KuppingerCole Analysts' View on Analytics

   

Article

Telcos: Making Use of Consumer Identities

Dr. David Goodman

For years telcos have been sitting on a wealth of user data. Where market penetration of connected devices, from smartphones to tablets, has reached saturation point, telcos have developed a billing relationship and a profile for most of the population including family groups and businesses. Anyone under the age of 30 has grown up in a mobile connected world with a service provider, over familiar from blanket public exposure through media advertising and sports sponsorship – the telco’s presence is rarely far away. This degree of familiarity could be expected to offer a high level of trust in telcos that in turn ought to provide plentiful opportunities for offering targeted and relevant value-added services, leading to business growth away from traditional revenue sources. To date, this has rarely been the case. However, the role of telcos is changing, due principally to the commoditization of services and the arrival of the over-the-top (OTT) players, who are able to offer VoIP services as well as a myriad of applications that today may only require the telco for Internet connectivity. As a result, more attention is now being paid to boost customer loyalty, to reduce churn and to target new services more effectively than in the past through experience-based marketing.

The operator’s data sources are as diverse as billing and payments, the CRM database, core network sessions, self-care applications, text messages and trouble tickets. This raw information can then be translated with good analytics into operational optimization and enrichment, both for the individual user as well as the network as a whole. The most transparent business opportunities are driven by insights based on user behaviour which when connected to business processes can drive actions. When automated and real-time, decision-making becomes quicker and more efficient.

Real-time data from network events and elsewhere can be analysed to assess symptoms and causes of issues, which when shared with a customer-facing team can dramatically reduce the time required to resolve calls and to repair faults. Real-time analytics of network traffic can also be used to predict and prevent cell congestion when there is a high concentration of users at, say, a football match or a concert. Likewise telcos can track the movement of vehicles and offer a premium service for avoiding traffic snarl-ups.

In some cases, the societal benefits are tangible as in the case when Telefonica used mobile data to measure the spread of a swine flu epidemic in Mexico, enabling the government to reduce virus propagation by 10%. Or when, after a massive earthquake in Mexico, Telefonica researchers captured mobile data records that, once anonymized and aggregated, allowed visualizations of the density of calls in the different parts of the city to be built, immediately depicting the areas most affected by the earthquake.

However, users are becoming increasingly aware of what data all companies store about them, and the telcos are no exception. It is only a matter of time before telcos are required to seek customer consent before selling their data insights to third parties.

   

Article

Risk and Governance in Analytics

 Mike Small

There is now an enormous quantity of data which is being generated in a wide variety of forms. However this data, in itself, has little meaning or value; it needs interpretation to make it useful. Analytics are the tools, techniques and technologies that can be used to analyze this data into information with value. These analytics are now being widely adopted by organizations to improve their performance. However what are the security and governance aspects of the use of these tools?

For example Dunnhumby which was created in 1989, by a husband and wife team, to help businesses better understand their customers by being 'voyeurs of the shopping basket'. Within a few years, they were working with Tesco to develop their Clubcard loyalty program. The insights from this help Tesco stock the right products, optimize prices, run relevant promotions and communicate personalized offers for customers across all contact channels.

However another side to this kind of analysis was described in the NY Times article How Companies Learn Your Secrets - NYTimes.com. According to this article a statistician working for the US retailer Target figured out how to identify customers in the second trimester of their pregnancy based on buying habits and other customer data. The targeted advertising based on this led to an angry father complaining to a store manager about advertising for baby clothes and cribs being sent to his daughter who was still in high school. It turned out that the analytics had worked out she was in fact pregnant but she had not told her father.

These examples based on loyalty cards illustrate the value of data analytics but the problem is now even more difficult. This is because of the amount of data that is being generated through smart devices and Apps vastly exceeds that from the occasional use of a loyalty card.

So where is the line between improving service to customers and invading their privacy? At what point does the aggregation and analysis of data become a threat rather than a benefit? These are difficult questions to answer and regulations and the law provide little help. For example when a customer in the UK accepts a customer loyalty card they accept the terms and conditions. These will almost certainly include an agreement that the card provider can use the data collected through its use in a wide variety of ways. Most people do not read the small print – they simply want the loyalty rewards. Those who do read the small print are unlikely to understand the full implication of what they are agreeing to. However under the data protection laws this agreement is considered to be “informed consent”. So is this a fair bargain? Based on the take up of loyalty cards in the UK - for most people it is.

So from the point of view of an organization that wants to get closer to its customers, to provide better products, to become more competitive data analytics are a powerful tool. According to Erik Brynjolfsson Professor at the MIT Sloan School of Management: “Companies with ‘data driven decision making’ actually show higher performance”. Working with Lorin Hitt and Heekyung Kim, Professor Brynjolfsson analyzed 179 large publicly-traded firms and found that the ones that adopted this method are about 5% more productive and profitable than their competitors. Furthermore, the study found a relationship between this method and other performance measures such as asset utilization return on equity and market value.

But what are the risks to the organization in using these forms of analytics? Firstly it is important to be sure of the accuracy of the data.

Can you be sure of the source of the data which originates from outside of your organization and outside of your control? Many consumers take steps to cloak their identity by using multiple personas, the Internet of Things may provide a rich source of data but without guarantees regarding its provenance or accuracy. If you are sure of the data what about the conclusions from analysis?

Can the analytics process provide an explanation of why it has reached the conclusions that you can understand? If not be careful before you bet the farm on the results.

Are you sure that you have permission to use the data at all and in that way in particular? In the EU there are many rules regarding the privacy of personal information. An individual gives data to a third party (known as the data controller) for a specific purpose. The data controller is required to only hold the minimum data and to only process it for the agreed purpose.

If you are going to use analytics it is a decision which should involve the board of directors. They should set the business objectives for its use, define the policies for its governance, and their appetite for risks relating to its use.

   

Comment

Managing the relationships for the new ABC:
Agile Business, Connected

Martin Kuppinger

Over the past years, we talked a lot about the Computing Troika with Cloud Computing, Mobile Computing, and Social Computing. We raised the term of the Identity Explosion, depicting the exponential growth of identities organizations have to deal with. We introduced the need for a new ABC: Agile Business, Connected. While agility is a key business requirement, connected organizations are a consequence of both the digital transformation of business and of mobility and IoT.

This rapid evolution in consequence means that we also have to transform our understanding of identities and access. We still see a lot of IAM projects focusing on employees. However, it is about employees, business partners, customers and consumers, leads, prospects etc. when we look at human identities.

 
Fig. 1: People, organizations, devices, and things are becoming connected –
organizations will have to deal with more identities and relations than ever before.

Even more, human identities are becoming only a fraction of the identities we have to deal with. People use devices, which communicate with backend services. Things are becoming increasingly connected. Everything and everyone, whether being a human, a device, a service, or a thing, have their own identity.

Relationships can become quite complex. A device might be used by multiple persons. A vehicle is not only connected to the driver or manufacturer, but to many other parties such as insurance companies, leasing companies, police, dealer, garage, inhabitants, other vehicles, etc. Not so speak about the fact that the vehicle for itself consists of many things that frequently interact.

Managing access to information requires a new thinking around identities and access. Only that will enable us to manage and restrict access to information as needed. Simply said: Identity and Access Management is becoming bigger than ever before and it is one of the essential foundations to make the IoT and the digital transformation of businesses work.

 
Fig. 2: APIs will increasingly connect everything and everyone – it becomes essential
to understand the identity context in which APIs are used.

In this context, APIs (Application Programming Interfaces) play a vital role. While I don’t like that term, being far too technical, it is well established in the IT community. APIs – the communication interfaces of services, apps (on devices) and what we might call thinglets (on things) – are playing the main role in this new connected world. Humans interact with some services directly, via browser. They use the UI of their devices to access apps. And they might even actively interact with things, even while these commonly act autonomously.

But the communication than happens between apps, devices, and services, using these APIs. For managing access to information via services, devices and things, we need in particular a good understanding of the relationship between them and the people and organizations. Without that, we will fail in managing information security in the new ABC.

Understanding and managing relations of a massive number of connected people, things, devices, and services is today’s challenge for succeeding with the new ABC: Agile Businesses, Connected.

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