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Industry Focus: Telecoms Can Leverage Big Data to Customize Offerings

by Miguel Carrero | insiderPROFILES

July 1, 2012

Though telecommunications firms are essential to today’s business operations, many of these companies are realizing that the products they provide are becoming a commodity. To differentiate themselves from one another, they need to customize their products and services based on the needs of their customers. And to do this, they must successfully comb through massive amounts of customer data — big data, to be exact.
 

The products and services that telecommunications firms provide have never been in higher demand. From both a personal and a professional perspective, we all want — we all need — to be connected to our respective networks nearly 24 hours a day and that has been good news for the telecommunications business. For much of the recent past, telecom providers were very busy simply trying to meet that demand and enjoying the financial benefits of that demand growth. But more recently, these providers have begun to realize their products are becoming a commodity. One network is the same as the next, in customers’ eyes. And for a capital-intensive industry like telecommunications, commoditization erodes profitability.

It’s not a new problem — for nearly 10 years telecom executives have been aware that the networks they provide are an invaluable asset, but they are not what will differentiate them as a company. The challenge is finding a way to bring their customers some kind of product or value-add that will differentiate one network from another.

The solution to this commoditization conundrum is for telecoms to customize their products and services based on the close relationship they have with their customers. It’s no longer good enough to just provide a functional network or even to expand the breadth of that network. That market is saturated. Instead, telecoms must offer unique products or services to customers. They must learn the likes and dislikes of their individual customers and offer the products and services that they want — in real time at a price that makes sense to them.

Leveraging Real-Time Customer Data to Offer Distinctive Products

Telecommunications companies are perfectly positioned to learn about their customers because these customers provide personal information every day. Telecoms are at the center of their customers’ digital universe. No other industry has access to the wealth of digital information about their customers on a daily basis. What websites they visit, what topics they search for, who they call, what apps they download — all this information is being passed across the telecommunications network and can be analyzed and evaluated to determine a customer’s preferences.

It’s the biggest of big data challenges. Telecoms have enormous amounts of customer data pouring into various systems every second of every day, but need to figure out how to analyze the data to determine what their customers will respond to and then deliver that product or service. And the analysis has to happen in real time, because near real time just isn’t fast enough to make the most of this new data. For instance, if you’re lost in San Francisco, getting a map or directions two days later doesn’t help. Knowing what website or store a consumer visited last week is useful, but knowing where the customer is shopping currently is significantly more powerful for demand generation.

For example, imagine you are browsing on a mobile device while vacationing in New York City searching for information about a Broadway show you want to see that very day. This contextual information can be combined with historical information — perhaps you have been browsing for musicals in New York for the past three weeks — and this data can be used to bring you a last-minute offer on a Broadway musical today at 3 pm. The contextual information of what you do, where you do it, and when you do it is very powerful for advertising and sales transactions.

That consumer information can be used in two ways. First, the collected data can be used to personalize the customer’s experience on the network. This could mean reverting value back to the subscriber by:

  • Offering customized billing plans for users based on network use — for example, encouraging customers to use their phones during non-peak hours to reduce load
  • Suggesting a specific service or capability precisely when they need it — for instance, offering traveling mobile users services in the local area or promoting taxi service late at night
  • Serving users an advertisement or promotion that is meaningful at the exact right time — for example, offering a discount on theater tickets while users are searching for the tickets, not after they purchased them

The second way that telecom providers can add value for their customers is to inject themselves into the value chains of huge telecom users like Facebook or Google. There are ways that the telecommunications providers can leverage real-time data to maximize the use trends of these major players.

For example, you might have a friend or associate who you talk with on the phone three times a month, but you are not connected to them on Facebook — and you would like to be. Facebook doesn’t know who you are calling on your mobile phone. But the telecom provider has that information and could collaborate with Facebook to help make that connection for you.

The Challenges

There are some hurdles to get past before telecommunications providers can execute on these strategies, however. And the first hurdle is privacy. How exactly can these companies use this private information about their subscribers to differentiate their offerings, without crossing a privacy line? Customers and subscribers provide their information with a certain level of trust and leveraging that information in the wrong way may cause customers to lose that trust. So privacy concerns need to be handled carefully and strategically.

The key to privacy is not only that those services need to be opt-in (i.e., companies need to explicitly say how the customer’s information will be used), but also that there is a more granular approach so customers can pick and choose what information about them can be used. Customers might want to allow a telecommunications provider to use their preference for sports-related information to provide content or promotions, but they might not want marketers to use information on their general browsing history because it could be considered too intrusive.

Another important element to privacy and use of personal data is that telecommunications firms have a monetary transaction value with subscribers. And if subscribers are not happy with the way their information is used, they can easily penalize the provider by canceling their service. That control point is more diluted with some other online services — such as Google or Facebook — where there is no direct financial transaction between subscribers and the provider.

Cross-enterprise communication is also an issue. Extending a strategy — even a well-developed one — across a very large telecom company with its various silos, organizations, and business units is a challenge. While the executive team may understand this strategy, at lower levels, traditional priorities like network expansion and improvement continue to dominate projects and goals. So consistent messaging is key. 

What Do Telecoms Need to Deliver on the Strategy?

So the strategy is clear: leverage the massive amounts of data flowing across the network to provide customized and differentiating services to customers. But where do telecommunications providers turn to execute on this strategy? Who should they partner with and what solutions will they need to make this a reality?

For starters, they need a partner that understands the business and the unique relationship between a telecom provider and its customers and subscribers. There is a level of trust that cannot be violated in leveraging this data. The strategy has to focus on increasing customer value, so selecting a partner that understands the business issues first and foremost is crucial.

The technology piece, however, is the real elephant in the room. Exactly what solutions are required and available to collect, analyze, and leverage the masses of data being shared across the telecommunications network in real time? That’s the question that has perplexed many companies.

The combination of Hewlett-Packard and SAP addresses these challenges and provides customers in the telecommunications industry the resource they require to execute on this strategy. Hewlett-Packard’s consultants and industry experts understand the telecommunications industry from both the technology side as well as the business side and can help integrate the right solutions into a customer’s environment.

SAP also has a strong presence in the telecommunications industry and its new in-memory appliance, SAP HANA, is a big data solution that can perform real-time analysis on the masses of data required to succeed with this strategy.

The Next Step

Telecommunications companies seeking to combine the unique expertise of Hewlett-Packard and the power of SAP HANA to better leverage their customer data can utilize the HP AppSystem portfolio of optimally configured hardware appliances with pre-loaded software and a full range of support services.

Together, HP and SAP engineers develop reliable and scalable configurations that are the right size for companies using SAP Business Suite, SAP NetWeaver BW, and other SAP applications. Available in six different configurations, the HP AppSystems for SAP HANA comprise three components: the SAP HANA appliance software, HP hardware, and bundled services with up-front pricing.

The packaged offerings allow telecommunications firms to implement and use SAP HANA quickly and efficiently to achieve faster ROI and further their big data strategy.

For more information on this portfolio and to get connected to tech trends, support alerts, and HP solutions, visit hp.com/go/sap/hana

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