on their patented Efficiency First® Framework. For more information, visit aotmp.com.

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Categories: Industry Viewpoint · Software