Finally, strategic turnaround measures must focus on a new or modified structure that includes functions to facilitate overall responsibility for processes, quality and ICT, best-effort quality of service delivery according to customer-specific demand, efficiency of production and operation, and joint and global responsibility for delivery and sales.

How do we apply the right control logic to measure successful achievement of these strategic measures?

Multinational telcos are increasingly benchmarked by criteria such as quality indices, customer satisfaction, or international process implementation. Company-wide control mechanisms based on central performance indicators are needed to meet these challenges. A special set of process and quality indicators provides corporate management with information to detect weaknesses and enable it to develop and implement strategic measures to eliminate them. The larger the organization, the more important these indicators are to make opportunities for improvement plain to see. Process and performance improvements are impossible without measurement and harmonized control meth­ods and procedures. Even if a process improves, it won’t be noticed unless indicators quantify it.

Control Logic

What must multinational next generation telcos focus their control logic on? A regular view of the value chain of business processes must be based on short- and long-term consistent control instruments, such as customer profitability analysis, and streamlined functional reporting.

Instead of absolute unit-specific profitability, operating business should be managed with a focus on gross profit results for customers and products. Gross profit should be a joint responsibility of sales and delivery. It is therefore a control parameter for both and can be defined as a customer order result and deliver production variations.

This implies that profitability is a joint responsibility embodied in the targets of each employee in sales and delivery across the company, with sales taking responsibility for order entry, revenue as well as customer contracts and delivery to optimize production-related costs. The respective control instruments and KPIs must be based on a contribution scheme that is uniform across the company. This scheme will include all income and expenses and therefore show the company’s overall performance.

The customer order result, including revenues and the full costs of goods sold, is the control level for service delivery managers on the customer order. Gross profit, including production variations, is the steering level of the delivery units. The operational sales profit is the result of the sales organization. EBIT, including overhead costs, reveals the company’s overall performance. For every business process that underpins the contribution scheme an adequate and transparent control profile must be drawn up, such as follows: each business process must be controlled by financial and non functional-unit KPIs; a modular and cascadable reporting system for integrated control is needed; a definition of unique control instruments for analytic purposes, e.g. product profitability; development of consistent sales channel and delivery unit instruments to control the business model that must be reflected in the above-mentioned contribution concept, and standardized company-wide KPI definitions and evaluations are needed.