Capture the value

13 Jul 2009

Most databases are designed around transactions and can\'t see the relationships between data. But as costs drop, operators are using analytics to understand customer behavior and extract more value and reduce costs

Carriers are putting ever more emphasis on gaining sustainable competitive advantage by sweating their assets. There is a real drive to use data analytics to extract more value from information held on customers to up-sell and cross-sell to them, as well as retain them. Data analytics are also key to stopping revenue leakage and plugging the myriad operational gaps that erode margin.

\'Other industries have been able to do this for years, but in telcos the sources of data are more complex,\' said Peter Briscoe, Telcordia\'s director of global solutions. \'We are just to the point where collecting useful data is viable, partly because the cost of technology and hardware has come down so far.\'

He note that it\'s only now as large-scale back-end transformation projects aren\'t going so well that telcos are looking more seriously to data analytics.

And well they might. Carriers are discovering they can typically cut between 5% and 12% of their costs without detriment once they have visibility of what\'s going on, said John Gillespie from Netezza, a growing player in data warehouse appliances.

He noted that operators often pay too much for interconnect charges since they had no way of knowing. \'We found $25 million in inaccurate interconnect charges at one of our customers, which they were able to dispute successfully because they had the data. Analytics are like an onion, the more you peel back, the more you find.\'

One of the biggest problems is that most of the databases the operators run are designed around transactions and can\'t see the relationships between data. This means carriers struggle to understand the impact of a technical or network event on their customers and bottom line, whether it\'s a wrongly provisioned switch causing revenue leakage or a glitch that results in an inaccurate bills being sent out.

\'If a customer complains once about an inaccurate bill, it\'s no big deal. But if they do it more than once, the same technical event is having much more than twice the effect on that customer,\' explained Dave Milham, from the TM Forum\'s customer experience and service quality management program.

\'Telcos need the analytics to ring alarm bells when a customer has complained more than once and is, for instance, someone senior within a large corporate customer.\'

However, as data analytics are now revealing, carriers need to be careful about making assumptions about who their most valuable customers really are. Typically, 20% of a carrier\'s customers account for around 70% of its profit.

Dave Grant, VP of global industry solutions at Teradata, says high revenue customers aren\'t necessarily the most profitable. \'Sometimes low spending customers are. Another issue is that carriers often don\'t know which services are profitable, and especially not when they are bundled.\'

Grant said a client discovered that some post-pay customers were receiving huge numbers of SMSs, which they didn\'t pay for as part of their plan, although the operator was paying high interconnect charges.

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