Project 2 - Subsea Telecom and Power Cables
Subsea Telecommunications and Power Cable require a Cable Lay Vessel (CLV)
Intro:
This was a very 'standard' strategy project in that it involved the right balance between the required depth of detail and the need to formulate a message for the client in a short amount of time. It utilized quite a typical framework in the grand scheme of things, mostly by first assessing the attractiveness of a particular market, then verifying the feasibility of actually entering the market by conducting a gap-analysis of required capabilities from that of the client's and those that were needed to succeed in the industry in question. Lastly, we delved into the preferred method of entry that was right for client, concluding the project by leaving the client with actionable goals to reach, and acquire the necessary capacities to put the plans into fruition. It is a type of project that all consultants should have under their belt, and which provides a good blueprint of how strategy projects actually unfold.
Basics:
It was a 6-week project, (with a couple of days prior and afterwards - Week 0 & A/S time, as is mostly the case with these projects), and I would say that in terms of difficulty (more a personal rating rather than an objective one), this would place a 6, on a scale of 10. It was interesting that it had 4 analysts (1 senior, 3 junior) to support one PM, and although there were two defined work modules, we all ended up working altogether on overlapping issues as time went by. There wasn't much direct client interaction, as the HQ of the client was quite far away, and Covid-19 restrictions made it difficult for us to really have offline interactions. We mostly worked from our own offices (not WFH), and we generally had a weekly review with the clients on Monday.
A Monday weekly review generally does not bode well for work-life balance; I think we worked during more than half of the weekends that we had, as we always needed to prep and finish up the weekly deck by Sunday to prepare for the meeting. Work-life balance was actually on the bad side, despite the difficulty of the project not being that severe, mostly because of large scope. We ended going home, on average, at around 2 am each day, and had at least 1 day a week where we'd go home around 5~6 ish in the morning. Still, the PM was generous enough to let us come to the office a bit later in the day were that to happen. We had all hoped that the partner was able to cut us some slack, by limiting the additional requests by the client and decreasing the scope, but I guess that was just too much to ask for :'). Not really sure if this was considered a 'key' account in the eyes of the firm, but it definitely did seem like the partner was quite lavish in terms of accommodating the needs of the client at the expense of the analysts he has at disposal.
Thoughts on industry:
Submarine cable installations. It is quite an interesting field, as the pre-requisite for any company in this field to own a cable-laying vessel, and be involved in EPCI contracts for large constructions worldwide. Cables are generally separated into telecommunications cables and power cables, but the technology and required equipment to carry out the installations is quite different (albeit not greatly).
Most of the world's overseas data traffic already goes through these fiber optics cables that have already been laid out over the course of multiple years; most of the time, telecommunications companies would be the main sources/funders of these large projects to lay out a cable throughout the entirety of the globe. However, this dynamic has been steadily changing throughout the years, as more OTT internet players (FANG), and also independent infrastructure developers have been vying to build more cable systems to later on sell the services provided through these cables to telco's and tech companies alike as a third party. With the advent of cloud computing and many more applications for exponentially growing demand for data, we can see the market for cables to likewise boom. Nonetheless, the changing market dynamics also affect the profitability of this market, as increasing levels of competition in not just the supply/manufacturers of cables, but also installers of these cables have been forcing the price element of this industry to decrease as it was when compared the past.
Power cables are fundamentally different from fiber optic cables in that they require a higher degree of technology to both produce and to install. Of course, they are heavier and thicker as well, and the physical limit of how much a vessel can carry around is a big differentiating factor in whether a company gets selected for the job or not. So far, power cables are generally the more profitable segment, but generally is limited to smaller (and thus shorter) regional projects, as we still need improvements in technology to see high voltage power cables being able to be stretched out over long distances. Generally, subsea power cables are used in two different market segments: 1) one being the interconnection market, which connects power grids across land masses, and 2) the second being offshore wind farms, where cables are needed to connect the wind turbines to its respective substation and power grid. Naturally, interconnections would be more prevalent in countries and regions that have more islands that need more efficient sourcing of electricity, and the offshore wind, along with the growing demands in renewable energy, are to be more prevalent in areas that have favorable geographical and weather conditions to allow for this type of green energy to be produced. Of course, more than the actual natural resources that allow for the generation of wind energy, the deciding factor would be the government's involvement in developing that sector, as we are barely passing the mark where investments into wind energy would actually break-even and become profitable.
Project Details:
Basically, the premise was that we required a cable-lay vessel that had the capacity to conduct operations in both markets to be in best position to capture the market. There were many different types of existing and future players that were also trying to enter the market, and the barriers to entry were quite high, not just the fact that you needed a high quality vessel, but meeting the qualifications and proven expertise to even be considered as a main installer for the large scale projects. The scheduling requirements to be which and when the vessels would be available to tend to a particular project needed to be dealt with, and every project had differing conditions that a vessel would have needed to endure. From the near-coast low-depth seabeds of Indonesia to the tumultuous, earthquake-ridden deep waters of Japan, it was difficult to ascertain the exact specifications that would determine a 'good' vessel to have. Add that to finding the economics of actually building a new ship, or even perhaps conducting a cost-analysis to chartering existing vessels, the scope of the project was quite large for any team to handle in a span of 6 weeks.
Nonetheless, we did the market analysis, obviously separating by region for each market. This somewhat resulted in a brief analysis of over 15 different markets (for telco, interconnections, and offshore wind), looking their expected growth and market entry barriers.
We then looked into the competitive dynamics for the actual target markets, analyzed the market share of existing players, and seeing what were the factors that made them so successful. By analyzing the landscape, that would mean we had to see not just the direct competition, but the involved stakeholders from the actual developers of a particular project, to all the different services and products that were required in the value chain of each market.
We then took that to compare the current capabilities of the client, to see where they would fit in the market matrix. By rating the each key factor in terms of urgency and impact potential, we would then identify the key areas for the client to focus on were they to truly consider entering the market.
Personal thoughts:
All in all, quite a fun project simply because it's an industry that isn't that commonly known, and is really intricately linked with a number of different markets and growing macroeconomic trends. At times, it was cumbersome simply because of the amount of material that we had to cover, and each weekly deck had over 40+ pages in the ppt deck, which then would result in a final report of over 200 pages. (mostly in appendix slides)
There definitely were a lot of 'nagging' additional requests by the client on a weekly basis. For example, they wanted to add additional country here and there for market analysis, or wanted to benchmark an additional competitor here and there, all resulting in additional research and expert interviews despite the storyline barely changing in the big picture.
I was also somewhat alleviated, that we didn't have to dive deeply too much, as it was more strategically oriented rather than an actual benchmarking project or a operations one. There was somewhat of a difficulty in reaching a consensus with the clients at first, as the internal politics resulted in differing teams wanting different things on the project. Some wanted a heavier market analysis component, whereas others wanted to pick apart the internal lack of competitiveness through a thorough gap analysis.
"Consulting" type work:
Market Segmentation and Analysis
Go-To-Market Strategy Formulation
Defining Key Success Factors
Assessing Internal capabilities and conducting gap-analysis
Competitive dynamics and benchmarking leading global players