France Telecom Interprets Market
Demands
Through Crystal Ball
France Telecom, the French national telephone company, provides
the network for both its own telephone operations and for the operations
of recent competitors such as Bouygues and Alcatel. With the increased
competition, France Telecom has worked to better understand the
market demand for telecommunications in France. As part of its efforts,
the company developed a spreadsheet model in which assumptions were
made about the demands for each region in France (analyzing the
number of calls, the distribution of the length of a call, etc.).
By examining the distribution of these possible demands,
France Telecom hoped to forecast the impact these demands might
have on its profit margin. For assistance with this market analysis,
they contacted Dr. Hervé Thiriez, a Professor in the Information
Systems and Decision Analysis Department at Groupe HEC (France)
and the CEO of Logma SA, a consulting company that specializes in
operations research. They invited Dr. Thiriez to work with them
to improve their marketing model through optimization and simulation.
Using Crystal Ball, Dr. Thiriez defined assumptions
for all the variable model elements, including the number of calls
and the distributions of call duration, and he defined the significant
results, such as profit margins, as forecasts. France Telecom was
also interested in adding linear programming optimization to the
model so that, once the market demand was known, they would be able
to reorganize their network so as to minimize costs. For the linear
programming element of the model, Dr. Thiriez first wrote a small
user macro that called Excel's Solver. He then opened Crystal Ball's
versatile Run Preferences dialog, where he requested that this macro
be run at the end of each Crystal Ball simulation.
Dr. Thiriez ran over 5,000 Crystal Ball iterations
for France Telecom's model. Through this technique, he was able
to simulate possible demand structures and was able to obtain in
each case, through the linear programming optimization, the resulting
profit. France Telecom now has the capacity to optimize, in real
time, its network structure to satisfy the market demand, an asset
that was very useful in its budget-planning phase.
In addition to Dr. Thiriez's consulting services (outlined
in our Consultant's Corner), he is the CEO of Editions MEV,
distributor of Decisioneering products in France, and the Editor
of La lettre d*Excel, the leading French Excel newsletter. As a
consultant, his current customers span a wide variety of economic
sectors, including aeronautics, automobile, banking, finance, insurance,
petroleum, pharmacy, and telecommunications.
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