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Guest View: No Service Provider is an Island – Predictions for 2014

Michal Harris, Director, Market Insight & Strategy at Amdocs | Jan. 17, 2014
Expect to see plenty of mergers and acquisitions in 2014 as the industry continues to evolve and service providers consolidate to embrace new challenges.

Big Data Will Be Even Bigger

Proactive customer care neatly brings me to my second prediction: big data is going to be even bigger in 2014. What is the connection?

It doesn't take a psychic to predict that big data - the data accumulated from customer touch-points, both structured and unstructured - will present a massive opportunity for service providers in 2014. Informa (August 2013) notes that big data currently represents 10 percent of the total IT budget of service providers who are implementing it, but that this figure is expected to increase to approximately 23 percent in five years.

What may surprise service providers is how quickly they will have to transition from merely managing big data to realizing its value in the coming year. Another surprise may be that the secret to realizing that value will be internal initiatives.

Gartner estimates that "there is about $240 million of additional revenue and $60 million in cost savings to be made from new internal use cases by the 'average' CSP." These internal use cases include data that provides more insight into customer segments (especially high-value customers) and using new types of data to create improved KPIs.

Going back to my earlier comment about the connection between proactive customer care and big data, internal data monetization will lead to improved personalization, including proactive customer care and marketing, as well as network optimization and planning.

For the moment, though, external data monetization is probably still the hotter topic, and we can expect to see many service providers leveraging existing data assets to create new revenue sources, such as mobile ads. For instance, Sprint offers a service where hotels, restaurants and casinos are able to identify the different profiles of people around their businesses and target advertising/promotions accordingly.

Additionally, big data has amazing potential to open up opportunities for new business models and partnerships.

Virtualization - It's More Than Efficiency

In the last two years, the cloud was a hot topic. In 2014, we expect the virtualization trend to grow wider to include network function virtualization (NFV) and software-defined networks (SDN) - which refers to implementing a network function on a virtual machine that can run on industry-standard server hardware.

Virtualization was initially promoted as an efficiency play for service providers. By re-architecting data centers and networks, service providers would be able to save huge amounts of CAPEX by replacing costly proprietary hardware with standardized, less expensive servers. In addition, OPEX will be reduced, perhaps even more dramatically, because software defined networks (SDN) and NFV will make services and infrastructure more agile and scalable , due to the centralization of the  management , and thereby less costly to maintain, reconfigure and upgrade.

 

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