InFocus: Business intelligence, now more than ever

Communications service providers around the world are facing significant competitive pressures from new rivals, changing technologies, and rising customer demand. In mature markets, major carriers are growing by acquiring competitors and forming alliances with a completely new breed of player, as eBay and Skype have demonstrated. In emerging markets, explosive demand presents opportunities for new providers to thrive—at least initially.

Meanwhile, market dynamics and government regulations around the world are creating a more competitive industry characterized by shorter time-to-market, smaller margins, customer focus, and next-generation services such as VOIP (voice over internet protocol) and IPTV (internet protocol television). To remain competitive and profitable, carriers need insight into their markets, operations, and customers. And executives need to make decisions in real time, based on the intelligence already captured in their operational and business systems.

Growth in mobile services, Internet access and data content is driving new investments just as the once cash cow, plain old telephony service revenues are shrinking. The same forces that are feeding the development of new services and entrance of new players is also driving margins thinner for most services as well as significant customer churn as competitors offer alternative choices.

The migration to next generation networks is driving new investments and service providers are investing billions of dollars into VOIP, IMS capability. Will these services be profitable? Will they drive new revenue streams that replace lost revenue of POTS? No one seems to know. This is why service providers are turning to business intelligence vendors to help them get “insight” into their business, core processes, customers, channels and revenue streams with trusted and clean data that management can use to base their decisions upon.

The industry challenge

In the last decade, service providers have spent significant resources and energy in putting systems for operations management and business process automation both for business and operational support. However the complex questions they need to answer go beyond any one operational system. For example, with today’s systems they know who their customers are and service providers are marginally effective in marketing new services to them. However if they want to know who are their profitable customers, which services the customer uses that makes them profitable, and which marketing campaigns should be targeted to this segment, then they find themselves having to extract data from multiple systems and manipulate complex spreadsheets.

This exercise is time consuming and fraught with delays. If any parameter changes in the equation they find themselves at square one and without the ability to construct ‘what if ‘scenarios and respond effectively to the changing market conditions. The analysis needs to be much more granular to allow for true assessment of the profit contribution of the customer and the services. Most of the business questions they want to answer go across multiple operational systems as business processes flow across many departments.

Clean trustworthy data: A core asset of the organization

What about the data? Can you trust data coming across from multiple systems? Data is becoming a core asset of the organization. Many service providers are looking at this very seriously with a strategy to manage the information, from the network elements systems all the way to executive dashboards, and create data models across the enterprise.

With emphasis on regulatory compliance and corporate governance it is imperative that the data be clean and trustworthy. It is becoming important to have audit trails so you can track the data all the way to the source systems and vouch for its accuracy through all the processing, consolidation and summarization the data undergoes.

Improve visibility into processes

It is not enough to have intelligence related to business transactions, the same holds true for many of the operational processes. For example, one area that has severe implications for customer satisfaction is the time it takes to activate a new customer. The activation of a new mobile customer can take several days and for a new DSL customer it can take several weeks. In the UK, it has taken some operators several months to activate a new DSL customer. Activating a new customer touches many departments at a service operator, from customer and service support to accounting, credit approval, billing, network planning, network support, inventory management, scheduling a service person to configure and install the customer premises equipment and turning on the service.

Most operators have disparate systems managing the provisioning and customer activation process and there is little visibility into the bottlenecks and disconnects. The activation of new customers has revenue implications and therefore on the share price and market evaluation of the carrier. This is a key business performance parameter with visibility in the office of the CEO and to the board.

The same disconnects happen in many other areas as well, to name a few: interconnect billing, network operations and management, service creation and introduction of new services, determining the profitability of various products, services and rate plans. The systems at most service operators are built for accounting purposes and do not provide adequate information across processes and functional areas to support business users in making business decisions.

Harnessing business intelligence to bridge the 'Information Gap'

There are software solutions that are helping service providers bridge this gap. For example, business intelligence applications extract and connect disjointed systems and data from disparate sources to enable the business user and decision maker to make an informed decision.

Generally, the IT organization at a service provider will consolidate data from multiple sources into large data warehouses or smaller data marts. The analytical applications and reporting tools are utilized to query the database and provide regularly scheduled production reports to the business users. Business intelligence solutions provide easy-to-use user interfaces; the users can also create their own reports and make ad-hoc queries as required by the business conditions. Analytical applications and digital dashboards go a step further by letting users keep their finger on the pulse with pre-structured guided analysis and sophisticated event management engines. The user can set alerts based on pre-determined business rules and thresholds.

Gaining enterprise visibility: One major operators' strategic vision

For example, a major mobile service operator was entering a new geographical market and they wanted to differentiate themselves by having one of the fastest customer activation times in their target market. They ran a marketing promotion promising a 4-hour activation turn around for new customers. They wanted to track the cycle time for activating new customers as well as make sure they had enough inventory of the mobile phones featured in the promotion. These key business performance indicators had visibility all the way to the executive staff.

The operator deployed a business intelligence solution to report on these parameters. They also made inventory status reports available to the manufacturers of the handsets via secure extranets so they would have visibility into the rate of depletion of inventory. Additionally, they have visibility of inventory at-hand and into the supply-chain to make sure that popular handsets and accessories are available to meet their sales goals. The executives on the other hand are tracking the actual performance against targets via digital dashboards. The dashboards show them actual vs. target performance on various parameters like customer acquisition, ARPU (average revenue per user), activation cycle times, campaign response rate and call center queue times, network inventory and capacity, days of network inventory available, etc.

Customer loyalty is more important than ever

It is important for service operators to be able to segment their customers more precisely than they have in the past. Not all services are attractive to all customers and it is very costly to run out-bound marketing campaigns that result in low response rates. Not only do they tax the resources of already over burdened call centers, they also result in customer irritation or the acquisition of customers who do not add any value to the bottom line. Service operators are using business intelligence tools to obtain a better understanding of their customers. Who are their high value customers, how can they treat them differently? A strategy that some other industries like airlines and credit cards have been using for years. Understand the impact of combining one service with another. Understand the basket mix of services being purchased by premier vs. low-usage customers and the revenue impact of each service. Understand the impact of marketing campaigns sooner and be able to take corrective action in mid-stream.

Without business intelligence applications they may not know the results of a marketing campaign for three to four months. A product promotion that is run in July will have customer’s usage in August show up in the September billing cycle. A 30 to 60 day delay that takes away the ability of the product manager to take action during the campaign. With business intelligence tools, the product manager can see the customer activation and usage on a daily basis without having to wait three months for the billing records. This enables him to adjust the message and the product if the campaign is not meeting its targets.

Improve customer retention with service insight

How would Amazon.com’s revenue be affected if its communications networks went down for 30 minutes, or if its customers experienced one-minute page refreshes? Communication services are mission-critical for today’s enterprises. Many providers now offer corporate customers service level agreements (SLAs) that guarantee specific service levels—and that require fines and restitution in the event of failure. But to deliver on these agreements, communications service providers need timely, accurate information about the quality of their services.

Business intelligence gives companies the service delivery insight to monitor, manage, and track your adherence to SLA delivery parameters. One can proactively manage network quality and service delivery, and share this information with customers through a secure, branded portal. With this transparency, companies can build trust among their customer base, helping to increase retention and profits.

Meet service delivery goals

If providers fail to meet their SLAs for activating services, completing change orders, or resolving trouble tickets, they open the door to customer churn. Worse still, they lose revenue because customers cannot use their services.

Using business intelligence applications, these companies can monitor important delivery metrics, such as the timeliness and accuracy of their customer activations, disconnects, change orders, billing, and service restorations. As a result, providers always know they are delivering services for corporate clients at the levels stipulated in their SLAs.

Maintain quality of network service

If providers use SLAs to guarantee the quality of their network in terms of throughput, noise, connectivity, latency and performance, customers may want to monitor the provider’s service delivery parameters. With business intelligence software, service providers can report on SLA performance through personalized portals. The most important customers can view actual performance and performance trends to get a detailed picture of the quality and reliability of the service. Meanwhile, engineers can monitor network performance and proactively address slowdowns and outages.

By consolidating data from operational systems, it’s possible to provide detailed analysis and reporting. Based on the information provided, companies can take action before service issues result in dissatisfied customers or penalties.

Improve billing accuracy

Each year, communications providers around the world lose an estimated $100 billion in uncollected revenues. But because revenue assurance crosses data sources, departments, and systems, point solutions fail to adequately address this complicated issue. Service providers need insight into revenue across the enterprise to give their executives a holistic view of the revenue assurance challenge and highlight problem areas. Exception based reports enable the executives to pinpoint trouble spots and establish controls before major losses affect the bottom line. Alerts keep them informed of business rule violations and discrepancies. By maintaining easy access to key business information, management teams can institute policies that prevent risk and fraud—and focus on remedying revenue leaks with the most significant bottom-line impact.

Without accurate billing, the operator is exposed to losses, fines, customer dissatisfaction, and regulatory implications. But many service providers have multiple billing systems, provisioning systems and back-end OSSs—and end up sending customers multiple, non-matching bills. The billing challenge is becoming more complex as customers download data and content from content providers not owned by the carrier.

Business Intelligence solutions combine information from multiple billing data sources into one view. Service providers can increase their visibility into billing and provide customers and partners with secure online access to consolidated billing information. By providing this information, providers build trust and underscore the value of their services. And by offering customers online bill analysis, providers help them manage and re-evaluate the services they receive, thus enhancing their relationship with the company.

Grow revenue with innovative products

Communications providers everywhere aim to beat the competition by quickly bringing innovative, high margin products to market. These companies can improve their success by targeting offerings to the most receptive market segments, monitoring adoption and profitability of the service and being able to quickly discontinue when it is no longer profitable.

Marketing executives and product managers can track the performance of a service against their goals and objectives on a dashboard that gives them the information about the adoption and popularity of a service. They can analyze usage trends, profitability, and product acceptance, view details by channel, market and other parameters. They can also find out which services are most popular and at what price points in the various markets, and how much profit each customer and service delivers.

If a new product is expensive to deliver and service, it may eat into a provider’s profits rather than increase them. With business intelligence, companies can integrate network and customer data to build a 360° view of their customers, products, and services. They can then tailor their new offerings based on customer demographics, credit and billing history, and use patterns.

Business intelligence solutions can help providers analyze market demographics and expose patterns of customer behavior that signal revenue growth opportunities. For example, if a phone service provider discovers that customers in certain ZIP codes frequently make long-distance calls to overseas locations, it can offer special calling plans to that specific segment.

As service providers combine data from multiple operations support systems (OSSs) and source systems, data integrity and reliability become critical. Providers can see an audit trail of their data, allowing them to base their decisions on trusted information. They can gain a complete view of their business and ensure a high level of data quality by reducing discrepancies and errors that occur as data flows from one system to the next. Knowing when to trigger teardown of a service is just as important as knowing when to introduce a new one. Business intelligence solutions generate alerts that help providers decide when to decommission services and operational reports that help manage the migration of customers to alternative services. Additionally, providers gain visibility to decommission services in their operational and billing systems simultaneously, helping to prevent revenue leaks.

The telecoms industry can prosper

There is no quick fix in this market but there are huge rewards to be gained from a focused approach to business intelligence. It is imperative that service providers dive into their data, which they have plenty of, and really analyze the operational and financial parameters. To obtain the margin improvements they are seeking, carriers will have to perform detailed analysis of cost of service, customer profitability and product margins in order to survive and thrive.

Rani Goel is Director of Worldwide Telecom Marketing at Business Objects.