Wholesale Optimization

Workshop description
Document 1.0, January 2012 Created by Client Management

Wholesale Optimization Workshop Description

Contents
0 1 2 Introduction ................................................................................................................................................................ 3 Workshop objectives .................................................................................................................................................. 3 NeuString Workshop concept and process................................................................................................................. 3 2.1 2.1.1 2.1.2 2.2 2.2.1 2.2.2 2.3 2.3.1 2.3.2 3 3.1 3.2 4 4.1 4.2 4.3 4.4 4.5 5 5.1 5.2 5.3 6 7 8 9 10 Intelligence ........................................................................................................................................................ 4 Historical trends ............................................................................................................................................ 4 Market conditions ......................................................................................................................................... 4 Analysis.............................................................................................................................................................. 4 Identification ................................................................................................................................................. 5 Quantification ............................................................................................................................................... 5 Decision ............................................................................................................................................................. 5 Evaluation ..................................................................................................................................................... 5 Prioritization ................................................................................................................................................. 5 Implementation................................................................................................................................................. 6 KPI ..................................................................................................................................................................... 6 Standard IOT...................................................................................................................................................... 7 Discounted IOT .................................................................................................................................................. 7 Current discount agreement coverage ............................................................................................................. 7 New discount agreement coverage .................................................................................................................. 7 Budget creation ................................................................................................................................................. 8 Standard ..............................................................................................................Error! Bookmark not defined. Advanced ........................................................................................................................................................... 8 Premium ............................................................................................................................................................ 9

Action .......................................................................................................................................................................... 6

Scope of Workshop ..................................................................................................................................................... 6

Post workshop documentation................................................................................................................................... 8

Workshop prerequisites ............................................................................................................................................. 9 Venue .......................................................................................................................................................................... 9 Workshop participants ............................................................................................................................................... 9 Timing and planning ................................................................................................................................................. 10 Workshop agenda ..................................................................................................................................................... 10

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Wholesale Optimization Workshop Description

Introduction

The NeuString Wholesale Optimization Workshop is a professional service offered to mobile operators targeting to optimize inbound revenues and minimize outbound costs. NeuString facilitate the workshop, by providing our experienced consultants intellectual capital, workshop material, analysis models and a state of the art analysis and simulation tool. All analysis and simulations are based on the operators own data and current situation. NeuString offers the workshop as an initial workshop for new clients and a follow up workshop for existing clients. The follow up workshop includes a session where predicted profit optimizations are benchmarked against the actual results. Furthermore, additional optimizations are identified, analyzed and predicted based on the results of the first workshop. The outcome of the workshop is a detailed reporting presenting the recommended optimizations to be used for final approval.

Workshop objectives

NeuString is aiming to provide the operator with a framework that will result into an optimized wholesale roaming business. An operator may have a specific financial goal, i.e. revenue retention at current levels, a certain percentage of cost reduction or a list of targeted discount partners at a set IOT level. In addition to the financial objective operators could also have objectives related to the list below: Increased budget control Improved time to market Detailed KPIs and monitoring reports. Investigation initiatives, e.g. new discount partners, new steering strategies

The specific objective of the workshop will be agreed upon with the individual operator and will be related to the selected workshop modules as described in section 4.

NeuString Workshop concept and process

As the market leading provider of business analytics tools, NeuString offers to share the knowledge gained through close partnerships with our clients and the experience of our consultants who have been working with the financial aspects of roaming for more than 10 years. The concept of the NeuString Optimization Workshop is: To provide a thorough financial analysis of the current roaming business To identify areas for optimization To quantify the identified optimizations To assess and quantify the potential risks To prepare a documented business case

In addition to investigating the financial impact, the workshop also adds other benefits such as in-depth evaluation of the current situation, impact of regulatory decisions and consequences from mergers and acquisitions, i.e. the financial consequences of shifting volumes from one partner to another based on a new and more favorable discount structure. The process is illustrated in the figure below:

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Wholesale Optimization Workshop Description

Intelligence Historical trends Market conditions

Analysis Identification Quantification

Decision Evaluation Prioritization

Action Implementation KPI

The process is further detailed in the following sections.

2.1

Intelligence

First part of the workshop is about collecting intelligence necessary to secure an optimal result. This means understanding the operators current situation and what challenges are being faced.

2.1.1

Historical trends

The historical trends are used to give an overview of the operators specific situation. The period of time will depend on the amount of data received. The elements which are typically covered during the analysis are: Service type distribution and evolution Inbound/Outbound ratios Top destinations by charge and/or volume Roaming partner tier distribution (Groups, Discounted IOTS, PNA etc)

This phase is used to share information regarding the operators specific internal strengths and weaknesses in order to set and align objectives. The focus will be determined by the selected module.

2.1.2

Market conditions

The market conditions are used to gain and share the understanding of what external factors should be taken into consideration. The elements which are typically covered during the analysis are: Presentation and discussion on examples and information about market regulations Discussion and information sharing on operator positioning in the market Group/alliance strategic relationships which should be taken into consideration Knowledge sharing on pricing levels and evolution within the region

This phase is used to share information regarding the markets opportunities or threats in order to set and align objectives. The focus will be determined by the selected module.

2.2

Analysis

At this stage of the workshop the intelligence gathered is used to identify and quantify optimizations. Ideas will be exchanged and discussed and a preliminary quantification of the possible scenarios will be provided.

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Wholesale Optimization Workshop Description

2.2.1

Identification

For most operators there will be a number of areas that can be addressed. This step can be considered as a structured brainstorming session where the workshop participants, guided by the consultant, discuss which areas of the selected scope should be evaluated. The identification will be based on the provided intelligence and take into consideration the historical trend and the market conditions.

2.2.2

Quantification

As soon as the possible areas for optimization are identified, the financial and market impact will be quantified. This could be in the form of specific revenue and cost implication or as a more long term element, which supports an overall goal of the wholesale business e.g. growing the retail market or establishing a strategic partnership with a roaming partner or group. Quantification will include a detailed analysis of the impact of for example alternative pricing and/or changes to the volumes depending on the selected workshop module.

2.3

Decision

The previous workshop phases have provided detailed intelligence and analysis of the operators business. These are the basis for deciding on what scenario should be pursued. Scenarios will be preselected and improved, so that only the scenarios most optimal for implementation are included in the Post workshop report.

2.3.1

Evaluation

Once the simulations, forecasting and discounting have been created the next step is to evaluate the scenarios based on the agreed upon objectives and goals: Revenue growth, retention, win back Cost control or minimization IOT plan parameters and retaliation risk assessment Discount optimization and financial impact overview Volume impact evaluation

The evaluation phase may include fine tuning or minor adjustments to already created optimizations.

2.3.2

Prioritization

Based on the optimization scenarios which have been prepared during the previous steps, the last step before action is to agree on prioritizations. The criteria should be agreed on amongst the workshop participants and should be aligned with the objective and goals set early on. Selection criteria could be whether the operator situation entails focus on the inbound revenue, meaning that revenue enhancement, retention or win-back should be prioritized before cost optimization. The overall net impact could also be taken into consideration as could the overall probability of securing a deal with a roaming partner. The participants will also agree on the preferred format and content of the business case documentation, which will be part of the overall workshop documentation.

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Wholesale Optimization Workshop Description

Action

The final step in the workshop may be the most important. It is important to have a plan, but in order to realize the potential optimization, action needs to be taken and the actual results need to be monitored. The final phase aims to support the client in agreeing on a detail implementation plan and agree on specific milestones to be closely monitored.

3.1

Implementation

Implementation activities will be very dependent on the specific workshop modules selected and the optimizations identified. The implementation phase will address the following elements: Technical capabilities and/or limitations Commercial options and notice Operator resources and bandwidth

3.2

KPI

Once the implementation plan has been completed and agreed upon with the workshop participants, a set of key performance indicators should be defined. This is to ensure that implementation is completed and that the expected results are achieved. KPIs can include for example: Overall performance Regional performance Agreement specific growth rates Discount coverage IOT levels

All indicators can be set based on charges or volumes, absolute values or growth rates, index or percentages. Additionally indicators can be weekly, monthly, per quarter or per year.

Scope of Workshop

The mobile roaming market has been evolving over the last few years to be more competitive and margins may be difficult to maintain. Through a close dialogue with many operators throughout the world, NeuString has a broad understanding of the challenges being faced in the market. Based on this experience NeuString offers different modules that will set the scope of the workshop as per the diagram below:
Inter operator tarifs Discount agreements Control and monitoring

Standard IOT

Current discount agreement coverage

Budget Creation

Discounted IOT

New Discount agreement coverage

Each workshop module can be selected and combined based on the operator current situation and prioritization. Elements not covered in the standard modules can be defined and agreed upon separately.

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Wholesale Optimization Workshop Description

4.1

Standard IOT

This module is focusing on evaluating and optimizing the current standard IOT and is typically relevant if the pricing has not been reviewed within the last 12 to 18 months. Regional regulations may also require an evaluation of the IOT. To evaluate the IOT, inbound/outbound ratios at a called destination level will be evaluated. The fairness principle will be applied to ensure that pricing levels are justified based on the current volume exchange. When making suggestions for changes, price sensitivity and potential volume shifting will be taken into consideration and high risk roaming partners will be identified. The financial impact may therefore include multiple scenarios based on different potential market reactions. The analysis will be focused on non-discounted roaming partners as the standard IOT changes will not impact the volumes already covered by discounts.

4.2

Discounted IOT

The purpose of this module is to evaluate the creation of a discounted IOT to be offered either within a group or alliance or to be offered to roaming partners within a specific strategic area. An evaluation of the overall potential will be made with due consideration to potential revenue reduction versus the cost optimization. This module will in many cases be applied within a group and will therefore include an evaluation both on group and individual affiliate level, meaning that both loss and gain distribution within the participating entities will be analyzed. Traffic redistribution and market share optimization will be included and multiple scenarios, based on the expected effectiveness/execution can be documented and evaluated. Depending on the expected application of the discounted IOT, roaming partners not relevant to the agreed upon level of pricing, will not be included in the analysis.

4.3

Current discount agreement coverage

This model reviews and analyses top destinations already covered by existing discount agreements. The prioritization areas can be either geographical, group or operator specific. The focus will be on tier one roaming partners, meaning partners with the highest potential measured either in charge or volume. Favorable negotiation or high risk positions will be identified in order to evaluate possible optimization scenarios. These could be based on revenue retention or win back scenarios in addition to cost reduction through either new discount schemes or steering optimization. In many cases a destination will include multiple discount coverage and thus consideration to roaming partner retaliation historical and future strategic importance is also part of the analysis. The financial impact of all selected discount optimization scenarios will be evaluated, however execution/realization of identified optimizations are dependent on actual negotiations.

4.4

New discount agreement coverage

The focus of this module is to identify and prioritize the expansion of the discount coverage. The prioritization areas can be either geographical, group or operator specific. The focus will be on tier two roaming partners, meaning partners with the highest potential measured either in charge or volume but which are not already covered by existing agreements. Favorable negotiation or high risk positions

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Wholesale Optimization Workshop Description

will be identified in order to evaluate possible optimization scenarios. These could be based on revenue retention or win back scenarios in addition to cost reduction through either new discount schemes or steering optimization. In some cases a destination will already have existing discount coverage and thus consideration to roaming partner retaliation historical and future strategic importance is also part of the analysis. The financial impact of all selected discount optimization scenarios will be evaluated, however execution/realization of identified optimizations are dependent on actual negations.

4.5

Budget creation

The focus of this module is to create a full budget for a defined period including the definition of specific performance indicators. The operator decides which approach should be taken, whether to use Top/Down or Bottom/Up. It is a prerequisite for this module that relevant discount agreements and forecasting expectations be prepared and brought to the workshop. A detailed benchmark analysis to historical performance and general market trends will be conducted. Critical performance indicators will be identified and monitoring and follow up procedures will be defined. Based on general market expectations multiple scenarios and/or versions of the budget can be created. Risk areas will be identified and alternatives will be suggested. However specific IOT changes or discount scenarios may not be detailed, as this areas is covered by other modules

Post workshop documentation

The operator can select the level of reporting required after the workshop. Each report is detailed in the sections below. The delivery of the workshop is closed upon the completion of the workshop documentation which will be provided no later than 10 working days after the completed session. The different reports are Core , Advanced and Premium report.

5.1

Core

The Core report provides an overview of the workshop objective, the process and the selected optimization scenarios. The documentation can be used to share the workshop findings and as basis for final approval of the agreed upon actions. A management summary highlights the process and the optimizations identified, including the recommendations based on the outcome of the workshop. Each selected optimization scenario will be detailed in a business case report. The content and format will be based on NeuString Standard business case reporting. This reporting includes benchmarking on multiple parameters such as Gross, Net, Revenue, Cost and volumes. Additionally simulations settings for the selected scenarios will also be provided for further analysis if necessary.

5.2

Advanced

The Advanced report is an extension of the Core. In this report recommendations are detailed to a higher extent and the element of probability evaluation is added. Based on the information exchanged during the workshop, considerations for longer term impact will be included as well.

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Wholesale Optimization Workshop Description

The Advanced reports comprehensive documentation will contain multiple scenarios for each optimization. For each scenario evaluation, all scenarios addressed during the workshop will be outlined and detailed in the NeuString standard business case report.

5.3

Premium

The Premium report is an extension of the Advanced report as it adds the element of an action plan. The action plan is a separate document that defines milestones and KPIs that have been agreed upon during the final phase of the workshop. The action plan will include all the agreed upon optimizations and the necessary tasks to execute. Timeframes for the actions will be including the identification of critical milestones. A suggested procedure for monitoring the progress and the expected results will also be added.

Workshop prerequisites

The preparation of the workshop is an extensive dive into an operators current situation. Information is shared regarding the challenges the operator is facing in relation to the agreed upon objective. NeuString will facilitate the workshop and provide materials, methods and models to support the achievement of the objectives. Background information and specific market knowledge and knowledge about internal policies and procedures will however have great impact on the workshop. Therefore, we do strongly recommend the client to use the information in this paragraph in order to prepare for the workshop and to assign the relevant specialists and decision makers to the workshop. Please note that some information is essential for successfully completing the workshop and that such information needs to be received by NeuString prior to conducting the workshop and no later than two weeks prior to the scheduled workshop dates. Information exchanged can range from information about ongoing discount negotiations to strategic financial goals, dependent on the preferred workshop module and the operator priority. The client will receive a request for information detailing the specific requirements. A 1 hour conference call is held to align expectations and agree upon a workshop outline and prioritization. The workshop outline will be provided to the workshop participants 2 days prior to the workshop session.

Venue

NeuString consultants conduct the workshop based on two venues. The preferred method is face to face with participants. This requires 1 full day per selected module. Combinations of the modules can be discussed as can the scope of the individual modules to accommodate the available client resources. An alternative to the face to face meeting is the split approach of 4 times 1 hour WebEx session. Each session will be focused on a different step of the workshop process.

Workshop participants

The recommended participants to the workshops may vary slightly according to the selected module, however in general the following roles are relevant:

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Wholesale Optimization Workshop Description

Budget responsible Negotiators IOT responsible Controllers

It is recommended that participants have the necessary mandate to decide on scenarios evaluated during the workshops.

Timing and planning

The workshop shall be committed by both parties no later than two weeks prior to the expected workshop date. The two weeks will be used for preparing intelligence reports and preliminary analysis as well as to verify completeness of the information exchanged. Depending on the scope and venue of the workshop the duration is 1 day for face to face and 2 weeks for the WebEx sessions. The workshop documentation will be sent no later than 10 workdays after completion of the workshop, assuming all requested material has been provided by the Client.

10 Workshop agenda
The agenda for the workshop set forth below is preliminary. The final agenda will be put together during the planning of the workshop and will be adapted to the Clients specific needs. This means that additional items might be added and that some items might be removed. Time prioritization can be changed as well. All changes to the agenda shall be mutually agreed. We strongly recommend that workshop participants are well prepared and that information about the workshop is distributed to all participants well in advance. Sharing information and objectives prior to the workshop will improve the output and significantly increase the value of the workshop. It is our suggestion that this document and all communication regarding the content of the workshop are distributed to all the participants.

Onsite 09:00 09:30 09:30 10:30 Introduction and workshop outline and objectives Intelligence -Historical trends -Market situation Analysis - Scenario identification - Impact quantification Lunch Decision - Scenario impact evaluation - Prioritization Action - Implementation - KPI

10:30

12:30

12:30 13:30

13:30 15:30

15:30

16:30

16:30

17:00

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Wholesale Optimization Workshop Description

WebEx sessions Session 1 Introduction and workshop outline and objectives Intelligence - Historical trends - Market situation Session 2 Analysis - Scenario identification - Impact quantification Decision - Scenario impact evaluation - Prioritization Action -Implementation -KPI Summary and closing of workshop

Session 3

Session 4

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