Role of KPI’s in Building Business Intelligence

A Study on KPI’s in Telecom Industry

Prepared by

Sai Venkatesh Attaluri

Introduction

A Key Performance Indicator (KPI) is ameasure of performance. Such measuresare commonly used to help an organizationdefine and evaluate how successful it is,typically in terms of making progresstowards its goals.

KPIs may be monitored using BI techniquesto assess the present state of the businessand to assist in prescribing a course ofaction. The act of monitoring KPIs in real-time is known as Business ActivityMonitoring (BAM).

Identifying KPI’s

Performance indicators differ from businessdrivers & goals. A school might consider thefailure rate of its students as a KPI whichmight help the school understand its positionin the educational community, whereas abusiness might consider the percentage ofincome from return customers as a potentialKPI.

But it is necessary for any organization to atleast identify its KPIs.

Identifying KPI’s

The key environments in identifying KPIs are:

Having a pre-defined Business Process (BP).

Requirements for the Business Processes.

Having a quantitative/qualitative measurement of the

results and comparison with set goals.

Investigating variances and tweaking processes or

resources to achieve short-term goals.

A KPI has to follow the SMART criteria. This means the

measure has a Specific purpose for the business, it is

Measurable, Achievable, Relevant to measure and it

must be Time phased.

Categorization Of Indicators

KPI’s define a set of values used to measure against.

Quantitative indicators which can be presented as a number.

Practical indicators that interface with existing company processes.

Directional indicators specifying whether an organization is getting better or not.

Actionable indicators are sufficiently in an organization's control to effect change.

Financial indicators used in performance measurement and when looking at an operating index

KPI’s of Telecom Industry

The KPI of a telecom field can be categorized as the following. Business & Marketing,

Revenue / Financial Analysis

Network Performance & Analysis

Customer Satisfaction,

Customer Analysis.

Quality / Usage (Airtime)

Coverage,

Faults and complains,

Etc

• Grievance

• Satisfaction

• Call Center

• Finance

• HRM

• SCM

• U & R,

• VAS

• Vendors

• Engagement

• Development

• Operations

• Network

• Coverage

Technical Business

CustomerAdmin

KPI’s of a Telecom

KPI’s of Network Performance

Service Availability

Grade of service

Service life of equipment

Bit error ratio

Bit rate

Downtime / Time out of service

Call completion ratio

Cost of support systems

Cost of operational system

Average call length

Analysis of ASR routes

Network traffic, congestion

Idle time on network

Dropped calls

KPI’s of Customer Satisfaction

Average score from external surveys

Average score from internal survey

Average score from call monitoring

Total number of complaints

Total number of unresolved issues

Number of responses generated

KPI’s of Network Coverage

% of land covered with services

% of population covered with services

Average land unavailable to services

Average population unavailable to

services

Access to customer service

Need of KPI’s in Marketing

Today, telecommunication industry is no longertechnology centric, but it revolves more aroundcustomer relationship.

The cut throat competition in the telecomindustry lead to tariff cut downs resulted in churnaway profit margins and thereby intelligentdecision making critical.

Customer satisfaction and MarketingIntelligence for segmenting customers as pertheir needs with innovative promotionalschemes are the drivers of business.

Thus the need of KPI’s centric to customer’sbehavior has become vital in MarketingIntelligence

Marketing KPI’s

KPI’s on AON

ARPUIN DECR

PF

Recharge MetricRecharge MRP

Voucher Group

Customer ProfileCircle, Handset, Active/Inactive, Pre-Post, etc

Data Usage (2G / 3G / Social Networking)Volume Based

Pack Activation

Marketing KPI’s

Churn (Voluntary / Involuntary)

SMS Usage ( Local / National / ISD)

Voice UsageOut Going / Incoming OnNetLocal / STD / ISD

Out Going / Incoming OffNetLocal / STD / ISD

Roaming

OG P2A Etc

VAS Usage

And the list goes on………………….

Using KPI’s

If the performing indicators are few a simple

spread sheet can help to figure out the factors

impacting the business. But reality is far

different.

The list of KPI’s and their subsets are

innumerous in each vertical and yet dynamic in

nature changing continuously becoming a reap

of historical data making it difficult to take

decisions at every level.

Using KPI’s for Intelligence

The data generated by KPI’s in its operationswhich is both accurate and timely needs to beprocessed and give a bird’s view to the decisionmakers . They require real-time, actionablebusiness intelligence for proactivemanagement rather than the “management byhindsight.

What is Business Intelligence?

First, all numbers are not analytics nor dothey necessarily lead to any kind of“intelligence” . There are some cleardefinitional criteria that we can use to ensurewe are talking about BI.

Business intelligence is intended to provideforesight by synthesizing to become usefulmission-critical information that allows to makean executive decision.

BI is derived from real-time data. For decision-making, the data used has to be up-to-the-minute real time data in order to accuratelyrepresent the state of the business.

In telecom eco system, even yesterday’s data is“old” ― data a few hours old is many a timesaccounted to make decisions.

Bringing Intelligence

BI should empower users to have access to real-time analytic data to use in their daily work. Goneare the days where BI used to be under the purviewof the statisticians or strategy experts.

Instead of choosing which employees can haveaccess to what information, its imperative to ensurethat the productivity and quality of employees workwill be enhanced with all the data they need on theirdashboards.

Research tells us that professionals spend 53percent of their time seeking out information.Collectively, the time spent gathering andlooking for information translates to anestimated. 5.4 billion lost hours per year for UScorporations.

Bringing Intelligence

Lack of Visibility◦ Leads Vs Conversions

◦ Forecasts Vs Actual

◦ Sales Vs Realization

◦ Product A Vs Product B

◦ Client A Vs Client B

The above example appears to be “What complexity is therefor the requirement of a system assisted intelligence?”

But if the above data is drilled down – by region, by customer,by product, by time of purchase, by location, by frequency,by method / channel of campaign etc., can a normalreporting system easily slice and dice the data such that thebest option of taking a quick decision making be donewithout any expertise of a Statiscian?

Challenges without BI

To make day-to-day decisions smarter and faster, it is critical to

have the data in hand is accurate, real-time, consistent, easy

to retrieve, and displayed in a fashion that is easily

understood by the user. The resulting intelligence has to be

crystal clear so erroneous conclusions and faulty decisions are

not made from the data presented at all levels be it

Operational, Tactical or Strategic.

It is important that the data presented with intelligence to your

users maintains the following characteristics:

◦ Clear Insights

◦ No ambiguity

◦ Understandable format to the users

◦ Simple and uncluttered

◦ Flexible format to change to another format.

Intelligence in Displaying Data

Conclusion

The goal of business is not to just track

metrics of KPI’s but it is to use those

metrics in conducting business to

enhance revenue now and in the future

by correct decision making now and for

the future.

Thank You

References

www.KPIlibrary.com

www.telecomasia.net

www.smartkpis.com