Description
By 2011 global cellular phone service subscribers is expected to nearly double.
Ingres InsIghts
BusIness IntellIgence for the
telecommunIcatIons Industry
ImprovIng the Bottom lIne and controllIng expenses
2 Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
taBle of contents
4 Introduction
5 Telecommunications Industry
Overview and Major Trends
7 Business Intelligence and the
Telecommunications Value Chain
8 Customer Relationship Management
Customer Proftability
Customer Lifetime Value
Customer Attrition
Customer Affnity
Target Marketing
Campaign Analysis
Cross-Selling
11 Product Development
Forecasting
Service Design and Delivery
Service Fulfllment
Service Usage and Charging
12 Finance and Asset Management
Budgeting
Asset Liability Management
Proftability Analysis
Reporting and Analysis
13 Human Resources
Human Resource Analytics
Manpower Allocation
HR Portal
Training and Succession Planning
14 Corporate Management
Corporate Dashboards
Statutory Reporting
15 Conclusion
16 References
About Ingres
Ingres InsIghts
3
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
author: christine normile
Christine Normile has more than 20 years of IT experience in engineering, consulting and
marketing in top-tier companies. An accomplished product strategist and marketer, her vision
and expertise in relational database management systems have driven notable revenue growth
and cost savings for a number of products and companies. Christine is currently Senior Product
Manager for Ingres Corporation where she is responsible for driving the future direction of
the Ingres Database. Christine began her career as an sofware engineer in Sunnyvale, CA
focused on performance management and spent many years consulting with clients worldwide
helping them improve data server performance and implement solid IT architectures. Prior
to joining Ingres, she was product manager for IBM’s Informix Dynamic Server.
aBout the author
4
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
By 2011 global cellular phone service subscribers is expected to nearly double. Competition
in the telecommunications industry is intense and several factors are forcing major changes.
Mergers and consolidation have completely altered the industry’s landscape and cross-border
ownership of telecom businesses is making this a globalized industry. Deregulation and
privatization will have a continual efect worldwide. Internet and wireless technologies are
continuing to advance rapidly quickly changing customer preferences, disrupting traditional
communication methods and forcing prices downward.
Te telecommunications industry encompasses many technology-related business sectors
including:
• local and long-distance telephone services
• wireless communications
• the Internet
• fber-optics
• satellites
• cable TV systems
Cable companies are now aggressively ofering local telephone service and Internet service.
Telecommunications service providers are now selling TV via Internet protocol services,
competing directly against cable for consumers’ entertainment dollars and making the
relationship between the telecom and cable sectors more and more complex.
Ingenuity, innovation, insight and a reasonable approach to spending and investment can help
to move the industry ahead. To drive these, telecommunications service providers will need to
employ cost-efective business intelligence (BI) solutions. Tis paper discusses how BI, built on
Open Source technologies such as Ingres 2006, can help telecommunications vendors control
costs and improve their bottom line in today’s extremely competitive environment.
IntroductIon
5
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
In the U.S., the telecommunications sector drives more than $1 trillion in annual revenue.
Worldwide, the industry accounts for about $3.5 trillion. As of mid-2007 there were over
2.3 billion cellular phone service subscribers worldwide. Tat number is expected to grow
to nearly 4 billion by the end of 2011. Telecommunications employs nearly 1 million people
in the U.S. making it one of the largest providers of employment in the world. Traditional
broadband suppliers are being threatened in multiple ways. Very rapidly, municipal Wi-Fi
systems are being developed, ofering city-wide, high speed, wireless Internet connections at
no cost or at prices much lower than DSL or cable access. Wi-Fi technology is limited to a range
of only 150 feet or so. However an advanced wireless technology, WiMAX, with a range of up
to 30 miles has the potential to disrupt traditional broadband, cell phone, landline and Wi-Fi
systems. Phone service using Voice Over Internet Protocol (VOIP) promises consumers good
value and the number of companies ofering this service has increased dramatically and millions
of households and businesses worldwide have signed up for VOIP service.
To retain customers, local phone companies are laying fber-optic cable directly to the
neighborhood and even into the home and ofce to provide ultra-high-speed Internet
connections and enhanced entertainment online oferings. To combat attrition as cell phone
owners drop their landlines and VOIP over cable takes even more landline customers away,
traditional telecommunications service providers must leverage the internet and the new types
of services it can provide. Major telecommunications vendors are focusing on bundled service
packages which combine wireless accounts, very high speed Internet access, entertainment
such as video on demand and internet TV, in addition to VOIP or landlines. Also, traditional
telecommunications service providers need to create innovative new value-added services that
are accessed online. For example, consumers might respond well to online services that monitor
home security or adjust home energy usage, or services that monitor the movements and needs
of elderly family members at home.
telecommunIcatIons Industry overvIew
and major trends
6
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
U.S. cellular phone companies are updating their networks to third generation systems (3G)
which will provide Americans the features that consumers in many other countries already
enjoy. Tis will drive changes in product oferings and rate charges as consumers vie to get
access to lost cost international cellular access and other 3G services.
Te competitive landscape continues to shif dramatically due to mergers and acquisitions.
Government regulations are bringing big changes to business strategies as they continue
to evolve quickly. Overall, the telecommunications industry is in a state of continuous
technological and economic fux driven by intense competition and new technologies.
7
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
Telecommunications vendors are rapidly acquiring signifcant product development capabilities
as technology changes drive consumer demand. However, they continue to lag behind in
understanding the customer. Tis has led to signifcant churn as products are developed and
discarded in an attempt to retain existing customers and drive new business. Deregulation
and increasing competition is forcing companies to move from traditional product-centric
operations to consumer-centric operations. Customer demand for new services and lower
cost services are forcing telecommunications service providers to increase their efciency
as never before.
Telecommunications vendors have to analyze their customers’ needs and tailor all their
business processes in the value chain to efectively meet their customers’ unique requirements
and increasing demands. Implicit in this argument is the assumption that telecommunication
companies have the ability to turn large volumes of data pertaining to their customers and
services into actionable information. Business intelligence systems can signifcantly help
in almost all aspects of the value chain to achieve this objective. Figure 1 illustrates the
telecommunications value chain. In the following sections we will focus on some of the BI
applications in each segment of the value chain.
BusIness IntellIgence and
the telecommunIcatIons value chaIn
figure 1:
telecommunications
value chain
human resource management
customer
relationship
management
corporate management
finance and asset management
forecasting service
design &
delivery
service
usage &
charging
service
fulfillment
8
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
A typical telecommunications company has a huge customer base and varied product oferings.
Many telecommunication companies will also service various markets across geographies
ranging from local frms serving a combination of urban and rural communities to international
vendors serving customers of diferent nationalities and lifestyles. To efectively interact with
customers and design suitable oferings, the vendor’s CRM strategy has to fully utilize the
potential of business intelligence solutions. Telco’s have to leverage the vast amount of data
residing in existing systems at each step of the CRM process. Te insight gained must then be
applied to developing new products and services to meet the ever-changing needs of existing
customers and to attract new customers. Te ever-shrinking margins caused by increased
competition mean that telecommunication service providers will have to seek innovative
ways to minimize the cost of implementing efective BI solutions.
Te CRM process in a telecommunications company has three steps:
1. Identify the most proftable or potentially proftable customers for future interaction.
2. Understand their needs and buying patterns, and
3. Interact with them so as to meet all of their expectations.
Figure 2 illustrates the role of business intelligence in each step of the CRM process. Right
from identifying the most proftable customers to improving the overall quality of customer
interaction, BI tools can go a long way in making the CRM strategy a success.
customer proftability
For telecommunications service providers to thrive, it is imperative they acquire new, proftable
customers as well as increase the proftability of existing ones. Identifying the most proftable
customer relatIonshIp management
figure 2: Business
Intelligence and crm
identify understand interact
• customer profitability
• customer lifetime value
• customer segmentation
• customer attrition
• customer affinity
• targeted marketing
• campaign analysis
• cross-selling
9
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
customers is the frst step in that direction. To arrive at the overall proftability of a customer,
vendors must quantify the costs associated in serving the customer over a period of time and
the revenues realized from them during that period. Te results of customer proftability analysis
can help identify why some customers are not as proftable as others. For example, a customer
might be unproftable because the products used by them do not match their risk profle.
Customer proftability analysis can signifcantly help in developing new oferings, customizing
existing oferings and helping to target market segments for future growth.
customer lifetime value
Customer proftability is not the sole measure of a customer’s value to the company. A customer
may have the potential of buying proftable products in the future. A customer may also server
as an excellent reference for more proftable customers. Customer Lifetime Value is, therefore,
a more meaningful measure. Ofen data mining tools are used to model customer lifetime value,
taking into account all the factors that have a bearing on the customer’s value over the entire
course of their relationship to the company.
Customer Segmentation: Segmentation is used to segregate customers who exhibit common
characteristics in diferent segments. Tese segments can then be treated as distinct entities
and the future interaction with them can be tailored accordingly. Customer segmentation can
save signifcant marketing efort. Ofen BI tools are used for customer segmentation. Te tools
use ‘clustering’ algorithms for segmenting the entire customer base into groups identifed on
the basis of various demographic factors and usage patterns.
customer attrition
Acquiring new customers is much more costly than retaining existing ones according to
numerous studies. Customer attrition analysis is an essential step in customer retention.
It involves analysis of data captured during individual customer contacts at various touch
points. For attrition analysis, customer contact data is coupled with other data sources like
billing information. Te resultant data set is then associated with customers who have switched
to analyze the possible reasons behind the decision. Te results can also be used to improve
the performance of customer touch points.
10
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
customer affnity
Afnity analysis, or market-basket analysis, reveals linkages between products that are likely to
be purchased together and between product groupings and customer segments. Tese afnities
can be, at times, extremely difcult to unearth and ofen business intelligence systems are used
for this purpose. Tese systems use a technique called ‘association analysis’ for arriving at the
right combination of products and services for a customer or customer segment.
target marketing
Marketing to a specifc customer group is a natural outcome of customer segmentation. Once
distinct customer segments are identifed, BI tools can be used to study the products likely to
be bought by the segment. Ofen data mining is used to develop predictive models to establish
the buying propensity of a segment towards various existing or new products. Armed with this
information, marketing managers can design specifc campaigns targeted at individual segments.
campaign analysis
Efective advertising campaigns that consistently deliver on their marketing performance
objectives are the result of skilled advertising personnel, extensive knowledge of the target
market segment as well as excellent understanding of past successes and failures. BI solutions
that bring together data from existing systems that deliver, track, and optimize branding and
direct response marketing campaigns can help telecommunications service providers reduce the
risk and increase the predictability of campaign execution. Campaign analysis is used to analyze
the efectiveness of a marketing or promotion campaign. Te efects of a particular campaign on
sales of the promoted product can be tracked using business intelligence solutions. Ofen the
surge in sales of the promoted product can result in decrease in sales of other related products.
BI tools can also help identify such relationships. Te campaign data is stored in a data
warehouse and can be used to predict the efectiveness of similar campaigns in the future.
cross-selling
Cross selling can be a major source of selling for a telecommunications company. For efective
cross-selling, existing data can be leveraged using business intelligence solutions to quickly zero
in on new products that may be required by existing customers. Tese can then be ofered to
them during the next contact.
11
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
forecasting
To plan their networks, telecommunications service providers perform forecasting that helps
operators to make key investment decisions. Tese decisions efect all aspects of the business
including product development, launch, advertising, and pricing. Efective forecasting helps to
ensure that the company will make a proft and that capital is invested wisely. BI solutions that
use forecast data can help network planners decide how much equipment to purchase and where
to place it to ensure optimum management of trafc loads.
service design and delivery
In response to ferce competition, telecom service providers must develop new products in order
to ofer a wide range of new value-added services faster and more cost efciently. Design of
efective services is enhanced through the use of BI solutions that provide information regarding
the adoption and proftability of existing products and services.
service fulfllment
Business Intelligence solutions can help telecommunications service providers improve
customer retention and satisfaction through the efective analysis of service fulfllment systems.
Information regarding installation, upgrades and repairs to customer’s service can help the
business reduce the cost associated with service fulfllment.
service usage and charging
Efective analysis of service usage and charge metrics can help telecommunications
service providers prevent fraud, increase collections and provide the basis for new product
development. In addition, this analysis can help in the planning for preventative maintenance
of the infrastructure and for planning for network upgrades. Data from existing billing and
receivables systems can be leveraged in BI solutions to help contain expenses as well as grow
the business.
product development
12
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
Te role of fnancial reporting has undergone a paradigm shif during the last decade. It is no
longer restricted to just fnancial statements required by law. Increasingly, it is being used to help
in strategic decision making. Many companies, in an attempt to improve fnancial reporting and
decision making, have integrated their fnancial data in a data mart or data warehouse.
Budgeting
Data warehousing facilitates analysis of budgeted versus actual expenditure for various
cost heads like promotion campaigns, product development, infrastructure maintenance,
investments, commissions, etc. BI tools can provide drill down capabilities whereby the reasons
for cost overruns can be analyzed in more detail. It can also be used to allocate budgets for the
next fnancial period. Various activity based costing models can be developed for better cost
control and allocation.
asset liability management
Models can be developed using BI tools to measure the company’s exposure to various risk
factors like changes in interest rates. Tese models can be used to predict the performance of the
portfolio under diferent economic scenarios and predict future liquidity needs of the insurer.
proftability analysis
Tis includes proftability of individual products, product lines, and investments. A
major component of proftability analysis is a thorough analysis of costs incurred during
product development which can be a major factor in reducing the overall proftability of
telecommunications companies.
reporting and analysis
Swif decision making requires ready access to fnancial data via an intuitive interface.
Increasingly companies are providing concerned executives web-based access to fnancial
data. Our Ingres Icebreaker BI appliance has a web interface that can greatly facilitate ad-hoc
querying and report distribution.
fInance and asset management
13
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
Business Intelligence can signifcantly help in aligning the HR strategy to the overall business
strategy. It can present an integrated view of the workforce and help in designing retention
schemes, improve productivity, and curtail costs.
human resource analytics
HR analytics can be generated to support an integrated view of the workforce. Various analyses
include staf movement and performance, workforce attrition by department, workforce
performance by department, compensation and attrition and absenteeism. Te HR data can
be integrated with benchmark fgures for the telecommunications industry and compared to
help identify areas for improving proftability.
manpower allocation
Tis includes allocating manpower based on new product launches and for major upgrade or
expansion projects. According to increased requirements, personnel can be deployed in specifc
areas where demand projections are high or likely to increase.
hr portal
Employers need to maintain accurate employee data which can be vied by the employees for
information about compensation, benefts, retirement plans and other HR related information.
Payroll data can be integrated with other HR information in an HR data mart and then be made
visible within the organization through an HR portal.
training and succession planning
Accurate data about the knowledge, skills and abilities of the workforce can be leveraged using
Business Intelligence solution to aid in succession planning. In addition, BI can help identify
skills gaps and design training programs to bridge those gaps.
human resources
14
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
Te top management of any telecommunications company has it’s own business intelligence
requirements. Te IT department is typically responsible for providing all the reports to them.
It is also responsible for providing statutory reports to various outside agencies as well as
meeting other information requirements within and outside the company. Tis may include
information given to customers in the form of statements and other reports. A BI environment
that leverages data collected across the value chain is possibly the only efective solution for IT.
corporate dashboards
Performance measurements like product line proftability, overall development costs, and ROI
can be presented in dashboard reports to top management to facilitate the decision making
process. Also alerts can be triggered if any performance measure reaches a pre-defned threshold
level. Tese reports can incorporate Telecommunications industry benchmarks provided by
third party researchers.
statutory reporting
Telecommunications companies have to provide statutory reports to outside agencies. Tese
reports can easily be generated from the Business Intelligence environment.
corporate management
15
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
Te Telecommunications industry is extremely varied in its adoption of business intelligence
solutions. Quite a few companies are in the advanced stages of their business intelligence
initiatives; yet there are many that are oblivious of the benefts of BI. Some companies are
hesitating due to anticipated high cost and long implementation cycles that many Business
intelligence solutions require. Some telecommunications service providers have gone for non-
scalable temporary solutions which ofen fail to leverage the ever-increasing volumes
of data. Hence, recognizing the need for an efective business intelligence environment based
on the right architecture is vital. But it is just the frst step. Te real challenge is to make
the BI environment an integral part of the decision making process. Efciently gathering
the information requirements of all the user-groups is extremely critical for the success of
any BI implementation. In addition, clear business objectives must be established for the
business intelligence solution. Tese objectives must meet the requirements of the business’s
top management in order to achieve success. Te recent introduction of BI appliances, such as
Ingres ICE Breaker BI Appliance, ofers a cost efective solution that can reduce the typical
BI implementation schedule from months to weeks.
conclusIon
©2008 Ingres corporation. all rights reserved. printed in the u.s.a. Ingres is a trademark of Ingres corporation in the united states and in other countries.
Bp-200a
inGres cOrPOratiOn : 500 arguello street : suIte 200 : redwood cIty, calIfornIa 94063
PHOne +1.650.587.5500 : faX +1.650.587.5550 : www.ingres.com : for more information, contact [email protected]
Ingres InsIghts > ImprovIng the Bottom lIne and controllIng expenses
about ingres corporation
Ingres corporation is a leading provider of open source database management software. Built on over 25 years of technology investment, Ingres is a leader
in software and service innovation, providing the enterprise with proven reliability combined with the value and fexibility of open source. the company’s
partnerships with leading open source providers further enhance the Ingres value proposition. Ingres has major development, sales and support centers
throughout the world, supporting thousands of customers in the united states and internationally.
references
Plunkett Research, Ltd. (2007). Telecommunications Trends. Retrieved November 30,
2007, fromhttp://www.plunkettresearch.com/Industries/Telecommunications/
Telecommunicationstrends/tabid/95/Default.aspx
Federal Communications Commission. (2007). High Speed Services for Internet Access Report,
January 2007 Retrieved November 15, 2007, fromhttp://www.fcc.gov/commissioners/martin/
documents/testimony020107.pdf
TMCNet. (2005). Research and Markets: Worldwide Telecommunications Revenue Totaled
$2.1 Trillion in 2004, Up 9.4% From 2003, Retrieved November 10, 2007, fromhttp://hosted-
communications.tmcnet.com/news/2005/apr/1133482.htm
Under Ground Online. (2004). Te future of broadband, Retrieved December 16, 2007, fromhttp://www.ugo.com/channels/tech/features/futureofroadband/wimax.asp
doc_419703881.pdf
By 2011 global cellular phone service subscribers is expected to nearly double.
Ingres InsIghts
BusIness IntellIgence for the
telecommunIcatIons Industry
ImprovIng the Bottom lIne and controllIng expenses
2 Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
taBle of contents
4 Introduction
5 Telecommunications Industry
Overview and Major Trends
7 Business Intelligence and the
Telecommunications Value Chain
8 Customer Relationship Management
Customer Proftability
Customer Lifetime Value
Customer Attrition
Customer Affnity
Target Marketing
Campaign Analysis
Cross-Selling
11 Product Development
Forecasting
Service Design and Delivery
Service Fulfllment
Service Usage and Charging
12 Finance and Asset Management
Budgeting
Asset Liability Management
Proftability Analysis
Reporting and Analysis
13 Human Resources
Human Resource Analytics
Manpower Allocation
HR Portal
Training and Succession Planning
14 Corporate Management
Corporate Dashboards
Statutory Reporting
15 Conclusion
16 References
About Ingres
Ingres InsIghts
3
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
author: christine normile
Christine Normile has more than 20 years of IT experience in engineering, consulting and
marketing in top-tier companies. An accomplished product strategist and marketer, her vision
and expertise in relational database management systems have driven notable revenue growth
and cost savings for a number of products and companies. Christine is currently Senior Product
Manager for Ingres Corporation where she is responsible for driving the future direction of
the Ingres Database. Christine began her career as an sofware engineer in Sunnyvale, CA
focused on performance management and spent many years consulting with clients worldwide
helping them improve data server performance and implement solid IT architectures. Prior
to joining Ingres, she was product manager for IBM’s Informix Dynamic Server.
aBout the author
4
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
By 2011 global cellular phone service subscribers is expected to nearly double. Competition
in the telecommunications industry is intense and several factors are forcing major changes.
Mergers and consolidation have completely altered the industry’s landscape and cross-border
ownership of telecom businesses is making this a globalized industry. Deregulation and
privatization will have a continual efect worldwide. Internet and wireless technologies are
continuing to advance rapidly quickly changing customer preferences, disrupting traditional
communication methods and forcing prices downward.
Te telecommunications industry encompasses many technology-related business sectors
including:
• local and long-distance telephone services
• wireless communications
• the Internet
• fber-optics
• satellites
• cable TV systems
Cable companies are now aggressively ofering local telephone service and Internet service.
Telecommunications service providers are now selling TV via Internet protocol services,
competing directly against cable for consumers’ entertainment dollars and making the
relationship between the telecom and cable sectors more and more complex.
Ingenuity, innovation, insight and a reasonable approach to spending and investment can help
to move the industry ahead. To drive these, telecommunications service providers will need to
employ cost-efective business intelligence (BI) solutions. Tis paper discusses how BI, built on
Open Source technologies such as Ingres 2006, can help telecommunications vendors control
costs and improve their bottom line in today’s extremely competitive environment.
IntroductIon
5
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
In the U.S., the telecommunications sector drives more than $1 trillion in annual revenue.
Worldwide, the industry accounts for about $3.5 trillion. As of mid-2007 there were over
2.3 billion cellular phone service subscribers worldwide. Tat number is expected to grow
to nearly 4 billion by the end of 2011. Telecommunications employs nearly 1 million people
in the U.S. making it one of the largest providers of employment in the world. Traditional
broadband suppliers are being threatened in multiple ways. Very rapidly, municipal Wi-Fi
systems are being developed, ofering city-wide, high speed, wireless Internet connections at
no cost or at prices much lower than DSL or cable access. Wi-Fi technology is limited to a range
of only 150 feet or so. However an advanced wireless technology, WiMAX, with a range of up
to 30 miles has the potential to disrupt traditional broadband, cell phone, landline and Wi-Fi
systems. Phone service using Voice Over Internet Protocol (VOIP) promises consumers good
value and the number of companies ofering this service has increased dramatically and millions
of households and businesses worldwide have signed up for VOIP service.
To retain customers, local phone companies are laying fber-optic cable directly to the
neighborhood and even into the home and ofce to provide ultra-high-speed Internet
connections and enhanced entertainment online oferings. To combat attrition as cell phone
owners drop their landlines and VOIP over cable takes even more landline customers away,
traditional telecommunications service providers must leverage the internet and the new types
of services it can provide. Major telecommunications vendors are focusing on bundled service
packages which combine wireless accounts, very high speed Internet access, entertainment
such as video on demand and internet TV, in addition to VOIP or landlines. Also, traditional
telecommunications service providers need to create innovative new value-added services that
are accessed online. For example, consumers might respond well to online services that monitor
home security or adjust home energy usage, or services that monitor the movements and needs
of elderly family members at home.
telecommunIcatIons Industry overvIew
and major trends
6
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
U.S. cellular phone companies are updating their networks to third generation systems (3G)
which will provide Americans the features that consumers in many other countries already
enjoy. Tis will drive changes in product oferings and rate charges as consumers vie to get
access to lost cost international cellular access and other 3G services.
Te competitive landscape continues to shif dramatically due to mergers and acquisitions.
Government regulations are bringing big changes to business strategies as they continue
to evolve quickly. Overall, the telecommunications industry is in a state of continuous
technological and economic fux driven by intense competition and new technologies.
7
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
Telecommunications vendors are rapidly acquiring signifcant product development capabilities
as technology changes drive consumer demand. However, they continue to lag behind in
understanding the customer. Tis has led to signifcant churn as products are developed and
discarded in an attempt to retain existing customers and drive new business. Deregulation
and increasing competition is forcing companies to move from traditional product-centric
operations to consumer-centric operations. Customer demand for new services and lower
cost services are forcing telecommunications service providers to increase their efciency
as never before.
Telecommunications vendors have to analyze their customers’ needs and tailor all their
business processes in the value chain to efectively meet their customers’ unique requirements
and increasing demands. Implicit in this argument is the assumption that telecommunication
companies have the ability to turn large volumes of data pertaining to their customers and
services into actionable information. Business intelligence systems can signifcantly help
in almost all aspects of the value chain to achieve this objective. Figure 1 illustrates the
telecommunications value chain. In the following sections we will focus on some of the BI
applications in each segment of the value chain.
BusIness IntellIgence and
the telecommunIcatIons value chaIn
figure 1:
telecommunications
value chain
human resource management
customer
relationship
management
corporate management
finance and asset management
forecasting service
design &
delivery
service
usage &
charging
service
fulfillment
8
Ingres InsIghts >
Business Intelligence for the telecommunications Industry
: :
ImprovIng the Bottom lIne and controllIng expenses
A typical telecommunications company has a huge customer base and varied product oferings.
Many telecommunication companies will also service various markets across geographies
ranging from local frms serving a combination of urban and rural communities to international
vendors serving customers of diferent nationalities and lifestyles. To efectively interact with
customers and design suitable oferings, the vendor’s CRM strategy has to fully utilize the
potential of business intelligence solutions. Telco’s have to leverage the vast amount of data
residing in existing systems at each step of the CRM process. Te insight gained must then be
applied to developing new products and services to meet the ever-changing needs of existing
customers and to attract new customers. Te ever-shrinking margins caused by increased
competition mean that telecommunication service providers will have to seek innovative
ways to minimize the cost of implementing efective BI solutions.
Te CRM process in a telecommunications company has three steps:
1. Identify the most proftable or potentially proftable customers for future interaction.
2. Understand their needs and buying patterns, and
3. Interact with them so as to meet all of their expectations.
Figure 2 illustrates the role of business intelligence in each step of the CRM process. Right
from identifying the most proftable customers to improving the overall quality of customer
interaction, BI tools can go a long way in making the CRM strategy a success.
customer proftability
For telecommunications service providers to thrive, it is imperative they acquire new, proftable
customers as well as increase the proftability of existing ones. Identifying the most proftable
customer relatIonshIp management
figure 2: Business
Intelligence and crm
identify understand interact
• customer profitability
• customer lifetime value
• customer segmentation
• customer attrition
• customer affinity
• targeted marketing
• campaign analysis
• cross-selling
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customers is the frst step in that direction. To arrive at the overall proftability of a customer,
vendors must quantify the costs associated in serving the customer over a period of time and
the revenues realized from them during that period. Te results of customer proftability analysis
can help identify why some customers are not as proftable as others. For example, a customer
might be unproftable because the products used by them do not match their risk profle.
Customer proftability analysis can signifcantly help in developing new oferings, customizing
existing oferings and helping to target market segments for future growth.
customer lifetime value
Customer proftability is not the sole measure of a customer’s value to the company. A customer
may have the potential of buying proftable products in the future. A customer may also server
as an excellent reference for more proftable customers. Customer Lifetime Value is, therefore,
a more meaningful measure. Ofen data mining tools are used to model customer lifetime value,
taking into account all the factors that have a bearing on the customer’s value over the entire
course of their relationship to the company.
Customer Segmentation: Segmentation is used to segregate customers who exhibit common
characteristics in diferent segments. Tese segments can then be treated as distinct entities
and the future interaction with them can be tailored accordingly. Customer segmentation can
save signifcant marketing efort. Ofen BI tools are used for customer segmentation. Te tools
use ‘clustering’ algorithms for segmenting the entire customer base into groups identifed on
the basis of various demographic factors and usage patterns.
customer attrition
Acquiring new customers is much more costly than retaining existing ones according to
numerous studies. Customer attrition analysis is an essential step in customer retention.
It involves analysis of data captured during individual customer contacts at various touch
points. For attrition analysis, customer contact data is coupled with other data sources like
billing information. Te resultant data set is then associated with customers who have switched
to analyze the possible reasons behind the decision. Te results can also be used to improve
the performance of customer touch points.
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customer affnity
Afnity analysis, or market-basket analysis, reveals linkages between products that are likely to
be purchased together and between product groupings and customer segments. Tese afnities
can be, at times, extremely difcult to unearth and ofen business intelligence systems are used
for this purpose. Tese systems use a technique called ‘association analysis’ for arriving at the
right combination of products and services for a customer or customer segment.
target marketing
Marketing to a specifc customer group is a natural outcome of customer segmentation. Once
distinct customer segments are identifed, BI tools can be used to study the products likely to
be bought by the segment. Ofen data mining is used to develop predictive models to establish
the buying propensity of a segment towards various existing or new products. Armed with this
information, marketing managers can design specifc campaigns targeted at individual segments.
campaign analysis
Efective advertising campaigns that consistently deliver on their marketing performance
objectives are the result of skilled advertising personnel, extensive knowledge of the target
market segment as well as excellent understanding of past successes and failures. BI solutions
that bring together data from existing systems that deliver, track, and optimize branding and
direct response marketing campaigns can help telecommunications service providers reduce the
risk and increase the predictability of campaign execution. Campaign analysis is used to analyze
the efectiveness of a marketing or promotion campaign. Te efects of a particular campaign on
sales of the promoted product can be tracked using business intelligence solutions. Ofen the
surge in sales of the promoted product can result in decrease in sales of other related products.
BI tools can also help identify such relationships. Te campaign data is stored in a data
warehouse and can be used to predict the efectiveness of similar campaigns in the future.
cross-selling
Cross selling can be a major source of selling for a telecommunications company. For efective
cross-selling, existing data can be leveraged using business intelligence solutions to quickly zero
in on new products that may be required by existing customers. Tese can then be ofered to
them during the next contact.
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forecasting
To plan their networks, telecommunications service providers perform forecasting that helps
operators to make key investment decisions. Tese decisions efect all aspects of the business
including product development, launch, advertising, and pricing. Efective forecasting helps to
ensure that the company will make a proft and that capital is invested wisely. BI solutions that
use forecast data can help network planners decide how much equipment to purchase and where
to place it to ensure optimum management of trafc loads.
service design and delivery
In response to ferce competition, telecom service providers must develop new products in order
to ofer a wide range of new value-added services faster and more cost efciently. Design of
efective services is enhanced through the use of BI solutions that provide information regarding
the adoption and proftability of existing products and services.
service fulfllment
Business Intelligence solutions can help telecommunications service providers improve
customer retention and satisfaction through the efective analysis of service fulfllment systems.
Information regarding installation, upgrades and repairs to customer’s service can help the
business reduce the cost associated with service fulfllment.
service usage and charging
Efective analysis of service usage and charge metrics can help telecommunications
service providers prevent fraud, increase collections and provide the basis for new product
development. In addition, this analysis can help in the planning for preventative maintenance
of the infrastructure and for planning for network upgrades. Data from existing billing and
receivables systems can be leveraged in BI solutions to help contain expenses as well as grow
the business.
product development
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Te role of fnancial reporting has undergone a paradigm shif during the last decade. It is no
longer restricted to just fnancial statements required by law. Increasingly, it is being used to help
in strategic decision making. Many companies, in an attempt to improve fnancial reporting and
decision making, have integrated their fnancial data in a data mart or data warehouse.
Budgeting
Data warehousing facilitates analysis of budgeted versus actual expenditure for various
cost heads like promotion campaigns, product development, infrastructure maintenance,
investments, commissions, etc. BI tools can provide drill down capabilities whereby the reasons
for cost overruns can be analyzed in more detail. It can also be used to allocate budgets for the
next fnancial period. Various activity based costing models can be developed for better cost
control and allocation.
asset liability management
Models can be developed using BI tools to measure the company’s exposure to various risk
factors like changes in interest rates. Tese models can be used to predict the performance of the
portfolio under diferent economic scenarios and predict future liquidity needs of the insurer.
proftability analysis
Tis includes proftability of individual products, product lines, and investments. A
major component of proftability analysis is a thorough analysis of costs incurred during
product development which can be a major factor in reducing the overall proftability of
telecommunications companies.
reporting and analysis
Swif decision making requires ready access to fnancial data via an intuitive interface.
Increasingly companies are providing concerned executives web-based access to fnancial
data. Our Ingres Icebreaker BI appliance has a web interface that can greatly facilitate ad-hoc
querying and report distribution.
fInance and asset management
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Business Intelligence can signifcantly help in aligning the HR strategy to the overall business
strategy. It can present an integrated view of the workforce and help in designing retention
schemes, improve productivity, and curtail costs.
human resource analytics
HR analytics can be generated to support an integrated view of the workforce. Various analyses
include staf movement and performance, workforce attrition by department, workforce
performance by department, compensation and attrition and absenteeism. Te HR data can
be integrated with benchmark fgures for the telecommunications industry and compared to
help identify areas for improving proftability.
manpower allocation
Tis includes allocating manpower based on new product launches and for major upgrade or
expansion projects. According to increased requirements, personnel can be deployed in specifc
areas where demand projections are high or likely to increase.
hr portal
Employers need to maintain accurate employee data which can be vied by the employees for
information about compensation, benefts, retirement plans and other HR related information.
Payroll data can be integrated with other HR information in an HR data mart and then be made
visible within the organization through an HR portal.
training and succession planning
Accurate data about the knowledge, skills and abilities of the workforce can be leveraged using
Business Intelligence solution to aid in succession planning. In addition, BI can help identify
skills gaps and design training programs to bridge those gaps.
human resources
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Te top management of any telecommunications company has it’s own business intelligence
requirements. Te IT department is typically responsible for providing all the reports to them.
It is also responsible for providing statutory reports to various outside agencies as well as
meeting other information requirements within and outside the company. Tis may include
information given to customers in the form of statements and other reports. A BI environment
that leverages data collected across the value chain is possibly the only efective solution for IT.
corporate dashboards
Performance measurements like product line proftability, overall development costs, and ROI
can be presented in dashboard reports to top management to facilitate the decision making
process. Also alerts can be triggered if any performance measure reaches a pre-defned threshold
level. Tese reports can incorporate Telecommunications industry benchmarks provided by
third party researchers.
statutory reporting
Telecommunications companies have to provide statutory reports to outside agencies. Tese
reports can easily be generated from the Business Intelligence environment.
corporate management
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Te Telecommunications industry is extremely varied in its adoption of business intelligence
solutions. Quite a few companies are in the advanced stages of their business intelligence
initiatives; yet there are many that are oblivious of the benefts of BI. Some companies are
hesitating due to anticipated high cost and long implementation cycles that many Business
intelligence solutions require. Some telecommunications service providers have gone for non-
scalable temporary solutions which ofen fail to leverage the ever-increasing volumes
of data. Hence, recognizing the need for an efective business intelligence environment based
on the right architecture is vital. But it is just the frst step. Te real challenge is to make
the BI environment an integral part of the decision making process. Efciently gathering
the information requirements of all the user-groups is extremely critical for the success of
any BI implementation. In addition, clear business objectives must be established for the
business intelligence solution. Tese objectives must meet the requirements of the business’s
top management in order to achieve success. Te recent introduction of BI appliances, such as
Ingres ICE Breaker BI Appliance, ofers a cost efective solution that can reduce the typical
BI implementation schedule from months to weeks.
conclusIon
©2008 Ingres corporation. all rights reserved. printed in the u.s.a. Ingres is a trademark of Ingres corporation in the united states and in other countries.
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about ingres corporation
Ingres corporation is a leading provider of open source database management software. Built on over 25 years of technology investment, Ingres is a leader
in software and service innovation, providing the enterprise with proven reliability combined with the value and fexibility of open source. the company’s
partnerships with leading open source providers further enhance the Ingres value proposition. Ingres has major development, sales and support centers
throughout the world, supporting thousands of customers in the united states and internationally.
references
Plunkett Research, Ltd. (2007). Telecommunications Trends. Retrieved November 30,
2007, fromhttp://www.plunkettresearch.com/Industries/Telecommunications/
Telecommunicationstrends/tabid/95/Default.aspx
Federal Communications Commission. (2007). High Speed Services for Internet Access Report,
January 2007 Retrieved November 15, 2007, fromhttp://www.fcc.gov/commissioners/martin/
documents/testimony020107.pdf
TMCNet. (2005). Research and Markets: Worldwide Telecommunications Revenue Totaled
$2.1 Trillion in 2004, Up 9.4% From 2003, Retrieved November 10, 2007, fromhttp://hosted-
communications.tmcnet.com/news/2005/apr/1133482.htm
Under Ground Online. (2004). Te future of broadband, Retrieved December 16, 2007, fromhttp://www.ugo.com/channels/tech/features/futureofroadband/wimax.asp
doc_419703881.pdf