I D C           C U S T O M E R                           S P O T L I G H TTelstra Embeds Business Logic S ystemsInTelesta...
lower-price MVNO players. Any advantage, no matter how slight, is squeezed ruthlessly to extractany last drop of value.Tel...
•   Impact upon internal resources, marketing and engineering teams.   •   Positive impact upon customer revenuesThe Busin...
ChallengesThe principal issue centred on initial concerns that BLS operations were located in Europe. Shouldany issue requ...
•    Increased Average Revenue per User (ARPU). Although Telstra does not disclose exact pre-          paid ARPUs, the com...
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GDS International - Next - Generation - Telecommunications - Summit - Africa - 5


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IDC Case Study Business Logic Systems

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GDS International - Next - Generation - Telecommunications - Summit - Africa - 5

  1. 1. I D C C U S T O M E R S P O T L I G H TTelstra Embeds Business Logic S ystemsInTelestage in Prepaid Mobility GrowthPublication Date - August 2011Sponsored by Business Logic SystemsIntroduction Solution SnapshotThis case study details how Telstra created competitive Organization: Telstraadvantage in the tightly contested Australian pre-paidmobile market. Operational Challenge: Improve Pre- paid mobile subscriber retention andTelstra is Australias largest Telecommunications service valueprovider with revenue of AUD24.98 billion and EBITDA ofAUD10.15 billion (FY2011 company accounts). A profitable Solution:company with healthy margins, Telstra provides a Business Logic Systems InTelestagecomprehensive range of services to both consumer and Project Duration: Deployment < 3business markets. These include local/national months/international voice and data services, IT services, internetservices, wholesale, media, online and mobile Project Cost: Costing on a percommunications. campaign basis; deployment cost approx USD1.0 millionEarly 2005 the company electrified the industry byannouncing an aggressive new 3G mobile infrastructure Benefit: Reduced churn by 3%;deployment. Dubbed Next G (for Next Generation improved campaign deployment timeWireless) it is the cornerstone around which Telstra builds, from a minimum of eight (8) weeks toshapes and executes its Mobile strategy in the Australian between two (2) to three (3) days.market – it provides a strong infrastructure, market and Reduced cost of campaigns by approx.competitive differentiator and consistent marketing and USD8 million, doubled campaignmessaging to consumer and business customers. response ratesBetween November 2005 and October 2006, the companycompleted a massive rapid deployment of its Next G(R)network service – one of the quickest and most successfulmobile infrastructure roll-outs seen in the industry. To thisdate (July 2011) Next G (R) remains the largest Mobilenetwork infrastructure in Australia and Telstra has beenaggressively upgrading capacity and speeds through acombination of HSPA+ and Dual Carrier HSPA solutions since commercial launch in November 2006.July 2011 network speeds now stand at up to 42Mb/s and Telstra plans to double this to 84Mb/s bylate 2011.With a relatively small population of 22.5 million people, the Australian market is intensely competitiveand handset penetration exceeds 100% of the population. Telstra faces strong competition frommultiple mobile service providers including Optus (SingTel owned) and VHA (Vodafone HutchinsonAustralia - after Vodafone Australias acquisition of Three Australia in 2009) as well as a clutch ofDocument Number : AU63312T ©2011 IDC
  2. 2. lower-price MVNO players. Any advantage, no matter how slight, is squeezed ruthlessly to extractany last drop of value.Telstra also embarked in 2008 on a Business Transformation project designed to refocus thecompany around customer service and engagement. Still ongoing, this strategic initiative wasidentified as critical to the organisations future success, particularly in a political environment wherethe Australian Federal Government is determined to create a National Broadband Network ("theNBN") and effectively impose a structural separation on Telstra.Telstra faced a tumultuous mix of issues. Lets pause and wind the clock back a little from 2011 to thebeginning of quarter 1- 2008. Then, Telstras share of Australian mobile pre-paid revenues stood atjust over 30%. Competitors struggled throughout most of 2008 to match the speeds and coverage ofNext G(R). However Telstras pre-paid share began to erode via churn to competitors and conversionto post-paid and by early 2009 its share had dropped to just above 20% of total pre-paid marketrevenues.No wonder then that Telstra was seeking ways to drive greater loyalty amongst pre-paid subscribersand reverse the decline in its pre-paid mobile base. With the cost of customer acquisition continuingto climb and mobility integral to its future, Telstra had to adapt.Telstra needed an edge in its go to market campaigns. It needed to strengthen its pre-paid loyaltybase and lengthen retention performance. The organisation concluded that its previous approach wasnot going to support its key goal of driving improved pre-paid loyalty. In short Telstra needed acampaign tool that gave it the flexibility to selectively identify and target pre-paid users and build end-to-end campaigns, and most crucially, do it via automation.The previous campaigns were manually driven, intensive, time-consuming and slow to execute. Veryslow. It was common to only run one, or maybe two, loyalty campaigns per year. Not well suited tothe fast-paced, highly competitive pre-paid market – a market that is fickle, price/value sensitive andopen to churn. Telstras marketing team would define target customers, attain a customer list, wash-out the customer list (Australia has specific regulations around marketing campaigns, for examplecompanies are restricted to frequency of contact) and then work with the data warehousing andengineering teams to create and execute a script and then credit customers. Each campaign neededto be built from scratch, an expensive option that simply wasnt quick enough to drive more positivemarket engagement.In short, Telstras pre-paid campaigns were slow, out of sync with competitive activity in the market,expensive and hampering the companys ability to create greater value in the market.SolutionTelstra is regarded through the telecommunications industry as a robust and thorough assessor ofvendor solutions. As part of its programme to deploy an efficient campaign solution the companyconsidered a number of external and internal aspects that were critical to the successful bidder: • Time to launch a campaign to market • Ability to tailor and segment campaigns by pre-paid mobile users • Ability to undertake automated campaigns • Ability to customise the solution interface and deliverables • Ability to undertake data analysisDocument Number : AU63312T 2 ©2011 IDC
  3. 3. • Impact upon internal resources, marketing and engineering teams. • Positive impact upon customer revenuesThe Business Logic Systems (BLS) campaign solution replaced an unwieldy internal process thatwas in place at Telstra. To launch a campaign with the previous approach involved a substantialdegree of manual engagement across multiple groups including Products, marketing, datawarehousing and engineering teams. This was both cumbersome and inefficient. BLS deployed itsInTelestage (sic) product to provide an end-to-end campaign and loyalty management solutioncomprised of: • Knowledge Base – a data storage and data warehousing module. • Segmentation – customer segmentation based on network usage and behaviour. • Campaign Management – real-time, periodic, customised marketing campaign management. • Reward Fulfillment – automated reward/loyalty fulfillment. • Relationship Manager – multiple customer touch points. • Campaign Reporting – Automated, near real-time campaign analysis. Source : Business Logic SystemsDocument Number : AU63312T 3 ©2011 IDC
  4. 4. ChallengesThe principal issue centred on initial concerns that BLS operations were located in Europe. Shouldany issue require on-site attention, Telstra was concerned that travel time to Australia would slowresolution. To help allay this concern BLS established an Asia-Pacific support centre in KualaLumpur, Malaysia to provide more localised support. The centre has brought an additional benefit inthat between Kuala Lumpur and Europe, service support can take a "follow the sun" route to helpspeed any resolution.With a higher number of campaigns in play, it became apparent that Telstra needed to adjust itsinternal approach to determining campaign success rates. The company is working on moving itsmetrics assessment from a strike-rate approach to one more focused on pure retention rates.From an ongoing operational perspective, Telstra found that the automation and the GUI worked wellyet for any new profile that is not pre-set there is a back-end configuration required. This cannecessitate a high level of involvement from the BLS team. As Telstras campaign profiles can bedynamic and driven by market activity it is difficult for the service provider to always know in advancewhat profiles will be required. If not managed carefully there is potential back-end configuration thatcan be costly and time-consuming.BenefitsTelstra has experience a dual stream of benefits through deployment of the BLS solution in terms ofprocess improvements and retention, including: • Increase in Number of Campaigns Executed – Perhaps a highlight of the deployment has been the move from 1 to 2 campaigns per year to 7 to 8 campaigns per month throughout 2010. Telstra upped the ante again in April 2011, planning 16 campaigns in one month, something that the organisation states it simply could not physically deliver without the InTelestage solution. • Dramatic Improvement in Execution Speed of Campaigns – A typical campaign now takes between 3 to 5 days to build and deploy. Prior to the InTelestage deployment a typical campaign took a minimum of eight weeks to execute from start to finish. • Automation – Telstra can now gain higher levels of efficiency around campaign targeting and management. This has removed the need for continuous reworking with internal data warehousing and engineering terms. This in turn frees these groups to work on more strategic projects.Improvement in process without an improvement in loyalty value would be meaningless and this iswhere the commercial strength of the BLS InTelestage solution comes to the fore: • Reduction in Churn Rates: Telstra cited that its mobile pre-paid churn rate had dropped over a two year period by 3%. Over a similar period, estimates suggest key competitors acquisition costs rose in the region of 20-30%. Not only is Telstra reducing its own churn, competitors are finding it more expensive to buy share. • st Increased Pre-Paid Revenues – Telstras financial accounts for 31 December 2010 suggest that the providers pre-paid mobile (excluding mobile broadband) revenues have increased by over 9% compared to the previous half yearDocument Number : AU63312T 4 ©2011 IDC
  5. 5. • Increased Average Revenue per User (ARPU). Although Telstra does not disclose exact pre- paid ARPUs, the companys accounts suggest that mobile service ARPUs (again, not including mobile broadband, which have also increased), have risen between by between AUD6-8 per month between FY2007 and 1H2010. • Improved Market Share of Pre-paid Revenues: Since the low point of share of pre-paid revenues in Q1 2009, IDCs data shows Telstras share of revenue has consistently improved to reach above 25% by Q4 2010.However, perhaps the ultimate validation came in late 2010 when Telstra paused its pre-paidcampaign activity. Churn started to increase. The campaigns recommenced in 2011.MethodologyThe project and company information contained in this document was obtained from multiple sources,including information supplied by BLS, questions posed by IDC directly to Telstra employees andTelstra corporate documents.A B O U T T H I S P U B L I C A T I O NThis publication was produced by IDC Go-to-Market Services. The opinion, analysis, and research results presented hereinare drawn from more detailed research and analysis independently conducted and published by IDC, unless specific vendorsponsorship is noted. IDC Go-to-Market Services makes IDC content available in a wide range of formats for distribution byvarious companies. A license to distribute IDC content does not imply endorsement of or opinion about the licensee.C O P Y R I G H T A N D R E S T R I C T I O N SAny IDC information or reference to IDC that is to be used in advertising, press releases, or promotional materials requiresprior written approval from IDC. For permission requests contact the GMS information line at 508-988-7610 or gms@idc.com.Translation and/or localization of this document requires an additional license from IDC.For more information on IDC visit www.idc.com. For more information on IDC GMS visit www.idc.com/gms.Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.comDocument Number : AU63312T 5 ©2011 IDC