margin management webinar comptel final pp - … management gain ultimate visibility and control...
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Margin ManagementGain Ultimate Visibility and Control
Gary Zimmerman – Director, NeustarJuly 15, 2010
COMPTEL WEBINAR PROGRAM POWERED BY:
Neustar – Who we are
• Nearly 900 employees worldwide
• Corporate headquarters in Sterling, VA (USA)
• Offices in North America Europe and Asia N t bli lOffices in North America, Europe and Asia
• 10,000+ customer entities, including 4,000+ network operators
• 2 major Network Operations Centers
Neustar, enabling seamless connectivity across disparate networks, technologies and
applications. • 2 major Network Operations Centers
• Nearly 150 network nodes worldwide
• Publicly traded (NYSE: NSR)
app cat o s
• FY 2009 revenue: US $480.4M
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AGENDARevenue management analyticsThe case for margin managementThe case for margin managementAn example in actionTaking the first stepGoing beyond margin managementGoing beyond margin management
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Opportunity - Reducing revenue leakage can provide headroom to address strategic issuesp g
•US communicationsservice providers (CSP)average around 14%annual revenue loss.
•Mobile providers are around 15%
Mid i CSP (100K t•Midsize CSPs (100K to1M Subs) average >18%loss
•Largest carriers averageb t 6% labout 6% loss
•All CSPs polled voicedconcern over next gentechnologies andapplications and theirimpact on revenueloss exposure.
Source: Analysys Mason
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Bottom line: A 1% reduction in revenue leakage can yield a 5% improvement in operating income
The broader view of Revenue Managementg
•RequiringD t ti
Next Gen RANext Gen RA•Policy &bandwidth mgmt.•Video & content
•Policy &bandwidth mgmt.•Video & content
Next Gen RANext Gen RA•Policy &bandwidth mgmt.•Video & content
Fraud Mgmt.Fraud Mgmt.
•Consumer &business fraud &credit risk
•Consumer &business fraud &credit risk
Fraud Mgmt.Fraud Mgmt.
•Consumer &business fraud &credit risk
Business AnalyticsBusiness Analytics
•Customer retention mgmt.•Marketing & campaigns•Customer retention mgmt.•Marketing & campaigns
Business AnalyticsBusiness Analytics
•Customer retention mgmt.•Marketing & campaigns
» Detection» Correction» Prevention
Video & contentassurance•Advertizing androyalty settlement
Video & contentassurance•Advertizing androyalty settlement
Video & contentassurance•Advertizing androyalty settlement
credit risk•Interconnect fraud•Dealer mgmt.
credit risk•Interconnect fraud•Dealer mgmt.
credit risk•Interconnect fraud•Dealer mgmt.
g p g•Product management•Customer / handset analytics
g p g•Product management•Customer / handset analytics
g p g•Product management•Customer / handset analytics
Traditional RATraditional RATraditional RATraditional RA Cost ManagementCost ManagementCost ManagementCost ManagementOperations» Prevention
across a number of
• Switch & order tocash mgmt.
•Billing qualityand contract rates •Broadbandreconciliation
• Switch & order tocash mgmt.
•Billing qualityand contract rates •Broadbandreconciliation
• Switch & order tocash mgmt.
•Billing qualityand contract rates •Broadbandreconciliation
•Least costrouting•Margin analysis•Partner &ecosystem mgmt.•Interconnect
•Least costrouting•Margin analysis•Partner &ecosystem mgmt.•Interconnect
•Least costrouting•Margin analysis•Partner &ecosystem mgmt.•Interconnect
Fulfillment Assurance Billing
Customer relationship mgmt.
Service mgmt. & operationsnumber of operational disciplines.
•Wireless roaming•Wireless roaming•Wireless roaming•Interconnectusage analysis•Interconnect billverification
•Interconnectusage analysis•Interconnect billverification
•Interconnectusage analysis•Interconnect billverification
Service mgmt. & operations
Resource mgmt. & operations
Partner / supplier relationship mgmt.
Network & ServiceNetwork & ServiceAssuranceAssurance
•Fault / performance•Application mgmt.•Fault / performance•Application mgmt.
•Compliance•Service quality mgmt.•Compliance•Service quality mgmt.
Network & ServiceNetwork & ServiceAssuranceAssurance
•Fault / performance•Application mgmt.
•Compliance•Service quality mgmt.
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An industry conundrumy• Voice still a big part of industry
revenues» 70% of Mobile
$120.00
Unlimited plans
» 70% of Mobile» 56% of Fixed
• A mature service in a mature $80.00
$100.00
nth
market, growing on par with GDP
• Competition squeezing margins» Ready substitution $40 00
$60.00
Cos
t per
mon Vz, T
SprintT-MobileMetro PCS» Ready substitution
» Flat rate pricing− Metro PCS - $10.00 goal− Magic Jack - $1 70 today
$20.00
$40.00 C Magic Jack
Magic Jack $1.70 today$-
2009 Today
Pricing and routing efficiencies are key to optimizing margins
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g g y p g g
Importance to voice provider communityp p y
•Maintaining margin in a falling (commodity) market•Right-sizing NNI capacity (trunks)•Managing interconnect agreementsg g g•Protecting your market
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A delicate balance
$
TiTime
…at the end of the day, I hope I’ve made money
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Hope is not a planp p• Do you have reliable visibility acrossall four variables?all four variables?1. Price2. Cost3. Capacityp y4. Quality
• Are the critical sources of information accurately correlated?correlated?
• Is the capability available on demand?
Having access to the right info at the right time is critical
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Neustar Margin Management – a complete solution• For CSPs who want to more
effectively optimize their voice traffic margins, Neustar’s Margin Management is an analyticsManagement is an analytics, address resolution, and routing solution that allows you to» Optimize costs, prices, capacity,
and revenue through interactive
Address resolution
and revenue through interactive analytics,
» Advertise and find the most direct routes for each number called,
» Take advantage of newer IP
Voice margin
optimization
Real-time routing
change / arbitrage
Optimized margins
» Take advantage of newer IP settlement models,
» And leverage termination rate and routing changes in real-time.
optimization g
• Unlike other solutions providers who solve aspects of the problem, Neustar provides a complete solution, with a TCO/ROI model th t’ i i th i d t
IP to IP interconnect
that’s unique in the industry.
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Visibility is the critical first stepy p•Massive mediation capabilitiesp
•Strong correlation of variables
•Visibility through effective displayp y
•Predictive power through scenariothrough scenario planning
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Optimized marginp gIs provided through an analytics application that provides “Margin Analysis” capabilities. It leverages the data correlation and aggregation capabilities of Agilis’ DataMind® platform.
• Benefits» Speed to results
− 60 to 100 days from start to production
g p
60 to 100 days from start to production» Compelling economics
− In quarter payback» Simple answers to complex problems
Holistic Approach
Managed Service
− Turn-key solution integrated with your infrastructure
» The comfort of Neustar− Built and operated by experts
Experienced Team
Carrier-grade
Platform
− Five 9’s quality− Trust and neutrality
Powered by
Advanced Capabilities
y
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Reviewing the dashboardg
Build a custom dashboard to quickly get a pulse on key performance indicators suchpulse on key performance indicators such as:• Profitability by carrier• Profitability by destination• % Margin by carrier
• Carrier N is taking the highestEXAMPLE:• Carrier N is taking the highest terminated traffic and it is also the highest margin carrier• Carrier T has highest margin %, sell more to Carrier T!• Highest exposure is from Carrier S, investigate if it is a pricing issue or a routing issue!
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Business Case 1: Pricing Issue
Scenario: • Domestic Routing Analysis | LCR & Actual Compared by Carrier
Summary: • Actual Routing Analysis (analysis on historical data) shows loss (negative margin) of $867,295• With Optimized LCR Routing, the margin improves to 255,305 p g, g p ,• There is net improvement of $1,122,600
Observations [for Carrier S]:• 74% of the loss ($642,768) is coming from Carrier S in Actual Analysis• Carrier S is showing negative margin even with the Optimized LCR Routing• Carrier S is showing negative margin even with the Optimized LCR Routing• The losses are reduced from $642,768 (Actual Analysis) to 171,169 (LCR Analysis)• There seems to be Pricing Issue with Carrier S• We’ll drill down on Carrier S to identify the issues…
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Case one details
Drill Down: Carrier [Carrier S] Choice [1] NPA [641] NXX [315]
• To destination 641-315, Carrier S is Choice 1 in the Actual Routing Analysis as well as in LCR Analysis• Carrier S has least cost among all carriers to this destination• However the margin is still negative• This indicates Pricing Issue with Carrier S for the destination 641-315
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Business Case 2: Routing Issue
Scenario:• International Routing Analysis | LCR and Actual compared by Destination• International Routing Analysis | LCR and Actual compared by Destination
Summary: • Actual Routing Analysis (analysis on historical data) shows margin of $386,779,844• With Optimized LCR Routing, the margin improves to $657,803,337
f $• There is net improvement of $271,023,492
Observations:• For Country – Egypt (20), the Actual Analysis shows loss (negative margin) of $2,305,791• With Optimized LCR Routing, the margin improves to $37,344,665With Optimized LCR Routing, the margin improves to $37,344,665• This indicates there were routing issues to this destination, which were fixed in the LCR Analysis• We’ll drill down to find out details…
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Case two details
Drill Down: Country[20: Egypt] Destination [208878]
• To destination 208878, there was a loss (negative margin) of $4,358,432 in Actual Analysis• With Optimized LCR analysis, the margin improved to $33,908,048, thus making a netimprovement of $38,266,480• Detailed report shows Carrier E took ~ 206 Mil minutes as Choice 1. It has highest costDetailed report shows Carrier E took 206 Mil minutes as Choice 1. It has highest cost(cost: 0.886254) among all available carriers to destination• This indicates Routing Issue to this destination• Optimized LCR analysis fixed the Routing Issue and made Carrier B (cost: 0.700198) asfirst choice
21 © Neustar Inc. / Proprietary and Confidential
Summaryy• Domestic example
» Actual Routing Analysis (analysis on historical data) shows loss ( ti i ) f $867 295(negative margin) of $867,295
» With Optimized LCR Routing, the margin improves to $255,305 » There is net improvement of $1,122,600
• International example» Actual Routing Analysis (analysis on
historical data) shows margin of $386 779 844historical data) shows margin of $386,779,844» With Optimized LCR Routing,
the margin improves to $657,803,337 » There is net improvement of $271 023 492» There is net improvement of $271,023,492» Changing one routing decision
created a $40,000,000 swing in profitability
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A possible outcome (illustrative) p ( )Margin Improvement Calculator Parameters MonthlyNetwork Traffic Information
Monthly Minutes of Use (MOU) 692,333,333Network Operating Numbers
Average revenue per MOU $0 0500 $34 616 667Average revenue per MOU $0.0500 $34,616,667Average cost per MOU $0.0258 ($17,862,200)Margin on MOUs $0.0242 $16,754,467
Improvement of Routing EfficenciesMargin Increase From Improved Routing Efficiency 3.50% $1,211,583g p g y $ , ,Margin Increase from Faster Routing Changes 0.50% $173,083
Improvement of Interconnect ManagementMargin Increase From Pricing Corrections 0.50% $173,083SLA Management 0.50% $173,083
Total Margin Improvement $1,730,833
Opportunity costsFor every ______ you delay here is the impact. Week
$399,423.08Day
$57,060.44Hour
$2,377.52
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Minute$39.63
Moving forwardg1. Conceptual agreement
2. Technical assessment2. Technical assessment» Technical discovery» Routing assessment
j t ( i k f ff )project (risk free offer)
3. Implement to maintain the gains
Technical assessment
Maintain the gains
gainsConceptual agreement
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Directions you can goy g
Broader in analyticsD
Network & service
assurance
TraditionalRA
Fraud mgmt.
Optimized Margins
Next Gen RA
Business analytics
Deeper in n
Number Portability Correction
network ro
IP to IP Interconnect
outing
Real-time routing change /
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arbitrage
Neustar™ Next Generation Routing –A Powerful Capability For Network EvolutionA Powerful Capability For Network Evolution
MarginMargin
LocalLocalNumberNumber
PortabilityPortabilityOperational Operational ManagementManagementMarginMargin
ManagementManagement
EnterpriseEnterpriseTrunkingTrunking
ManagementManagement
NeustarManaged
RealtimeRealtimeRoutingRouting ServiceService
DiscoveryDiscovery
TrunkingTrunkingManagedService
SS7(MAP, CAP,
INAP)
NGNSIP/ENUM
IMS
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Seamless evolution into IMS/RCS capabilities
A broader deployment of Neustar™ Revenue Management Analyticsg y
Next Gen RANext Gen RA•Policy &bandwidth mgmt.•Video & content
•Policy &bandwidth mgmt.•Video & content
Next Gen RANext Gen RA•Policy &bandwidth mgmt.•Video & content
Fraud Mgmt.Fraud Mgmt.
•Consumer &business fraud &credit risk
•Consumer &business fraud &credit risk
Fraud Mgmt.Fraud Mgmt.
•Consumer &business fraud &credit risk
Business AnalyticsBusiness Analytics
•Customer retention mgmt.•Marketing & campaigns•Customer retention mgmt.•Marketing & campaigns
Business AnalyticsBusiness Analytics
•Customer retention mgmt.•Marketing & campaigns
assurance•Advertizing androyalty settlement
assurance•Advertizing androyalty settlement
assurance•Advertizing androyalty settlement
•Interconnect fraud•Dealer mgmt.•Interconnect fraud•Dealer mgmt.•Interconnect fraud•Dealer mgmt.
•Product management•Customer / handset analytics•Product management•Customer / handset analytics•Product management•Customer / handset analytics
Traditional RATraditional RAS it h & d tS it h & d t
Traditional RATraditional RAS it h & d t
Cost ManagementCost ManagementCost ManagementCost ManagementOperations• Switch & order tocash mgmt.
•Billing qualityand contract rates •Broadbandreconciliation
• Switch & order tocash mgmt.
•Billing qualityand contract rates •Broadbandreconciliation
• Switch & order tocash mgmt.
•Billing qualityand contract rates •Broadbandreconciliation
•Interconnect billverification•Least costrouting•Margin analysis•Partner &
•Interconnect billverification•Least costrouting•Margin analysis•Partner &
•Interconnect billverification•Least costrouting•Margin analysis•Partner &
Fulfillment Assurance Billing
Customer relationship mgmt.
Service mgmt. & operations •Wireless roaming•Wireless roaming•Wireless roaming ecosystem mgmt.
•Interconnectusage analysis
ecosystem mgmt.•Interconnectusage analysis
ecosystem mgmt.•Interconnectusage analysis
g
Resource mgmt. & operations
Partner / supplier relationship mgmt.
Network & ServiceNetwork & ServiceAssuranceAssurance
•Fault / performance•Application mgmt.•Fault / performance•Application mgmt.
•Compliance•Service quality mgmt.•Compliance•Service quality mgmt.
Network & ServiceNetwork & ServiceAssuranceAssurance
•Fault / performance•Application mgmt.
•Compliance•Service quality mgmt.
© Neustar Inc. / Proprietary and Confidential29
F i f ti N t ’ M i M t S l ti
Thank you for joining us today!
For more information on Neustar’s Margin Management Solution:
Email: [email protected]
Phone: 877.831.3984
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COMPTEL WEBINAR PROGRAM POWERED BY: