Defining and Measuring Value in OSS Projects

By Barbara Lancaster

Is a new inventory, provisioning, activation, or other OSS system worth $100,000, $1 million, or $10 million? To answer this question it's necessary to unravel an OSS environment's complex systems and processes to find how each element will contribute to, or take away from, the final calculation of total value. This means examining exactly how operational improvements can be reaped that will in turn recover the costs of the OSS ' on-going maintenance and evolution, in addition to the initial acquisition and integration costs. It also means evaluating whether headcount will be reduced or increased in user and systems operations groups. Ultimately, it requires a service provider to define reliable measurements that will prove definitively whether the new OSS ' expected benefits are achieved.

Implementing Common Measures

Service providers are moving toward common measures of business performance that will make it much easier to analyze OSS’ impact to the business accurately and consistently (see sidebar). Borrowing from the successful Product Lifecycle Management theory prevalent in manufacturing, this move towards common metrics makes it easier to design and implement the measurements necessary to gather appropriate details and numbers. Knowing exactly how success will be measured and which measurement targets to hit will result in a streamlined OSS selection process, a positive cycle of improved information, more accurate proposals, better implementations and will allow service providers to achieve expected business benefits faster.

There is, however, a catch. Though network and service provisioning processes fit nicely into a factory analogy, the job of maintaining a day-in and day-out relationship with each customer - maintaining the network, handling service issues, configuring features, re-routing traffic around congestion, producing invoices every month, etc. - does not fit so neatly. There are not yet standard metrics to help us understand things like the increased call volumes caused by new product announcements, cable cuts, or a competitor's new long distance discount offering.

Click to view SIDEBAR: Examples of Measures to Demonstrate OSS Value

Problems with Cost Recovery Value Propositions

Often OSS providers attempt to prove their value with various cost recovery arguments. For example, many OSS application providers focused on network inventory and provisioning suggest that their solutions pay for themselves easily because they recover stranded or lost network assets. But calculating whether the assets recovered will have a substantial impact on next year's forecasted capital expense budget is a complex calculation in and of itself. Put simply, some assets may be obsolete, completely depreciated or not on next year's shopping list anyway.

Another problem with this cost avoidance oriented message is that the group within a service provider that benefits most from asset recovery - usually Finance - is not the group that needs the capital expense funding - Network Engineering. The bottom line is that the five to 10 percent of stranded assets in the average service provider's network may have very little business value when found and returned to inventory. Thus, the vendor's value proposition may be misstated, overstated or lost in the wrong message.

Cost Savings Initiatives Often Miss

Calculating an OSS ' perceived value has another real hurdle in attempting to gain the decision maker's attention. The senior team often is not interested in trying to understand a complex value chain argument. The payback it is looking for is typically top line driven and thus focused on generating more revenue. Revenue is tangible and immediately visible. While this frustrates the champions of an operations improvement project for which the payback is measured in reduced operational expense, there is good reason for the executive suite's lack of interest. Too many cost reduction initiatives simply fail to deliver the promised impact to the bottom line.

Another reason why cost savings arguments may fall on deaf executive ears is because executives are bombarded with business cases from a variety of different groups, each of which is focused only on improvements in its operational area. Adding up the estimated savings in each business case can suggest company wide savings of 50 percent or more. This end result is highly unlikely. It is more likely that the savings expected in one area will cause additional expense in another. Project benefits are often more interdependent than each group has considered individually.

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