I consider rigorous tracking of operational finance metrics as an absolute necessity in running a telecom business. At a bare minimum, a company should have command and control of the following metrics:
- Dollar amount of new sales each month
- Dollar amount of sales that are canceled prior to being installed
- Dollar amount of revenue in the “pipeline” (that is, revenue that is sold but not yet installed)
- The amount of revenue installed each month
- The amount of revenue disconnected each month
- The amount of revenue that is re-priced each month (either upward or downward)
Precision is a key word here. A company should have clear and complete definitions of each term. The goal is to have no ambiguity. In future blog entries, I will describe what is meant by this.
During the past two years, I have met with a few dozen management teams. Most claim to have their arms around these metrics. A few do, and I’ve seen a few situations that left me very impressed. However, many of today’s telecom providers are (in my opinion) nowhere close to where they should be. Curiously, a few companies have admitted they don’t track these metrics, citing difficulty and a lack of resources.
I am not sure which is worse: a company that thinks it is doing this but isn’t or one that knows it isn’t but cites “lack of resources” as the reason. By the way, some of those who claim insufficient resources had plenty of dollars to fund speculative growth initiatives.
The theme of this blog is: the telecom boom, meltdown, resurgence: what have we learned? The importance of maintaining command and control of day-to-day financial management processes is a lesson that must be learned.
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