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Telcos plan to spend $284 million this year
on data warehousing projects and systems--the storing, analysis, and
retrieval of massive amounts of information--and by 2003, this spending will
ascend to over $2 billion, says a new market research report by Insight
Research. Data warehouses help carriers to distinguish the characteristics
of their most profitable and highest-spending customers, and the tremendous
economic benefits provided by this targeted marketing approach can easily
justify the investment.
According to Insight's report Data Warehousing in
Telephone Networks 1998-2003, the cost of implementing a data mart or
data warehouse can run anywhere from $40,000 to $3 million, depending on the
size of the carrier and the number of customers involved. With annual
customer value averaging $500, even the slightest reduction in churn can
help a carrier to retain millions in revenue, thus recouping the data
warehouse investment. The average industry churn rate of 20 to 25 percent
implies that a carrier with 500,000 customers will lose 125,000 to competing
offers this year. Data warehouses are capable of reducing churn by a
conservative estimate of five percent, meaning that same carrier would keep
6,250 customers, resulting in $3.1 million retained revenue. On the
average, direct savings would be $1.9 million per year.
"Data warehouses may be even more important than the current investment
logic implies," explains Robert Rosenberg, president of Insight. "In this
brave new world of deregulation, telcos will be entering new
businesses--take for instance AT&T's foray into cable with its pending TCI
merger. Data warehouses could be re-targeted depending upon how
telecommunications companies evolve over the next few years," Rosenberg adds.
Further forecasts of the global market for telecommunications data warehouse
systems, data mining software, data mart systems, and OLAP software are
published in Data Warehousing in Telephone Networks
1998-2003, a 198-page market research study. The study includes an overview of data warehouse
technology, applications for carriers, implementations by leading telcos, 30
vendor profiles, and five-year revenue projections.
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