accenture network operations planning

8/14/2019 Accenture Network Operations Planning

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By Jason Cook and Adam Hutchinson

Network and Operations Planningfor TelecommunicationsGetting the Edge in the Network-Expansion Boom


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1 Network and Operations Planning for Telecommunications

Reacting to a surge in demandfor network bandwidth, todays

telecommunications carriers must domore than respond to demand. Newmarket dynamics require longer-term build-plans driven by highlyresilient, cross-functional planning.

Heres how to make the switch.


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Unfortunately, even as consumers demandmore bandwidth, they have not beenwilling to pay higher fees for the addedcapacity. Revenue growth is diminishingfor many services; no longer trackingdirectly with the rise of traffic volume.Yet carriers must move fast to keep upwith consumer expectations, becauseas services converge, customers find iteasier than ever to switch carriers tokeep pace with their needs. Poor network

performance, or even the perceptionof poor performance, quickly leads toincreased churn and lost subscribers.

Speed and quality of network deploymentare now key differentiators. Its criticalthat new technology and capacity bedeployed quickly and eff icientlynotonly to avoid customer defectionsbut to more quickly capture availablerevenue and market share. Effectivelymanaging network growth programsat speed and scale has thus become

vitally important to a carriers long-termviability in the market. Despite the majorcapital investments and the focus ofboards and senior leadership on networkperformance, network performancestill struggles to keep pace with risingconsumer expectations and networkdeployment frequently lags behindplanned timelines. Todays carriers mustplan and execute faster than ever before.


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Impacts on the carriers supply chain

Instead, companies must now deploy theirnetworks in anticipation of demand, usinghighly adaptive and well-coordinatedplanning, construction and

engineering programs.

This change has substantial impactsthroughout the enterprise, includingon the supply chain. The new networkdynamics require a fundamentallydifferent approach to capital planning,network construction, engineering,technology management, capitalequipment forecasting, equipmentdistribution, and vendor collaboration.

Most importantly, supply chainoperations must be designed to providemaximum responsiveness to the networkconstruction and engineering teams by

making sure equipment is available in theright place at the right time. Fortunately,increased volume provides opportunitiesto change the traditional methods forprocurement and distribution ofnetwork equipment.

The pace of change is forcing companies to movebeyond traditional approaches to building their network.

Yesterdays best practiceresponding to existing customerdemand and expanding capacity on a just-in-time basisis a guarantee of failure in todays environment.


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Challenges that cant be addressed withBusiness as Usual

Frequent Plan ChangesLarge network deploymentsrarely go according to plan, for avariety of reasons. For instance,large deployments exponentiallyincrease demand for fieldengineering and constructioncapacity. Often, personnel taskedwith construction must alsotake on break-fix issues and

customer-connectivity orders.Because these other activitiesare inherently unpredictable,they often force changes to theinstallation plan for networkdeployments. Additionally,individual projects haveunique aspects that cannot beanticipated before construction.While average build times can beestimated, an individual site willhave unique aspects includingthe current configuration, the

distance from the network accesspoint, and local regulations andpermitting, any and all of whichcan lead to substantial variancein build time. Plan changesare constant. Planning is acontinuous, dynamic process.

Coordination acrossorganizational boundariesIn most cases network-related planningis broken up into silos including OEMproduction planning, network capacityplanning, capital planning, networkdesign, procurement, construction,engineering and provisioning, as wellas third party service providers (turfvendors) and other carriers. Suchboundaries slow down, and sometimesblock, the flow of information needed toeffectively plan equipment purchasingto minimize lead times. (An examplewould be a change in network designthat affects the type and quantityof equipment that will be required.)Minimally, the design changes shouldbe communicated to the equipmentforecasting team. Ideally, the networkdesign team should consider impactsto existing equipment inventory and

OEM lead times in their design decision.Its ineff icient to make network designdecisions without input to or from theequipment planning organization. Yetmany companies still do.

Annual planning cyclesMost companies conductplanning activities on an annualcycle with little considerationgiven to required lead timesacross functions, OEMs andsuppliers. Inevitably, this cadencecreates uncertainty in equipmentdemand and lengthens cycletimes. Traditionally, annual

demand for network equipmentwas relatively moderate andpredictable. But in todaysenvironment of greaterequipment demand driven bylarge network deployment,annual planning cycles can leadto significant spikes in demandthat contribute to equipmentshortages and long lead times.Truly efficient planning functionrequires constant updating of thenetwork construction plan, which

maintains a 12-18 month view ofequipment demand.


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OEM capacity constraintsThe global economic downturnhas led manufacturers to cutback on capacity. Moreover, somesubcomponent suppliers, hit by

the economic turmoil and naturaldisasters, have not survived. Thishas limited OEMs ability to reactto unexpected surges in demand,even as those surges have becomecommon. Manufacturers havebeen cautious about increasingcapacity when carriers are unableto provide accurate forecasts offuture equipment demand. The result:Recent quarters have seen significantincreases in order fulfillment times,with some taking 60 days or more.

On the carrier side, CEOs increasinglycite vendor performance as achallenge that constrains networkgrowth. Yet most of these samecarriers fail to provide their OEMswith a reasonable predictionof demand prior as an input toproduction planning (which istypically takes place 6 - 9 monthsahead of carrier equipment orders).Carrier and OEM capacity planningare inextricably linked but rarelywell-coordinated.

Sub-optimization of networkequipmentIncreased lead times incentivize hoardingof network equipment. Uncertain of

whether equipment will be availablewhen needed, construction or engineeringteams may order and pick up equipmentthat will not be installed immediately. Inthe meantime, equipment shortages maybe delaying other projects. This resultsin unnecessarily large working capitalinvestment in non-revenue generatingassets (many months of supply, largeinvestment in WIP) and delays the overallnetwork deployment.

Most carriers struggle to dynamically

re-balance project equipment to whereits needed most. And some are entirelyunable to do so. During a large buildeffort, it is not uncommon for carriersto have 3-9 months of equipment supplydeployed to field locations where itcannot be shared, while capital projectsin other locations are delayed due toequipment shortage.

Additional challenges

Capital Efficiency

The need to efficiently use capital isincreasingly important. The probability ofurgent unpredictable demands for capital,along with the inability to increase rates,makes it imperative for companies nowto flex available funding. Undisciplinedor unsystematic approaches to capitalallocation effectively hide value thatcompanies can no longer afford to miss.

Visibility and Reporting Capability

A lack of end-to-end managementsystems (often seen in the absence ofautomated reporting procedures) leads toblind spots where there should be end-

to-end visibility of deployment status. Inthe field, inbound or in-transit supply, andthird-party vendors, there are frequentgaps that limit a carriers view of theiravailable supply. Lack of visibility alsolimits the carriers ability to measure truecapital project cycle times.


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To address these challenges, it is necessary to transformkey aspects of the traditional network planning andbuilding approach in 3 areas.

1. Plan all aspects of the network deployment using acommon Network & Operations Planning (N&OP) processthat spans organizations

2. Utilize a command center model to coordinateexecution and manage progress against build plans

3. Take advantage of the increased volume to acceleratethe way network equipment is procured and fulfilled

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All these promoters of inefficiency arelegacies from a different environmentand are ill-suited to todays conditions.Companies therefore face a choice: Theycan take a new approach to networkdeployments and supply-chain planning

and execution, or they can limp alongwith business as usual and watch asfaster competitors get to market quicklywith new technology and gain thecompetitive edge. Bringing the best supplychain insights to network deploymentpresents a great opportunity to eliminateinefficiencies and thrive in todaysdynamic and unpredictable environment.


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A comprehensive Network and Operations Planningapproach addresses the inefficiencies and delays thatplague network deployments. It enables coordinationwithin the carrier and with external partners (e.g.equipment suppliers, turf vendors, other carriers) byproviding a framework to dynamically meet the demands incrucial areas including:

Network capacity forecasting

Network design and deployment planning

Vendor collaboration and forecasting

Network equipment planning

Network equipment fulfillment and

inventory management

N&OP is an ongoing, iterative processthat assures end-to-end visibility andtimely access to the right planninginformation by the right people acrossfunctional areas (see Figure 2). N&OPresults in an executable plan that isaccurate, up to date, and coordinatedacross all functional areas and third-party equipment and service providers.By creating the plan, the organizationcan also provide an accurate forecast toits vendors, reducing cost and equipmentlead time. Additionally the plan will bemore realisticbased on agreed forecastsand a practical assessment of vendorcapacity and other equipment constraints.

This assures that the plan is a real-worldprogram that is actually executable, notan ideal-world vision to be put on a shelf.

To accomplish the goals of N&OP,representatives of all stakeholderorganizations meet frequently to establishand maintain a twelve-month rolling viewof network build operations and to reactto changes in the deployment plan by

reallocating equipment inventory.

To be successful N&OP requires strictadherence to requirements. This meansdedicated resources to support theframework and most importantly thecommitment of the executive leadershipteam to enforce accountability. Settingup an effective N&OP frameworkrequires detailed definition of rolesand responsibilities, open exchangeof planning-related documents, and aregular meeting cadence.

What is N&OP?

The Network and Operations PlanningApproach


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Historical Telecom Deployment Large Telecom Deployment

Capital efficiency is the main driver

and companies will try to hold lessinventory to keep costs down

Preemptively investing in inventory

is main driver in order to keep orderfill rate & maintain a higher requiredservice rates

Suppliers and Vendors are siloed and

not part of a strategicplanning process

Coordination with suppliers and

vendors is critical and increasesin volume needs to be openlycommunicated

Plans are made to handle rapid

responses around unplanneddown time

The way to handle unplanned

downtime is not by making rapidresponse, but by preemptivelystrategizing how to get equipment

to the right place at the right time

Historical inventory levels are used to

benchmark network needs Need to change your inventory holding

levels as you expand


Network Equipment Planning

Today, business as usual for network operations is foreach project to estimate demand and place orders forequipment. But the increased volume associated withvast deployments lends itself to a larger-scale, inventory-stocking approach.

Figure 3: The impact of better visibility on long term equipment demand.

By making the switch from project-by-project to a total-inventory approach,carriers can dramatically reduce theeffective lead time for network equipmentfrom the current 50-90 days maximum to7-14 days.

Cutting the effective lead time fornetwork equipment has two primarybenefits, both of which removean important constraint from theconstruction cycle time. First, lead-timeimprovement permits more flexibility inconstruction schedules and reduces the

chance of delays in construction dueto lack of equipment. This helps moreefficiently to manage limited installationcapacity and expense budgets, whileminimizing installation cycle time.Secondly, once lead times are reduced,

installation organizations are less inclinedto hoard equipment in ghostfield inventory.

Over the past few years, in working withthe N&OP framework, we have found thatswitching to this approach can greatlyaccelerate network build times. In some

cases, the N&OP approach has permittedcompanies to build network nine timesfaster than they were doing before. Therehave also been significant cost savingsfrom accelerated retirement of outdatedtechnology. And, as weve mentioned,

effective lead time can be cut from 50-90 days to a week or twowith a minimalincrease in working capital. We believe,in fact, that this lead-time improvementcan be achieved with a decrease inworking capital.


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Financial Impact

A good example of the impact of accelerating the buildof next generation networks is the current enablement ofLTE for mobile telecom. For every month a cell site is notupgraded, either by a carrier or a backhaul partner, around$3000 of revenue is lost.

This means that accelerating the build of25,000 sites by an average of 1 monthcan generate $62M is incrementalrevenue while reducing expense tobuild those sites. We have seen 18-20month delivery cycles cut in half usingN&OP, resulting is $750 million or more

in increased revenue, with additionalbenefits due to improved capitalefficiency. Additionally, once contractsfor next generation sites are established,N&OP provides an advantage in capturingadditional revenue for the next wave oftechnology and bandwidth upgrades.

Conclusion

But today demand for more digitalservices is skyrocketing among businessesand consumers, spurring a buildingboom in network capacity that shows nosigns of stopping. To do well in this newenvironment, companies are turning toa new paradigm: Build plans driven bycommitted, disciplined, well-executed

internal planning, not external demand.

This new paradigm offers a greatopportunity for carriers to changethe way they acquire and deploy theirnetwork equipment. The framework werecommend can capture efficienciesthroughout the process, by removinginformation from silos, breaking downorganizational barriers, and implementing

end-to-end visibility in the network-building process.

Companies that take up this N&OPapproach will get an edge from betterforecasts, lower working capital andthe benefits to brand that come witha reputation for better quality service.Companies that stick to business asusual, though, may find themselvesleft behind.

There was a time when telecommunications carriers could

get along fairly well by performing maintenance andresponding to demand when and where it arose.


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What is driving increased demandfor network capacity?

Several factors are driving increased demand for capacityand new network technology:

Consumers are moving away from

traditional Wireline communicationtoward Mobile communications (seeFigure 4).

Development of multimedia

applications, such as Pandora, Netflixand YouTube.

Development of devices that facilitate

the consumption of data heavyapplications (e-books, sophisticatedtablet apps, powerful games, etc.).

Next generation mobile communications

technology that increases peak devicecapability and consumer expectations.

Figure 4: Usage of traditional wireline and mobile communications in North America.

North America

Units (000)

Mobile Lines

Fixed Lines

400,000

300,000

200,000

100,000

2005 20072006 2008 2009 2010 2011 2012 2013 2014

0


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About the AuthorsJason Cook is a Partner in AccenturesCommunications, Media, and TechnologyManagement Consulting practice with16 years heavily focused on the Telecomindustry. He has extensive experiencehelping clients develop and implementinnovative solutions for network planningand logistics. He graduated from the

University of Puget Sound with a BA inBusiness Administration and Finance. Healso holds an MBA from the University ofMontana. Based in Denver, Colorado, he canbe reached at [email protected]

Adam Hutchinson is a Senior Managerin Accenture Communications, Media,and Technology Management Consultingpractice. He has 14 years experience inSupply Chain Planning and Fulfillment andhas worked extensively with mobile carriersincluding leading initiatives to developand implement processes across planning,construction, and provisioning of majortelecommunications network upgrades. Heholds a BBA in Operations Managementfrom James Madison University and anMBA from the University of Chicago- Booth School of Business. Based inChicago, Illinois he can be reached [email protected].

About AccentureAccenture is a global managementconsulting, technology services andoutsourcing company, with more than249,000 people serving clients in morethan 120 countries. Combining unparalleledexperience, comprehensive capabilitiesacross all industries and business functions,and extensive research on the worlds

most successful companies, Accenturecollaborates with clients to help thembecome high-performance businesses andgovernments. The company generated netrevenues of US$25.5 billion for the fiscalyear ended Aug. 31, 2011. Its home page iswww.accenture.com.

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