From pureplay grass and steel towercos to diversified infracos, and from companies building their business from scratch to towercos being carved out of MNOs, Sitetracker has a history of working with some of the biggest names in the sector. TowerXchange speaks to David George, Sitetracker’s Vice President for EMEA & APAC about the challenges for some of the different business models, key considerations in defining KPIs and ensuring user adoption as strategies evolve and the tangible benefits being shown by AI.
The original article from TowerXchange is available here.
TowerXchange: We are seeing an increasing trend towards MNOs carving out their towers into tower businesses, particularly in Europe. How do you see the attitudes or requirements of such companies differing from those of towercos being built from scratch?
David George, Vice President, EMEA & APAC, Sitetracker: Sitetracker has worked with a towerco starting their business from scratch and the choice of platform was integral to the set-up of their business, the company in question made the decision to use Sitetracker before they had even built their ERP; the platform and its capabilities were that fundamental to their business.
When it comes to towercos being carved out of MNOs, the decision-making process varies depending on their goals; are they carving out their business to be sold on or are they carving it out to be run independently? Secondly, to what extent is the towerco going to make use of parent companies? Some companies have taken the view that they are going to build their tower businesses from scratch, becoming completely independent and using the opportunity to create brand new technology ecosystems; others would rather take the band aid off slowly and use parent systems for a number of years.
The biggest challenge when doing a carve out, is how to separate people, systems and data. The two businesses are so intrinsically linked together that it is a major operation to pull the two apart and create two independent entities. It is this change management that is so daunting.
With MNO carve outs, the unique thing is that they have this captive customer that, at least for the early days, will contribute the lion’s share of the revenue of that business. Everything that the towerco does by default has to be geared towards serving that customer and making sure that the systems interact with each other in a seamless way. If you are going to create separate systems, data still needs to flow easily and as much as they want to establish themselves as independent, they need to take care of the anchor customer that they have. That being said, independence is key; the whole concept of being a neutral infrastructure provider is that you are able to offer your assets to different parties without the different parties knowing what each other are doing.
There is also a shift in mindset that is required, and you need to disconnect yourself from a legacy of doing things in a certain way for 20+ years. If you are part of an MNO, the tower unit is ultimately a cost centre, you have a budget to build towers and may need to beat that budget down but there is generally no revenue associated with it. When you become a separate towerco business there needs to be a shift in mindset that you are an independent company, with an independent source of revenue; towers are no longer a cost centre, they are the asset that generates revenue for you.
For MNOs carving out towercos, there is now this fundamental difference that means it is important to have deeper visibility into your tower assets. You need to understand what elements of your processes are able to move the needle from a revenue perspective and what elements of your processes enable you to drive your cost structure down in an appropriate way; and it is about figuring out what elements of your cost structure drive revenue versus what elements of your cost structure you need to optimise. In order to do that you need much better visibility into processes, you need more data flowing through the entire lifecycle, you can’t have things sitting in disparate systems.
Companies building towercos from scratch will have this central to the development of their company, but for carve outs they need to transition to an end to end system with a lot of visibility on their data.
TowerXchange: Can you talk us through some of the challenges when defining a system for towerco carve outs?
David George, Vice President, EMEA & APAC, Sitetracker: When it comes to building a system, that is the easy part, defining exactly what you want built is tough, especially when it comes to multi-country carve outs, where different opcos have historically operated independently of each other. Lots of work needs to go into getting what are effectively multiple different companies to agree on things such as the right process to deploy a tower or the best way to manage a lease. It is also important to define the new KPIs which the business is working towards in order to define the system, with the KPIs for a towerco differing from those of an MNO network team. For example, MNO teams may have been targeted on the number of sites that they could get built; on a towerco side it is more about equating KPIs to revenue, for example, how quickly can I get a site up that a customer is asking for so that I can start charging lease rates.
Additionally, as you start onboarding more people from different functions onto a system you will uncover a raft of new things that you need to address, once again causing the specification to change.
Whilst it can take time for the customer to properly define their requirements with a series of back and forth iterations, one of Sitetracker’s biggest advantages over its peers is that we work on a platform that is extremely flexible; it is a low code environment which is highly configurable. In most big implementations that we have done, the biggest surprise to customers (who enter these implementations wearing the battle scars of previous big implementations they have been involved in) has been the speed and ease at which we can make these adjustments.
TowerXchange: Beyond defining the system what are the other big challenges in transitioning to a new platform?
David George, Vice President, EMEA & APAC, Sitetracker: After specifying the system, the second biggest challenge is on the user adoption side; if you’re going to implement a solution that you’re expecting the operational side of business to use, you need to have buy in from all stakeholders to ensure user adoption. So, if some teams or even individuals continue to work in spreadsheets or other systems, you will end up with key pieces of data missing. This also precludes companies from taking full advantage of the power of AI built into platforms like ours. Also, the system needs to be flexible enough to fit with the way that people are working in order for them to use it. So, if we see user adoption declining with one of our customers, we hold steerco meetings to see why this might be the case, perhaps it might be that they implemented a process change in a certain country and suddenly the tool doesn’t work for them, and then we go and fix it.
TowerXchange: We have seen an increasing trend towards towercos diversifying beyond macro towers, moving into areas such as small cells, DAS and fibre. How is Sitetracker positioned to support companies should their business move in this direction?
David George, Vice President, EMEA & APAC, Sitetracker: Towercos around the world are all thinking about how they can extend their business and grow their revenues. Right now, they are primarily in the business of leasing passive infrastructure to customers, but a number of them are now looking at broadening their portfolio from bus shelters, street poles, rooftops, small cells to DAS providers to find additional revenue opportunities.
There are companies that Sitetracker competes against who are pureplay tower platform providers, but we see ourselves as an end to end solution provider. We don’t only work with towercos, we work with fibrecos, MNOs, specialist DAS players and other players giving us the experience and expertise to support towercos as they diversify their asset base. Whilst we see some towercos starting to move more into the active side of networks, their requirements to MNOs in managing those active networks will differ, with each of the different businesses having different priorities.
TowerXchange: We have discussed Sitetracker’s AI capabilities in the past, can you tell us more about the use cases where it is showing promise?
David George, Vice President, EMEA & APAC, Sitetracker: The AI in Sitetracker’s offering, our Einstein product, is an underlying platform capability that comes to us from Salesforce. As mentioned previously, it would take hundreds of millions of dollars of investment to develop a system like this but we’re able to build upon what Salesforce has in the market. It is an amazing piece of software functionality, and something that we have had a really positive response to from our customers.
Two key use cases of the Einstein product are in milestone management and vendor performance. For example, if I am looking at rolling out a new site and want to achieve this in a three month period, I can run an analysis which can look at historic data and see what happened last time I built a tower of that size in that region. How long did it take to carry out site acquisition, site permitting and site build; where are the bottlenecks and the biggest variances; what levers can I pull to address these, will I be able to hit the deadline? I can compare the outcome about when I worked with vendor y versus vendor x and make a decision that I have a better chance of hitting deadlines if I switch vendors; the insights that Einstein provides can enable better decision making within the business.
We are also working with our clients to look into other applications of Einstein, for example in managing power, looking at failure rates and the time it takes to get things fixed. It is important to not lose context when looking at things such as this, for example, one site could be in an urban area with easy access whilst another could be in a rural and remote area – the difference in location will also be a function in the differing repair times.
TowerXchange: Finally, as we heard during TowerXchange’s Data Collection & Utilisation working group meeting in which Sitetracker were involved, the inability to demonstrate ROI has been the biggest barrier to towercos investing in new data systems. Why do you think this is and what lessons can you give?
David George, Vice President, EMEA & APAC, Sitetracker: It is a commonly cited problem that towercos are struggling to demonstrate the ROI to invest in such systems. The reason that companies are unable to build an ROI is because they haven’t worked out the KPIs they need to be measuring against. When it comes to calculating the ROI and operational return, it always comes back to two things – does it increase revenues or does it decrease cost.
From an increasing revenue perspective, how effectively can you market your portfolio and how quickly are you able to respond to customer requests that come in; can you seamlessly transition that request into a set of activities in the field that enable you to fulfil that request in the shortest amount of time? What value can you assign to this? You are competing against other towercos who can get the answer back the fastest, the company that can commit to having a site available and ready the fastest is at a competitive advantage. In the past, MNOs would only go to their internal tower teams to see what sites are available, now they have a choice of sometimes four or five companies. Being able to respond quickly enables you to win more business and start generating increased revenues sooner.
Some towercos are brilliant at this but for others (particularly those in developing markets), because their business is growing so fast, their focus is still on building as many new sites as possible. Only once a company starts to reach a certain level of stability do they start to focus more closely on metrics around the increased revenue from being able to respond to requests faster and more efficiently.
Author: Laura Graves, EMEA – Managing Director TowerXchange.