STEM is the tool of choice for any project requiring ultra-detailed financial reporting or node-level technical analysis.
STEM is a flexible analytical system which allows you to explore multi-dimensional scenarios and sensitivities of detailed network business models.
STEM is also a professional modelling package which offers template replication for repetitive model structures, resource-level breakdown of costs allocated to services, and the seamless integration of annual, quarterly and monthly inputs and outputs.
Maintaining repetitive model structures with template replication
The economics of cellular networks is better in urban areas, where cell utilisation is greater and backhaul is cheaper. We add geographical variants to a vastly simplified cellular model in order to demonstrate a manageable model structure which captures these effects.
Creating a template which replicates an original structure during every model run
Typically the subscriber base is weighted towards the urban centres, while the rural areas require the greatest numbers of base stations.
Consistent calculations for each geo-type
Resource-level breakdown of allocated costs for service costing
STEM performs detailed cost allocation through the calculation framework for handling incremental demand which is generated when a model is run. Appropriate shares of Resource costs are routed to the respective Services responsible for used and slack capacity. The STEM model engine only stores results for the total allocations, and can store separate results for the costs of each separate Resource which are allocated to a given Service (without requiring any changes to the inputs), based on a scaleable implementation designed to avoid a combinatorial impact on performance.
Total depreciation allocated to a service, and depreciation from individual resources
The full range of capex and opex results are available for related service / resource pairs and transformation / resource pairs, as well as a used capacity result which can be used to understand the share of the installed capacity of a resource allocated to a specific service.
Direct cost results allow for costs driven by intermediate demand from partially slack equipment, and vary more closely in relation to the underlying service demand than used cost results. Direct costs represent the cost of a fully efficient network and are the keenest indicator for tactical pricing.
Seamless integration of years, quarters and months
STEM will generate business-plan results 'out-of-the-box' in months, quarters and years. Individual inputs can be qualified for specific quarters or months, or even dates, without the same granularity being required throughout. These time-series mechanics deliver maximum results detail with minimum user hassle.
Within the STEM model engine, a calculation period has an arbitrary length, measured in days. A single set of results is generated for each period, based on a single flow of calculations. No significance is attributed to points within a calculation period. The first principle is that STEM will dimension and install Resources from the beginning of a period to meet the demand from Services at the end of the period. The second principle is that revenues are generated according to tariffs at the beginning of a period, and capital expenditure and operating costs are also calculated according to trend values at the beginning of a period.
By default, STEM generates annual results, with an optional Y0 base period which is often used to capture initial conditions or to show an explicit zero at the start of a green-field business plan. The optional Years in Quarters and Quarters in Months inputs define additional detail to be superimposed on the initial years (and quarters) from Y1.
Nesting years, quarters and months, and elapsed time
Proportional spacing
All time-series inputs in STEM are parameterised, so that appropriate intermediate values can immediately be inferred without having to type in additional assumptions. For example, STEM can fit a unique S-curve through two period/value pairs to meet a long-term saturation value. From a small number of parameters, STEM can provide all annual values, and any intermediate quarters and months as requested. So if you need a business plan in quarters, all you have to do is set Years in Quarters as required.
Calculating intermediate values from a small number of parameters
Or you can enter intermediate periods such as Q1 2004 and Q2 2004. For a demand input, these will be interpreted as (end of) 30 March and 30 June respectively, because STEM qualifies all period inputs with an assumption about when in that period the value pertains. In line with the principle of installing equipment to meet end-of-period demand, STEM aligns demand assumptions with the end of the associated period by default. So for a Penetration input, 2004 really means 'end of 2004'. You can enter years, quarters, or months side-by-side, and each period is reconciled with a common alignment assumption which ties the associated value to a precise number of elapsed days from the start of Y1.
STEM generates shorter time period results automatically, and supports the seamless integration of annual, quarterly and monthly inputs. The Results program and add-in for Excel can both consolidate annual or quarterly results, facilitating comparison of year-on-year revenues and charges, or summarising the impact of the more detailed calculations. This shorter time period model is as easy to use as an annual model, only requiring sub-annual data where specific mid-year dynamics must be captured.
The power of logic to manage complexity in business modelling
Template replication increases productivity through the automated copying and updating of large, repetitive model structures, improving clarity and reliability and guaranteeing consistency, especially when incremental structure is propagated through a model.
The resource-level breakdown of costs allocated to services delivers incomparable detail and insight into the business realities within a network, as well as full accountability (and debugging) of all resource costs. The seamless and convenient integration of annual, quarterly and monthly inputs and outputs bridges the gap between a 'back of envelope' calculation and a quarterly business cases which captures critical mid-year dynamics.
