To be really useful, gross margin calculations need to be;
- Timely – your costs or revenues change daily and so should your Gross Margin reporting
- Using the right data – revenues, less network costs, less energy costs gives Gross Margin
- Accurate – only possible at the lowest level possible – the NMI or MIRN
- Meaningful – and then reported at any business level you’d like ( state, network, customer )
But traditional approaches had significant challenges. For starters, the data sources you might use to reveal gross margin have inherently different purposes. They have different timings ( when the data arrives ) and different meanings of the dates contained. Many data sets are incredibly noisy, and do not reflect information you want to use in your gross margin calculations ( with network settlements a clear victim to noisy data sets ).
In fact the challenges were often seen to be insurmountable, with Gross Margin calculations reduced to high level, ‘once every so often’ spreadsheets written by the analyst in the corner. And realistically, those Gross Margins were estimations, based as much on intuition and assumptions as they were the data that supported them. How much consumption did you really bill in July? Because it’s usually not contained on the bills that go out the door in July.
Data volumes are a challenge too – as is the computational power needed to break down the different data sets for meaningful comparisons. So the traditional approach of ‘roll your own’ Gross Margin reporting usually ended up with estimates based on assumptions based on whatever data was easy enough to get into Excel.
Not any more.
Quantify is our ground breaking Gross Margin and Revenue Assurance tool, and we’ve purpose built the product to solve all the traditional challenges.