In four posts last week, I discussed Revenue Under Contract. Recurring revenue is extremely important to telecom services companies. The durability of the recurring revenue is influenced by how much revenue is under contact. Given its importance, it is highly desirable to know the total amount of revenue under contract. Also desirable is to know the pace in which Revenue Under Contract is growing or shrinking.
In the posts, I showed a graph of the past five months of data for Zayo Bandwidth. The commentary showed that the five-month trend line provides insights into the business. Before I get into ways that the data is used–some of which were hinted about in blog comments–I want to address the following questions:
How do we capture this information?
How do we know it is accurate?
How big is the army of people who do the tabulation?
And was I serious when I said we track this daily?
Salesforce.com–I hope you are reading this, as you are about to get another big plug from me.
As I was writing this post, I opened up my Salesforce.com account. I clicked on Reports and scrolled down to the section called “Revenue Expiration (Erickson/Cheedle)“. Erickson as in Matt Erickson, head of Zayo Bandwidth Product; Cheedle as in Brad Cheedle, head of Zayo Bandwidth Sales. (Erickson/Cheedle) as in if the data isn’t accurate, I know which direction to growl.
Within this Revenue Expiration (Erickson/Cheedle) section of Reports are seven reports, including:
- Remaining Contract Value Embedded Base
- Contract Value Gross Install Pipeline
- Remaining Contract Value Gross Disco Pipeline
- Remaining Contract Value Revenue Commitments
I clicked on Remaining Contract Value Embedded Base. When I clicked on it, three numbers popped up. The first is the number of “records” (specifically 8,673), which is the number of service instances for which ZB issues invoices each month. The second is the amount of MRR that is associated with these 8,673 service orders–for illustration purposes, let’s say this amount is $11,000,000 / month (hypothetical number). The third number is the total amount of Remaining Contract Value, which (hypothetically) might be $250,000,000.
$250,000,000 thus is the amount of Remaining Contract Value associated with the Embedded Base, at this precise moment. If a disconnect is processed later today, the number will go down. If a new install is made–or a contract term extended–the number will go up.
The next thing I did was click on the Salesforce.com button called “Show Details”. In seconds, all 8,673 records are listed–showing me the contract value for each one. The fourth one is a DS3 from NYC to PA with a price of $900/month and a Remaining Contract Value of $9,468.
Its circuit ID is 034029. I clicked on this number and it took me to the details of this particular service order. It turns out this order has a one year term and was signed on May 1, 2009. “Remaining Days in Term” is also shown–and in this case there are 320 days of remaining life.
Voila: $900 MRR/month * 320 remaining days / 30.41 average days in a month = $9,468. I repeat: Voila!
…more to follow…
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