Telcos can cut capex by 25% and achieve same results

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KUALA LUMPUR: Telecommunication companies have the potential to reduce their capital expenditure (capex) by a quarter and still achieve the same results by optimising their capital investment through just-in-time (JIT) information from their networks.

Clarity Malaysia Sdn Bhd chief executive officer Tony Kalcina cited Telstra Corp Ltd as an example.

The Australian telco had successfully created a JIT capital investment system that leverages predictive analytics based on what is commonly known as “Big Data” information from its existing network to determine the areas where capex is best spent, including its timing.

“Telstra gained a 25% reduction in capex just by collecting and analysing data differently and implementing JIT.

“[As such,] if an organisation’s capex is RM2 billion, that’s RM500 million of cost savings for them,” Kalcina told The Edge Financial Daily in an interview.

Clarity Malaysia, a real-time analytic technologies solutions provider, is 80% owned by Malaysian firm AGA Group Sdn Bhd and 20% by Australia-listed Clarity OSS Ltd.

Big Data analytics refer to high volume, high velocity and/or high variety information assets, and typically includes social media, mobile and web data. Due to its massive volume, it is difficult to analyse using traditional database and software techniques.

Kalcina said a key reason why the desired benefits of many large-scale information technology (IT) projects had failed to materialise as expected was due to the lack of close integration of the insight gained from customer behavioir through Big Data sources into existing systems.

“Five years ago, we began a journey with a telco here in Malaysia, which allowed us to probe into their network and analyse their transactional data — [we found out that] what was lacking was the understanding of customer experience to optimise their business,” he said, adding that the telco’s average revenue per user and market share had suffered as a result.

Kalcina said an organisation should see double-digit improvements on various performance metrics if it leverages Big Data analytics with the right strategy coupled with effective action.

He said that the level of investment for leveraging Big Data ranges from RM50 million to RM150 million, depending on the size of the business and the scale of the project.

Kalcina pointed out that there is tremendous opportunity for the application of Big Data analytics in the public sector.

“The government can be a major thrust in making Malaysia a regional leader in Big Data by becoming its early adopter and developing a centre of excellence for the region,” he added.

This article first appeared in The Edge Financial Daily, on October 23, 2014.