What is the future of the telecom sector? We have been seeing telecommunication providers switching their perspective on seeing network infrastructure as a source of competitive advantage and moving towards closing Network Sharing Agreements with their traditional competitors, in a race to create cost benefits and ensure coverage for providing their traditional telco services. While big telecom companies struggle to define their long-term strategies and fight a future as a “dump pipe” provider, Big Data arises as a solution for maintaining relevance, increasing customer experience, and tapping into new sources of revenue. This is a trend Vodafone Group Plc, one of the world leading telecommunications company, has also been tapping into.
How can Big Data help? Gaining and utilizing insights into customers profile and usage behavior helps telecom organizations by both increasing customer experience and by decreasing internal costs. When it comes to operational efficiencies, one of the first important moves Vodafone has done was partnering with Celonis in 2017 and implementing their software solution – “the full body MRI scan” as called by Exposito, Celonis CEO – to gain data transparency from start to end into their supply chain and accounts payable and thus creating a map of their internal processes. Not only does this offer a diagnosis into existing inefficiencies, but by adding AI and ML tools on top, it also offers recommendations into process improvement and process automation (potentially reducing the human capital cost and further improving the quality of available data in the future).
In addition, through predictive analysis of data behavior, Vodafone is not only able to better handle its working capital, by identifying customers who are most likely to have problems paying bills, thus enabling the company to take precautionary actions, but will also support it to increase flows of recurrent revenues and better management of a stable customer base, by identifying customers who are about to port-out, and who would thus exacerbate churn. Again, the company has the opportunity in this case to take precautionary actions, thorough early renewal proposals or product placements fit with the respective customer behavior.
Use of Big Data helps Vodafone work on the other side of the value creation, by improving the customer experience. Vodafone achieves this through different means:
- integrated systems and customer interfaces – all customer requests and interactions with Vodafone are now centrally stored and available across all interfaces Vodafone uses to interact with its consumers, digital or non-digital: retail, customer service, website (desktop and mobile), MyVodafone App, SMS. Not only does this enable the operator to create less friction with the customer and solve customer requests efficiently, but it also allows it to better follow the customer through its buying journey and increase probability of finalizing a service purchase through repeat product exposure;
- increased quality of network by predicting peak network usage so that Vodafone can take measures to relieve traffic congestion;
- proactive service and product proposals – by understanding customer behavior, Vodafone can proactively suggest products and services to address specific customer needs and reduce bill-shocks (which tend to lower customer experience and trigger customers to change service providers);
- create new product offerings, enabled by data, such as Internet of Things solutions and Vodafone Analytics. Vodafone Analytics is a platform developed to offer value for B2B customers, by analyzing telecommunications data based on user geolocation and behaviors. Through this service Vodafone promises businesses an insight into users’ behavior and a path to make data driven future investments, and thus reducing costs by reducing the need for trial and error. How does this work more specifically? Let’s take the example of a retailer: not only will this tool support decisions related to future footprint expansion (or why not, decisions to optimize existing footprint), but it will also enable such customer to better understand the user and potential user behavior within each retail space and in surrounding areas, enabling them to make better use of the space acquired. Such customers can also target future campaigns at segments within a precise geographic area to optimize return on investment.
As we can see, this is not the result of light decisions and superficial investments. Rather, this is a journey Vodafone engaged in more than five years ago and in which it has invested systematically. After partnering with Google Cloud in 2019 to host its cloud platform for data analytics, business intelligence and machine learning, Vodafone reinforced the partnership in 2021 to boost its data processing capabilities. The operator’s need to move and process “huge volumes of data globally from multiple systems into the cloud” will be enabled by an integrated data platform called Nucleus – which will use hybrid cloud technology – and a distribution engine called Dynamo – which will pull data from various sources and push key information back to end points, where it will be used.
This entire infrastructure not only will enable Vodafone to migrate its SAP environment to Google Cloud and create digital twins of its worldwide digital infrastructure and many of its internal support functions, but it also enables the giant telco operator to put big data at the service of its customers, as we have seen in previous examples.
The question remains: what will be the future of the telco industry? With traditional telecommunication services becoming commoditized, will Big Data provide significant opportunity and returns to make up for the continuous investments required in their network? Is the Big Bet on Big Data enough?