The intelligent route to BI?

*This case has been designed for iCreate 2015 and is for illustrative purposes only

Ned Telecom continues to be among the top four mobile service providers globally with a
presence in 20 countries including India, Sri Lanka, Bangladesh and 17 countries in the African continent.
The companys diversified service range includes mobile, voice and data solutions across 2G, 3G and 4G
technologies. In addition to providing long-distance connectivity in India, Africa and the rest of the world,
Neds service portfolio comprises an integrated suite of telecom solutions, and it also offers Digital TV and
IPTV services in India. All these services are rendered either directly or through subsidiary companies
under the unified brand name Ned.

With the recent acquisition of 3G and 4G spectrum, Ned now has a pan-India mobile broadband footprint
and a stronger position in the 900 MHz band which will enable it to provide 3G services on this band as
well. Ned saw accelerated growth in postpaid through the launch of several innovative offerings.

India is at the cusp of another telecom revolution with the boom of mobile data. The governments Digital
India initiative has the potential to transform the daily lives of citizens by bringing in greater transparency
and efficiency in the delivery of public services and expanding its reach to markets, which were otherwise
considered remote. Among the Telecom companies, Ned Telecom is strongly positioned to make a
significant contribution to Digital Indias goals.

Neds customer base (number of subscribers)

India GSM mobile: 220,665,000
Telemedia / Broadband customers: 3,512,000
Digital TV Services: 10,422,000

Looking Ahead

Recently, Telecom providers have begun to pursue growth through innovative digital ecosystems
for next-gen services. The focus is shifting from core Voice and Data offerings to alternate revenue
streams (that leverage on the massive reach of Telcos and the wealth of subscriber information) including
digital ecosystems i.e. digital components and applications across multimedia, entertainment (games,
music, and movies), online shopping, financial offerings etc. Sometimes this means entering into the right
partnerships and/or developing application program interfaces, mobile payment programs or mobile
advertising solutions as the case may be. Without these capabilities, Telecom companies may struggle to
thrive in this highly competitive arena. It is important to serve the right data at the right time on the right
device, and it is this balance that will determine who leads the market in terms of technology edge, tieups with Internet/app companies, web startups, content aggregators, platform providers and the like.

The Business Intelligence Project

Swati is the Sourcing & Procurement Head of Ned. She has been thinking about the Business
Intelligence transformation project for some time now and is required to make a presentation to the CEO.
She understands that Business intelligence (BI) solutions can provide a big competitive advantage if data
can be effectively managed and transformed into meaningful insights. She also realizes that there are
multiple considerations she must take into account:

I.

As Ned grows, it needs to be supported by scalable and capable infrastructure

II.

Any investment Ned makes in hardware, software or services will need to be justified with an ROI
(Return on Investment) and TCO (Total Cost of Ownership) over a specified timeframe of 5 years

III.

Existing investments in the current IT stack are significant. Could there be a way to leverage this?

Ned is looking to source an advanced data analytics solution which is real time, granular to each individual
record and customer and can combine data from multiple and diverse source systems like GSM,
Broadband and DTH. Real-time event detection will accommodate data in motion and Complex Event
Processing can help identify patterns of business or meaningful events (opportunities or threats) while
also conducting a quick analysis, allowing Ned to respond to them as almost immediately.

Swati is seeking answers to the following questions:

What are the new business opportunities that BI will create for Ned Telecom?

Is there a business case to invest?

What sourcing strategy and pricing model should she recommend?

What negotiation strategy should be adopted given the available options?

The problem at hand:

One of the challenges characteristic to the Telecom industry is the enormous volume of data
generated. Not only do Telecom systems generate a huge number of detailed call records, but the records
themselves are very large. In fact, every transaction whether an SMS or a visit to a retail store generates
data around the identity and location of the customer and the performance of network elements. Data
volumes continue to grow at an astounding rate, more recently with the widespread adoption of data
services. Records now capture details of websites visited, content downloaded, identification of APPs and
videos etc. among other data. The current data volume is approximately 13 BN events per day and the
next 3-5 years expect to see 20 -35 times the current volume. The problem is dual in nature: not just is it
a problem of quantity, but at the heart of the issue is how Telecom companies use this information.

The current BI solution at Ned

The current BI stack (a combination of all software elements of BI) at Ned is an Aerys solution and
comprises a Customer Lifecycle Management (CLM) system, an Analytics system and an Offer
Fulfilment system

The Aerys stack, especially the CLM system, is utilized to its full capacity and is not further scalable in
current form. This may limit the business capabilities that BI makes possible. The CLM system, in
specific, needs to be upgraded from a hybrid architecture (several customized in-house and legacy
applications) to a more standardized stack

The Analytics system, which is a large portion of the Aerys stack, goes end-of-life in December 2015
and the entire Aerys stack goes end-of-life by September 2016. Swati can choose to upgrade the entire
stack with a solution offering from Aerys (Neds existing partner) or replace the stack with a state-ofthe-art stack from a new vendor

From the current Aerys infrastructure (software stack + hardware), hardware worth US $2 mn can be
redeployed in alternate projects in September 2016

Replacement of BI solution will incur a data migration cost of 100 crores

The following are key factors that influence the choice of BI stack

1. Scalability & Operational Maintenance / Excellence: Due to a space limitation on the Aerys BI
system, Ned is unable to bring in and process additional relevant and important information into
BI, and may lose out in areas such as customer-centered services marketing. For targeted
marketing efforts to be contextual and effective, there needs to be near real-time synchronization
between campaign creation, communication and offer fulfillment. Swati realizes that the current
Aerys system is not adequate for Near Real Time/Real Time analytical capabilities.
2. Data availability on T0*: With the Aerys system, Ned is not able to tap into the value of data realtime. Data is not available for analysis sooner than T0+48 hours. In some cases, the data lag may
go well beyond T0+72 hours; handling real-time data is not possible with the current architecture
of Extract Transform Load (ETL) tools

3. Cost of data storage: storing structured and unstructured data efficiently for retrieval and
processing
4. Data Visualization: The current system does not have the capability to seamlessly transact with
data reporting and visualization tools
*T0 or Real time is defined as the moment of generation of a Call Detail Record (CDR)

Commercial Impact

Revenues are directly linked to the effectiveness of products, services or marketing campaigns
that take inputs from BI generated information and reports. The success rate of such efforts at Ned is 1520% while the competition has a success rate of 35-40%.

The Aerys BI stack is provided by Daenerys Global, a reputed brand, and has been in use for the last 10
years incurring an all-inclusive cost of 550 Cr INR since. Ned additionally incurs about 7 Cr INR per year to
run & maintain the platform, and ensure security patches and bug fixes. If Ned were to replace the current
infrastructure with Daenerys new solution Drago, it would need to pay Daenerys 257 Cr INR as a onetime license cost for software with an annual maintenance charge of 39 Cr INR, and 100 Cr INR for services
and 250 Cr INR for hardware. While Drago is a newer solution with limited customer references, it is lab
tested for seamless integration across data visualization tools, database, OS, middleware etc.

Swati has been in conversation with her counterparts in the industry about the latest technology being
used for BI platforms in high end computing and big data processing. She has come across a vendor called
Tyrion Pvt. Ltd., a privately held company based out of the United States. While the company is small, the
technical evaluation results have been outstanding and Tyrion has capabilities to process huge volumes
of data, a big need in the next 3-5 years. The investment required to procure the software solution from
Tyrion is 225 Cr INR with an additional 45 Cr INR as annual maintenance.

Since Tyrion provides only the software solution, Swati will need to procure Hardware and Services from
two other vendors- Bronn and Oberyn - at a cost of 170 Cr each.

Annexure I:
The Current state of the Telecom Industry and its impact on the Indian economy

Indias internet users have risen considerably from 50 Mn in 2007 to 100 Mn in 2010 and more than 300
Mn in 2014, with close to 60% users accessing internet via mobile, making India the worlds second-largest
internet market (Source: The Internet & Mobile Association of India). Increasingly, first-time users are
coming online via mobiles, leapfrogging the desktop era. The time taken to add incremental 100 Mn
internet users has shrunk from 10 years in the previous cycle to under 2 now. India enjoys favorable
demographics for internet penetration compared to many others; around 75% of its online population are
aged between 15 and 34.

India is a lucrative market for global and domestic smartphone manufacturers. Smartphone shipments
have doubled year-on-year, which led the total established base to reach 150 Mn in 2014. Enhanced focus
on manufacturing affordable handsets with indigenous technology will further spur mobile telephony. At
the same time, it will widen and deepen the internet user base.

Growth in smartphones, therefore, would lead to a significant rise in mobile data usage, which, as per
estimates is likely to grow 13 fold in the next five years. As per these estimates, mobile data traffic will
grow thrice as fast as fixed IP traffic between 2014 and 2019 and therefore, is expected to account for
28% of the total internet traffic by 2019, up from 9% in 2014.
(Source: Cisco- VNI Global data traffic forecast).

Hence, a converged opportunity exists through voice secularity, data uptake and new services in the
country across technologies as consumer needs are diversified across the spectrum of offerings. Different
consumers have widely varying consumption patterns from being first-time users to affluent data hungry
consumers providing telecom companies a well balanced portfolio.

Indian Telecom Sector:

Indias total customer base stood at 996.49 Mn with a tele-density of 79.38%, as on March 31, 2015,
having grown from a base of 933 Mn and a tele-density of 75.23% last year. Urban tele-density stood at
148.61%, whereas rural tele-density stood at 48.37%, as on March 2015. Indias Telecom sector has grown
phenomenally with the countrys total customer base second only to China. The wire-line customer base
continued to decline from 28.49 Mn, as at the end of March 31, 2014, to 26.59 Mn at the end of March
31, 2015, representing a penetration of just 2.12%. The scale of the mobile opportunity in India is
therefore immense.

Total Telecom Subscribers (Wireless +Wireline)

942.95 Million

Total Wireless Subscribers (Quarterly Growth +1.15%)

914.92 Million

Total Wireline Subscribers (Quarterly growth -1.66%)

28.03 Million

Total Broadband subscribers (Quarterly growth of +13.07%)

68.83 Million

Total Registered DTH Subscribers

67.57 Million

Monthly ARPU GSM Full Mobility Service

INR 119

Data Usage per subscriber per month

70.10 MB

http://www.trai.gov.in/WriteReadData/WhatsNew/Documents/quarterly%20press%20release%20final.pdf

Annexure II

About Daenerys Global

Daenerys Global manufactures and markets computer hardware, middleware and is a large US$ 80bn
company. It is known for innovations and its ability to manage large and complex projects. Daenerys is in
business with a large number of Telcos worldwide and across other non-telecom firms, and has done a
large amount of work in the BI space.

About Tyrion
Tyrion is a privately held company with an annual revenue of just over $800Mn. The companys value
proposition lies in providing high-volume and complex data processing in a lower turnaround time
(approx. 1/16 that of Drago). Tyrions BI solution is more recently being used across industries including
retail, telecom and aerospace, to process massive data volumes and provide real-time throughput.

Key Capabilities:

Large Data Processing Capability

Right data collection and ETL (Extract Transform & Load) with Real Time Action

A common Platform for Batch and Real Time Campaigns

Strong Master Data Management

Enriched customer profile and faster data aggregation leading to less Go-to-market time

Annexure III

Meanwhile

Competition:

Stannis Telecom will launch its high-speed data and voice services on 4G in phases in the next year, riding
a 50,000-crore INR investment by parent company Stannis Ventures India Ltd, a move cheered by
consumers but one which could trigger another round of intense competition in the crowded telecom
space.

Stannis Ventures is to commercially start its 4G services in the next 3 months and Stannis will push to get
cheaper devices into the market. Stannis plans to quickly gain ground in the Telecom space by providing
voice and data services at throwaway prices.