After Time Warner Telecom and others invaded its turf, a new financial reporting and budgeting system helped Texas-based GVTC's executive team improve customer service and compete

So often, preparing for new competition means a focus on network and operations support system/billing upgrades. Modernizing the network is crucial for Independents to compete and better serve customers, but just as important are sophisticated financial tools and systems to help Independent telco management teams see the business — and assess the competition — in a whole new light.

That's the story at GVTC — originally Guadalupe Valley Telephone Cooperative, based in the Texas hill country north of San Antonio — where a new financial reporting, analysis and budgeting system helped management address and, yes, beat a wave of new competitors.

Without insight into how its business was competing across an array of key performance indicators, including customer churn, line loss/growth, average revenue per user trends, and geographic and demographic penetration, the GVTC management team would have been hard-pressed to make the tough strategic decisions required to compete in its new environment, said Mark Gitter, chief financial officer for GVTC.

“We view ourselves as strategic managers; we realized we had to be really good at strategic management if we were going to battle these giants coming into our territory,” Gitter said, referring to Time Warner Telecom on the landline side as well as AT&T, headquartered in nearby San Antonio. “Strategically, we focused on being performance-based and market-driven. To do that, we needed a forecasting/budgeting tool to help us determine what the financial implications of our decisions would be. We had to measure results and be out in the marketplace driving toward those results and getting ahead of the competition.”

A new management team instituted the financial systems remake; indeed, the two went hand in hand, Gitter said. The new managers knew they needed better financial analysis tools to compete in a new deregulated environment. They also needed to assess the impact of network spending decisions, including a strategic focus on competing through increased investment in fiber to the premises and through improved and more proactive customer service, Gitter said.

The rebuilt IT/financial systems centered on an implementation of OutlookSoft, an enterprise software platform specifically built to help medium- to large-sized companies manage financial and operational performance requirements. The platform — which subsequent to GVTC's deployment was acquired by SAP and renamed SAP Business Planning and Consolidation — includes modules for financial planning, consolidation, reporting, analysis, compliance and performance measurement.

Helping GVTC to deploy the system was Dallas-based consultancy and systems integrator Akili, which not only had the IT chops but understood the drivers and goals of GVTC's competitive transformation, Gitter said.

The challenges were large, said Shiek Shah, consultant and Akili co-founder. Existing GVTC systems were unable to extract the data needed for sophisticated financial analysis. Worse, the business lacked processes for accumulating and gauging the business impact of such data. GVTC also lacked the ability to determine business units and products. To that end, it needed tools for cost structure analysis and the ability to identify operational issues that were affecting costs and profitability.

To address those issues, Akili helped GVTC implement an integrated, multiyear budgeting process using four main OutlookSoft/SAP applications: Finance, Human Capital Management, Capital Expenditures and Customer Churn. An integrated financial reporting package also was implemented, with an emphasis on variance analysis and financial metrics.

Gitter said one of the main appeals of the OutlookSoft product was its integration with Microsoft Excel, which the telco had implemented and used across the company. Because of that, “the learning and training curve and the implementation curve was greatly accelerated, not only for our accountants but for the rest of the organization,” he said.

The majority of the deployment was done in a rush in 2006 to beat the year's budget/planning cycle. GVTC started facing competition in its core business last August. So far, it's lost only about one-third of the lines it originally forecast competitors would take. “That's a pretty telling tale right there,” Gitter said.

More recently, the new financial tools helped GVTC prepare for the “battle of Boerne,” a small, upscale San Antonio suburb. The town was served by area incumbent Verizon; GVTC actually formed a new CLEC to compete with Time Warner Cable and Verizon for both business and residential new business, including new fiber-based video and broadband offerings.

GVTC quickly captured one-third of the market, which — along with efforts to stem competitive losses — has helped it grow annual revenues from $60 million a few years ago to $75 million today, Gitter said. Overall, GVTC is the largest telephone cooperative in Texas and the ninth-largest LEC overall. It serves 41,000 customers with over 42,000 access lines in 11 counties.

“The primary core thing is to know your markets and know your information,” Gitter said. “If we are able to get information and react to it quickly, we can be more nimble and strategically focused. The devil is in the details, and understanding your markets provides a big competitive advantage for companies our size.”