Telecommunications Analysis An Introduction Evaluation Matrix, Views of Telecommunication, Planning,

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Telecommunications Analysis An Introduction
Evaluation Matrix, Views of Telecommunication,
Planning, Modeling, Budgeting

• Roosevelt University
• Dr. Roger G. Clery

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Introduction

• Telecommunications is voice and data
• Data Communications is computer related
• Convergence is ?

Telecommunications
Data Communications
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Job of T-com Manager

• Technology
• Business
• Planning
• Operations
• Legal Regulation

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Three Views of Telecom

• Cost to be minimized
• Resource to improve productivity
• Strategic Asset

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Outsource or DIY Do It Yourself

• Control
• Time
• Ability
• Resources

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Outsource V DIY
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Planning

• Strategic 3-5 years
• Tactical 1-2 years
• Operational 1 year or less

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Modeling

• Analog a Model Train same but smaller
• Symbolic a Spreadsheet

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Symbolic Model

• Numeric uses numbers
• Lexiconic uses words
• Diagrammatic uses pictures

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Numeric Models

• Can be descriptive
• Can be problem solving
• Can often be run in reverse
• EIR

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Rogers Rule

• A bad model is better than no model

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Bruce Tomkins Tenet

• Give a fool an Electronic Spreadsheet and in two
  weeks the fool will have a comprehensive model of
  the world!

2 2 17.4
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The Computer is your friend

• Use it for modeling
• Use it for problem solving

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One easy to use model

• The Evaluation matrix
• Also called Decision matrix/graph/array
• examines and quantifies complex decisions
• identifies factors / attributes
• makes you think about the importance of each
  factor
• allows you to evaluate each thing separately
• Lets you explain how you made a decision

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The Evaluation Matrix
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The Evaluation Matrix
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The Evaluation Matrix
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The Evaluation Matrix
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The Evaluation Matrix

• Biggest total score wins!

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The Evaluation Matrix

• Biggest total score wins!

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Evaluation Matrix

• Weights are relative (and arbitrary)
• Scores use scale 1-5 or 1-10 bigger is better
• Be sure to multiply correctly!
• Be sure to add correctly!

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Steps to construct an Evaluation Matrix

• List all factors like price, speed, color
• Select the most important factor and give it a
  big weight 20 to 30
• Select the next most important factor and
  estimate its importance relative to factor in
  step 2 continue this for all factors
• For each entity (thing, person, place, product)
  decide how well it does for each factor remember
  that best is 10 and worst is 1 or 0
• Multiply score in step 4 by weight
• Add em up biggest wins

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Budgets

• Unusually
• Could be Time, Quality, Availability
• Uses the past to predict the future

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Budget Predictions about the future based upon
the past

• Prognostication especially about the future is
  difficult - Yogi Berra

IT AIN'T OVER, TILL ITS OVER
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Operations budget

• Usually one year
• Predictable patters
• Stays the same
• Increases Decreases arithmetically
• Increases Decreases Proportionally
• Increases Decreases Exponentially
• Changes periodically ------

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Budget

• Total Telecommunications Budget for 2XX1 is
  424,565
• What will it be next year???

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Telecommunications Departmental Budget
Look for patterns
Always put Totals!
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Operations Budget

• Look for patterns
• Use judgment about trends
• When in doubt estimate high
• When change is required estimate high

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Capital Budgets

• For one time large expenses
• More than 10,000 dollars
• More than 3 years life

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Three ways to evaluate capital expenditures

• Payback How soon do you get your money back
• NPV Net Present Value
• IRR Internal rate of return

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Payback

• If a PBX cost 4000 and the benefits are 1100
  per year
• At the end of 3 years 3,300 are paid back
• 700 left to go 700/1100 .6363
• Payback is 3.6363 years

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Present Value

• Money (cash) has more value today than in the
  future
• If interest rate is 5 and I can put 1000 in the
  bank today, in one year I will have 1050
• 1000 1050 ? 1000/1050 .952380952
• .952380952 is the PV factor

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Net Present Value NPV

• This is the sum of all money, with money in the
  future reduced by the Present Value factor.
• Money today has a factor of 1.000
• Money in one year at 8 is .9259
• Money in two years at 8 is .8738
• The longer the time and the higher the interest
  the smaller the PV factor

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What is the NPV of spending 1000 now and getting
600 back in one year and 700 back in two years at
8

• Answer
• -1000 x 1 -1000.00 (minus for spending)
• 600 x .9259 555.54
• 700 x .8738 611.66
• NPV is 116.20 (this is a good deal
  because you would be ahead 116.20)

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NPV
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IRR is Internal Rate of Return

• It is a - NOT a dollar value
• Not easy to calculate by hand, but easy for
  spreadsheet
• Can be misleading if total dollars are ignored
• Can have more than one value if alternate plus
  and minus cash flows

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IRR is rate for zero NPV
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IRR is the percentage that makes NPV equal zero
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IRR is the Interest Rate that make the NPV Zero
Be sure to format the cell for at least 2 decimal
places!
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END