A Resource Allocation Model for Standardisation Activities in a Telecommunication Company

of master's thesis Abstract: Compatibility, interoperability, market growth and technology utilisation are key issues in competitiveness for a telecommunications company. Standardisation can help to achieve these goals. Participation in standardisation is a strategic decision because of long term impacts and commitment to substantially different evolvement paths, and should therefore be linked with company core competencies and believed market growth. However, it is difficult to identify the standardisation activities that improve most the competitive status of the company, because of intangible benefits, uncertainties, large number of alternatives, strategical considerations, etc., which inspire application of decision analysis. This Thesis presents a portfolio model that was developed for a major telecommunications company to support the allocation of resources to standardisation activities. The model assumes that standardisation improves the success rate for pursuing widely adopted technologies , which in turn creates sales. The probabilities for standardisation and widely adopted technology success are altered by reallocating resources, which changes the expected sales from a widely adopted technology. Because the activities are linked (e.g. standardisation and development budgets and synergies/cannibalisation), they are considered as a portfolio when searching the optimal resource allocation. Robustness to parameter estimation errors is achieved by expressing sales as plausible sales intervals. If the realisation of the sales parameter would be known in beforehand they would result in an optimal resource allocation. Therefore the share of resource allocations that are optimal with some sales within the intervals and allocate a specific amount of resources for an activity is used to indicate how good that allocation is for that activity over the plausible sales intervals. If a particular allocation is (never) optimal with all values for sales, then it is certain to (never) recommend that allocation. Weaker results indicate an activity as a net gainer or net loser when reallocating resources. The model was applied in an exercise for the telecommunications company involving about a hundred standardisation activities with interactions, and personnel from different parts of the company organisation. The analysis indicated three activities to terminate and suggested that some activities could significantly benefit from having more resources to standardisation, development or both, whereas other were not as sensitive to increased/decreased resources. for their comments and guidance on my Thesis. My parents Ph.D Esko Toppila and Lic.Ph Hilkka Koljonen-Toppila have supported me in writing this Thesis. I also want to thank my girlfriend Henriikka for her patience during this long lasting project.