2011

Business Intelligence in Telecommunication Industry

By:

Debesh Majumdar

09BM8016

Kumar Bipallav Mani

09BM8068
 Contents
Pages

1. Introduction 2–4

2. Gartner Predictions 4

3. Analysis of the telecom industry 4-5

a. Key areas to be addressed 4-5

b. Advantages of using BI in the telecom industry 5

4. Data Sources and Users 5-6

5. Data Warehousing Models 6-8

6. Strategic Business Intelligence Architecture 9 - 10

7. Technological Architecture 11

8. Key Performance Indicators (KPIs) for Telecom 12 - 15

9. BI Tools available 15 - 16

10. Gartner Magic Quadrant 17

11.TCO of BI applications 17 - 18

12. Conclusion 19

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Introduction

The telecommunications industry is increasingly becoming more competitive because of the entry of number

of competitors eager to get their share of pie in this exponentially growing business. One of the most

important metric used by the telecommunications carriers to measure their success is by the size and growth

of their profit margins. Therefore, the service providers are under intense pressure to squeeze profit from the

slim margins available to them.

Why is Business Intelligence needed in Telecom Industry

• Revenue leakage, costing the industry $100 billion annually

 This is one of the biggest issues facing the telecom service providers.

 Smart BI solutions can go a long way in plugging the loopholes and making revenue tracking

accurate.

• Inaccurate or missed inter-carrier billing

 This happens especially in case of roaming when network providing the calling services

changes from one telecom service provider to other providers due to changing locations.

• Fraud, a $12 billion annual industry problem

 Fraud is a real threat not only from the revenue generation perspective for the service

provider but also for the overall security of customers and country at large.

 Exponentially increasing customer base clubbed with the ever increasing advancement in

technology poses a huge challenge for the telecom providers to handle fraud.

 Advanced and robust BI solutions can be very useful in mitigating and eventually doing away

with this menace.

• Churn, a multi-billion dollar problem exacerbated by the wireless number portability requirement

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  Churn rate for telecom service users has always been a problem for the industry with

customers switching over to the competing providers for lower price, better connectivity or

some offers.

 With the introduction of mobile number portability this problem has only become more

serious as the most important factor for not switching from one provider to another i.e. the

mobile number is no longer an issue.

 BI solutions can be used to keep a check on the changing preferences of the customers in

order to give them the flexibility of choosing the offers or service they want without

switching to a competitor.

• Inefficient network usage and least cost routing plans

 Many a times we have seen the signals switching between different areas of the same service

providers which clearly indicates a problem in the layout of the towers.

 Business Intelligence can be used very effectively to reduce the operational overheads. It can

be especially useful in planning the layout of towers in a way which maximizes its utilization.

Key facts and predictions for the Indian Telecom sector:

• The Indian Telecommunications network with 621 million connections (as on March 2010) was the

third largest in the world. Indian telecom network had become the second largest in the world with

total subscriber base of over 670 million at the end of July 2010. With this overall tele-density in the

country had reached over 58% mark. In last five years not only urban tele-density had risen from

26% to more than 125%, but rural tele-density had also increased phenomenally from 1.73% to over

27%.

• The sector is growing at a speed of 45% during the recent years.

• Expected mobile subscriber base will touch around 771 million by the year 2013.

The service providers or carriers rely heavily on the analysis of tons of data they get from call detail records
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(CDR). Increasingly powerful data warehouses and smarter business intelligence solutions are the only tools

which can handle and make sense out of the terabytes of data and help them meet profit goals. Multiple

departments in the firm provide in-depth data regarding various aspects, analysing and integrating these

enables carriers to reduce revenue leakage and churn, mitigate fraud, optimize network usage and improve

the bottle line thereby increasing profit.

Large networks and their associated switches, call centres data, billing systems data and service

department’s data can generate hundreds of millions of individual CDRs daily. These data are slated to grow

exponentially as new services, advanced technologies, number portability etc. become common. The ever-

expanding volume of important data are the ingredients which are and would be creating a huge strain on the

traditional RDBMS, servers etc. thereby necessitating the adoption of smarter Business Intelligence

infrastructure and solutions.

Gartner Predictions:

 Through 2012, more than 35 per cent of the top 5,000 global companies will regularly fail to make

insightful decisions about significant changes in their business and markets

 By 2012, business units will control at least 40 per cent of the total budget for BI.

 By 2012, one-third of analytic applications applied to business processes will be delivered

through coarse-grained application mashups.

Analysis of the telecom industry

Key areas to be addressed

1. Operations and budget analysis.

2. Capacity management.

3. Network operations management.

4. Customer churn management

5. Customer and market segmentation

6. Fraud management

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 7. Call centre management

8. Subscribers’ usage pattern management.

Advantages of using BI in the telecom industry:

1. Improving the customer experience which would also result in finding different torrents and avenues

for revenue generation.

2. Individual call detail records (CDR) of customers could be recorded with unmatched scalability

which would enable thorough analysis and provide incisive insights.

3. Advanced analytical functions for monitoring financial data.

4. Creating and analysing models to develop loyalty among customers.

5. Ensuring a full proof security of customer’s financial and personal data.

6. Continuously finding ways for providing customized offers and benefits to the customers based on

their activities which would take care of their changing preferences.

7. Getting all the relevant information relating to the network status and service levels from all the

circles and areas.

8. Keeping a tab on overhead expenses as well as finding ways to maximize individual’s efficiency by

monitoring workforce expenses on customer services like call centres etc.

Data Sources and Users

Data Sources Data Users

Call Detail (Switch) Marketing

Billing Data (Billing Centre) Sales

Customer Care (Call Centre) Service

Subscriber Data (Operational CRM) Operation and Maintenance

Network Performance (OSS) Network Planning

Table 1: Depicts the sources of data and the departments using the data.
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The table shown above illustrates the various sources from where the data gets generated like Call centers

and other point of customer service generates data which are used by the customer service department,

similarly billing data are sources of data which are used by the sales department for gearing up their sales

efforts based on the bill details. Like if the bill details contain major portion related to overseas calls, then

the offers related to ISD calls can be targeted towards such customers.

Data Warehousing Models

Fig 1: Data Warehousing Model

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Fig 2: Data Warehousing Model

The above two models are few of the many data warehousing models used by telecom companies. The

model basically consists of Fact tables and dimension tables. Dimension tables contain attributes that

describe fact records in the fact table. The attributes provide descriptive information in some cases while in

other cases they are used to specify how fact table data should be summarized to provide useful information

to the analyst. Dimension tables contain hierarchies of attributes that aid in summarization. For example, a

dimension containing customer information would contain descriptions related to the customer like customer

name, customer ID, customer’s circle, customer’s state, customer’s city of residence, zip code, house

number and may be further subdivided so as to reach a level where identification of each customer becomes

possible.

Dimensional modelling produces dimension tables in which each table contains fact attributes that are

independent of those in other dimensions. For example, a customer dimension table contains data about

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customers, a tariff table contains information about the various tariff plans available, the pricing and

duration related to each tariff plan etc. and a distance dimension table contains information about countries,

circles, states, the originating point of the call and the terminating point of the call. Queries use dimension

table’s attributes to specify a view into the fact information. For example, a query might use the customer,

distance, date and tariff dimensions to ask the question "What was the cost of the last call made the XYZ

customer on 10th April, 2011 at 11 pm?" Other queries can similarly be used to drill down to an even more

complex or detailed data.

8
Strategic Business Intelligence Architecture

Fig 3: Strategic BI architecture.

A strategic BI architecture would ensure that real time data is captured from all the different sources

possible and be robust enough to take care of expanding needs in the long run. Such a BI architecture is

deployed keeping a longer term perspective and is flexible enough to take care of the increasing complexity.

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A standalone CRM application in spite of the continuous improvements is not geared to match up to a full-

fledged BI system’s analytical capabilities.

CRM softwares can provide answers to relatively simpler queries but find little use in actual scenario and

may not be very helpful in answering tough questions which will have actual business impact. There needs

to be the ability to carry out what if analysis and other such comprehensive situational analysis in a highly

dynamic market conditions, so as to come up with solutions to lingering problems or to the problems that

may occur in future.

Also almost all the departments are affected by any business decision and the level of complexity that needs

to be handled can be handled only by a BI application. For example,

activating a new customer affects many departments from customer and service support to accounting, credit

approval, billing, network planning, network support, inventory management etc. There is very little

visibility of the bottlenecks and disconnects in such a scenario. The activation of new customers has revenue

implications and, therefore, affects the share price and market evaluation of the carrier and hence is a key

business performance parameter. The same lack of visibility happens in many other areas as well: network

operations and management, interconnect billing, service creation, and introduction of new services and

offers, determining the profitability of various products, services, and call rate plans etc. The systems at

most service providers have been built for financial and accounting purposes and do not provide adequate

information across processes and functional areas to support business users in making business decisions

based on the power of information. The business intelligence applications extract and connect disjointed

systems and not-so-easily available data from disparate sources and enable the business user and decision

maker to make an informed decision.

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Technological Architecture:

Fig 4: Technological Architecture of BI suite

The generic technological architecture of a BI application is shown above. The data from various sources

like Call Centres, Network Operations and Performance Centres etc. are extracted, transformed and then

loaded into the Data Warehouse. Often there is a Data Mart which interfaces between the client side terminal

and the Data Warehouse and basically acts as a cache and speeds up the retrieval of relevant data. Data

mining tools are invariably present in a BI suite and form the backbone of the BI application. The data

retrieved as a result of the query is used across the organization.

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Key Performance Indicators (KPIs) for Telecom:
Systems and Network
Call Centre Performance
Analysis/Capacity Planning
• Wait times • Availability
• Average speed of answer • Grade of service
• Call volume • Service life of equipment
• Number of complaints • Bit error ratio (data, bits &
received elements transfer)
• Revenue per call • Downtime/Time out of
• Average quality of calls service
• Number of call transfers • Call completion ratio
• Average call length • Cost of support systems
• Number of one call • Cost of operational
resolutions systems
• Abandon rates • Average call length
• Customer satisfaction • Analysis of ASR routes
• Network traffic,
• Number of calls answered
within ten seconds congestion
• Idle time on network
• Agent efficiency
• Dropped calls
Revenue/Financial Analysis
• Average revenue per user
(ARPU)
• Prepaid ARPU
• ARPU from contracts
• Revenue per voice-minute
• % of non-voice revenue
• Average revenue
realization (ARR)
• Minutes of usage
(MoU) per subscriber
• Average revenue per
subscriber (ARPS)
• Periodical Revenue
Analysis
• Analysis of company
overhead
• Profit and loss analysis
• Recovery analysis
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 Quality/Usage -
Customer
Analysis of volume Coverage Customer Analysis
Satisfaction
of successful calls
•Average score from •Mean opinion score •% of land covered •Customer
external surveys •Service with services segmentation
•Average score from •Duration of calls •% of population •Analysis of
internal surveys •Billed amount of covered with subscriptions
•Average score from each calls services •Top N churns
call monitoring •Average land •Churn
•Total number of unavailable to
complaints services
•Total number of •Average population
unresolved issues unavailable to
•Number of services
responses generated •Access to customer
service

Compliance/Service
Marketing Faults and complaints Fraud Analysis
Analysis
•Effect of promo •% of open and level •Service connection •Normal Traffic
campaign on of escalation priority •Timeframe for •Identity deviations
subscriptions required repairs and from normal traffic
•Trend analysis •% closed installations patterns
•Segment analysis •Mean time to •Reliability •Normal usage per
•Call behaviour resolved •New service customer per area of
analysis •Work in progress connections country
•Customer service •Activations, de- •Identify phone
level statistics activations, re- numbers of
activations customers with high
•Miscellaneous deviation
services
•Waiting time
•Waiting period
before grant of
service
•% order error rates
and reasons

Fig 5: Key Performance Indicators and their usage according to the section:

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Key Performance Indicators based on the type of Office:

Fig 6: KPIs based on the Front Office or Back office requirements.

Key Performance Indicators are a great way to track the parameters against which the effectiveness and

performance of the organization can be gauged. KPIs help organizations prioritize among competing tasks

by linking it to some visible and critical result like bottom-line, top line, reduction in number of complaints

etc. In this way they act as reflect the organization’s key business drivers (KBDs) also known as critical

success factors(CSFs)

Key Performance Indicators should be defined based on the following:

• Specific – The KPIs should be very focused and specific leaving no room for ambiguity.

• Measureable – They should be easily measurable.

• Achievable – They should be set at a level which can be achieved.

• Relevant or results based – KPIs should be framed keeping the organization’s strategies, goals,

objectives etc. in mind.

• Time bound – They should be time bound so as to create a sense of urgency and motivate the

employees to achieve them.

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Once the KPIs are selected they can be used based on the importance and urgency by creating facts and

dimension table in the Data Warehousing model which can collect the relevant data and aid in further

analysis as well as keep a check on the same.

BI Tools available

Fig 7: List showing major commercially available BI tools and current version available.

The market for Business Intelligence tools is increasingly rapidly not just in telecommunication sector in all

major industries. Many commercial players are already in the market with complete suites to cater to the

different needs of the customers in various industries. The BI tools market is mainly dominated by Oracle,

SAP, Microsoft, IBM and Microstrategy.

There are many open source solutions available and the smaller to medium sized firms especially prefer

these as against the commercially available solutions mainly due to the lesser cost incurred upfront. Also

this provides them with more flexibility in checking the suitability of the BI solutions in their organization

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as these open source solutions provide a minimum of a month long free trial. The total cost of ownership for

these solutions is lower compared to the commercially available solutions.

Fig 8: Opinions about the total cost of ownership of open source solutions.

The major open source BI tools vendors are shown below:

Fig 9: Few of the major open source BI tools vendors.

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Gartner Magic Quadrant

Fig 10: Gartner’s Magic quadrant showing the relative positions of market players in BI tools.

TCO of BI applications

Fig 11: Pie chart depicting the share of Total Cost of Ownership in an organization.

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The total cost of ownership (TCO) of Business Intelligence applications in a typical organization is split

mainly into the following:

 Staffing: accounts to close to 50%

 Software: accounts for about 20%

 Hardware: accounts for about 8%

 Training: accounts for about 8%

 Downtime: accounts for 5%

 Others: accounts for 9%

Fig 12: Comparison between the traditional reporting system and BI solutions in terms of TCO

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Conclusion

The telecommunication industry is one of the first industries to adopt the Business Intelligence solutions

mainly due to the ever increasing data that they have to handle. Most of the telecommunication companies

have moved to scalable and smarter BI solutions which have helped them in making significant reduction in

their bottomline and increase their topline by customizing the services to be offered to their expanding

customer base. Anticipating customer needs and providing them with the services they want at cheaper cost

has vastly improved the loyalty of the customers towards their service providers. This has become a

possibility largely due to the advanced and robust BI solutions which can provide access to real time and

relevant data in various formats which enables the management to make strategic decisions.

BI solutions have not only helped the telecom companies in increasing the customer loyalty, it has helped

every department of the organization to achieve a level of efficiency which can hardly be imagined without

a successful implementation of Business Intelligence solution. It has helped in improving operational,

marketing, customer service and financial efficiency to name a few.

The growth of the BI applications is only slated to grow in the future as the competition few stiffer.

One of the major challenges facing any organization using the BI solution is getting the most out of it by

effective implementation of the solution which can only take place in a true sense when the whole

organization participates enthusiastically.

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