Over the past year, telecommunications companies have, by necessity, axed expenditures: network upgrades have been delayed or canceled; thousands of jobs eliminated; and swank office suites replaced by humble cubicle farms.
But according to new Yankee Group research, at least one line item has emerged unscathed from all the budget butchery, and will increase well into 2004 — analysis and reporting applications (ARA).
“Given the characteristics of ARA, and the nature of the problems that carriers are currently dealing with, it was pretty clear from the start that this was an area where (they) need to spend more money,” David Hawley, a telecom software analyst at the Boston research firm, told internetnews.com.
Broadly defined, ARA helps carriers, Internet service providers and cable firms ferret out inefficiencies of their systems. For example, the software could more accurately forecast network capacity or scrutinize customer data to tailor personalized offers.
Of the telecoms surveyed by Yankee Group, 55 percent said their ARA budget grew by $500,000 to $1.5 million from 2001 to 2003 (not one reported a decrease in ARA spending). The offerings are so crucial, Hawley said, that they will be “a primary factor in the success or failure of communications service providers.”
A statement like that will catch the attention of telecom executives who have been hit by a double-whammy of stiff competition and economic uncertainty.
Another selling point for the software is that it’s relatively cheap. ARA prices range from a few thousand dollars (typically a query and reporting add-on to a database management system purchase) to $250,000 (for a baseline data enrichment tool) to $1 million to $3 million (for a comprehensive ARA infrastructure).
These are all relatively modest investments for CSPs, Hawley said. And provided a data warehouse is already in place, a system can be operational in weeks.
Several firms are in position to benefit from increased ARA spending. For starters, telecom-focused vendors on solid financial footing and a track record with large organizations should do well. These include SAS and Object Management, Hawley said.
But there is also room for companies with integration expertise such as IBM or American Management Systems and vendors developing products that address specific ARA issues, namely Vibrant Solutions, Emerging Technologies Group or
Lightbridge.
Because of confidentiality agreements with telecoms, Hawley could not specify which companies were making the best use of ARA technology. In general however, wireless organizations are best in using advanced analytics while interexchange carriers
