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Data warehousing in the Telecommunications Industry

By Judith Lamont

Three forces have converged to propel telecommunications into one of the most competitive business arenas of today's market: technology development, user demand and deregulation. Ten years ago, the heart of the telecommunication industry was long-distance service. Now an array of new services ranging from paging to cellular phones and wireless Internet are technically feasible. Users have responded by signing on and demanding ever increasing quality (not to mention bandwidth). Deregulation has allowed competition to open up even in such traditional areas as local phone and cable service. It has also prompted a series of mergers and acquisitions among both small firms and the industry giants.

All that leads to one bottom line: a data management nightmare. The large, long-established firms have legacy data on mainframes that may need to be integrated with data stored somewhere else on a series of new products. Worse yet, data from a small company bought to provide a new product may need to be combine with that legacy data. Yet the mandate to "know the customer" means that no matter how challenging, the task must be achieved or the company will not survive.

"Putting the customer at the center of the business is one of the key trends in the industry," said Stewart Meyer, telecommunications industry analyst for MicroStrategy (www.microstrategy.com). "The best way to do this is through a data warehouse." He also noted that, as in other industries, there is a need to integrate customer input from numerous channels, including call centers and the growing number of online transactions. Each service representative should be able to see a full history of the customer's interactions with the firm. New transactions need to be fed back into the database.

Although those issues are similar to the ones faced by many companies implementing data warehouses, the telecommunications industry does have some unique requirements. The most outstanding one is the sheer volume of data.

"Some switches are producing millions of records an hour," said Rick Plaster, a technical consultant for Perspective Technologies. Perspective, a MicroStrategy business partner, is an experienced implementer of data warehouses for the telecommunications industry. Plaster drew a comparison between large companies, which were doing sophisticated data analyses before the newer software tools were available, and smaller companies which were focusing on the simpler task of data consolidation.

The call volume translates into major storage requirements, among other things.

"Two years of call detail records (CDR) can require 100 terabytes," said Rich Peters, manager of telecommunications industry solutions at FileTek (www.filetek.com). FileTek implements call detail warehouses for large telecommunications firms as well as financial, retail and government organizations. The volume of data also can make it inaccessible to the decision-making process if it is not properly managed.

"The firm is trying to get a certain amount of 'stickiness' with the customer in each interaction," said Peters, "and to know ahead of time which of the many available services that customer is likely to buy." The well established goals of customer retention, cross-selling and upselling can be effectively supported by viable data warehouse and analytical tools such as online analytical processing (OLAP). Those are among the primary customer-related applications for data warehousing and OLAP. For example, telecommunications firms can examine the CDRs for calling patterns that might indicate that an additional service would be of interest. Customer satisfaction is at the heart of those efforts.

Combining customer sales data with external data can lead to some sophisticated marketing strategies. For example, one firm used social security numbers (which indicate the location in which an individual is born) in combination with the individual's present address. Those who were living away from their birthplace were targeted as candidates for a long-distance plan.

Companies can also target their high-profit for identifying high-probability new customers, leading to more effective marketing strategies. Well managed data reduces the cost of acquiring new customers, particularly if it is quickly made available to all the departments that need it, regardless of the channel through which it was acquired.

Another option is to have all the data in a warehouse but set up data marts for focused applications. Each of those approaches has trade-offs in terms of speed and availability, and each requires careful planning to ensure the system accomplishes the desired goals.

Article copyrighted by and reprinted from KMWorld, January 1, 2000, Volume 9, Issue 1

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FileTek implements call detail warehouses for large telecommunications firms as well as financial, retail and government organizations.

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