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Michelle
Michelle
10/24/2017 | 8:16:48 PM
Watch out
This sounds like pretty good advice. I think #1 is especially good.
Phil_Britt
Phil_Britt
10/27/2017 | 8:16:06 AM
Re: Watch out
Even though "automation is hard" and may take longer than expected, it continues to become more pervasive throughout industries, not just telecom. So the question is "when" not "if."
mendyk
mendyk
10/27/2017 | 11:11:43 AM
Re: Watch out
Agree about when and not if regarding telecom automation. But the bigger question may be, who?
Joe Stanganelli
Joe Stanganelli
10/25/2017 | 9:45:51 AM
Perverse disincentives
All well put -- esp. the point about stockholders -- a fact of life that I've long criticized about publicly held companies who are perversely disincentivized from long-term innovation projects.

As for the rest of it, it's a little like jumping off a bridge just because everybody else is. But in this case, if you're the last to jump off the bridge, the sky falls on you.

Or something like that. It's a bit early for analogies when I haven't finished my first dose of caffeine.
mendyk
mendyk
10/25/2017 | 9:51:19 AM
Re: Perverse disincentives
Thanks, Joe. Re the jumping off, CSPs are going to be forced to make a decision -- take the leap and hope all this transformation/automation stuff really works in their favor, or play it safe and stay on the bridge, knowing that eventually -- and that eventuality may be a couple of decades away -- the bridge will collapse of its own accord.
Sterling Perrin
Sterling Perrin
10/25/2017 | 10:54:17 AM
Re: Perverse disincentives
Bill Walker from CenturyLink made a very interesting general point about capex/opex savings that applies to automation. Talking specifically about SDN/NFV he said that when you save the company X dollars in a year, then the CFO cuts your budget by X dollars the next year. It becomes a one-time benefit to your organization, because year 2 that money has breen removed from your budget.

The process/business structure becomes a disincentive to investing in the opex savings side of automation - not just for the C-level executives but for the network planners as well. 

Sterling
mendyk
mendyk
10/25/2017 | 11:33:19 AM
Re: Perverse disincentives
Yes, the reward for doing a good job often is a shot to the nuggets. That's why smart folks make sure to get bonuses and such to compensate for making their lives miserable.
brooks7
brooks7
10/25/2017 | 1:10:44 PM
Re: Perverse disincentives
 

I would argue that this exchange (Dennis/Sterling) is exactly why NFV will go nowhere anytime soon.  In the eyes of the CTL exec, Budget = Power.  Thus, I can not go with something that would ultimately lower my Budget...even if it is the best thing for the company.

seven
Sterling Perrin
Sterling Perrin
10/25/2017 | 2:06:11 PM
Re: Perverse disincentives
Brooks,

The other side of the NFV coin is something that generates revenue - then everybody seems to buy-in bc revenues increase and budgets increase. The CTL comments help explain why capex/opex saving use cases go nowhere but new revenue use cases move forward. There is a place for automation in revenue-generation use cases. In the report, we cite SD-WAN as a prime example of that.

Sterling
yarn
yarn
10/25/2017 | 4:33:08 PM
Re: Perverse disincentives
The same arguments are applied to ignore other difficult challegences such as climate change. The power of ignorence is strong as there are few issues that can't be ignored for a very long time. Many will just go away, but others exacerbate and become more costly to solve later. Without automation few people would be able to afford a car and there wouldn't be a case for building a national highway system, gas stations and massive oil production. But there would be less global warming...

Hm, perhaps there are 6 reasons to ignore autmation:-)
Duh!
Duh!
10/26/2017 | 11:14:59 AM
Re: Perverse disincentives
Opex reduction is a sure bet for the C-suite. If you take out some number of heads - loaded with health care, pensions (the unions haven't let go of those), OT, etc. plus strike risk - you know what it's going to do to your income and cash flow statements over the next few years.

If you create a new service, you're betting that its value proposition is as good as you think it is, that you've priced it right, that your competition isn't going to respond, that its margins will compensate for revenues lost by cannibalizing other services, and that your team is going to execute. If you're smart, you also factor in lots of confirmation bias on all the above.

Of course, you need some of both. But if your main objective is to keep raising the dividend to keep your share price up, which business case is going to be easier to buy into?
Dissertationcorp
Dissertationcorp
10/26/2017 | 8:24:01 AM
Re: Perverse disincentives
This is really niuve we need help to make sure that we have some solutions in our life styles
Duh!
Duh!
10/25/2017 | 1:41:04 PM
Re: Perverse disincentives
... that's also why smart CEOs tie individual performance goals to corporate goals like "Reduce opex by x-percent".
mendyk
mendyk
10/25/2017 | 1:58:35 PM
Re: Perverse disincentives
I wonder how many CEOs -- smart or otherwise -- actually drill down into the "how" when it comes to setting or approving performance targets.
brooks7
brooks7
10/25/2017 | 2:05:57 PM
Re: Perverse disincentives
Duh!,

Easier said than done.  Reducing Opex does not mean that there is a project approved.  It means opex was reduced.  Here we are talking about something where one would think that whole departments will disapear over time.  Something more like:  Reduce operational headcount by 50% in 2 years.  People look up and ask...Will I have a job?

seven

 
Joe Stanganelli
Joe Stanganelli
10/26/2017 | 6:54:09 AM
Re: Perverse disincentives
@Sterling: Excellent point/reminder -- and it reminds me of a corollary effect: That when you save your organization as a whole -- including other departments -- $X, then the leaders of those other departments may get credited for coming in under budget, while you as the innovating department leader stand to get reprimanded if your CAPEX is too high.

Or, as it is put much more succinctly: (link)
Joe Stanganelli
Joe Stanganelli
10/26/2017 | 7:05:09 AM
Re: Perverse disincentives
Playing it safe by staying on a disintegrating bridge. It's nice to have a companion in stretching analogies to torturous limits. ;)

Taking it yet further: For all the hype of digital transformation tech as we know it presently, the real winners are going to be those who innovate yet a third option that is better than what we have now and renders it moot by just walking off the bridge safely to land -- leaving everyone else to their morbidly no-win choice.
mendyk
mendyk
10/26/2017 | 10:41:54 AM
Re: Perverse disincentives
The walking off the bridge onto land part would be getting acquired by one of the Websters. Brought to you by AT&T, an Alphabet company.
Duh!
Duh!
10/25/2017 | 1:59:06 PM
One of those industry buzz-words
"Automation" is one of those nebulous things that everybody "gets" - differently.

Rhetorical question: where is the "automation" line-item in next year's capital budget? Answer: there are line items for things like capitalized software (MANO, analytics, VNFs, etc), servers, fabric switches, white boxes, robotic fiber frames and all the capitalized software that goes with them. Automation is simply a byproduct of the architecture that these things comprise.

To oversimplify: it just falls out of the new architecture.

Or am I missing something?
mendyk
mendyk
10/25/2017 | 2:04:12 PM
Re: One of those industry buzz-words
I don't think you're missing anything. That's going to be a big challenge. "Automation" is a pretty vague end-concept for CSPs, one that involves overhauling just about every part of their business. For the Webscale companies, automation, as some would say, is baked into their DNA. One way this logically plays out is if the Web guys just buy up the Tier 1 CSPs. That would clear up any vagueness.


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