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Breaking Down Complexity in Pricing:

An introduction to a ’s Pricing Knowledge and Simulation Platform

Operatorsproposal 10102010

In the Telco world, casualties from price wars abound…

a3 Pricing Platform Operatorsproposal 10102010

Traditional Data-warehouse solutions struggle to meet the demands of simulating pricing scenarios on complete Call Data Records

  • Too much...
    Traditional Warehouse solutions struggle to keep up with volume and sources of data.
  • Too slow...
    With the ever increasing velocity and variability of customer behaviour, marketing departments often left with the choice of making partially informed decisions, or taking leaps of faith.
  • Too many clients...
  • Too expensive... Storing and processing costs per terabyte is high, in the thousands of dollars.
  • Too restricted... With a high cost per TB, there is a reward for performing analysis on samples rather than entire base. Client applications, are restricted to slice and dice. New analysis often requires new extraction and transformation.
  • Too complex...

3 a s Pricing Platform is at the forefront of the Hadoop revolution bringing the power of Big Data technologies to Pricing analytics:

þ Designed for Business Users, not data analysts

þ Interactive Tools – with an industry specific interface

þ Focuses on a High Volume, Heavy Processing problem

The challenge

  • Pricing expertise and skills are hard to find and retain
  • Dichotomy between product managers and pricing managers
  • Operators with a segment driven Organizational structure can find that products developed for one segment result in massive cannibalization of another
  • Product driven Organizations can often neglect customer driven aspects and rules established with previous plans
  • Within operations in the development of new tariffs and offerings, a full 360 view is not often taken into consideration – hasty decisions taken under the guise of NBA type campaigns can often result in unnecessary erosion
  • Sharing experiences and expertise across the group is difficult – There is no central repository of pricing related knowledge and experience and we are all forced to reinvent the wheel
  • Dearth of tools catering to both the strategic as well as the number crunching aspects of pricing
  • Traditional Data-mining tools allow analysis based on averages at best, and are heavy on assumptions. Only specialized tools allow actual simulation based on CDR reprocessing.

The skewedness and concentration of the traffic and revenue distributions make relying on average estimates or samples a dangerous proposition

Capturing, retaining and propagating pricing knowledge is imperative

Procedural Knowledge

  • Theoretical and technical knowledge, the how-to of pricing.
  • Combination of general and country specific knowledge – not often documented. Currently resides mostly with individual experts.

Empirical Knowledge

  • Experience relating to pricing plans and tariffs that have been tested in specific markets.

Business Intelligence

  • Results relating to the simulation of new price plans and tariffs in different markets and operations – both launched and aborted. Currently cannot be carried out using CDRs but only at a 30K foot aggregate level or with limited samples.

3 a ‘s pricing platform looks to address this challenge by creating an ecosystem in which pricing knowledge, experience and business intelligence can be shared globally

The cloud based user interface breaks pricing into building blocks ensuring that all tariff modifiers are taken into consideration and guiding through the creation of a tariff

“Published” tariffs are tagged at different stages of their life-cycle and experience can be shared across the group in a tariff “library”

Agenda

I. The platform

I. The tool

II. The Technology

With 3+ levels of interaction the platform defines the parameters of usage for different levels of users

  • “Cloud” Knowledge: Pricing rules and published tariffs
  • Local Experimentation: Tariff development and testing

Academy (group):

  • Covers all operations group wide with a “library” of “Published” tariffs from all operations

Playground (Operation):

  • Local Experimentation: Tariff development and testing

Sandbox (user):

  • Experiment with definitions of new tariffs

Laboratory (User):

  • Group or OpCo users with special permission to experiment with not only new tariffs but new rules in their own private lab

3 a ’s pricing tool digitizes the tariff definition workflow, effectively guiding the tariff creation process

a^{3}s

Define time and traffic rules

Enter Tariff elements

Share across group

Test tariff

Playground Monitor: OpCo level lead and “champions” of the platform

OR

Sandbox or Lab users: individual users with varying degrees of freedom of experimentation. A Lab user can also redefine the OpCo level time and traffic rules for the purposes of simulation.

Agenda

I. The platform

I. The tool

II. The Technology

Our Pricing Platform is a stand-alone application for the design, development and testing of new pricing schemes

Design & define pricing rules at a country / operator level

Analyze results

Develop tariff (Price plan, add-on or reward scheme)

The interface breaks down pricing and tariff structures into basic building blocks

Traffic type (Voice, SMS, MMS, video, data)

Time rules (peak /off-peak , weekend, nights, happy-hours etc)

Destination rules for B party

Designing and defining pricing rules

  1. Design & define pricing rules at a country / operator level
  2. Develop tariff (Price plan, add-on or reward scheme)
  3. Analyze results
  4. Set & launch simulation parameters

Setting and launching simulation parameters
Scope and date range can be varied
Multiple tariffs can be simulated at the same time
Migration curves can be graphically manipulated

Analyzing results Simulation results can be saved and retrieved at any time

When retrieving saved results, all assumptions and parameters used are displayed…

Detailed analysis on usage, behaviour, revenue and customers is available

Heat maps provide insight into competitive landscape

Migration impact is easily assessed

Key Features

  • Different User levels – Given the different mix of pricing know how within the organization, Pricing Managers can give users different levels of access
  • Maximum flexibility: the Tariff editor allows the definition of tariffs taking a variety of different elements
  • Automatic tariff validation - Given the complexity of the multiple dimensions on which tariffs can be defined, the tool automatically checks that all traffic types have rules defined to cover them

Key Attributes of a Business Case

  • Logical Assumptions: Assumptions need to be realistic and documented.
  • Preview: While full re-processing of the entire base is recommended, the preview tool runs on a sample to allow tweaking of tariff elements and assumptions
  • Portfolio*: The simulation tool is capable of running a portfolio combining multiple new tariffs at the same time

With the heavy cost of storing and processing data in traditional D/W the reward for off-loading resource hungry functions to Big Data applications is considerable…

3 a uses the power of “Big Data” and the cloud to create a hybrid global / local architecture…

3 a ‘s Layered approach also allows for multi-level customization

3 a ’s Value proposition in a nutshell

  • Big data technologies
  • Knowledge platform in the Cloud
  • Best practice inspired
  • Flexible and usable reporting