Six steps to cost transparency
Instead of resolving this problem, many operators choose to remain in a limbo state of inaction. They neither choose to start a new project to overcome the existing complex structure of various allocation systems, nor do they simply stop the flood of information which is frequently not essential to the business.
However, the problem will not go away by itself. Internal clients such as Marketing, Pricing and Strategy need the type of cost information described above, especially, as they are required to calculate more precisely the profit impact of business decisions at ever increasing intervals. How do successful telecommunications operators tackle this problem?
Almost all successful operator projects we came across within the last five years followed a similar solutions approach: Step 1: In simple terms, everything should start at the top. Independent of the maturity of the cost management system, it is the Chief Finance Officer, the Chief Marketing Officer and the Chief Executive Officer who need to make the conscious decision that an allocation system is needed and wanted. However, before the decision to implement such an allocation system is delegated to lower management levels, it is vital that the executive management sets the basic rules:
• The allocation system has to provide only a specific set of numbers!
• The final numbers will only be produced for specific internal customers!
• There are clear limitations as to the complexity of the system!
• The project does not aim for a 100% correct allocation. The 70-30 rule applies!
• The project has to be done in a given timeline. Exception will not be granted!
• The executive team is the escalation partner and will review the progress regularly!
Step 2: Having set these basics, the executive team then has to choose a competent team of finance and marketing project staff able to work on the standard business alongside the project on a very critical timeline.
The requirements for such a project team are:
• The project manager has to be recognized in the business as an effective employee.
• All team members must be fully committed to the project plan.
• The team must be composed of interdisciplinary skills (finance, marketing and engineering, database specialist).
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