Data matching is the new gold for telecom operators

13 October 2015 Consultancy.uk

Telecom operators find themselves in challenging waters in recent years, stiffed by competition from new market entrants and the impact of waning cash cows. For those that want to stay on top of their ball game change is key, with a transitioning to a data activator model one of the key strategic ways forward, suggest a new study by Atos Consulting.

Every year Atos Consulting, the consulting arm of IT services giant Atos, conducts research into the main trends and developments in the telecom, media and technology industry. This year’s edition, titled ‘Telecom operator: activate your gold’, looks in particular at the rise of data in the telecom space, and elaborates on how operators can tap into what is dubbed the industry’s new gold.

The research shows that the telecom sector is being faced with a wide range of simultaneous and high-impact changes, of which some are so disruptive they have the potential to reshape the fundaments of the industry. One of the key central trends is that of connectivity. Humanity, in particular in Western societies, has embraced internet and online devices (smartphones, tablets, etc) with an extraordinary speed, and as a result consumers are online virtually non-stop, regardless of what they are doing and where they are. According to the researchers, by 2018 the globe will see 25 billion connected objects, of which 4.5 billion are smartphones.

The three Revolutions in Information Representation

While the rise of connectivity brings with it several major challenges to operators, such as increasing stress on infrastructure, investments required in new technologies and changing consumer demand – topics which have dominated the media for a number of years now – the upside is that it too paves the way for an entire new market. This new economy, dubbed ‘the Economy of Data’, holds a mountain of value, which if monetised successfully, will bring forward a range of prosperous business models.

The mountain of added-value waiting to be capitalised sits, say the authors, mainly in the space between the consumer and provider. On the one hand consumers have needs which they are seeking to fulfil, and on the other hand there are providers anxious to provide the demanded products and/or services. For both parties the match between the two represents the value, and it is that role – the matchmaker, named ‘data activator’ by Atos Consulting – that is ideally placed to succeed in the new economy of data.

From a consumer perspective, two aspects stand at the heart of their value. Firstly, throughout the search process they want to be provided with relevant, ideally fully tailored, information. The matchmaker here plays a role in ensuring the seller base is aligned with consumer demands. The role of digital footprints is in this respect paramount – through their behaviour and decisions, connected consumers provide a mass of information on for instance preferences, personal interests and location. On the back of amalgamation and time, this creates a rich consumer profile, which should feed-in to the matching process to ensure maximum relevance. At the other end of the spectrum, a connected consumer is also open to receive information, such as for instance service messages, or tailored promotions.

Consumer and Offerer

From a seller’s viewpoint, the value centres around two key dimensions: fit and conversion. Sellers want to reach their addressable market, and through the use of digital footprints they can target their approach to their bull’s-eye. With relevance for consumers on the rise, so too will the quality of conversion and client relationships, creating value across the value chain, from sales to after-service.

By merging these two worlds in the digital space, the data activator can unleash a massive potential which can bottom-line run into billions of euros. To illustrate the value: according to Compass Intelligence the value of a relatively complete consumer profile is now worth $55, with the price forecasted to rise further in coming years as improved Big Data techniques bolster the opportunities of data capture and analysis. Another benchmark, from Facebook, shows that the implicit value of a single user on its platform has grown from $10 a few years ago to more than $50 this year, as the social media giant has among others been able to enrich the footprint of Facebookers worldwide. “The new economy of data calls for a new matchmaker, to bring the connected consumer and the connected offerer together,” says Tom Konings, Principal at Atos Consulting and one of the authors of the report.

Value of a Consumer Profile

The opening space will naturally not remain unnoticed in the marketplace, with a range of companies positioning themselves. “Tech companies, telecom operators, governments, large social sites, and at a smaller scale in certain niches even independent platforms are behind the scenes preparing themselves for the role of data activator,” says Konings. A synopsis of the market forces however reveals that telecom operators are best equipped to end up on top, he says, building on their natural role in the chain, and the pole position they have in terms of access to personalised client data.

He bases his reasoning on a number of factors. Operators are in his view “trusted, and rather independent parties”, and have the luxury that consumers are continuously connected to them, in essence providing them with digital footprints at literally no extra cost. They in addition can relatively easily create the mirror image for businesses, nurturing effective matching, and can build on a strong heritage of managing enormous amounts of data and serving millions of customers. For operators which can successfully transform their business model to include the data activator role, the future is bright he says, while on the downside, those that miss the digital boat are set to face a grim future. “Our forecasts indicate that those that observe the trend from the sidelines will find themselves in a very difficult position by 2020.”

Data Activator

It is however not all about the blunt monetisation of data, warns Konings. There are a number of governance factors that will play a pivotal role in dividing the wheat from the chaff in the heating up marketplace. As an intermediary, managing timing is key, so striking the right balance between frequency (income) and long-term client demands should be top of mind when drafting matching strategies. “Good timing encompasses next to timing delivery also the right frequency, the right context and ensures a message is received in the right place, for example at walking distance from a store,” says Konings. Transparency is another important area. Against the backdrop of growing data usage versus privacy concerns, providing transparency on data management to consumers and businesses is imperative. “This provides insight, creates understanding, and allows users to control their data settings, as element that ensures the data ecosystem maintains a sustainable place within society.”

For executives at telecom operators, Konings concludes by saying that it is time for action. “With traditional business lines under threat, findings new revenue streams is important. Analysts alike agree that entering the market for data activation is one of the most promising new markets around, and if executed successfully, it welcomes a lucrative line of business. We believe now is the time to dig for and activate your gold.”

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”