This is an update to STL Partners report A3 for telcos: Mapping the financial value, published in May 2020, which estimated the financial value of automation, AI and analytics (A3) through bottom up analysis of potential capex/opex savings or revenue uplift from integrating A3 into 150+ processes across a telco’s core operations.
The value is measured on an annual basis in dollar terms and as a proportion of total revenue for a “standard telecoms operator”. Access to the full methodology and definition of a standard telco is available in the report Appendix.
We categorise the value of automation, AI and analytics (A3) in telecoms across operational area, as well as type and purpose of A3 technology. Our graphic below summarises the value of A3 across the following six types of technology:
- Making sense of complex data: Analytics and machine learning used to understand large, mostly structured data sets, looking for patterns to diagnose problems and predict/prescribe resolutions.
- Automating processes: Intelligent automation and RPA to enable decision making, orchestration and task completion within telco processes.
- Personalising customer interactions: Analytics and machine learning used to understand customer data, create segmentation, identify triggers and prescribe actions to be taken.
- Support business planning: Analytics and machine learning used in forecasting and optimisation exercises.
- Augmenting human capabilities: AI solutions such as natural language processing and text analytics used to understand human intent or sentiment, to support interactions between customers or employees and telco systems.
- Frontier AI solutions: A number of individual AI solutions which have particular, specialist uses within a telco.
For further detail on this categorisation methodology, see STL Partners report The telco A3 application map
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What’s new in 2022
The colouring of the use case categories in the graphic below remains largely unchanged from May 2020. Some uses of A3 were reasonably mature in that timeframe and already rolled out in a typical telco, so their value was already well understood.
We estimate that the most valuable use case categories, primarily in networks and operations, deliver over $50 millions in annual benefits – and sometimes up to hundreds of millions. Throughout this report we express the value in dollar terms and as a percentage of savings within each domain. This is because while $50 million is clearly a significant sum, it accounts for just 0.33% of total revenues for our standard operator, so showing values for unique use case categories as a proportion of total revenues undermines the potential value A3 can add to individual teams, and in turn contribute to significant aggregate value across an operator.
Overview of the financial value of A3
Source: STL Partners, Charlotte Patrick Consult
In our May 2020 research, many of the more sophisticated uses of A3 were understood in theory but yet to be implemented. Researching these various newer uses cases throughout 2021 has revealed that many are now, at least partly, rolled out (although some are still waiting for cleaner data or more orchestration capabilities).
However, there were a few new case studies with financial benefits that necessitated more than small changes to the 2020 financial value calculations. Summarising the changes illustrated in the graphic above:
- The most noticeable change in uptake for A3 was in the BSS domain. Vendors and telcos were not discussing much beyond RPA and basic analytics in 2020, but there are now a whole range of potential uses for ML (typically in the box labelled “Revenue management” in the graphic above). The question of how much additional financial value to assign to this is interesting – some of the A3 will ensure that the rating and charging systems can cope with the additional volume and complexity around 5G and IoT billing, so an allocation of revenue uplift has been assigned. However, this revenue benefit only accounts for around 6% of the additional $83 million in value from A3 in networks and operations estimated in this update.
- We have added partner management as a new use case category, within operations. This is to allow A3 value to be added as telcos work with more partners and in new ecosystems, and accounts for 6% of additional value in networks and operations in this update.
- An increase in the assumed value of A3 within marketing programs, owing to the addition of ML to improve the design of new offers.
- The value of a previous use case category labelled “Troubleshooting” has been subsumed into “Unassisted channels”, as telcos find it difficult to implement troubleshooting tools for customers.
- Some increase in financial benefit around customer chatbots and field services, due to new case studies showing financial value.
Our report includes a section for each of the first three columns of the graphic above (Networks and operations, customer channels, marketing and sales). The final column (other functions) doesn’t currently have financial calculations underpinning it as values are thought to be insubstantial in comparison to the first three columns.
Table of contents
- Executive summary
- Overview of the financial value of automation, AI and analytics (A3)
- Financial value by business unit
- BSS, OSS and networks
- Customer channels
- Sales and marketing
- Methodology for Calculating Financial Value
- Augmented Analytics Capabilities
- A3 in customer experience: Possibilities for personalisation
- A3 for telcos: Mapping the financial value
- The value of analytics, automation and AI for telcos – Part 1: The telco A3 application map