IBM has acquired business intelligence (BI) analytics company, Netezza for $1.7 billion and this is expected to strengthen Netezza's footprint in the African telco market.
IBM will pay $27 for each share of the ten-year-old company. The acquisition is expected to close in the fourth quarter of 2010.
According to the tech giant, it has invested more than $12 billion in 23 analytics related acquisitions so far. In the second quarter of this year, IBM's analytics business grew 14%.
During a visit to SA to meet with channel partners and customers, Chris Smith, director of Netezza EMEA telecommunications, says - without specifying names - a few local telcos have already signed up to its technology.
Smith says: “From a market perspective, the IBM acquisition has been a positive move for us because it has made it easier for Netezza to expand into the big markets in the African continent. Our plans will become integrated with IBM's strategy going forward.”
He adds: “In coming weeks and months, Netezza's focus will be proactively approaching as many organisations that are in our target market.”
BITanium, a specialised BI service provider in SA, will be distributing Netezza's solutions such as its TwinFin data warehouse appliance into the South African market.
According to Smith, Netezza's primary focus is on the telecommunications, financial and retail sectors. He explains one of the biggest challenges telcos deal with is accessing huge amounts of data and extracting insight from it.
“Telcos are moving away from doing rear view dashboard BI towards predictive analysis,” notes Smith. He says social network analysis is using the information that's available on the telco network to analyse service uptake.
“It also provides churn management by running algorithms to predict which customers are about to leave the telco network to a competitor based on competitive calling plans.
“We've identified SA as a big market opportunity for us. Our technology is applicable worldwide; however in SA we're seeing a lot of opportunities in the telco space with new telcos coming into the market that are trying to leverage VOIP and WiMax.”
Smith says the explosion of data and content is making unstructured and structured data management more complex, especially for telcos that have to analyse huge amounts of voice data, mobile Internet data and text.
According to the IDC 'Expanding Digital Universe' study, data in enterprises is growing at about 20% CAGR, content is growing at approximately 60%. The estimated relative proportion of content to data in 2010 is estimated at an amazing 95% to 5%, up from 85% to 15% only five years ago.
“Another challenge is revenue assurance, which is critical for telcos that use data warehousing technology to pull together call records from their switches and interconnect systems,” adds Smith.
“However, operational systems do make mistakes due to misconfigurations or whether a rate plan has not been updated. Incorrect billing to customers can cost a telco upward in the millions. Orange Telecom in the UK recovered $40 million in revenue just by using a correct data warehouse approach.”
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