Quantifying and Delivering Value with Geospatial Network Infrastructure Management Solutions

Scott Casey, GE Digital EnergyScott.Casey@ge.com

Ross Smith, PA Consulting GroupRoss.Smith@paconsulting.com

GITA Conference 2011

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

Methodology of PA Consulting Group, Inc.

Introduction and BackgroundA Brief tour of the ROI Handbook & Supporting

ToolsExamples and Case StudiesQuestion and Answer

AGENDA

Investment prioritization and justification are more relevant than everOrganizations 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…As the market evolves, network operators and service providers need to 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

operate the services running across the network.

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

Inve

ntor

y

Workflow Management

External G

ateway

CapitalProjects

Rebuilds, Upgrades

Suppliers, Contractors

Use

Dat

a

CustomerService

Trou

ble

&P

erfo

rman

ceM

anag

emen

t

NO

C

Reporting (Scorecard)

….having  the  right  information available to the right people at

the  right  time….

CustomerOrders

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.

What’s  different  about  this  approach?

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?

5. Is there a positive economic case?

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 analysisIs  it…to communicate the  value  so  people  ‘get  it’?  e.g.  to  elicit  an  intuitive  or  emotional  reactionto 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 youto help make/drive decision making about investment decisions, priorities etc moving forwardAll 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 investment that will achieve that level of benefit

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…

Program Vision

Program Objectives

Project Initiatives

Business Design Factors:

Current Desired

Project Delivery Structure

And then these initiatives feed the budget forecast model and roadmap planning..

Program Blueprint

Multi-year BudgetForecast

Roadmap

Business Objectives &

Expected BenefitsCurrent & Future for the

Business Design

OpEx, CapEx and FTEs• What needs to be done• When it will be done• Cost & Resources

required

Practical initiatives

1.662.14

2.633.09

3.73

4.36

0.000.501.001.502.002.503.003.504.004.50

Cost

of N

etw

ork

Plan

ning

&

Docu

men

tatio

n ($

B)

2007 2008 2009 2010 2011 2012

Year

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

Total Global Cost ($B)

2.416.41.3

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

0.010.020.030.040.050.060.070.080.090.0

Conn

ecte

d Ho

useh

olds

(M

illio

n)

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 $1650By 2012 global cost of further 60M homes is approaching $5BN (5% of 100BN)

Source: Heavy Reading

FTTx Cost Comparison

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 creation2. Detailed network design for a service area

Recorded significant time/effort savings:1. Service area creation: 60% improvement

90 minutes, previously 225 minutes2. Network design: 94% improvement

4 minutes, previously 74 minutes

FTTH Planning & Design Tool

Example

Customer 1 saw FTTH residential network planning reduced from 1 month to 3 daysCustomer 2 realized 70% saving on FTTH network design timeCustomer 3 saved €533k on the design of their FTTH networks across 80 planning areas

FTTH Solution ROI Results

25

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.

Please be sure to take a copy of the ROI Handbook!!

Questions

Scott.Casey@GE.com