The 33rd Annual International Symposium on Forecasting June 23-26 KAIST College of Business Seoul, South Korea

Big Data Analytics Adoption in Telecommunications Industry : The Korean Telcos Perspectives
Presented by: Patricks Oghuma SMIT Lab- KAIST

Contents

BIG DATA

Background and Motivation Literature Review Conceptual framework & Methodology Findings Korea Telecom Landscape Conclusion
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Background & Motivation 1/14

BIG DATA

The adoption of smartphones account for 82.5% of all mobile traffic (Cisco,2012) 90% of traffic on mobile network in the future will be delivered over the internet as an OTT service (Cisco,2012) Consumers are becoming hyper connected (IBM,2012) Using MIM, SNS on mobile device
SMS usage down by 40% and revenue down 28% in one year( Cisco,2012)

Availability of : alternatives ; platform ; ubiquitous BB; generous price plan.

Should Telcos be the next KODAK or Dinosaur?

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Background & Motivation 2/14

BIG DATA

New ICT Trend:

Service: Sharing / participation:
It is no longer unidirectional but multidirectional

Content:
Dynamic( Video , intelligence, emotion)

Technology
All IP , Big Data, Cloud People are experiencing SAMARTIZATION in their everyday lives
Source: The Human face of Big Data by Rick Smola The Age of the Platform by Phil Simon Too Big to ignore: The business of Big Data by Phil Simon
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Background & Motivation 4/14

Big Data

BIG DATA

Data sets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze ( McKinsey Global Institute ,2011) The next frontier for innovation, competition, and productivity(MGI and McKinsey's
Global Institute 2011)

Big Data spans four dimensions: Volume, Velocity, Variety, and Veracity (Cisco,2012). Big Data is cultural ,technological and scholarly phenomenon (Danah et al, 2012) Trends in BD It is alarmingly increasing in usage (Nielsen, 2011) Organizations are investing huge amount of resources to it(IBM,2012; McKinsey & Company) eg Facebook, Google Competitive advantage: operation optimization ,effective marketing, better customer experience and new streams of revenue Big Data is not a business model. The biggest concern is the pace of innovation.
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Background & Motivation 5/14

Why Big Data for telecoms companies
Saturation of the market Need to grow revenue Need to defend the existing revenue Need to grow new business and protect against churn Many communication channels are now available Data usage is growing fast ARPU is decreasing Telcos less relevant in the value chain

BIG DATA

Data deluge era has come to stay. The telecom ecosystem is unfolding in a state of chaotic effervescence. Revenues erode and services are commoditized. Multifaceted innovation around internet and mobile technology is revealing rich new gold mines to be exploited- customer data vide BDA. Issues :
Privacy & Security concerns
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Background & Motivation 6/14

BIG DATA

Data is everywhere. New technologies provide capabilities to store huge data.

More data in first weeks than data had been collected in the entire history of the astronomy (Cukier, 2010)

Sloan Digital Sky Survey (2000)

Facebook Web Site (n.d.)

15 billion uploaded photos with a growth rate of 220 million new photos per week

Sources of Data: social media, video, audio, mobiles, medical imaging, surveillance, etc.
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Background & Motivation 7/14

Big explosion of data will continue in the next years. Big Data is a term related with this explosion of data. There is not a concrete definition of Big Data.

BIG DATA

Data sets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze MacKinsey Global Institute (2011)
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Background & Motivation 8/14

Importance of Big Data

BIG DATA

Features of Big Data

Volume

Velocity

4Vs
Value

Variety

The huge amount of information we are creating every day, through many sources, may reveal trends or insights in real time*, giving the chance to improve decision-making (Global Pulse 2012).
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(*) Real time refers to data that is relevant to a relatively short period of time, or data that is made available within a timeframe that allows governments, organizations, or individuals to take a fast action.

Source: DataStax (2011)

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Background & Motivation 9/14

Big Data for Sales Effectiveness

BIG DATA

Big Data for Increase Revenue

31%
New

42%
Existing

27%

Source: Lattice Engines/CSO Insights (cited in Marketing Charts n.d.)

Source: Avanade (2012) Global Survey: Is Big Data Producing Big Returns?

Around 87% had an increase in sales effectiveness with Big Data.

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42% increased existing and 31% found new sources of revenues

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BACKGROUND & MOTIVATION (10/14)

BIG DATA

Big Data can generate significant financial value across sectors

Source: McKinsey Global Institute Analysis

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BACKGROUND & MOTIVATION (11/14)

Global ARPU Trend (US$)

BIG DATA

Messaging Trend (Million per day)

Actual Hyper Competitive Environment Commoditization of traditional services. Other players eating into their revenues (e.g., Google & Skype).
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OVUM forecasts due to OTT players By 2020 telcos will have experienced a loss of US$ 479 bn in voice revenues. By 2016 the loss in SMS revenues will reach US$ 54 bn.
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BACKGROUND & MOTIVATION (12/14)

Key Trends Underlying the Telecom Market
Becoming commodities Have alternatives to Telcos services

BIG DATA

Voice & SMS

Smart Devices Users

Voice, message, video

Aggregation & Fragmentation

ARPU

Revenues from SMS, Voice and data are declining. Telcos Cannot maintain revenues and usage.

Decreasing

Source: IDATE 2012, IE Market Research Corporation 2011, The Korea Economic Daily 2012
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BACKGROUND & MOTIVATION (13/11)

BIG DATA

In short: Telcos are now dumb pipes for service providers

Telcos
Consumer

1) Telcos need to innovate in new business models and automate processes To be SMART pipe (Oracle 2012; Ovum 2012) 2) Data is the oil that will fuel Telcos future growth (Ovum 2011)
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BACKGROUND & MOTIVATION (14/14)

What are the challenges? Concerns When Using Mobile Apps

BIG DATA

Also, a proper adoption by Telcos is needed Privacy Laws EC 95/461995 Directive Should be followed by all sectors, including Telcos. Personal information is defined as any information relating to an identified or identifiable natural person. Under the Korean law,11731, everyone has the right to privacy in their conversations and messages for mailings and telecommunication

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Problem statement

BIG DATA

What can telcos do with the massive set of data which continue to grow exponentially in their networks and as their services and revenues are rapidly becoming Commoditized and Cannibalized and in return their network get congested by the OTT players.

For fear of Network Neutrality law How do telcos remain relevant in a seriously weird business environment?
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Way out for Telcos

Innovation- BDA
Passing through thick and thin now due to the rapid changing face of communications. Co-opetition/ Collaboration Homegrown OTT serviceJoyn Become a platform player

BIG DATA

Source: Dundee,2000; Barnett et al.,2000; Wong,2000; Racanelli, 2001 and Ruke et al., 2003

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Literature Review (1/6)

We integrated literature on:

BIG DATA

Big Data

Lazer et al. (2009); Manovich (2011); Pariser (2011) Sara Philpot (2010); Danah Boyd et al. (2012) Frank J. Ohlhorst (2012), Villars et al. (2009)

Data Mining

Bose et al. (2001), Mozer et al. (2001) Fayyad et al. (2002); Apte et al. (2003) Chang et al. (2009); Sara Philpott (2010)

Churn Manage.
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Kenneth Cox et al. (1997); Scarfe et al.(1995); Tsaih et al. (1998) Berson et al. (1997); Xie et al. (2009); Tsai et al. (2010) Xia et al. (2001); Song et al. (2001), Kim et al. (2003); Kim et al. (2004)

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Literature Review (2/6)

BIG DATA

TECHNOLOGY ADOPTION THEORIES

Adoption: "Tend to adopt, use, and utilization (Rahim 2003, Lertwongsatien et al. 2003).
Tornatzky et al. (1990) posited a 3- stage process for technological adoption in organization. STOPE (Barky 2004).

TASK TECHNOLOGY FIT (TTF) CONTEXT

The TTF model Gooduhe et al. (1995) impact on individual and Zigures et al. (1999) impact on organization: proper match b/n task and technology characteristics results in a better performance impact. Goodhue and Thompson (1995), TTF on individuals the degree to which a technology assists an individual in performing the portfolio of the task.
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Literature Review (3/6)

BIG DATA

GAPS
Relatively little or no sufficient research has been done on the adoption of BDA in the telecom industry in this era of Data deluge.

OUR CONTRIBUTION
OPERATIONAL & METHODOLOGICAL Contribute to a growing body of literature in BDA in the telecom industry Explore TOE framework and show the relationship and factors of BDA adoption

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Review (4/6)

BIG DATA

TOE

Why TOE?... Macro-Level

BD as ICT innovation / emerging technologies adoption. (Caldeira et al. 2003; Rui 2007; Oliveira et al. 2011) Comprehensive tool for technological adoption in an organization. (Tornatzky et al. 1990)

Individual Level: TPB, TRA, TAM, Innovation Diffusion Theory. Organizational Level: Yazn Alshamalia et al. (2013) used Rogers DOI.

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Literature Review (5/6)

IS Adoption and Context Enterprise system SMEs in Northwest of England Authors (Ramdai et al.,2009) Technological analyzed variables Relative advantage, Compatibility, Complexity, Trialability, Observability Perceived direct benefits, Perceived indirect benefits Relative advantage, Complexity, Compatibility Relative advantage, Complexity, Cost, Compatibility Organizational analyzed variables Top management support, Organizational, IS experience Size Perceived financial cost, Perceived technical competence Size, Top management support, Technology competence Size, Top management support, IT competence Size, Global scope, Top management support, Technology competence Size, Resources, Trust, Risk, Project team Size, Scope, Resources Size, Top management support, IT competence Size, Top management support, Formalization Size, Top management support, Innovativeness, Prior IT experience

BIG DATA
Environmental analyzed variables Industry, Market scope, Competitive pressure, External IS support Perceived industry pressure, Perceived government pressure Competitive pressure, Trading partner pressure, Information intensity Competitive pressure, Vertical linkages, External support, Information intensity The industry, Competitive pressure, Dealings with government, Regulatory compliance Stakeholders, Location, Market conditions, Risk Rivalry and relations with buyers and suppliers, Risk Competition intensity, Regulatory environment Competitive pressure, Trading partner pressure Competitive pressure, Industry, Market scope, Supplier efforts and external computing support

Electronic Data Interchange (Kuan and Chau,2001) Small firms in Hong Kong Communications technologies (Wang et al.,2010) RFID in the manufacturing industry
Communications technologies SME in the US Communications technologies Adoption of single on and multifactor authentication Communications technologies Grasping project complexity in large engineering project Communications technologies OSS in South Africa Communications technologies Cloud computing Communications technologies Cloud computing in Vietnam Communications technologies Cloud computing adoption by SMEs in the North East England (Wen et al.,2010)

(Marise-Marie et al.,2010)

Existing technologies in use, New technologies relevant t an organization, Business processes accomplished through technology (Bosch-Rekveldt et al.,2011) Goals, Scope, Task, Experience, Risk

(Van Belle et al.,2012) (Borgman et al.,2013) (Chang et al., 2013) (Alshamaila et al., 2013)

Relative advantage, Complexity, Compatibility Relative advantage, Complexity, Compatibility Relative advantage, Complexity, Compatibility Relative advantage, Complexity, Compatibility , Uncertainty, Trialabity

Source: Alshamalia et al. (2012)

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Literature Review (6/6)

BIG DATA

IT innovations are highly differentiated technologies for which there is no single adoption model

Relative Advantage Compatibility

Size Top Management Support Prior Technology Experience

Competitive Pressure Industry

Complexity
Trialability

Regulatory / Government Policy

Technological

Organizational

Environmental

Source: Kautz et al. (2000) and Alshamalia et al. (2012)

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Conceptual Framework

BIG DATA

Big Data Analytics

Organizational

Environmental

Technological
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Methodology

BIG DATA

Research Design

A multi-perspective (TOE) framework as theoretical base.

An inductive content and qualitative analysis using semistructured interviews as primary data (face-2-face) (Leedy and Ormrod 2005).

Interviewees: industry experts, research institutes, vendors, and from the three telcos in Korea.

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Results (1/3)

BIG DATA

Interviewees (N = 29): Government Research Institute Private research Institute IT Consulting Telcos IT Company Academic
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Results (2/3)

BIG DATA

Technological Key Words Relative Advantage Technological Readiness Technology Competence Trialability Compatibility

Organizational Key Words Big Data Awareness Innovativeness Human Resources Expertise Top Management Support IT Competence

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Results (3/3)

BIG DATA

Environmental Key Words

Regulatory Support Security and Privacy Protection Fair Competition Customer Satisfaction Regulatory Environment

Regulatory Compliance Customer Trust Business Value Customer Churning Customer Consent

80% of Respondents agreed with TOE framework

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FINDINGS

BIG DATA

In the organization context, Big Data awareness, and human capacity development towards Big Data and management support posed strong influence. From the environmental context, regulatory compliance, competition and privacy concerns indicated strong influence From the Questionnaire and Experts interview, dearth of skilled Big Data practitioners and data scientists, most enterprise lack right mindset to exploit Big Data and Big Data training and education are needed. Implementing Big Data could pose some challenges. The new paradigm involves the use of data in an ethical and secure manner to overcome customers privacy concerns.

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Case Studies
Telefonica: Brazil, Germany, UK Verizon Wireless :USA Precision Market Insight Dynamic Insight

BIG DATA

Packaging anonymized customer data, analyzing, and aggregating it and then sell the insights (but not the total) to marketers, retailers (Ovum,2012)

Telecom Italia UK telecom firm O2:

Customers can sign up to view their personal data(who and when calls came and went out)
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BIG DATA

But

BIG DATA Adoption is Slow.Dearth of

Skilled BIG DATA Practitioners and Data Scientists.Most telcos Lack Right MINDSET to Exploit.
BIG DATATHE New, DEFINITIVE Source of

COMPETITIVE ADVANTAGE Across ALL Industries most especially telcos.

Source: Wikibon Big Data Manifesto, 2011

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South Korea Mobile Market

BIG DATA

South Korean mobile users primarily use MIM services on their mobiles. Mobile penetration over 110%

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Source: Asia Pacific Ventures,2012; KCC, 2012

Conclusion 1/2

BIG DATA

Telcos business models are no longer sustainable.Dumb pipe model strategy is no longer sustainable , smart pipe strategy relying on network assets and network services to compete with the disruptive innovation in the industry. The novelty of this study can be seen as a significant contribution to the body of knowledge and vital for policymakers and stakeholders in the industry.

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Conclusion 2/2

BIG DATA

The telecom ecosystem is unfolding in a state of chaotic effervescence. Revenues, services and networks are facing undue pressures Yet multifaceted innovation around the internet and mobile technology is revealing new gold mines to be exploited! Big Data is to telcos in this era of data deluge what electricity was to the Industrial Age.
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BIG DATA

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