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IDC Technology Spotlight in collaboration with Tech Mahindra

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IDC Technology Spotlight in collaboration with Tech Mahindra

  1. 1. US42325917 T E C H N O L O G Y S P O T L I G H T Implementing Self-Service Predictive Analytics in the Telecom Sector March 2017 Adapted from Business Strategy: Technology-Oriented Value Chain 2016–2017 Investment Guide by Kimberly Knickle, Heather Ashton, et. al., IDC #US40539916 Brought to you by Tech Mahindra, Powered by IDC Communications service providers (CSPs) own and manage communications networks with a business model based on the transport of information. CSPs sell voice and data services to both business and residential end users. They also make money by providing network connectivity to other telecom companies and by wholesaling circuits to heavy network users such as internet service providers (ISPs) and large corporations. The industry is undergoing rapid change as fixed-line voice revenue, traditionally the biggest revenue generator, continues to decline and service delivery is more about data and mobility. Revenue growth is greater for IP-based voice services and mobile data services. Given that shift, IDC Manufacturing Insights is seeing an increased appetite for advanced analytics, particularly self-service analytics, in this sector. This Technology Spotlight examines the role of self-service, predictive analytics in the telecom sector. It also looks at the role of Tech Mahindra in addressing the challenges that CSPs face in today's market. Business Challenges in the Current Environment On a global basis, CSPs are organized in structures that range from publicly owned corporations to government-owned ministries. Deregulation caused the breakup of most PTTs, which were large national and regional operators. Today, national competition in the communications industry is often described in terms of "incumbents" and "competitors." Increasingly, market competition on an international basis is shaped by the remnants of the incumbent CSPs and the aggregation of mobile CSPs into larger groups that dominate spending and shape many industry trends. At this stage, the communications industry players are generally publicly owned companies rather than government-owned monopolies with a diverse set of shareholders common to public companies. The competitive environment for CSPs is intense. In the consumer and small to medium-sized business markets, the industry faces one of the highest rates of churn (the movement of customers to a competitor) and CSPs compete heavily on price. For these markets, success relies heavily on branding. Heavy investments in efficient billing systems and outsourcing operations contribute to financial viability. Corporate customers are less price sensitive and more concerned with the quality and reliability of their communications systems. They are willing to pay for premium services such as higher-security private networks and videoconferencing. The CSP customer device or corporate infrastructure shapes what CSP service offerings can deliver. Costly access networks stretching across vast geographic footprints, especially radio network coverage and broadband fiber deployments, provide the CSP with the reach to the customer's location. The dynamics of the industry are varied, from the influence of the buyer to competition and substitutes, as shown in Figure 1.
  2. 2. ©2017 IDC2 FIGURE 1 Forces at Work in the Telecommunications Industry Source: IDC, 2017 Telecom Industry Subsegments The telecommunications industry is typically divided into three main sectors: wired, wireless, and satellite. It should be noted that CSPs do not create the content that is transmitted over their networks, such as TV programs or other media, because this would be considered part of the media or broadcast industry. Also of note is that we are not considering hardware manufacturers.  Wired: The largest sector of the telecom industry is made up of wired CSPs, which provide wired (landline) telephone, DSL, cable TV, and internet services. Companies may own, share, or lease network capacity. This sector also includes direct-to-home satellite television. Wired companies can offer a variety of other business services such as outsourcing.  Wireless: Wireless CSPs provide voice, data, internet, and other services via signals transmitted over radio tower networks. A large component of these services is from cell phone service as well as mobile Internet services to Internet-enabled devices.  Satellite: Satellite companies are both private and government organizations that transmit data via satellites. While the preceding are the traditional segments of the telecommunications industry, the lines between these segments are increasingly blurred because some wired companies have wireless divisions and because similar services are being supplied by all these sectors of the industry. It is also important to note that the availability of cloud capabilities further blurs the lines of distinction. Power of Buyers Power of Suppliers SubstitutesCompetition Threat of New Entrants • HIGH. Buyers hold a lot of power, especially consumer/residential. View services as a commodity, high rate of churn. • Corporate customers have higher switching costs. • LOW. Entrants must possess a lot of cash to enter this capital-intensive industry plus deal with regulatory bodies like the FCC. There is also the issue of the finite amount of radio spectrum available. • HIGH. High rate of churn and commodity offerings leads to heavy pricecompetition and spending on marketing for brand recognition. Substitute products abound, and exit strategies are scarce because expertise and investments are industry specific. • MEDIUM. Bargaining power is diluted by the number of large providers, though their equipment is essential for CSP functioning, and suppliers have close relationships with CSP customers. • HIGH. Substitute offerings from cable TV and satellite companies as well as internet telephony from ISPs increase the pressure faced by CSPs.
  3. 3. ©2017 IDC 3 Creating business value in the telecommunications industry depends upon customer growth in terms of revenue and profitability. To excel, CSPs need to have the ability to reach customers, efficiently serve those customers, and keep ahead of requirements for capacity and service flexibility. They also need to do all three of these things at scale. As a result of increasing pressures, CSPs and the telecom industry as a whole are transforming around operational models, services, relationships, infrastructure, supplier relations, customers and branding and, as always, regulation. A key focus area for creating business value is around improving margins, which leads to targets for revenue growth and operational efficiencies as well as cost cutting. The Customer Is King — From Control to Providing Customer Experience The transformation vision is not just about economics for the CSP. It is also about the value to the customer. CSPs have extraordinary assets in the form of customer service and billing relationships with customers, knowledge about where customers live or operate and, in the case of mobile offerings, knowledge of where customers are at any point in time. CSPs capture data that includes call and online session details, such as time of day, length of session, and content of session. And yet, increasingly, customers are in charge; they are more sophisticated and informed. They consume via multiple channels, are constantly comparing and sharing via social networks, and have a strong desire to design their own experience. They expect and demand quality — though their trust and loyalty is tenuous. Supporting a positive and rich user experience in the corporate and consumer context has driven investments in recent years and will continue to shape priorities as customers are demanding that their CSPs change the interaction. Customers are driving CSPs to embrace trends such as self-ordering, self-servicing, customer trouble ticketing, online payment, and automated supplier procurement. Analytics and "Eyeballs" Most CSPs we speak with cite two separate "gaps" for their business., The first gap is between the amounts of data to which companies have access and the degree to which they have analytics to derive insights from all the data. The second gap is between the insights generated from analytics and the ability to have people available to react to those insights. The ability to leverage advanced and comprehensive analytics with an easy-to-use, even cognitive capability is both a key requirement and a notable gap. Trends and Strategic Imperatives Digital disruption is a provocative notion that IDC has been championing for the past few years following the introduction of our 3rd Platform concept in 2013 and the prediction that by 2018, fully one-third of all industry leaders will be disrupted by digitally enabled competitors. When one considers that 52% of the Fortune 500 companies listed in 2000 are no longer in business, this prediction strikes a rather ominous note. Defined as "the approach by which enterprises drive changes in their business models and ecosystems by leveraging digital competencies," digital transformation is particularly important for the telecom industry. The Personalized Customer Experience: Analytics and Business Intelligence To maximize customer revenue and reduce churn, CSPs are turning to robust business analytic tools to segment their customer base and identify the most profitable customers. Some of the more advanced providers are taking these applications to the next level and applying one-to-one marketing strategies. Advanced services require deep customer knowledge both to market and to maintain. For CSP customers, compelling applications and content are critical, and personalization is what makes the applications and content compelling. Analytics is the key to personalizing applications and content.
  4. 4. ©2017 IDC4 Many CSPs cite analytics as a top investment priority for 2017–2019, and some still view analytics as a net-new area of investment. The primary challenge for CSPs is not a technical issue — data warehousing and analytics technologies are not the gating factors — but a mindset issue. That aside, according to IDC's 2016 Vertical IT and Communications Survey, investments in analytics are quite advanced in this industry: 55% of respondents are using big data analytics, and 14% of respondents are in pilot phases. The organizational silos that exist among internal service provider organizations, such as IT, networks, and marketing, have limited their ability to aggregate and analyze customer data derived from multiple sources. Ultimately, strong customer service relies upon CSPs having a closer understanding of their subscribers. From call center familiarity with a subscriber's billing address to making connections with friends, families, and social networks, CSPs have significant amounts of raw information to piece together. The Future of Analytics As the use of analytics progresses, CSPs will move to run their businesses with a richer set of metrics. In the 2016–2018 period, we expect to see the relationship between CSPs and their customers become even more dependent upon service-level agreements (SLAs), self-service predictive capabilities, and the ability to offer comprehensive yet intuitively simple analytics capabilities. As companies transition from "analog" to "digital," expectations and capabilities become greater. In the digital world in which we now operate, capabilities and attributes such as "self-service," "automation," "quick response/delivery," and "always available" have become increasingly expected by customers, consumers, and providers. Further, as consumers transition from older to more tech-savvy younger generations, expectations become even more pronounced. Digitally enabled advancements such as mobility/mobile access, self-service portals, and easy access to documents via the cloud are increasingly "table stakes" for consumers to reach telecom providers and get the services they expect. For CSPs, integration of silo systems, automation of processes, self-service applications, seamless integration of different technology components, cloud enablement, advanced analytics, omni-channel servicing, and cybersecurity are just some of the expected digital capabilities. Furthermore, analytics must be better. We are long past the time where retrospective analysis is good enough. Customers and consumers expect their telecom services to be available all the time, with perfect reliability. Consequently, analytics must increasingly be proactive, predictive, and prescient. The ideal self-service analytics capability should be able to both remedy the "reason for the call" and identify root cause to prevent reoccurrence. It should be easy to use and able to leverage existing data to predict future problems and prevent them from occurring. Of course, nothing can fully predict the future, but the ability of analytics to be "prescient," based on existing data sets, will be a key element of customer and consumer satisfaction. The Key Benefits of Analytics The benefits that will accrue to the telecom company that can provide effective self-service, predictive analytics are potentially great. Indeed, for any business, the ability to target the right customer/consumer at the right time with the right product directly defines the success of customer/consumer retention and meets the growth objectives of the organization.
  5. 5. ©2017 IDC 5 Business analytics play a significant role and are critical/strategic for any organization to adopt. Early adopters of advanced business analytics are likely leaders today and will be better positioned to win in the market in the future. Benefits include:  Analytics can foster higher customer and consumer satisfaction, particularly with tech-savvy consumers who are used to interactive, always-on interactions.  A self-service predictive analytics environment facilitates building one's own reports, exploring data, and leveraging intelligent insights for building a better business.  A self-service business intelligence and analytics environment empowers customer-facing staff to make informed business decisions, ensures better customer experience, reduces churn, and boosts revenue without a system overhaul.  In terms of business endurance, the future will involve automation of massive machine learning processes. It will help CSPs not only get valuable customer insights but also gain customer satisfaction and maintain relevance. Considering Tech Mahindra PRISM In the self-service, predictive analytics space, Tech Mahindra has a robust offering called PRISM (Predictive Insights from Tech Mahindra), a platform for executing both traditional and self-service predictive analytics. At its core, the PRISM platform enables:  Business insights designed to provide a simple, structured, accelerated, and lean approach  Analytics on structured and unstructured data, with preventive and predictive capabilities in both batch and real time Tech Mahindra, leveraging knowledge of both telecom and analytics, has built PRISM, a "self-service" platform for business intelligence and predictive analytics. The PRISM platform democratizes the analytics play by giving different users a forum for interacting and analyzing. The PRISM platform automates the data science life cycle and is designed to help business users and data scientists leverage technology power without knowing about it. A self-service platform such as PRISM can help accelerate the delivery of valuable insights to business users/end consumers. PRISM is a data model/platform that is designed to have significant flexibility in adoption and implementation. As illustrated in Figure 2, it is a "closed loop" self-learning platform that offers an easy-to-use analytics engine designed to provide the right insights at the right time. The benefits of PRISM include:  Configures rather than iterates: This is intended to allow customers to avoid days or weeks of iterating data models and reduce the effort required significantly.  Data preparation phase via automation: Data sets can be organized and examined prior to applying models and creating analytics sets for each algorithm. Typical requirements will be to create derived variables, categorization, and pre-processing of binary data. Automation of this process is designed to save weeks of team effort because data preparation is a crucial step.  Provides a set of algorithms: A number of algorithms are available. It's generally not possible for data scientists to know all algorithms. PRISM allows them to explore the accuracy of different results even for algorithms they would normally hesitate to apply.  Model configuration and execution: The system can configure and execute without writing CLIs and can provide result generation and evaluation. Automation of model development reduces iteration and allows easy model access.
  6. 6. ©2017 IDC6 FIGURE 2 PRISM Business Analytics Framework Source: Tech Mahindra, 2017 Challenges Although Tech Mahindra has brought a well-considered offering to the marketplace, advanced analytics is an increasingly crowded space and the ability to differentiate is critical. Further, the bewildering array of new technologies and potential business approaches available to CSPs means that priorities are watered down. According to IDC's 2016 Vertical IT and Communications Survey, only 13% of telecom respondents identified analytics as a top priority. Clearly, there remains an opportunity for better education about the benefits that analytics can provide. Conclusion As with most segments of the manufacturing industry, telecom is experiencing significant change. At the core of this change is the need to provide a personalized customer experience. To maximize customer revenue and reduce churn, CSPs must adopt robust business analytic tools to segment their customer base and identify the most profitable customers. Advanced services require deep customer knowledge both to market and to maintain, and analytics is the key to personalizing applications and content. Business analytics play a significant role in enabling necessary business performance and are strategic for any organization to adopt — and to adopt now. Early adopters of advanced business analytics are likely leaders today and will be better positioned to TechMBusiness AnalyticsFramework  Industry & Domain Expertise Applied  Identify gaps in current process Expectations & Problems Data Preparation Exploratory AnalysisAdvanced Analytics Insights  Identify Data sources  Clean data  Find data distribution insights  Identification of outlier records  Createpredictive models using advanced analytical techniques  Recommendations/Next Best Action  Createbusiness rules Multiple Regression Logistic Regression Neural Networks Decision Trees 4321 _***_*  mediahalomediaseasonaleconomicmacroeS  Internal External +6% Marketing Impact Business Benefits HigherMarketing Impact LowerCosts Increased Revenue Options Loyal& Happy Customers Visual Analysis Tools Business Drivers
  7. 7. ©2017 IDC 7 win in the market in the future. Benefits will be broad, including higher customer and consumer satisfaction as well as the ability to leverage intelligent insights in real time, make more informed business decisions, and gain valuable customer insights. Tech Mahindra PRISM is an offering that provides many of these benefits. To the extent that Tech Mahindra can address the challenges described in this paper, IDC Manufacturing Insights believes PRISM is well positioned for success. A B O U T T H I S P U B L I C A T I O N This publication was produced by IDC Custom Solutions. The opinion, analysis, and research results presented herein are drawn from more detailed research and analysis independently conducted and published by IDC Manufacturing Insights, unless specific vendor sponsorship is noted. IDC Custom Solutions makes IDC Manufacturing Insights content available in a wide range of formats for distribution by various companies. A license to distribute IDC Manufacturing Insights content does not imply endorsement of or opinion about the licensee. C O P Y R I G H T A N D R E S T R I C T I O N S Any IDC Manufacturing Insights information or reference to IDC Manufacturing Insights that is to be used in advertising, press releases, or promotional materials requires prior written approval from IDC Manufacturing Insights. For permission requests, contact the IDC Custom Solutions information line at 508-988-7610 or gms@idc.com. Translation and/or localization of this document requires an additional license from IDC Manufacturing Insights. For more information on IDC Manufacturing Insights, an IDC company, visit http://www.idc-mi.com/. For more information on IDC, visit www.idc.com, or for more information on IDC Custom Solutions, visit http://www.idc.com/prodserv/custom_solutions/index.jsp. Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc-mi.com

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