As the consolidation in business intelligence (BI) offerings continues through 2007, another two trends are starting to have an impact, both on the vendors that sell the solutions and the customers who buy them. Telecoms operators in Europe - fixed and mobile - are starting to change their business models because of competition.
According to Doug Dorrat, a telecoms analyst at MicroStrategy, this change will have to come to SA too.
"Telcos will have to start gaining insight into their customers` general spending patterns," he says. "The pay-per-use model has already moved into the pay-for-access model in Europe and soon it will have to become transactional."
Since average revenue per user (ARPU), a critical key performance indicator for a carrier, is dropping too quickly for the common garden variety telco to survive, Dorrat predicts they will have to get involved in customers` buying habits, specialist needs and individual profile if they are to skim a piece of those transactions.
The problem is that telcos are nowhere near capable of analysing the terabytes of transactional information that their users generate every quarter, let alone identifying key customers. That is not to say that local telcos aren`t already adopting BI tools and techniques.
David McWilliam, MD of Cognos South Africa, says telcos need to extract and analyse the information to create customer and market profiles.
"Telcos are fast realising that BI is a crucial tool to understanding their clients` needs and preferences; building profiles from the information that resides in their systems is thus essential," he says.
New generations
This, he says, allows them to tap into the needs and requirements of lucrative markets such as the Y generation - users born between 1980 and 1997 that have huge buying power. "Locally, we also have a segment referred to as 'black diamonds`; establishing their preferences and buying trends delivers huge competitive advantage to telcos. BI is most commonly employed in telco billing departments and call centre environments in an effort to get to know customers better, deliver analysis and profiling, and send reports to the right people at the right time.
"This information is essential in this market where companies are vying for loyalty and need to establish which market segments are the most profitable," he adds.
SAS South Africa`s Carel Badenhorst agrees that query and reporting BI is already a part of the telco landscape, but points out that the underlying data is not given the proper care and attention necessary to get a trustworthy, single, consistent view of the enterprise.
"Like a French Riviera blonde, there is not much substance behind the pretty view," he comments. "When we start moving toward the data integration section of BI, the challenge will be the portion that gives telcos and other large organisations the ability to push their disparate data sources out of the department or business unit data store into a single copy of quality, integrated truth for the entire enterprise."
This is where most organisations, including telcos, need to do a lot of work. The activities of readiness assessment, business process re-engineering, change management and infrastructure investment need to form an integral part of the data integration section for it to be a success.
"This process is currently happening and is likely to take some time for telcos to get right," Badenhorst adds, "because the first ingredient for making this significant data integration effort a success is recognition by top management that they actually need some substance behind their pretty pictures. This activity usually eats up about 80% of any BI budget, but get that right and the rest is easy and trustworthy."
Cometh the hour
Information is essential in this market, where companies are vying for loyalty.
David McWilliam, MD, Cognos SA
The other seismic event in the BI world is a shift by Microsoft to play more aggressively in the market. To be fair, Microsoft is hardly a new entrant into the BI space, as Cyril Belikoff, business group executive for Microsoft South Africa`s Information Worker division, points out.
"We`ve been playing in the analytics and scorecarding space for some time. Microsoft changed the BI landscape many years ago by including BI analytics into SQL Server at no additional cost, and others have followed," he says.
"We have many successful implementations globally and locally, so our maturity is not in question. In addition, we acquired ProClarity [early last year], which is a very successful BI solution offering."
And the numbers point to growth. IDC ranked Microsoft number three in reporting and analysis tools, with nearly 28% revenue growth, and number six in advanced analytics, with revenue growth of 40%. Clearly there are numerous SMEs with BI needs that feel Microsoft`s solutions offer what they need.
"Right now, there`s a lot of consolidation in the BI industry," says Belikoff. "Our approach is based on broad availability and affordability. There`s room for many players; the key is delivering a solution that meets customer needs in an affordable and sustainable way. For us, the most powerful effect on the market comes from BI solutions delivered by our partners, who build industry- and customer-specific solutions on an existing platform."
There`s no doubt that specialist vendors are watching Redmond carefully (see the roundtable discussion for more comments). However, SAS`s Badenhorst thinks there will be plenty to go around.
"Microsoft as a scalable, stable, strategic business support platform for business intelligence will not work for everyone, just like SAS doing this may be overkill for others," he says.
The BI landscape is clearly varied enough in its requirements to provide a piece of action for all vendors playing in this space.
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