Network Re-Architecture Nets $10M In Annual Savings

Situation - Declining Operating Margins Require Re-Thinking of Networking Services:

A leading telecommunication provider needed to reduce operating costs to maintain network margin and EBITDA goals during a period of declining revenue and competitive pressure.  Operating margins for this business segment had dropped by 50%.  The CEO demanded that margins be quickly brought back in line with targets.

While network revenue and margins have been in decline across the industry for several years, network expenses remain a large portion of operating costs.   Over this period all network operators, as well as corporate network users, have gone after the low hanging fruit to reduce costs.  In today’s environment low hanging fruit had all been plucked.  A deeper look was required.

Solution - Re-Architecture of Network With Minimal Customer Impact:

The company viewed the initiative to reduce network costs as one of the key goals for the year and turned to Capto members for leadership and direction.  Capto’s team members worked closely with the company’s internal networking and finance teams to conduct a comprehensive cost audit of the existing network infrastructure, identifying areas for potential consolidation or elimination.

While several areas of potential savings were identified – the impact of the resulting changes to the network infrastructure had to be carefully planned and implemented to eliminate customer impact where possible and limit the customer impact where it was unavoidable.

Leveraging the industry pricing knowledge, technical and leadership expertise of Capto’s team, the company effectively re-architected key networking infrastructure components and consolidated the number of providers to gain pricing concessions, renegotiate contracts, and improve service levels.

Capto’s team then worked analyze customer impact and develop a transition plan to implement the network changes.  While this larger effort was underway, Capto’s team worked with the company’s internal network group to spin up smaller audit projects, eliminating underutilized circuits and re-deploy equipment, to further reduce costs across the network.

Finally, a program office was established to oversee these efforts and provide weekly dashboard updates to the executive team tracking progress and measuring savings.  This communication platform enabled the team to engage sales, customer care and other executive support to proactively manage issues and effect course corrections throughout the transition of the network.  The network transition was accomplished in under a year and netted $10M in annual savings.