Profitability Analysis Modeling for telecoms

Companies need flexible, real-time analytical profitability models that will allow them to make insight-driven business decisions in order to anticipate problems and improve productivity, profitability and efficiency.

To this end, financial modeling assists them with scenario planning in order to reveal the key elements that drive the company’s business and understand how to build those drivers into the financial model.

Challenge

everis was engaged by one of the world’s leading telecommunications companies to develop and implement an analytical accounting system for all its multinational B2B customers in its European offices, so as to ensure homogeneous data exchange.

• More than 5,000 customers, 900 of which multinationals.

There was an added complexity because the company had recently acquired another telecommunications company, which involved migrating and integrating both systems and all the customer data they contained.

Objectives

The project objectives included:

• Defining the most optimum and efficient way in which to undertake the project.
• Proposing a data architecture on which to implement the solution taking into account the specific characteristics of the company’s systems.
• Aligning implementation with planning.
• Defining an analytical income statement per corporate customer/product by customer segment and cross-referenced by product.
• Obtaining visibility and understanding on where profit and value is derived from.
• Achieving real-time decision-making on:
  • how to grow business and market share
  • developing or discontinuing commercial activities with clients
  • optimizing the product portfolio or sales channels
  • efficient and effective customer life cycle management
  • maximizing ROI

Solution

With information rapidly becoming a strategic asset, making insight-driven business-critical decisions provides a competitive advantage in the new business reality.

Therefore, we needed to find a sufficiently flexible analytical solution for company’s Business Division that would become fully integrated with company’s current and future systems.

A P&L has many line items. We analyzed how to allocate income and expenses for each customer/product on a line-by-line basis, taking into account their individual bearing on the income statement. Since, due to their nature, certain costs cannot be directly allocated to clientXproduct, we designed business-oriented cost allocation drivers.

To this end, we defined cost allocation modules based on information provided by a renowned audit firm.

The everis project team was made up of technology and financial experts, which allowed us to address the complexity inherent to the systems of a telecommunications company while obtaining the detailed finance analytics demanded by the company’s Business division.

Three types of implementation were evaluated:

• Implementation on SAP
• Datawarehouse
• External tool (Tagetik)

Benefits

The benefits of the solution implemented included:

• Competitive advantage.
• Maximized business profitability.
• Optimized use of assets and resources.
• Agility to respond to internal/external changes.
• Development of digital competences: disruptive mindset, data-driven management, agile culture, effective communication, collaborative ecosystem, technological savviness.

Results

• Definition of business needs, taking into account all the capabilities of the company’s systems.
• Construction of a more flexible model that will enable the company’s Business Division to choose the criteria for reporting income and expenses in much greater detail.
• Make better, insight-driven business decisions.
• The automation of the analytical process allowed the company to free up human resources (20-30 people) and cut costs.
• Delivery of analytical reports in 15 days (on the 6th day of the month instead of the 20th).