Big data analytics: boon or bane?
Big data analytics provides an opportunity for telcos to exploit an existing asset that is increasing in size exponentially. This asset is the telcos’ network, operational and customer data, which can be mined to provide better business insights. Ovum’s new report “Big Data Analytics and the Telco: How telcos can monetize customer data,” is the first in a series of reports examining how telcos are using big data to improve customer experience and increase their revenues.
It also identifies some of the leading Big Data analytics vendors and examines their current solutions.
Is big data analytics a big headache?
While researching the topic of big data, we found that telcos were reluctant to talk openly about their activities. This indicates that telcos are either developing unique or commercially sensitive solutions or that they haven’t yet made significant commitments.
Telcos and vendors recognize the benefits of providing personalized telecoms services to customers and improving efficiency and business decision making. They also see some potential in selling customer profile data to third parties, although perhaps not as much as initially envisaged. While there is a significant amount of hype around the subject of big data, it cannot be easily dismissed.
The proliferation of smart devices and services has led to a considerable increase in the number of customer-telco interactions through multiple channels, which is forcing telcos to sharpen their focus. As a result, mining greater volumes and a larger variety of data (in real time) will become a powerful competitive asset. This is the true value of big data analytics.
Clear use cases at the customer level
Predicting and reducing churn, promoting loyalty, upselling and cross-selling offers, and personalizing services are all key areas where telcos can use big data analytics to benefit their businesses. Some of the most compelling use cases relate to the marketing opportunities enabled by big data. For example, Everything Everywhere in the UK is using big data analytics to upsell LTE to its existing 3G customers while Telefonica Digital and Verizon are cross-selling anonymized data to third parties to generate additional revenue streams.
Taking the big data analytics medicine
Some industry players see the big data analytics debate as old news that doesn’t deliver anything new. Certainly, the concepts have been around for some time and we have yet to see the full-on wave of commercial activities that might have been expected. However, one of the major reasons why this hasn’t occurred is because of a traditional stumbling block – the telco organizational structure.
A well-executed big data analytics project requires a flat (or at least flexible) business structure and agile processes, not siloed structures with artificial constraints (like internal politics) to logical business processes. Telcos have made progress towards becoming more customer-centric and less network-centric, but in order to succeed they also need to become more data-centric and embrace the over-the-top operating model.
Telcos don’t have to make the journey
Transforming operating models and business processes is a difficult task and many telcos may not be entirely sure what they are actually transforming to. In addition, many telcos lack the necessary skills in-house to make their data work for them. As data scientists are in high demand and short supply, this area is ripe for vendor support, either with pre-integrated solutions or hosted services. Many of the traditional software vendors are verticalizing their offerings for the telecoms market, with IBM and Oracle making the greatest strides. However, the diversity of the competitive landscape is raising the stakes. Choosing a business intelligence and analytics solution has become a strategic decision that shapes whether a telco will be able to move up the value chain. The ability for analytics to consume big data makes this decision even more critical.
Clare McCarthy is practice leader for Ovum’s telco operations research and consulting services.