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Value Calculators - in Sales Session 1: Value Calculator Quickstart

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Page 1: Value Calculators in sales 121023

Value Calculators - in SalesSession 1: Value Calculator Quickstart

Page 2: Value Calculators in sales 121023

Ericsson Internal | 2012-10-15 | Page 2

How to Join› EVERYBODY

– Connect with Lync – Join online meeting– No audio

› If you have VIDEO– Polycom system directory– Connect to:– SE KI 11 01 049 (8) Petunian

› Without video– Use audio conference– Dial-In: 89920 ECN Short number– Passcode: 7393 447#

› My mobile number– +46 730 312 376

Value Calculators - in SalesSession 1: Value Calculator Quick start

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Ericsson Internal | 2012-10-15 | Page 3

Technology checkPlease answer the following question in the chat:

What is your experience with Value Calculators?

a) I have done and presented a Value Calculator to a customerb) I have presented Value Argumentation including money to a customerc) I have done Value Calculators or value argumentation, but not really

presented them to a customerd) I have not done any Value Calculators before, but I have taken the

financial traininge) I have not done any Value Calculators before and have not take the

financial training

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Ericsson Internal | 2012-10-15 | Page 4

About this course› No course -> Training› No Finance -> Sales› 3 Sessions

– Quick start– In depth– Tools and sources

› Format– Many exercises– Repetition– Questions in chat– Breaks

Value Calculators - in SalesSession 1: Value Calculator Quick start

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Ericsson Internal | 2012-10-15 | Page 5

Agenda› Introduction› Benefitting sales› Value Calculator Technicalities› Next sessions

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Introduce YourselvesCourse exercise

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INSTRUCTIONS

› 15 minutes

› Focus on telling each other what kind of Value Calculator activities you have been involved in and your experience.

› Write key words on a slide and send to me, [email protected]. I will distribute to all participants.

POWER POINT TEMPLATE

› Name?› Working position?

› Experience in building and using Value Calculators?

› How will you use the knowledge this course will give in your daily work?

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Ericsson Internal | 2012-10-15 | Page 8

Agenda› Introduction› Benefitting sales

– Proving Value– Mitigating risk– Engage with C-level– Block competition

› Value Calculator Technicalities› Next sessions

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Ericsson Internal | 2012-10-15 | Page 9

Benefitting Sales› Proving value

› Mitigating risk

› Engage with C-level

› Block competition

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Ericsson Internal | 2012-10-15 | Page 10

Benefitting Sales› Proving value

› Mitigating risk

› Engage with C-level

› Block competition

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Ericsson Internal | 2012-10-15 | Page 11

+ $

- $

Why buy?

Investment case

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Ericsson Internal | 2012-10-15 | Page 12

+ $

- $

Why Ericsson?

Marginal case

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Ericsson Internal | 2012-10-15 | Page 13

Benefitting Sales› Proving value

› Mitigating risk

› Engage with C-level

› Block competition

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Ericsson Internal | 2012-10-15 | Page 14

Benefitting Sales› Proving value

› Mitigating risk

› Engage with C-level

› Block competition

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Ericsson Internal | 2012-10-15 | Page 15

Benefitting Sales› Proving value

› Mitigating risk

› Engage with C-level

› Block competition

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Ericsson Internal | 2012-10-15 | Page 16

Purpose of the Value CalculatorCourse exercise

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INSTRUCTIONS

› What is most important in the form and format of a Value Calculator that mainly shall:

– Prove value– Mitigate risk– Engage with C-level– Block competition

› Write each purpose on the wall› 10 min. for yellow stickers› 10 min. to discuss and choose top

2 per purpose

PRESENTATION TEMPLATE

Most important, when to:› Prove value

– 1…– 2…

› Mitigate risk– 1…– 2…

› Engage with C-level– 1…– 2…

› Block competition– 1…– 2…

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Ericsson Internal | 2012-10-15 | Page 18

PRESENTATIONS

› Group A. What is most important when to Prove value– 1…– 2…

› Group B. What is most important when to Mitigate risk– 1…– 2…

› Group C. What is most important when to Engage with C-level– 1…– 2…

› Group D. What is most important when to Block competition– 1…– 2…

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Ericsson Internal | 2012-10-15 | Page 20

Agenda› Introduction› Benefitting sales› Value Calculator Technicalities

– Revenues– CAPEX– OPEX

› Next sessions

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Ericsson Internal | 2012-10-15 | Page 21

Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

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Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

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TOP DOWN Forecast

0200400600800

1 0001 2001 4001 6001 8002 000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

BU

SD

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TOP DOWN Forecast

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Bottom up forecast

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Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

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DimensioningNW Dim

Traf

fic d

istr

ibut

ion

6

Core

Dense urban

Extreme

High

Low

Medium

RAN Transport

RAN Transport

RAN Transport

RAN Transport

Urban

Extreme

High

Low

Medium

RAN Transport

RAN Transport

Transport

RAN Transport

RAN

Suburban

Extreme

High

Low

Medium

RAN Transport

RAN Transport

RAN Transport

RAN Transport

Rural

Extreme

High

Low

Medium

RAN Transport

RAN Transport

Transport

RAN Transport

RAN

Usage(GB/sub/month)

(Minutes/sub/month)

Subscribers(#)

1 2

Traffic management (data)(% remaining traffic)

Total traffic(Gbps)

Busy hour share(%)

5

3

7

Traffic in BH(Gbps)

4

Coverage Peak rate

NWcost

(CAPEX+

OPEX)x

x

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Pricing

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Sensitive information

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Sensitive informationLTE Throughput per band and area type

31,0

33,0

35,0

37,0

39,0

41,0

43,0

45,0

400 900 1 400 1 900 2 400 2 900 3 400

DU

URSU

RU

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Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

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OPEX split

35%28%

11%

10%

7%

7%

8%

8%

10%

15%

12%17%

5%4%

Other/G&AMultimedia apps

BSS

OSS/ NW mgmtSI CAPEX

Equipment roll-outConstruction

Transport

Core

Site Equipment

Access

3% 2%

3%4%

3%

4%3%

3%

8% 9%

37% 39%

4%5%

10%12%

7%

15%16%

7%8%

4%

9%

Other/G&A

Marketing and sales

Term. & roaming

Terminals

Customer mgmtContent right-to-use

Service dev/BSS

Network O&MNetwork development

Site Costs

1%

3%4%

1%

3%

CAPEX (~15% of Sales)Mature market

Source: Ovum

OPEX (~60% of Sales)Emerging marketMature market Emerging market

Sum 100% 100% 100% 100%

E/// A

ddressable 34%

E/// A

ddressable 57%

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Agenda› Introduction› Benefitting sales› Value Calculator Technicalities

– Revenues– CAPEX– OPEX– Results– Risk– Finance

› Next sessions

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Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

› Results

› Risk

› Finance

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Ericsson Internal | 2012-10-15 | Page 35

Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

› Results

› Risk

› Finance

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Ericsson Internal | 2012-10-15 | Page 36

Value Calculator Technicalities

› Revenues

› CAPEX

› OPEX

› Results

› Risk

› Finance

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Agenda› Introduction› Benefitting sales› Value Calculator Technicalities

– Revenues– CAPEX– OPEX– Results– Risk– Finance

› Next sessions

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Building a Value Calculator in 30 minutesCourse exercise

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Generic Value Calculator- Ready made graphs

Ready made graphs.

NOTE: on row 195 there is a button to update the graphs that compare the scenarios

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Ready Financial output- Income statement- Balance sheet- Cash flow-Key Financial Indicators

Generic Value Calculator- Ready made Financial statement

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Easy input:- Revenues- Opex- Capex

For up to 5 scenarios

Generic Value Calculator- easy input and scenario comparison

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Add your own sheets for the dimensioning in Your case

Generic Value Calculator- dimension in support sheets

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Financials:- Discount rate- Value Calculator horizon

Generic Value Calculator- Financial Input

Switch between Scenarios

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BACKGROUND

› Operator WideNet is planning to expand its network indoor coverage in shopping malls etc using WiFi. The plan is to increase the indoor coverage with 2,000 WiFi nodes per year, over the coming 5 years. They anticipate this will increase customer satisfaction so much that they would gain an additional 50,000 subscribers per year.

MORE INPUT

› Monthly ARPU: 30 USD› CAPEX: 3,000 USD / node› OPEX: 4,000 USD / node› OPEX: 20% of revenues› Depreciation time of a WiFi node:

8 years (business life time)› Discount rate: 15%› 5 years business horizon

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MAIN QUESTION

› Is this a profitable investment, considering the financial KPIs below?– Net Present Value (NPV)– Internal Rate of Return (IRR)– Payback time

SCENARIOS

› How many subscribers per year (as a minimum) is needed to justify the investment?

› Is an additional 200 sites that gives 10% more subscribers a better case?

› What if non-network opex is 3 mill USD yearly + 20 USD / subscriber yearly

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INSTRUCTIONS

› Use the Generic Value Calculator model

› 30 min to prepare, individually

› 15 min for one person to get feedback from his/her group.

› Questions, if we have time

› Send me your ready BC model, before end of this lesson

PRESENTATION TEMPLATE

› Base scenario– 5 year NPV– Payback– Peak funding– Minimum subscribers?

› +200 nodes scenario– 5 year NPV– Payback– Peak funding

› 3 mill USD OPEX scenario– 5 year NPV– Payback– Peak funding

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Agenda› Introduction› Benefitting sales› Value Calculator Technicalities› Next sessions

– In depth – 30 Oct– Tools & Sources – 6 Nov

1

2

3

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