Following the wave of global liberalization on telecommunication,
the Taiwanese government deregulated the
telecommunication industry in 1997. Soon after, a host of
ISP (Internet Service Provider) companies entered the market
to provide value-added services over the network infrastructure
and compete for customers. Over the years,
network bandwidth has been upgraded from narrowband
to broadband, and the network population has grown substantially.
It has since grown from 3% of national households at the end of 1996 to 38% at the end of 2002, and
reaching 43% in June of 2006 (Institute for Information
Industry, 2006). The growth shows a very steep curve in
the first few years and a somewhat slower pace lately. During
this period of fast growth, one can imagine the fury of
ISP dealers in trying to offer various products with different
fee schemes to attract subscribers. Initially, pricing strategies
did work in recruiting new subscribers. However, after
these years, the marketing emphasis may have shifted from
product and cost orientation to that of customer needs.
Users have started realizing that service quality may be
more important than slight differences in fees. At the same
time, ISP management has also realized the well-known
fact that, the cost of developing a new customer is five to
seven times the cost of retaining an existing one (Wayland &
Cole, 1997). Management discovered that the need of network stability, data security, usage convenience, and
personal preference should be high on the customers’ service
agenda. This is also evidenced by McCue’s (2006)
ISP satisfaction survey, which indicated that reliability is
the most important factor for 78% of business customers
(McCue, 2006), and more than half of them indicated they
would switch to another ISP to get improved reliability.
Thus, how to develop a service management strategy,
which recognizes the shift from market share to percentage
of life-long customers, has become a major issue for all ISP
companies. The service management for the Telecom
industry, in general, consists of customer and product management
and resource management (Ericsson, 2005). It
aims to ensure that customers experience quality and perceive
the value of services delivered, and improve operational
readiness for short time-to-market of new
innovative services, as well as enhances utilization of existing
network facilities. In order to develop a relevant management
strategy in this increasingly competitive ISP
market, management must understand customers’ needs
and preferences and network facility utilization, before
any proactive actions for customer care can be devised.
Users’ needs and preference may be expressed in terms
of usage patterns. However, the nature of ISP industry,
where users and management may never see each other face
to face, makes it impossible to develop a traditional indepth
mutual understanding. Currently, the most common
means in servicing customers in ISP industry in Taiwan is
through call center. Over the years, it was found that a call
center is a rather passive way to service customers; it basically
waits for customers to call to present problems. The
most management can do with a call center is to call customers
to understand the reasons for switching to another
company. In addition, management has found the following
problems with a call center. Firstly, staff of a different
shift may not be able to respond properly to the customers
who call at an earlier shift. Secondly, it is difficult to market
effectively, because customers are usually not in a happy
mood when they call. Thirdly, it is difficult to measure
the effectiveness of each individual staff. Overall, most
ISP providers in the nation today are lacking the knowledge
of their customers’ network usage behaviors; they
are not able to raise the profile of customer loyalty. As
Oracle stated, customer loyalty might be the only sustainable
competitive advantage in this very challenging economical
time (Oracle Corporation, 2006). Thus, at this
stage, any company who knows how to deal with customers
effectively will have the definite strategic edge over others.
In addition to customers’ usage patterns, the network
resource management is also an important issue that can
benefit both customers and the company. With proper
management of network resources, an ISP company must
plan for resource allocation according to users’ needs of
geographical nature, which will aid in achieving better cost
effectiveness.
The objective of this research is to propose a Business
Intelligence (BI) process for the ISP industry in Taiwan,which could assist management in developing effective service
management strategies. The ISP industry in Taiwan is
characterized by the heavy pressure for raising revenue
after hefty capital investments in the last decade and the
lack of knowledge to develop effective competitive strategies.
The process applies data mining, visualization, and
RFM customer value modeling as the underlying methodologies
to identify various knowledge patterns. These patterns
form the basis for discovering business intelligence,
which includes the identification of VIP status, characteristics
of different usage group, users’ monetary contribution,
and network facility utilization. A BI decision support system
is developed with MVC (Model-View-Controller)
architecture to facilitate the intelligence dissemination.
The performance of the system is empirically and subjectively
evaluated by the company staff. The remaining structure
of this paper is as follows. In Section 2, we present a
review of underlying methodologies that are utilized in
the study. Section 3 describes various phases of the proposed
BI process. In Section 4, we implement BI process
with actual data from the company and describe the development
of a BI decision support system. The system evaluation
is described in Section 5, and Section 6 concludes
this paper.