Strategies for telecom executives: navigating the OPEX conundrum

As the market becomes increasingly competitive and technology evolves rapidly, telecommunications industry leaders must find ways to achieve more with less — managing operating expenses (OPEX) without sacrificing critical capabilities. This balancing act is especially difficult in a capital-intensive industry like telecom, where infrastructure investments and IT systems are crucial for ongoing operations.

In this post, we’ll examine the key drivers behind OPEX pressures in telecom and how to navigate them with greater confidence.

The telecom OPEX dilemma: Managing costs without sacrificing capabilities

A keychallenge for telecom executives is managing the ratio between revenue and IT/technology OPEX. While OPEX can be controlled in areas like marketing with reductions in planned spending, lowering IT and technology costs is more complicated. These expenditures are tied to core business systems and services that power the business, such as network management, billing, data storage, customer relationship management, and security systems. Success in this area has always required structured review, negotiations and tough decisions to manage resources, systems, and vendors.

Establishing a system roadmap is a critical component of OPEX efficiency. Determining what systems to retire, maintain, or invest in lays the foundation for cost reductions and more effective investments. An effective roadmap involves not only evaluating current system architecture, skills availability and cost of ownership, but also considering future business needs.

By assessing the total cost of ownership (TCO) and the return on investment (ROI) for each system, organizations can make informed decisions about where to allocate resources. This process also highlights areas where automation or integration can improve operational efficiency, reducing manual effort and enhancing agility.

To create a successful system roadmap, involve key stakeholders from IT, operations, finance, and leadership to ensure you consider all needs. Driving consensus requires aligning the roadmap with the company’s broader business objectives, prioritizing systems for efficiency, and using data-driven decision-making. Regular reviews and feedback loops will help adjust the plan as business needs evolve.

Balancing Innovation and OPEX efficiency

Whether it’s new product offerings, expanded 5G networks, or building out new infrastructure, telecoms are competing heavily to differentiate themselves against established and emerging players in the market. Telecoms must find ways to fund innovation without letting OPEX spiral out of control.

Technologies like automation, AI, and cloud-based services require significant upfront CAPEX investment but can drive long-term OPEX efficiency. For example, AI-driven network optimization tools may have high initial costs but improve network management, leading to long-term savings. Most will require additional funding in areas of talent management as well as infrastructure to leverage these technologies effectively — a hit against the OPEX numbers.

This is where a long-term strategy that prioritizes sustainable value over short-term savings comes in handy — but only if you can help sell the vision to the board, show a clear path to achieving the goals agreed upon with IT and Finance executives, and get support from across the business to take part in the successful execution of the plans.

OPEX efficiency and innovation do not happen in a vacuum, so the closer IT leaders work with their finance counterparts, the stronger the outcome.

Are software vendors crunching your OPEX?

Telecoms often rely on software vendors for systems like ERP, network management, and CRM for operations. These are not strategic tools, but rather, mission-critical, taking up a significant portion of the IT budget. Adding to the cost are continuous upgrades and the push to the cloud, both of which may show little to no ROI for the business but come with the threat of losing support or being locked out of new innovations.

To take greater ownership of one’s IT roadmap, reduce unnecessary spending, and maximize the value of existing systems, telecom leaders should explore third-party support options that can better align with their objectives and provide better, more expert support and services. Third-party support can extend the useful life of your system while avoiding the CAPEX costs and risks of upgrades.

When your existing enterprise system is stable, robust and tailored to your needs, replacing it with new technology can introduce unnecessary risk. Instead, leverage your proven system as a foundation for business innovation through third-party support, while significantly reducing support costs and saving OPEX.

More importantly, shifting funds from the treadmill of upgrades to real innovation helps to close the gap between tomorrow’s possibility and today’s capability, driving meaningful change for the business. 

Building a sustainable approach to OPEX management

In a competitive industry where technological evolution is constant, staying ahead requires not just cutting costs but investing wisely for the future. In part two, we’ll explore strategies for managing these OPEX challenges effectively and examine what it means to embrace a flexible, composable IT strategy.

Discover how Rimini Street is helping telecom clients accelerate digital transformation, regain control of their IT roadmap and significantly reduce maintenance costs, while freeing funds to invest in strategic initiatives. Learn how you too can drive digital transformation without disruption while maximizing the full potential of your investments.