It is easiest to think of value when a monetary figure can be attached to something, but how can value be assigned to intangibles, like quality or service? The value an individual would assign to one of these factors will always vary from one person to the next, and can change given timing or other circumstances.
By Cisco Eng. Shingie Lev Muringi
This subjectivity complicates the effort of assigning value. The effort of assigning value is further complicated when considering that the value of a company as a whole is much more complex, and is not simply the sum of all the individual components.
In order to assess the value of a telecoms system, companies must consider various factors. These factors are not easily defined, as, unlike in the past, no one solution fits all telecoms needs within a company.
Value in telecoms
There are three factors that should be on every manager’s mind when selecting a telecoms solution:
Quality is broken down into two important components for telecoms solutions, where if either of these are inadequate, the user experience is diminished.
i. System robustness: The reliability of the installation and equipment. This is predominantly hardware (tangible), but is now increasingly including intangibles such as software.
The increased pace of software development has benefited users, and is the main reason for the many feature-rich bespoke solutions available today. On the downside, frequent software upgrades can unfortunately result in unforeseen software glitches, particularly with open source software.
ii. Audio quality: Voice call quality is an important measure of the experience of an audio conversation. In the telecoms industry, a well-known quality measure is the MOS score, which is the mean opinion score. As the name suggests, this measure is based on users’ opinions when asked to rate the quality of a call, on a scale from one to five. In VOIP, the quality of the conversation is highly dependent on Internet connectivity.
The cost of the service provided is made up of several different charges.
* Non-recurring costs (NRC): Fees charged for set-up, installation, support or miscellaneous once-off or ad hoc services provided.
* Monthly recurring costs (MRC): Fees charged monthly for services provided, which could include line rental, cloud services or bundles.
* Hardware rental costs: Equipment owned by the provider and rented to the customer for as long as client uses the service or for the duration of the contract term, on completion of which the client then owns the hardware.
* Maintenance costs: These can also fall under ad hoc non-recurring costs and includes general repair and upkeep. If it is not included as part of the service contract then maintenance will normally be of a reactive rather than a preventative nature.
* Usage costs: Cost of phone calls, which vary by destination called and by provider used. VOIP is regarded as offering the cheaper call plan, with the benefit of free calls between users on the same network. Globally, cellular providers offer free call packages (unlimited calls) across networks.
This includes uptime, service levels, support, maintenance, general monitoring and response times. Nowadays, many providers include Internet connectivity as a service.
These three factors together form the value triangle.
It is easy to see how each of these factors are interconnected and interdependent.
The service level offered is directly related to the service level agreement (SLA) chosen, with a gold service level costing considerably more than a bronze SLA.
Quality, which in the case of VOIP is dependent on Internet connection, is therefore dependent on type of connection and speed of connection selected.
These factors (service, cost and quality) all work together to define value in telecoms system needs, so without any one of these three, the balance is lost.
Therefore, seeking to maximise one factor independently results in the compromise of the other two. For example, by focusing primarily on quality, the cost or service factors will be neglected. When maximising quality and service, this will come at the detriment of cost, ie, a top-of-the-line solution with first-class service will be expensive. The ultimate goal is to find the “sweet spot”, which is in the middle.
“You pay for what you get” is commonly recited, but it is certainly not that straight-forward.
For office-based telecoms solutions, companies turn to VOIP as they see it as a cost saving solution. Ironically, in making this decision, the value triangle is ignored, resulting in managers wanting the best quality and service at very little cost. This often leads to frustration on their part and that of the service provider.
Although VOIP is able to provide some savings, the reality is that if large savings are required, concessions will need to be made on quality or service. Therefore, it is imperative to consider the value triangle when selecting a VOIP solution, and it is my hope that in making the decision, companies will be mindful of value rather than a bargain.
Given the rapidly changing telecoms and technology industry, there may be a need to introduce a fourth component to the three discussed above.