Eddie VanCompernolle, vice president of IT Network Systems; Josh Morton, vice president of IT Operations and Enterprise Services; and Peter Campbell, vice president of IT, lead Sprint Nextel's IT team.
Features
Case Study
Smart call
Sprint Nextel dials up a data warehouse to cut costs and enable marketing initiatives.
by Patricia Keefe
Few industries are more competitive than telecommunications, and for the companies fighting for market share, nothing is more critical than subscriber data management. After the merger of Sprint and Nextel, company managers knew they needed to consolidate systems to provide a timelier, cohesive view of its subscriber data to successfully manage the combined customer base.
But the United States' third-largest wireless service provider faced significant challenges in late 2007 when it sought to achieve its objective:
- The Marketing Department lacked a single, dedicated view of its 45 million subscribers after the merger, and it often took a back seat to the Finance Department, which shared the data warehouse.
- Sprint's 2005 merger with Nextel had left the company with a fractured view of its subscriber base, with multiple legacy applications and servers feeding multiple databases.
Management, however, had strong leadership and the vision to understand the importance of investing in technology. Looking at the big picture, Sprint Nextel realized it stood to gain huge IT cost savings by investing in a data warehouse platform from Teradata.
"A centralized database is at the heart of intelligent campaign delivery. Without it, the risk is too high."
—Mike Nevels, Sprint Nextel
In the short term, the company would benefit from a bold plan to consolidate an array of technology into a streamlined, dedicated wireless-data infrastructure supporting a new base marketing warehouse (BMW). Further out, the project would result in reduced expenses for maintenance, functionality upgrades and system management. It would enable advanced analytics and modeling of the customer base, and provide an integrated platform for multiple-base operational needs, such as customer relationship management (CRM).
From a marketing standpoint, the installation of the dedicated data warehouse is the foundation for bigger things, says Mike Nevels, director of CRM and database marketing. "When you go into a Sprint store, we should have information pushed from the central marketing database, so that we know all your preferences: how you want to be marketed to, your preferred handset, et cetera; and when we last contacted you with what offer. We also should know your value and whether you are at risk of leaving us. We will then treat you commensurate with your value—that's customer management," explains Nevels. The ultimate goal: a 360-degree view of each customer from any access point.
The correct choice
The mobile service provider built the BMW mostly on its own, but it chose longtime partner Teradata after a thorough evaluation of platforms and their associated costs. "Teradata played a huge role in getting approval for this project, but its selection was not a given," notes IT Account Manager III Robin Errigo, who was involved in the concept, design and build-out stages of the BMW.
A major factor was that the overall cost was priced in line with Sprint Nextel's business case. Other factors included the compression routines the carrier can do with the data warehouse and the workload management capabilities it delivers, says Jeff Jones, the application development manager responsible for ongoing support of the consolidated environment. "A big piece of this was that we had internally the necessary experience to be able to really leverage [the] Teradata [system] and build the base marketing warehouse quickly without much outside help."
That knowledge came in handy, as the team was under time constraints as well. "They wanted us to meet synergy targets sooner rather than later, so we got it done in a short period of time. Time to first deployment was six months. As an IT department, we did a phenomenal job of meeting the timeline so we could start shutting down the [legacy systems]," says Errigo.
A proven track record also played a key role in the decision. "Sprint Nextel and Teradata have been business partners for many years, and we rely on Teradata to get very important business done in a timely manner," says Peter Campbell, vice president of IT. "This project is just one example of how we leverage the power of Teradata for competitive advantage."
Rapid ROI
After Sprint Nextel answered its IT department's call to action and invested in a new data warehouse platform, the return on investment (ROI) was achieved in less than 18 months. In that time, the consolidation project recovered hardware, labor and software licensing costs, producing enough savings to fund the new marketing data warehouse.
It doesn't get much better than that in terms of ROI. "We reduced overall IT spending by cutting ongoing software license cost," says Jones. The project team met its objectives on time, on budget and on target.
From a business standpoint, Nevels asks, "How do you put a value on knowledge?" Centralized data means more accurate predictions, which helps the organization be more targeted and refined in its marketing campaigns. As a result, it can better focus on the profitability of customers. So far, the Marketing Department has experienced a 30% increase in its ability to deliver campaigns each month, a drop in processing time from 15 to 10 days, and about a 20% jump in the number of campaigns delivered per person per month.
"We rely on Teradata to get very important business done in a timely manner."
—Peter Campbell, Sprint Nextel
Consolidate the data environment
The BMW project was designed to condense the legacy marketing data environments into a cohesive platform able to support analysis of the customer base. To meet departmental synergy targets, the project removed IT costs from the business side. This was accomplished by moving business-based IT functions into IT, and by decommissioning four marketing systems, 11 servers, 53TB of storage and more than 105 software licenses, Jones explains. Side benefits included year-over-year savings produced by:
- Elimination of end-of-life refreshes for several software environments
- 25% reduction in the disk footprint
- Drop in internal network traffic
- Considerable increase in available data center space
The new data warehouse eliminated many of the headaches and much of the uncertainty associated with the data-collection and reporting processes that resulted from the Sprint/Nextel merger. For instance, validation and audit procedures now ensure the accuracy and completeness of the data being fed into the reports, while business rules are applied only once, and data replication is strictly regulated. Easier access to data is now based on source availability and the business need.
According to Jones, the new marketing environment allowed Sprint to bring its code-division multiple access network together with Nextel’s legacy Integrated Digital Enhanced Network and leverage the two customer bases on one platform. "By bringing these together, we can develop campaigns that really direct the customer base. What is the right application or applicable technology based on their need?"
Beyond immediate operational and data-quality improvements, additional qualitative benefits will enable the Marketing Department to more deeply exploit the Teradata technology to multiple ends. These include capacity planning, asset management of servers and licenses, system backups, and various application support activities, such as testing and production support.
"By bringing [Sprint's and Nextel's networks] together, we can develop campaigns that really direct the customer base."
—Jeff Jones, Sprint Nextel
The right initiatives at the right time
The BMW has allowed us to bring new marketing capabilities into the new system and to introduce new requirements—all while staying within the business case and cost," Errigo says. Much of the information that was integrated has allowed modelers to better profile or score customers for retention.
"We need to be selective about who we market to and about the offer itself. I want to save the company dollars by not marketing to people inappropriately," says Nevels. "We are now able to continually refine marketing practices to give customers the right treatment at the right time."
In one case, Sprint Nextel determined that a retention campaign was contacting customers too early and using the wrong communication tool. The telco is also better positioned to avoid wasteful marketing efforts on low-activity customers. It has instead refocused those marketing funds on high-end customers with up-sell campaigns, offering the latest technology, more services and attractive incentives.
Exceptional customer care is the key to achieving loyalty, according to Nevels. "Centralizing the information allows you to segment the customer base and provide offers that map to their interests," he says. "You don’t offer a camera user a phone without a camera." You also don’t leave big-ticket customers to cool their heels in line.
Working together
The IT team probably would not have met its deadline had it not been for the small, focused, blended team of Marketing and IT staff driving the project. "We had an incredible business partner" that not only helped manage the scope but also made quick decisions on issues, Errigo notes. "They were an extended part of our IT team. They helped to deliver some of the historical data we needed; it helped us tremendously. It’s not often when bringing up a new system that you are fully loaded with all your history."
In turn, Nevels notes that he is "closer to IT than I have been in five years," adding that "mutual respect has been earned through working together on this project."
Cost savings aside, at its core the new marketing environment is about looking forward. "This is a journey that will go on, and a centralized database is at the heart of intelligent campaign delivery. Without it, the risk is too high," says Nevels. Thanks to improved and updated data collection and data rules, as well as the capabilities built into and fostered by the BMW, a re-energized Sprint Nextel Marketing Department will be able to craft offers and programs necessary to keep growing revenues and, ultimately, to keep the company in fighting form.
Patricia Keefe is a freelance writer and editor specializing in business and technology.