Data ascends from the basement to the boardroom
Customer information has been part of telecommunications operators' asset bases for decades, with the largest operators accumulating terabytes of data11. But so far, collection of customer, network and operational data has outweighed insight12.
In 2009 however, several factors are expected to raise the profile of information, catalyzing its ascension to the boardroom.
First, the economic outlook is likely to put pressure on operators' margins, as clients become more willing to haggle for better deals, as a means to trim their outgoings. Better customer information may help operators retain their clients and attract those of their competitors, by gaining a better understanding of where clients feel the value lies.
The diversification of other sectors into telecommunications is likely to continue. Some of these new competitors may already have a comprehensive understanding of their customer bases, which could be used to compete against operators.
For telecommunications operators to be able to face up to their competition, they may need an equivalent understanding of their customer bases: otherwise their role may be reduced to that of wholesaler, a change that would likely imply much lower revenues per subscriber.
A key result of the economic downturn has been the sharp contraction in credit available to consumers, particularly in markets where debt-to-income ratios have risen to over 100 percent13. A sharp fall in credit is likely to change the behavior, spending patterns and needs of some customers in a fundamental manner. In 2008, the decline in disposable income encouraged the adoption of SIM-only contracts in some markets14. Having a deep, current view of the customer is likely to be essential to operators providing services, products, bundles and pricing that are appropriate for their clients.
Accurate information may be essential to enable an operator to transform from being regarded as best for the latest technology, to best for value. Information is also likely to be vital in supporting diversification into other areas, such as IPTV and managed services.
Better customer information may also help operators respond more quickly to rapidly emerging phenomena such as social networking and online video sharing. It could also enable operators to capitalize on such developments, rather than be sidestepped by them.
New technologies may also help bring customer information to the fore. Software-as-a-service (SaaS) may facilitate low-cost, scalable analytical tools. Applications that monitor unconnected device usage, such as MP3 consumption on mobile phones, may provide richer detail.
Bottom line
Operators should recognize that information assets may become as important to value creation as physical assets. They should consider how to structure their activities to utilize their full spectrum of information. Customer information management should be integrated, not appended, or worse, archived.
Information should be represented at the highest level. Having a Chief Information Officer (CIO)15 on the senior management team and implementing a Data Governance framework may become essential. Insights gained from customer information are likely to be relevant to the whole board, and customer information should inform the widest range of executive decisions.
Operators should appoint CIOs with care. The CIO should be able to collect and analyze customer data and make it relevant to strategy, innovation and operations. Leadership and communications skills may often be as important as IT experience16. Operators may need to hire interim expertise and solutions to analyze data, if they lack the required skills among the current workforce17. Operators should contract customer information systems specialists to accelerate execution.
Operations should be optimized to deliver value at the lowest possible cost. Understanding the data points in operational key performance indicators should enable operators to manage their processes, both customer facing and back-office, in the most efficient manner.
Gathering customer information should be assiduous but not undermine consumer privacy. The value of information should be balanced against the possible consequences, should it be lost, stolen or abused. Operators should manage this tension without increasing risk. Data security should be a priority, particularly if third parties are involved in systems development and data analysis.
Technology companies should consider the telecommunications industry's complexity when designing customer information solutions. Although network technology is often homogeneous, billing, customer relationship management (CRM) and information systems are frequently proprietary. Technology companies should also consider the evolving service portfolios of operators. Customer information solutions must be flexible enough to accommodate data relating not only to calls and connectivity, but also media consumption, downloads and financial transactions.
Regulators should monitor operators' activities closely. Open dialog with operators may be essential, along with clear guidelines about acceptable and unacceptable practices. Similarly operators should monitor the evolving regulatory environment regarding retention of customer information, from calling records to browsing logs18.
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