The Value of Investing in Strategy
As little as 10 years ago, the procurement strategy for most stakeholders in the utility telecommunication space was one of “just buy the same, nothing much has changed”. From microwave transport to land mobile radio investments, decisions based on factors such as equipment type, system architecture and application support were typically easier to make than they are today. Life cycle and depreciation could be dependably counted on for 20-30 years, and the generally accepted idea was that future capacity needs would increase at a steady (and moderate) pace.
It's surprising to realize that even 5 years ago, we were routinely having conversations with our clients about the value of shifting from TDM to packet technology. Several believed that SONET technology would remain king within the transport world. It is a very different world today. We are regularly involved in IP-MPLS network overlays, packet transport upgrades, digital voice radio systems and broadband field area networks. The Operational Technology space is converging with enterprise IT, leading to questions about the efficiency of supporting assets, and how best to maximize investments. On top of that, equipment has become more sophisticated and complex so that life cycles are reduced, and operational requirements increase exponentially. Today, it is nearly impossible to anticipate having the same technologies in the field for the next 30 years. The landscape for Critical Industrial Infrastructure (CII) is rapidly changing, so too must the communications systems that support these users. But how do companies make the best decisions on capital investment in technologies that seem to be changing at such a quick pace? How do we, as consultants, best support our clients in ensuring that the best decisions are made on the right direction to take?
Developing a Strategic Roadmap
To successfully face these challenges, we’ve found that the development of a Strategic Roadmap is essential to identifying client needs and requirements, gaining buy-in from all invested parties, and creating the appropriate content to help choose the right direction for our client’s communications systems.
Financing a strategic effort can tend to give pause to the decision makers in the CII space. Historically, these efforts were reserved for the off-the-wall,out-of-the-box initiatives that seldom saw the light of day; broadband over powerline, automated robotic inspections, 3d technologies. Many of these made it through the strategic phase and are in use today, but several never made it past an idea. And where does the budget come for these research initiatives? Out of the limited Operating and Maintenance (O&M) budget that communications staff is given every year to ensure that these systems stay up and working to support our energy infrastructure. It’s understandable that there would be some hesitancy to budget dollars for something that might not get approval within the company.
But with the rapid change of technology, there is a growing recognition that planning has become just as important as decision-making. Due diligence is the key to gaining buy-in from management, and eventually the State and Federal regulators. It can be really helpful to say, “We didn’t make this decision lightly; we did the research necessary to come to a conclusion that this is the best solution for our needs, and ultimately the needs of our customers”.
“We didn’t make this decision lightly; we did the research necessary to come to a conclusion that this is the best solution for our needs, and ultimately the needs of our customers”.
Executing the Strategy
The most important factor in successfully executing a strategic plan is to identify the right key stakeholders to sponsor and champion the planning effort. Recognizing the significance of the engagement, and the value of participation are key factors in making sure that the results of the strategy are well-received and easy to act upon in subsequent phases. The roadmap cannot be developed in a vacuum, otherwise the results are simply the ideas and suggestions of a small handful of people who will then face the uphill battle of getting buy-in from their management.
Once the key stakeholders have been identified, they follow these basic steps of a strategic planning effort:
- Needs Analysis and Requirements Development – What are the operational and business needs of all the participating groups? This step is integral to the development of the strategy. How can you identify the potential solutions if you don’t appropriately identify the problems, including the needs and wants? How do these groups work together, where can you find efficiencies and overlaps? It is necessary to understand the limitations of the current system(s), the financial constraints on budgeting, risks/gaps/challenges, identify current & future application support, staffing concerns, and so on and so on. The results of this collaborative effort will serve as the baseline for evaluating potential future state solutions.
- Current State Assessment - Depending on the focus of the effort, you may be looking at one or more communications systems as part of the overall strategy. It is necessary to understand the current state of these systems, including equipment, technology, system architecture, coverage, staffing, etc. Many clients use this phase as an opportunity to bring their current system documentation up to a present state, including site surveys, tower mapping, documentation packages, circuit mapping, and more. Upon establishing where things stand today, we should be able to start building a migration plan from the current state to the future state to satisfy the needs and requirements gathered in step 1.
- Future State Development – The value of developing a future state relies on the information gathered by the key stakeholders. Clients that have a clear idea of what they need, and where they need to go, tend to get a clearer picture of the right solutions in short order. Clients that are new to planning will usually spend more time and leverage more support from their consultant in order to properly think through their needs and requirements over the next 10-20 years. Depending on the system(s) involved in the strategy, the future state assessment focuses on the potential solutions including present technologies and those that might be more readily accepted during the life of the roadmap. For example, when looking at transport technologies, perhaps microwave is a safe short-term choice for the client. They use it now, capacity is limited but not too constrained, it serves the rural areas sufficiently. When looking 10 years down the road, that picture might look very different: service territory growth, capacity and bandwidth increases for smarter applications at the edge, federal and state funding initiatives subsidizing capital investment, to name a few. Suddenly, deploying a fiber network doesn’t seem as impractical as before. All this to say, the development of future state alternatives is the culmination of the initial steps of the strategic engagement. A preliminary amount of engineering design is performed on alternatives to build Rough Order of Magnitude (ROM) pricing on deployment and O&M, staffing expectations, capital budget planning over the life of the roadmap, etc. Collaboratively, the team will evaluate these options to determine the best system solution(s) to satisfy the needs of the company.
- Creation of the Roadmap & Strategic Plan – Once the assessment has been completed and the stakeholder group has agreed upon the proposed solution(s), creation of the plan is the final step. The Roadmap & Plan will provide the framework for the future of the company’s communications systems, including OT/IT governance for the life of the plan, and the next steps for planning, procuring, implementing, and managing current and future telecommunications systems. The plan effectively addresses current technology gaps and risks and serves as the blueprint for the next generation of improved systems. While documenting the short and long-term goals of the stakeholder group, an equally important aspect of the strategic plan is to lay out the estimated capital spending (both budget and schedule) over the life of the roadmap. These budgets include the high-level estimates on equipment spend, implementation costs, staffing/training requirements and more. If the plan, and its results are appropriately socialized amongst the business units and management, having a clear idea of spending over the next decade cannot be overstated. We find that getting budget approvals is much easier and consistent when everyone knows what to expect very early on.
We have clients of all shapes and sizes, with varying levels of comfort with strategic initiatives. Some are industry leaders regularly on the cutting edge of technology and have experience in the process of thinking big, getting buy-in and producing the necessary justification for long-term decisions. Others are successfully maintaining their operations, tactically replacing systems as needed, but thinking about what the future holds. While we help them all in different ways, one constant that benefits all parties is the value of investing in strategic planning.
The Telecommunications industry changes at an unbelievably rapid pace. Technology is becoming so robust, yet sometimes it feels like the advances can barely keep up with the growing needs of the industry. The costs involved in the future of communications are large, and they require a different way of looking at things like amortization and depreciation, the value of intangible assets like spectrum, and how to converge systems to support multiple business and operating units. The trepidation is understandable, which is why proper planning is paramount to successfully identifying and developing both the needs of the client and the systems that will take them where the industry needs them to go.