Telecommunications business intelligence beliefs

Business Intelligence has become a strategic directive within the telecommunications industry.

This article originally appeared on the BeyeNETWORK.

Over the past decade, I have been exposed to the telecommunications (telecom) industry in many ways. As a consumer, I have moved from a single phone line, basic cable, dialup modem household to a three phone number (one landline and two wireless), Tivo driven satellite, DSL LAN household. As a professional, I have seen the growth of telecom customer care and billing systems grow from simply being back office operational systems to touch points for marketing and customer relationship management. As a graduate business school student and resident of the Denver Metro area, I witnessed, and cast a critical, analytical eye toward, the ride of the telecommunications industry to the top of the Internet Bubble in 2000 and back down the other side. With this decade of experience, I have come up with some strong opinions about the telecommunications industry and how business intelligence can impact the strategic decisions of the telecommunications industry.

Also, since I am a self-described sports junkie with an MBA, this article might sound a little like Michael Porter playing the role of Crash Davis in a Hasty Pudding presentation of revival of “Bull Durham” at Harvard…

 I believe that the telecommunications industry has been misinterpreted for many years…

During those go-go days of the Internet Bubble, the telecommunications industry was easily described as the companies that built out and used the telecommunications infrastructure, telecommunications service providers; and those who manufactured the equipment that enabled that infrastructure, telecommunications equipment manufacturers. However, when the Internet Bubble burst, it was determined we had enough telecommunications bandwidth or at least we could accept the limitations based on the cost of additional bandwidth. At this point, the telecommunications industry, as a whole, fell on hard times.

Some firms fell because they had overestimated the demand for that additional bandwidth. Some firms fell because they played fast and loose with generally accepted accounting standards. Some firms fell because they were branded as “telecommunications industry” firms. Truly the falling tide of the telecommunications industry lowered a lot of boats, even those that did not “deserve” to be lowered.

Even today, there are many who still view the telecommunication industry as one group and find it hard to tell the difference between the business models of Lucent Technologies and the former AT&T Wireless, now part of Cingular. (“Hey, they were both part of AT&T. They must both be in the telecommunications business...”).

 I believe telecommunications should be defined in terms of service providers not equipment manufacturers…

I prefer to think of the telecommunications industry in terms of telecommunications (TSP) or communications service providers (CSP) rather than their equipment manufacturer brethren. These providers include:

  • Incumbent Local Exchange Carriers (ILEC) or Regional Bell Operating Companies (RBOC) like Qwest and BellSouth;
  • Competitive Local Exchange Carriers (CLEC) like Level3;
  • Wireless Communications Service Providers like Cingular;
  • Internet Telephony (VoIP) Carriers like Vonage;
  • Cable Operators like Comcast; and
  • Direct Broadcast Satellite Operators like DirecTv and XM Satellite Radio.

This is by no means an exhaustive list of the telecommunications services provider industry. But, it gives you a good idea of the types of firms that I believe should define the telecommunications industry.

No disrespect to the firms that produce the “nuts and bolts” that make telecommunications services possible. However, they manufacture and market a relatively static and tangible set of hardware and software products to a relatively small set of corporate customers.

Telecommunications service providers, irrespective of whether they own their own network or pipe to the end-consumer, are involved in creation, marketing, provisioning and billing of a relatively flexible and intangible set of services to a relatively large number of customers, both corporate and consumer.

I believe that a strong competitive strategy provides the foundation for corporate success…

As stated above, the telecommunications services industry fell on hard times with the bursting of the Internet Bubble. There were too many competitors and too much bandwidth to go along with poor business models and “creative” accounting standards. Since then, each of the firms in the telecommunications industry are attempting to find a level of competitive advantage over their challengers for “share of wallet” for the customer, business or consumer, of their given target markets.

In 1980 Michael Porter, widely viewed as a leading authority on competitive strategy and the competitiveness, described three strategies to create competitive advantage. For those firms seeking to be the low-cost provider to a particular market, Porter prescribed the following corporate activities:

  • Employ tight costs controls across the organization;
  • Execute the measurement of strict quantitative business objectives; and
  • Implement frequent and detailed reports on those business objectives.

These activities were designed to take advantage of greater profit margins not available to competitors who do not implement the same types of cost controls.

For firms hoping to differentiate themselves as premium alternatives, Porter offered the following advice:

  • Use strong marketing abilities;
  • Cultivate a reputation for quality service and high customer satisfaction; and
  • Develop the capability to assimilate internal and external information to stay ahead of the competition.

The above advice provides companies with the advantage to blunt a market’s sensitivity to price and focus on value-added aspects of an offering.  This, in turn, allows a company to charge a relatively higher price and deliver a greater profit margin.

For firms looking to target a particular market segment or customer segment, Porterrecommended a focused mix of the two approaches above. To fall in between the two strategies in an unfocused way, is a good way to waste corporate resources and incur the wrath of the investor community still wary of the telecommunications sector following the bursting of the Internet Bubble.

 I believe that business intelligence provides the infrastructure for competitive advantage…

In a recent Yankee Group report, the following areas were described as the top business intelligence activities priorities for the telecommunications industry:

  • Service Provisioning/Activation Analyses (Cost control and customer satisfaction);
  • Network Performance Management (Business objective measurement and cost control);
  • Market segmentation and campaign management to put those services in front of the best prospective clients (Marketing ability and information assimilation);
  • Customer Churn (Information assimilation and customer satisfaction);
  • Channel Performance (Cost control and customer satisfaction);
  • Revenue Assurance and Fraud correction (Business objective measurement and cost control);
  • Financial Visibility (Business objective measurement);
  • Customer Service Performance and Customer relationship management to maintain and promote customer satisfaction before, during and after the consumption of those services (Cost control and customer satisfaction); and
  • Customer/Product Profitability Assessment (Business objective measurement and information assimilation).

As you can see, each of these areas of Business Intelligence relate to at least one of the strategic objectives for competitive advantage laid out by Michael Porter.

I believe that business intelligence can enable the future success of the telecommunications industry…

I do not believe that business intelligence is the “magic bullet” that will magically repair the image of the telecommunications industry and bring a return of the go-go days of the Internet Bubble. No application or toolset used without the proper dedication and strategic direction can be a “magic bullet.” However, I do believe that business intelligence can enable the competitive advantage of the telecommunications service providers that will lead the industry in both the short-term and the long-term. No matter what the next “killer application” is that will drive another telecommunications boom, the firms that have implemented sound business intelligence practices and solutions will be the ones positioned to benefit the most from that next “rising tide.”

John Myers has more than 10 years of information technology and consulting experience in positions including business intelligence subject-matter expert, technical architect and systems integrator. Over the past eight years, he has gained a wealth of business and information technology consulting experience in the telecommunications industry. John specializes in business intelligence/data warehousing and systems integration solutions. John may be contacted by email at John.Myers@BlueBuffaloGroup.com.

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