The model includes elements for both DSL and WiMAX access technologies, but our objective is to compare the economics of these two different technologies in isolation, as well as a case where both run in parallel. Rather than build three separate models and risk assumptions and calculation getting out of step, the preferred approach is to develop a scenario structure for the market models driving each technology, so that three consistent sets of results can be generated from the same base data.
The addressable market is 60% with DSL or 100% with WiMAX; and there will be less DSL subscribers if WiMAX is available too as some will prefer the flexibility and possible lower pricing of the WiMAX option.
This structure is systematised with STEM through the combination of scenario dimension and variant elements which, with a few clicks, can identify which parameters to vary in a model, and the alternative values to be provided. Further parameters can be added or removed as required.
A second dimension is used to explore extremes for the as-yet untested IPTV business model, comparing a modest base penetration assumption with zero or 100%, and even a experimental case where only video is offered.
Already the implied two-dimensional scenario space has twelve possible outcomes, and we work with a limited selection corresponding to two ‘slices’ through this space. We first compare technologies against the base video assumption, and then see how the video alternatives would impact the dual-technology case.
Business evaluation and comparative scenario results
Business models must evolve to accommodate new technologies or services, and to adapt to the rapidly changing focus of an investment project. It must be routine and straightforward to edit an existing scenario space, or sometimes to discard existing dimensions and start again completely, without compromising the core model.
By automating the management of scenarios and generation of consistent scenario results, STEM massively streamlines the business modelling task and lets you focus on insightful analysis instead of wrestling with the same old formulae in a spreadsheet.