31 JANUARY 2018

How Prescriptive Analytics Might be the Cure for Surviving the Digital Transformation
Do you feel it?  There is a seismic shift, what analysts are calling a digital transformation, happening in telecom right now.  According to McKinsey and Company, selling wireless service is no longer the high-growth business it used to be. Finding new customers has gotten harder for the carriers, and competition is fierce.  It used to be that service providers were able to compete on who had the best network, but today those differences are all but negligible. For almost a decade, US consumers were asked in the popular TV ads, ‘Can you hear me now?’ The answer is finally yes, everyone can hear you now.  So, what happens next?

Wireless connectivity is more important than ever; our lifeblood for getting access to the devices, apps and content we crave. But for many wireless carriers, revenues have shrunk over the past year. What’s a service provider to do when a new breed of competitors and over-the-top content providers are profiting more from their networks than they are?

The Explosion of Digital Ecosystems
It seems the solution is to think outside the box – or maybe outside the ‘pipe’ is a better way to put it. Today’s digital transformation means wireless companies are pulling out all the stops to differentiate their offerings by creating an ecosystem of digital content and services that help set them apart, moving into adjacent businesses such as media, IoT, financial services, IT services, logistics, and even utilities in search of new opportunities and revenue streams.  But service providers don’t have the expertise needed to offer all this on their own.  Instead, they are turning to partnerships that bring specialist expertise to complement the carrier’s strong customer relationships and existing wireless network. One early example is in media, through partnerships with companies like Netflix, HBO and Spotify. In the case of AT&T, their potential merger with Time Warner would pair a telecom giant with a media giant. Time Warner wants new ways of reaching younger audiences through their beloved smartphones, while AT&T wants to sell more videos and other content as a way of boosting its shrinking wireless business.  These new ecosystems are popping up not just in the U.S., but around the world, as telecom providers look for ways to reinvent themselves.

Things are Really Getting Complicated
While it may be good for business, all this change is creating a lot of complexity. It used to be that to deposit a check, you’d go to the bank. Music was played on a CD purchased from a store.  To see a movie, you’d go to a theater, and to buy a book you’d go to a bookstore.  Of course, now all of this can be done over your phone, but the majority of these 3rd party purchases still happen outside the ‘wall’ of the service provider.  That changes as new partnerships emerge. Financial lines become blurry as complex business models are formed with multiple stakeholders, creating acronyms like B2B2X, along with a maze of partner KPIs and SLAs to navigate and negotiate.  Who ‘owns’ the customer?  Who is responsible when content or services aren’t delivered properly, and who gets what share of the revenue? How are margins tracked and complex partner payments reconciled? These are just a few of the thousands of questions that will arise from this digital makeover.

Is There a Prescription for That?
Service providers know they are moving into unchartered waters, so the smart ones are turning to the business of analytics to help answer the tough questions and ensure they stay profitable as things get more and more complex.  Some of the more forward-thinking carriers are looking to the relatively new field of prescriptive analytics. Prescriptive analytics predicts not only what will happen, but also why it will happen- providing recommendations for actions that will take advantage of the predictions.  This lets service providers approach new business decisions, and validate and optimize existing business with significantly more insight and confidence, creating opportunities for carriers to expand and compound their partner relationships that need to be managed from a cost, revenue and margin perspective.

Of course, benefiting from prescriptive analytics requires the right skill set and expertise. It’s quite complex, using a combination of techniques and tools such as business rules, algorithms, machine learning, artificial intelligence and computational modelling techniques that leverage many different data sets, including historical and transactional data, real-time data feeds, and big data. When implemented correctly, prescriptive analytics can play a big part in how service providers and their partners make decisions, and on the company’s bottom line.

As demand for services such as media and the Internet of Things continues to grow, there will be even more partnerships, devices, services and content to manage. Service providers that equip themselves with the analytical tools to manage the chaos and better understand their business will have the competitive edge they need to survive – and even thrive – during this digital transformation.  At TEOCO, we have been at the cutting edge of business analytics since our founding in 1995. Our solutions help identify the most profitable scenarios, and question your financial flows well beyond simple process verification. To learn more about TEOCO’s business analytics solutions and how we can help navigate your digital transformation, visit our website.