Quantifying and Delivering Value with Geospatial Network Infrastructure Management Solutions

Quantifying and

Delivering Value with

Geospatial Network

Infrastructure

Management Solutions

Scott Casey, GE Digital Energy

[email protected]

Ross Smith, PA Consulting Group

[email protected]

GITA Conference 2011

The information in this presentation and ROI Handbook are derived in whole or in part, under license, from the ROI

Introduction and Background

A Brief tour of the ROI Handbook & Supporting

Tools

Examples and Case Studies

Question and Answer

Investment prioritization and justification

are more relevant than ever

Organizations are seeking to quantify specific and measurable return across all IT investments.

As a result, many geospatial technology advocates face significant challenges to secure funding because:

Senior leaders expect a strong economic (quantitative) business case to support all funding/budget requests

Historic investment in technology applications may not have yielded tangible value that senior executives recognize

Strategic technology investments are not  high  enough  on  the  ‘priority  stack’ compared with other tactical initiatives that address short-term issues

Lack of awareness of the value and benefit of exploiting network inventory information through all parts of the business

To  support  you  with  these  challenges…

GE Smallworld have collaborated with PA Consulting Group and assembled our collective insights and experience, together with practical tools, to help you build more robust ROI-based business cases – annual budget requests – that win the support of executive decision makers.

The ROI Handbook is relevant across the technology lifecycle including organizations:

Whom have yet to have an established corporate network infrastructure management platform

Those  seeking  to  prioritize  ‘next  steps’  to  ensure  current  platforms  fully   deliver on their potential value

Those  seeking  to  upgrade  to  the  latest  versions  of  GE’s  network   infrastructure management solutions

Geospatial Network Infrastructure

Management Solutions and where they

fit…

address several conflicting objectives:

reduced cost, both CapEx and OpEx; increased network reliability; and

improved customer service.

In order to meet these three competing goals, operators need to:

better manage their network infrastructure to ensure they more effectively utilize their network;

plan cost-effective network upgrades that deliver; maintain their critical network assets; and

Geospatial network infrastructure

management solutions fill the needs, but

are  more  than  simply  GIS  tools…

Geospatial network infrastructure management system

– act as the master of record for an operators network infrastructure, in terms of assets, location, connectivity and capability

– play a key role in planning, constructing, operating, and maintaining critical network assets

More than a traditional GIS technology development

– these industry-focused applications are foundational elements for supporting key business processes across multiple business units within the network operator

– helping design, construct, service, restore and maintain complex network assets throughout their entire life cycle

Generic role of Infrastructure Management

Solution within Telecom Operations

Planning, Engineering, Design, Construction Physical Inventory Order Management, Provisioning, Repair Logical Inventory Outside Plant Inside Plant Consume Inventory Proactive & Reactive Work Cre ate Inv en tor y Workflow Management Ex tern al Ga tew ay Capital Projects Rebuilds, Upgrades Suppliers, Contractors Use Da ta Customer Service T rouble & Performance Management NOC Reporting (Scorecard)

….having  the  right   information available

to the right people at the  right  time….

Customer Orders

Our intent here is to help you to make

fact-based  decisions…

…about  investments  in  geospatial  solutions Specifically, this ROI Handbook will help you:

• to prove the value quantitatively so it is irrefutable (based in fact)?

• to communicate the  value  so  people  ‘get  it’?    e.g.  to  elicit  an   intuitive or emotional reaction

• to help drive toward the actual realization of value (measuring success, not just 'doing projects')

• to secure the right amount of funding; or spend what you know you have most effectively

• to help make/drive decision making about investment decisions, priority etc moving forward.

The approach helps to answer 5 key

questions  asked  by  executives…

1. How will the investment in a geospatial network solution impact

• revenue, costs; service levels; regulatory compliance, public safety and shareholder value etc; and

• how will it contribute to our overall business goals & objectives?

2. What are the capital and operational expenditures required, and what is the on-going cost of ownership?

3. When will we realize the expected benefits?

4. What resources are required to deliver, implement and sustain the solution in order to realize the benefits?

What is it?

Part Strategy and part Business Case

Organize for Success

Step 1 describes the necessary planning steps that are required to lay the groundwork

to complete a geospatial network

infrastructure management solution Strategic Plan and ROI-based Business Case.

Identify Business Imperatives

Step 2 describes how to engage with senior business stakeholders to identify their key

issues, challenges, goals and objectives

Understanding the Gap: Current vs Future State

Step 3 determines the current business situation and creates a future vision that delivers the benefits needed to secure the commitment of senior stakeholders. This is

key  to  the  ‘change  management’  

considerations of proposing changes to current business processes

Defining the Program Portfolio

Step 4 provides guidance on how to build a portfolio of projects that will collectively deliver the required benefits. In particular we

decompose the program into manageable parts.

Implementation & Operational Team Design

In Step 5, we provide guidance on how to assess the business readiness of your organization to take

on a major technology-enabled change program, and how to establish an appropriate delivery model for the program - including post-deployment when it

is  operational  in  a  “business  as  usual”  setting.  

Building a Multi-year Budget Forecast

Having defined the program (which is a portfolio of discrete projects) in Step 4, we provide guidance in Step 6 on how to forecast the capital and operational

cost of executing those projects. The aggregation of the costs of the individual projects will create a

multi-year budget forecast for the entire program.

Quantifying the Benefit

In Step 7 we provide an approach to modeling benefits quantitatively and incorporate concepts

such as benefits realization curves, confidence factors, expert witnesses, value-driver trees and more. The model we provide is a robust toolkit that has been designed to allow individual benefits to be

modeled.

Building the Program Benefits Roadmap

In Step 8 we discuss how to create a powerful illustration  of  ‘what  is  going  to  happen’  using  an   implementation roadmap that demonstrates, quarter

by quarter, which projects are being executed and when the benefits will be delivered.

Proving the Economic Case

Having created a multi-year budget (the investment) and modeled the value to be delivered (the expected

benefits) we now have the key pieces of information required  to  calculate  the  “ROI”.  In  Step  9  we  explain   financial methods such as net present value (NPV) and internal rate of return (IRR), and provide insight into the

different  flavors  of  “ROI”  models  and  their  relative   strengths and weaknesses.

Executive Communication: Delivering the Case

The final step of the process is to consolidate the key pieces of information at the right level of abstraction for

the executive team. Step 10 should be for completeness and not the lynch pin in the final

submission, where you cross your fingers and hope that the budget is approved! If you have completed each step appropriately, then you should already be confident

that the senior leadership fully appreciate the benefits that the solution will deliver.

Customer viewpoint: When (and why)

you might use this approach?

• Green Field

• Departmental silos

• Merger & Acquisition

• Upgrade

• Replace

• Integration

• Going Mobile

• Defense Against Cost

Cutting

• Demonstrating risk of

inaction

Not just for one-off use. The approach is intended to help you sustain funding and value delivery over time.

The approach is participative and

cross-functional…

• Recognizes this is a business

transformation program, not

a simple technology implementation

• Therefore, is necessary to secure the commitment of senior leaders and front-line staff

• Change management and

regular communication across all levels begins at the outset

Consider the focus of an ROI and value

based analysis

Is  it…

to communicate the  value  so  people  ‘get  it’?  e.g.  to  elicit  an  intuitive  or  emotional   reaction

to prove the value quantitatively so it is irrefutable (based in fact)?

to help drive toward the actual realization of value (i.e. measuring success, not just  ‘doing  projects’)

to secure the right amount of funding to support your program

to spend what you know you have most effectively, in the case of budget already allocated to you

to help make/drive decision making about investment decisions, priorities etc moving forward

All the above?

The depth to which you perform the ROI analysis will depend on the primary reason

you are conducting the analysis in the first place

Many organizations approach ROI by

putting  the  investment  first…

Most calculate what a particular investment will deliver in terms of benefit…  

instead of determining what benefit they need to achieve for the business; and

then follow a structured process for determining the right level and pace of

Developing a metrics dashboard allows

you to track many different metrics in a

single place

Allows you to track actual impact to the business

Provides credible input into subsequent budget

submissions

Provides executives with

tangible  ‘proof’  of  the  impact  of   the program

Keeps the program benefits, not technology, focused

Examples and

Case Studies

A  completed  example…

And then these initiatives feed the budget

forecast model and roadmap planning..

Program Blueprint

Multi-year Budget

Forecast

OpEx, CapEx and FTEs

• What needs to be done • When it will be done

• Cost & Resources required

1.66 2.14 2.63 3.09 3.73 4.36 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 C os t of N e tw ork P la nn ing & D oc um e nt a ti on ( $ B ) 2007 2008 2009 2010 2011 2012 Year

Total Global Cost of Network Planning & Documentation for FTTH Connections ($B)

Total Global Cost ($B)

2.4 16.4 1.3 4.3 22.3 2.2 6.5 28.8 4.1 9.4 35.0 7.0 13.2 44.1 11.7 16.9 53.6 19.1 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 C on ne c te d H ou s e ho lds (M il li on ) 2007 2008 2009 2010 2011 2012 Year

FTTH Connected Households by Region

Americas AP EMEA

Cost of FTTH planning, design &

documentation

FTTH global landscape

~90M homes connected by 2012

FTTH network planning & documentation

Average cost of FTTH network

planning/document is 5% of overall cost  of  connection  per  home….   averaging $1000 to $1650

By 2012 global cost of further 60M homes is approaching $5BN (5% of 100BN)

FTTH

Deployment

Financial

Analysis

Example

Customer Process Improvements

Major Telecom ILEC deploying FTTH solution has

benchmarked two key FTTH plan/design processes

1. Service area analysis and creation

2. Detailed network design for a service area

Recorded significant time/effort savings:

1. Service area creation: 60% improvement

90 minutes, previously 225 minutes

2. Network design: 94% improvement

FTTH

Planning &

Design Tool

Customer 1 saw FTTH residential

network planning reduced from

1

month to 3 days

Customer 2 realized

70%

saving on

FTTH network design time

Customer 3 saved

€533k

on the

design of their FTTH networks

across 80 planning areas

FTTH Solution ROI Results

Conclusion…

We hope you have found the structured methodology and insights valuable.

We wish you success in developing quantifiable business cases for geospatial network infrastructure management investments that in turn will drive indisputable business value for your organization.

We are happy to provide on-site  ‘primer  workshop’  on  the  

methodology to you and your peers/leadership, targeted around your specific environment, challenges and goals.

Questions

[email protected]

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