A.T. Kearney, one of the world’s leading management consulting firms in the Telecom industry has identified that regional telecom operators may reap significant benefits by implementing cost and CapEx optimisation programs. It is estimated that there is potential of more than 10per cent improvement compared to the world’s best-in-class telecom operators and A.T. Kearney’s Global Cost and Performance Benchmark initiative.
“Gone are the days when GCC operators were mostly top-line focused battling for market share. As markets mature in the region, operators can no longer solely rely on revenue growth to increase profit and therefore attention turns to optimization of costs and CapEx to maintain a healthy bottom line,” said Mr. Marc Biosca, Principal and Head of the Communications Practice of A.T. Kearney in the Middle East. “In addition; limited growth opportunities, technological changes, increasing competition and dynamic customer expectations provide added challenges to telecom operators’ performance in the current market,” he continued.
A powerful and proven approach to cost and CapEx optimization leverages international benchmarking. Detailed benchmarking helps operators identify those areas with highest potential, as well as understand the root causes for higher costs or poor performance, allowing operators to prioritize and focus on those areas with highest savings potential leading to faster results.
“Cutting costs is easy and everyone can do it, however optimizing costs in the right areas - where there is excessive spending or underperformance - without negatively affecting the customer experience and the overall performance of the business is something different and definitely more challenging,” said Mr. Biosca. “Detailed cost and optimization benchmarking provides extra visibility to CEOs and CFOs on where to cut, why and how.”
Based on A.T. Kearney’s experience, operators who were successful in enhancing value through cost and CapEx optimization programs have done so by leveraging best practices in four areas; optimized procurement, extraction of group synergies, improved business processes and optimized asset utilization through efficient infrastructure management. For example optimizing procurement and efficient infrastructure management in the network and IT areas is known to provide quick wins of 10-20 per cent cost savings. Some leading operators have managed to realize up to 25 per cent savings on customer service costs by managing call volumes, focusing on first call resolution and enhancing service levels.
“Such programs need not only focus on reducing the costs and CapEx from the current base, but in most cases also look for efficiency improvements through operational excellence, seeking to achieve higher service levels and customer satisfaction at no extra cost,” stated Mr. Biosca.
GCC operators can embark on their own performance improvement journey to extract further value from their cost and CapEx base. A.T. Kearney believes that the key considerations for a successful optimization program are; first, to secure top management support and alignment for any optimization program that will be implemented; second, to consider the strategic context of such a program in order to agree on the overall design: quick wins vs. long-term sustainability (or both); and lastly, to leverage global best practices and benchmarks along with any identified cost and CapEx optimization initiatives to extract high impact savings and to ensure GCC operator performance in-line with best-in-class global operators.
