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July 2013

Back Office Streamlining to Enterprise Support: The Many Flavors of Wireline Analytics

Back Office Streamlining to Enterprise Support: The Many Flavors of Wireline Analytics

Getting scoop on how mobile operators use analytics is not so hard: just ask the many analytics vendors out there who focus on mobile.

But wireline analytics is not so widely documented, partly because its use in wireline is scattered across dozens of productivity pockets -- network inventory, enterprise business, wireless backhaul, etc.  That’s why I was delighted to interview Tom Nolting, Vice President in support of Billing and Revenue Assurance at Fairpoint Communications, a $1 billion U.S.  LEC.

Tom and I met at the recent Telecom Analytics conference in Atlanta where we discussed several successful analytics apps where Tom’s team is adding value and better serving customers.

Dan Baker: Tom, to start, it would be great to hear a little history of the Fairpoint business.  A few years back most of us remember the major expansion when you purchased the New England assets of Verizon.

Tom Nolting: Sure, Dan.  Back in 2008, FairPoint was predominantly a rural wireline provider.  And yes, we then acquired Verizon’s Northern New England properties which grew the company from 200,000 to 1.2 million access lines.

The migration of the legacy Verizon Systems to our new enterprise operating systems was hugely complex, but we succeeded in reducing 300 systems or more down to only 30.  The cutover happened in early 2009 -- about the time I came onboard -- and immediately the company was in a struggle, losing market share, and went into bankruptcy in late 2009.  But in January 2011 we emerged out of bankruptcy successfully.

I’m happy to say 2012 was a good year for FairPoint: we had four consecutive quarters of strong EBDITA.  We also reduced our operating expenses, improved service levels, and had strong free cash flow.  We voluntarily paid off a portion of our debt which was a signal to investors and community that we were financially stable again and our stock price in the last 12 months has doubled.  By some accounts, the stock could be considered the best performing stock in its class.

Where is the business going these days?

Like most wireline operators, our residential voice has been the bread and butter, but has been in continuous decline.  So how do we make up the difference?  Well, we invested $200 million into a carrier Ethernet network.  That’s a significant investment for Fairpoint, so our mission is now to sell broadband, high speed access, and carrier Ethernet services, particularly toward business / enterprise and government accounts.

Is there a particular area you are getting good value out of analytics?

Billing is certainly one key area.  Analytics has helped us is in rationalizing where the top sources of billing problems lie for our enterprise customer, complex customers, right down to our residential customers.

For instance, we put in a new review process that merges sampled invoices with trouble reports to extract the impacted accounts / dollars impacted.  We could also quickly narrow down the cause to specific order management or process issues.

That allowed us to better tee up and prioritize our IT projects.  Now I’ll admit that the situation didn‘t get better overnight, but at least we now know what problems our large customers face and can track current status, root causes, and the development schedules to get things fixed.

Our analytics team is a small one with assist from two vendors who have greatly helped.  The challenge has been that we spend too much time -- 90% of the effort and resources -- getting data collected and putting it into a format that makes it easy to extract meaning from.

In the last 18 months, however, we’ve done a great job of streamlining that process so the data is packaged, formatted, and put into a very useable and intuitive form without requiring a large staff of people to pour over it.  Our analysts are able to pick out and find meaningful things now.

We also sought out our internal experts and codify their institutional knowledge so the software can look for particular things.  For example, we had trouble with billing jurisdictions and distinguishing our end offices that overlap into another provider’s territory.  We’ve automated that now.

Are analytics vendors knocking on your door, hoping to look at your data and do a pilot study or two?

Yes, we get approached all the time in that way.  And I’m kind of conflicted here because I’ve been on both sides of the fence.  When I worked for a vendor, I was the guy coming in and offering a free analysis to show you where you could cut expenses.

On the carrier side, however, you end up being so immersed in day-to-day operations with finite people resources.  It’s tough to set aside the bandwidth to look at a proof-of-concept.  Now if something is very compelling, we certainly take an interest, but I’m also responsible for weekly testing and running of deployments we’re putting in for customers.  It’s tough to divert your attention and resources from that kind of thing.

What about the sales-to-order-to-cash pipeline?  Is analytics giving you any help streamlining your back office operations there?

Well, one interesting project we kicked off in the year analyzes sales-to-bill data for small-to-medium businesses (SMBs).  Fairpoint has deployed products we feel are very competitive and appealing to those customers and we want to track that more closely.

Now while it’s encouraging to see our bookings to SMBs have picked up, we lack rigor around knowing if those booked sales are converting to actual billed revenues.  I’m also concerned about the pace: how quickly are we getting booked sales into our revenue stream?

From an analytics view, we pull data from Salesforce.com -- our main sales activity repository -- to feed our Siebel order management system.  What this gives us is visibility -- at an aggregate level -- on how well and how fasts our forecasted sales are turning into billed revenue.

This analysis gives us a more accurate look at our sales-to-bill pipeline.  We’ve also discovered many cases where salespeople didn‘t factor in promotions that should be deducted from forecasted sale.

We also noticed that a lot of revenue gets stuck in the delivery chain.  For instance, the customer may be waiting on a piece of thirty party infrastructure to arrive before he commits to us.  Now financially, that a big concern because our network assets are on hold and revenues are not yet flowing.

So we need good information to allow us to make some decisions: we need to quantify the impact of contracts that don‘t materialize on time.

What about wireless?  Lots of small-to-mid-sized operators in the U.S. market are moving to wireless.

We wish we could, but bandwidth costs a lot and we don‘t have the financial wherewithal.  But interestingly enough, we have a great business doing wireless backhaul or fiber-to-the-tower.  As a wholesaler, there are about 1,000 towers that FairPoint runs fiber to.  This is a very attractive business because it entails long term contracts and if a customer, say an AT&T or Verizon, chooses to switch provider, it’s very expensive for them to do so.

So as the demand for mobile broadband increases, we’ve actually outstripped our capacity.  It’s insatiable demand that’s providing a revenue stream that offsets some of the decline in our special switch to access business.

The analytics activities you’ve talking about so far, Tom, are on the billing and operational side.  What about business or customer analytics?

Retaining enterprise customers is a biggie.  We started a program to identify high-risk customers so we can proactively take steps to keep them.

It’s simple things, like looking at contracts that are coming due and making it clearer to individual sales person that you have three months before, say the Ben & Jerry’s contract is going to expire.  In the past, they were not alerted in time.  So we’re getting smarter about that now and have put data into a very usable form for our sales people.  We also give them incentive to migrate customers off legacy services that are expensive for us to maintain — and onto our new products.

We’ve also greatly improved the information salespeople have when they’re in front of customers.  For instance, salespeople must precisely know what can be delivered to the customer -- and this comes back to having a better knowledge of our plant.

Today, our software-based inventory system is rather weak in telling us where copper is, where fiber is, what capacity can be delivered to location to support specific services.  So improving that capability is a big priority of mine.  After all, we compete with companies who are 100% fiber and can often deliver much quicker than we can.

Another aspect of upgrading our inventory software is efficiency.  People in our back office have to manually look at the engineering and map network layouts, so we need to automate that.

Is margin assurance on your radar?

It very much is, particularly for a new venture of ours where we go out-of-territory and use middle-mile providers.

Say, we’ve got a law firm in Portland, Maine who also has offices in Boston and New York.  Well, we’d love to service those locations but we don‘t have network in Massachusetts or New York.  So what we do is contract the middle-mile guys to extend our network.  That’s where margin assurance is key: we need to be smart about how much we pay for all elements of those facilities, both fixed and variable costs.  Is this a profitable venture for us?  What’s the payback: 12 months or 18 months?

Interesting.  Tom, thanks for this nice briefing.  Certainly looks like you’ve got your hands full, but it also sounds like you thrive on the struggle.

Copyright 2013 Black Swan Telecom Journal

 
Tom Nolting

Tom Nolting

Tom Nolting is Vice President, Billing and Revenue Assurance at FairPoint Communications.  For the last four years he’s overseen the FairPoint Northern New England retail and wholesale $1.2B billing support functions.  He also led the formation of the company’s revenue assurance program over the Wholesale and Retail markets.  Prior to joining FairPoint, he held leadership roles at Vertek and Lavastorm and was a Director of Wholesale Billing Operations at Verizon.   Contact Tom via

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