The Internet of Things (IoT) revolution is creating an enormous volume of data for the telecommunications industry (telcos). Data gathered from in-store beacons, environmental sensors, and mobile devices have the potential to create value in new, unprecedented ways. Now telcos must determine the best way to analyze and monetize this data. The new business models telcos develop must balance the need for data privacy with the need to identify granular insights that improve customer experience. As consumer behavior and expectations change, service providers will need to provide increasingly sophisticated services. Stephan Gatien, global head of the Telecommunications Industry Business Unit at SAP, recently shared his insights on IoT data analysis on the S.M.A.C. Talk Technology Podcast.
The challenge: Retaining current customers and creating new business opportunities
Consumer behavior has changed significantly in the last five years. Consumers are shifting to apps like WhatsApp, Facebook Messenger, Snapchat, and Instagram rather than calling and texting.
“That’s the big issue for telco providers,” says Stephan Gatien on the S.M.A.C. Talk Technology Podcast. “Their core services – text, voice, and data – are actually evaporating. The revenue associated with these services is evaporating. The big challenge in this industry is to determine how to offset the degradation of this revenue coming from text, voice, and data to a certain extent, by buying new services that will be relevant to subscribers. By also new services that may be relevant in the new digital life, in the new digital world we live in.”
Telco companies are trying to reinvent themselves and stay relevant in the digital era. This has led to two major trends. First, companies are focused inward on their customer experience. They need to retain their most valuable customers.
“What we’re seeing is a very strong focus on customer experience, customer centricity,” says Gatien. “There is an extreme investment in customer experience… understanding what your customers want in order to personalize and address their needs and hang onto the right ones.”
Secondly, telcos are looking outward. They’re considering how they can monetize the enormous volume of IoT data currently in their possession.
“The Internet of Things is a huge opportunity for telco providers to be even more pervasive in our lives,” says Gatien. “There are connections all around. There are billions of sensors in the world and there are only going to be more and more. How to make money around that is a big search, a big hunt for many providers.”
Predictive analytics and machine learning turn IoT sensor data into actionable insights
The telecommunications industry has access to a staggering amount of data. But access to data is just the first step. The telco industry still needs the ability to quickly analyze this data and then to monetize customer behavior insights gleaned from this analysis and build real business value.
“The explosion of data, whether it’s on the subscriber side, all of us in our digital lives accessing something, texting something else, watching a video, or whether it’s on the business side where large organizations will rely increasingly on beacons in stores, on sensors to drive their processes, will create terabytes of data, petabytes actually,” says Gatien. “The opportunity is huge to find a way through both faster computing capabilities and smarter analysis, including data science, to monetize this data in a meaningful way.”
The Internet of Things has the power to turn endpoint things into actionable things. But without a system for analyzing this data, the data’s value is limited. To fully realize IoT data potential, telecommunication companies need powerful analytics processing and machine learning. For example, telcos could use IoT data to better understand consumer usage patterns. Predictive analytics could help telcos better managing changing network usage patterns. This could reduce the likelihood of a major outage when data demands surge, such as during major sporting events like the Super Bowl.
Preventive maintenance is another practical application of IoT data. Telcos can use insights from IoT data to optimize bandwidth and coverage. Reducing dropped calls and boosting download speeds would deliver an immediate benefit to customers. Telcos would also benefit by minimizing revenue lost to service disruption.
New business opportunities for the telecommunications industry
IoT, predictive analytics, and machine learning are creating new business opportunities for the telecommunication industry. To succeed, telcos must choose a business model that will address data privacy concerns while delivering actionable insights that benefit both consumers and companies. Telcos that use their data to deliver exceptional value will benefit from both new revenue streams and greater customer loyalty.
For more information on how IoT, predictive analytics, and machine learning are disrupting the telecommunications industry, listen to Stephan Gatien on the S.M.A.C. Talk Technology Podcast.
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