Category Archives: Data Privacy

IDC Life Sciences and Ponemon Research Highlights Need for New Security Measures

The Healthcare and Life Sciences industry has demonstrated its ability to take advantage of data to fuel research, explore new ways to cure life threatening diseases, and save lives.  With the adoption of technology innovation especially in the mobile technology segment, this industry will need to find a balance between investments and risk.

ModernMedicine.com published an article in May, 2014 stating how analysts worry that a wide-scale security breach could occur in healthcare and pharmaceuticals industry this year.  The piece calls out that this industry category ranked the lowest in an S&P500 cyber health study because of its high volume of incidents and slow response rates.

In the Ponemon Institute’s research, The State of Data Centric Security, respondents from the Healthcare and Life Sciences stated the data they considered most at risk was customer, consumer and patient record data.  Intellectual Property, Business Intelligence and Classified Data responses ranked a close second.

Data security

In an Informatica webinar with Alan Louie, Research Analyst from IDC Health Insights (@IDCPharmaGuru), we discussed his research on ‘Changing Times in the Life Sciences – Enabled and Empowered by Tech Innovation’.  The megatrends of cloud, mobile, social networks and Big Data analytics are all moving in a positive direction with various phases of adoption.  Mobile technologies tops the list of IT priorities – likely because of the productivity gains that can be achieved by mobile devices and applications. Security/Risk Management technologies listed as the second-highest priority.

When we asked Security Professionals in Life Sciences in the Ponemon Survey, ‘What keeps you up at night?’, the top answer was ‘migrating to new mobile platforms’.  The reason I call this factoid out is that all other industry categories ranked ‘not knowing where sensitive data resides’ as the biggest concern. Why is Life Sciences different from other industries?

Life sciences

One reason could be the intense scrutiny over Intellectual Property protection and HIPPA compliance has already shone a light on where sensitive data reside. Mobile makes it difficult to track and contain a potential breach given that cell phones are the number 1 item left behind in taxi cabs.

With the threat of a major breach on the horizon, and the push to leverage technology such as mobile and cloud, it is evident that the investments in security and risk management need to focus on the data itself – rather than tie it to a specific technology or platform.

Enter Data-Centric Security.  The call to action is to consider applying a new approach to the information security paradigm that emphasizes the security of the data itself rather than the security of networks or applications.   Informatica recently published an eBook ‘Data-Centric Security eBook New Imperatives for a New Age of Data’.  Download it, read it. In an industry with so much at stake, we highlight the need for new security measures such as these. Do you agree?

I encourage your comments and open the dialogue!

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Posted in Application ILM, Data Governance, Data masking, Data Privacy, Data Security | Tagged , , , , , | Leave a comment

Just In Time For the Holidays: How The FTC Defines Reasonable Security

Reasonable Security

How The FTC Defines Reasonable Security

Recently the International Association of Privacy Professionals (IAPP, www.privacyassociation.org ) published a white paper that analyzed the Federal Trade Commission’s (FTC) data security/breach enforcement. These enforcements include organizations from the finance, retail, technology and healthcare industries within the United States.

From this analysis in “What’s Reasonable Security? A Moving Target,” IAPP extrapolated the best practices from the FTC’s enforcement actions.

While the white paper and article indicate that “reasonable security” is a moving target it does provide recommendations that will help organizations access and baseline their current data security efforts.  Interesting is the focus on data centric security, from overall enterprise assessment to the careful control of access of employees and 3rd parties.  Here some of the recommendations derived from the FTC’s enforcements that call for Data Centric Security:

  • Perform assessments to identify reasonably foreseeable risks to the security, integrity, and confidentiality of personal information collected and stored on the network, online or in paper files.
  • Limited access policies curb unnecessary security risks and minimize the number and type of network access points that an information security team must monitor for potential violations.
  • Limit employee access to (and copying of) personal information, based on employee’s role.
  • Implement and monitor compliance with policies and procedures for rendering information unreadable or otherwise secure in the course of disposal. Securely disposed information must not practicably be read or reconstructed.
  • Restrict third party access to personal information based on business need, for example, by restricting access based on IP address, granting temporary access privileges, or similar procedures.

How does Data Centric Security help organizations achieve this inferred baseline? 

  1. Data Security Intelligence (Secure@Source coming Q2 2015), provides the ability to “…identify reasonably foreseeable risks.”
  2. Data Masking (Dynamic and Persistent Data Masking)  provides the controls to limit access of information to employees and 3rd parties.
  3. Data Archiving provides the means for the secure disposal of information.

Other data centric security controls would include encryption for data at rest/motion and tokenization for securing payment card data.  All of the controls help organizations secure their data, whether a threat originates internally or externally.   And based on the never ending news of data breaches and attacks this year, it is a matter of when, not if your organization will be significantly breached.

For 2015, “Reasonable Security” will require ongoing analysis of sensitive data and the deployment of reciprocal data centric security controls to ensure that the organizations keep pace with this “Moving Target.”

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Considering Data Integration? Also Consider Data Security Best Practices

Considering Data Integration? Also Consider Data Security

Consider Data Security Best Practices

It seems you can’t go a week without hearing about some major data breach, many of which make front-page news.  The most recent was from the State of California, that reported a large number of data breaches in that state alone.  “The number of personal records compromised by data breaches in California surged to 18.5 million in 2013, up more than six times from the year before, according to a report published [late October 2014] by the state’s Attorney General.”

California reported a total of 167 data breaches in 2013, which is up 28 percent from the 2012.  Two major data breaches caused most of this uptick, including the Target attack that was reported in December 2013, and the LivingSocial attack that occurred in April 2013.  This year, you can add the Home Depot data breach to that list, as well as the recent breach at the US Post Office.

So, what the heck is going on?  And how does this new impact data integration?  Should we be concerned, as we place more and more data on public clouds, or within big data systems?

Almost all of these breaches were made possible by traditional systems with security technology and security operations that fell far enough behind that outside attackers found a way in.  You can count on many more of these attacks, as enterprises and governments don’t look at security as what it is; an ongoing activity that may require massive and systemic changes to make sure the data is properly protected.

As enterprises and government agencies stand up cloud-based systems, and new big data systems, either inside (private) or outside (public) of the enterprise, there are some emerging best practices around security that those who deploy data integration should understand.  Here are a few that should be on the top of your list:

First, start with Identity and Access Management (IAM) and work your way backward.  These days, most cloud and non-cloud systems are complex distributed systems.  That means IAM is is clearly the best security model and best practice to follow with the emerging use of cloud computing.

The concept is simple; provide a security approach and technology that enables the right individuals to access the right resources, at the right times, for the right reasons.  The concept follows the principle that everything and everyone gets an identity.  This includes humans, servers, APIs, applications, data, etc..  Once that verification occurs, it’s just a matter of defining which identities can access other identities, and creating policies that define the limits of that relationship.

Second, work with your data integration provider to identify solutions that work best with their technology.  Most data integration solutions address security in one way, shape, or form.  Understanding those solutions is important to secure data at rest and in flight.

Finally, splurge on monitoring and governance.  Many of the issues around this growing number of breaches exist with the system managers’ inability to spot and stop attacks.  Creative approaches to monitoring system and network utilization, as well as data access, will allow those in IT to spot most of the attacks and correct the issues before the ‘go nuclear.’  Typically, there are an increasing number of breach attempts that lead up to the complete breach.

The issue and burden of security won’t go away.  Systems will continue to move to public and private clouds, and data will continue to migrate to distributed big data types of environments.  And that means the need data integration and data security will continue to explode.

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Take Action – Reduce Your Risk of Identity Theft This Holiday Season

Reduce Your Risk of Identify Theft This Holiday Season

Reduce Your Risk of Identify Theft This Holiday Season

What is our personal information worth? 

With this 2014 holiday season rolling into full swing, Americans will spend more than $600 Billion, a 4.1% increase from last year. According to the Credit Union National Association, a poll showed that 45% of credit and debit card users will think twice about how they shop and pay given the tens of millions of shoppers impacted by breaches. Stealing identities is a lucrative pastime for those with ulterior motives. The Black Market pays between $10-$12 per stolen record. Yet when enriched with health data, the value is as high as $50 per record because it can be used for insurance fraud.

Are the thieves getting smarter or are we getting sloppy?  

With ubiquitous access to technology globally, general acceptance to online shopping, and the digitization of health records, there is more data online with more opportunities to steal our data than ever before.  Unfortunately for shoppers, 2013 was known as ‘the year of the retailer breach’ according to the Verizon’s 2014 data breach report. Unfortunately for patients, Healthcare providers were most noted for the highest percentage of losing protected healthcare data.

So what can we do to be a smarter and safer consumer?

No one wants to bank roll the thieves’ illegal habits. One way would be to regress 20 years, drive to the mall and make our purchases cash in hand or go back to completely paper-based healthcare.   Alternatively, here are a few suggestions to avoid being on the next list of victims:

1. Avoid irresponsible vendors and providers by being an educated consumer

Sites like The Identify Theft Resource Center and the US Department of Health and Human Services expose the latest breaches in retail and healthcare respectively. Look up who you are buying from and receiving care from and make sure they are doing everything they can to protect your data. If they didn’t respond in a timely fashion, tried to hide the breach, or didn’t implement new controls to protect your data, avoid them. Or take your chances.

2. Expect to be hacked, plan for it

Most organizations you trust with your personal information have already experienced a breach. In fact, according to a recent survey conducted by the Ponemon Group sponsored by Informatica, 72% of organizations polled experienced a breach within the past 12 months; more than 20% had 2 or more breaches in the same timeframe. When setting passwords, avoid using words or phrases that you publicly share on Facebook.  When answering security questions, most security professionals suggest that you lie!

3. If it really bothers you, be vocal and engage

Many states are invoking legislation to make organizations accountable for notifying individuals when a breach occurs. For example, Florida enacted FIPA – the Florida Information Protection Act – on July 1, 2014 that stipulates that all breaches, large or small, are subject to notification.  For every day that a breach goes undocumented, FIPA stipulates $1,000 per day penalty up to an annual limit of $500,000.

In conclusion, as the holiday shopping season approaches, now is the perfect time for you to ensure that you’re making the best – and most informed – purchasing decisions. You have the ability to take matters into your own hands; keep your data secure this year and every year.

To learn more about Informatica Data Security products, visit our Data Privacy solutions website.

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Time to Change Passwords…Again

Time to Change Passwords…Again

Time to Change Passwords…Again

Has everyone just forgotten about data masking?

The information security industry is reporting that more than 1.5 billion (yes, that’s with a “B”) emails and passwords have been hacked. It’s hard to tell from the article, but this could be the big one. (And just when we thought that James Bond had taken care of the Russian mafia.) From both large and small companies, nobody is safe. According to the experts the sites ranged from small e-commerce sites to Fortune 500 companies.  At this time the experts aren’t telling us who the big targets were.  We could be very unpleasantly surprised.

Most security experts admit that the bulk of the post-breach activity will be email spamming.  Insidious to be sure.  But imagine if the hackers were to get a little more intelligent about what they have.  How many individuals reuse passwords?  Experts say over 90% of consumers reuse passwords between popular sites.  And since email addresses are the most universally used “user name” on those sites, the chance of that 1.5 billion identities translating into millions of pirated activities is fairly high.

According to the recent published Ponemon study; 24% of respondents don’t know where their sensitive data is stored.  That is a staggering amount.  Further complicating the issue, the same study notes that 65% of the respondents have no comprehensive data forensics capability.  That means that consumers are more than likely to never hear from their provider that their data had been breached.  Until it is too late.

So now I guess we all get to go change our passwords again.  And we don’t know why, we just have to.  This is annoying.  But it’s not a permanent fix to have consumers constantly looking over their virtual shoulders.  Let’s talk about the enterprise sized firms first.  Ponemon indicates that 57% of respondents would like more trained data security personnel to protect data.  And the enterprise firm should have the resources to task IT personnel to protect data.  They also have the ability to license best in class technology to protect data.  There is no excuse not to implement an enterprise data masking technology.  This should be used hand in hand with network intrusion defenses to protect from end to end.

Smaller enterprises have similar options.  The same data masking technology can be leveraged on smaller scale by a smaller IT organization including the personnel to optimize the infrastructure.  Additionally, most small enterprises leverage Cloud based systems that should have the same defenses in place.  The small enterprise should bias their buying criteria in data systems for those that implement data masking technology.

Let me add a little fuel to the fire and talk about a different kind of cost.  Insurers cover Cyber Risk either as part of a Commercial General Liability policy or as a separate policy.  In 2013, insurers paid an average approaching $3.5M for each cyber breach claim.  The average per record cost of claims was over $6,000.  Now, imagine your enterprise’s slice of those 1.5 billion records.  Obviously these are claims, not premiums.  Premiums can range up to $40,000 per year for each $1M in coverage.  Insurers will typically give discounts for those companies that have demonstrated security practices and infrastructure.  I won’t belabor the point, it’s pure math at this point.

There is plenty of risk and cost to go around, to be sure.  But there is a way to stay protected with Informatica.  And now, let’s all take a few minutes to go change our passwords.  I’ll wait right here.  There, do you feel better?

For more information on Informatica’s data masking technology click here, where you can drill into dynamic and persistent data masking technology, leading in the industry.  So you should still change your passwords…but check out the industry’s leading data security technology after you do.

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Posted in Application ILM, Data masking, Data Privacy | Tagged , , , | 1 Comment

Scary Times For Data Security

Scary Times For Data Security

Scary Times For Data Security

These are scary times we live in when it comes to data security. And the times are even scarier for today’s retailers, government agencies, financial institutions, and healthcare organizations. The internet has become a battlefield. Criminals are looking to steal trade secrets and personal data for financial gain. Terrorists seek to steal data for political gain. Both are after your Personally Identifiable Information, like your name, account numbers, social security number, date of birth, ID’s and passwords.

How are they accomplishing this?  A new generation of hackers has learned to reverse engineer popular software programs (e.g. Windows, Outlook Java, etc.) in order to find so called “holes”. Once those holes are exploited, the hackers develop “bugs” that infiltrate computer systems, search for sensitive data and return it to the bad guys. These bugs are then sold in the black market to the highest bidder. When successful, these hackers can wreak havoc across the globe.

I recently read a Time Magazine article titled “World War Zero: How Hackers Fight to Steal Your Secrets.” The article discussed a new generation of software companies made up of former hackers. These firms help other software companies by identifying potential security holes, before they can be used in malicious exploits.

This constant battle between good (data and software security firms) and bad (smart, young, programmers looking to make a quick/big buck) is happening every day. Unfortunately, the average consumer (you and I) are the innocent victims of this crazy and costly war. As a consumer in today’s digital and data-centric age, I worry when I see these headlines of ongoing data breaches from the Targets of the world to my local bank down the street. I wonder not “if” but “when” I will become the next victim.  According to the Ponemon institute, the average cost to a company was $3.5 million in US dollars and 15 percent more than what it cost last year.

As a 20 year software industry veteran, I’ve worked with many firms across global financial services industry. As a result, my concerned about data security exceed those of the average consumer. Here are the reasons for this:

  1. Everything is Digital: I remember the days when ATM machines were introduced, eliminating the need to wait in long teller lines. Nowadays, most of what we do with our financial institutions is digital and online whether on our mobile devices to desktop browsers. As such every interaction and transaction is creating sensitive data that gets disbursed across tens, hundreds, sometimes thousands of databases and systems in these firms.
  2. The Big Data Phenomenon: I’m not talking about sexy next generation analytic applications that promise to provide the best answer to run your business. What I am talking about is the volume of data that is being generated and collected from the countless number of computer systems (on-premise and in the cloud) that run today’s global financial services industry.
  3. Increase use of Off-Shore and On-Shore Development: Outsourcing technology projects to offshore development firms has be leverage off shore development partners to offset their operational and technology costs. With new technology initiatives.

Now here is the hard part.  Given these trends and heightened threats, do the companies I do business with know where the data resides that they need to protect?  How do they actually protect sensitive data when using it to support new IT projects both in-house or by off-shore development partners?   You’d be amazed what the truth is. 

According to the recent Ponemon Institute study “State of Data Centric Security” that surveyed 1,587 Global IT and IT security practitioners in 16 countries:

  • Only 16 percent of the respondents believe they know where all sensitive structured data is located and a very small percentage (7 percent) know where unstructured data resides.
  • Fifty-seven percent of respondents say not knowing where the organization’s sensitive or confidential data is located keeps them up at night.
  • Only 19 percent say their organizations use centralized access control management and entitlements and 14 percent use file system and access audits.

Even worse, those surveyed said that not knowing where sensitive and confidential information resides is a serious threat and the percentage of respondents who believe it is a high priority in their organizations. Seventy-nine percent of respondents agree it is a significant security risk facing their organizations. But a much smaller percentage (51 percent) believes that securing and/or protecting data is a high priority in their organizations.

I don’t know about you but this is alarming and worrisome to me.  I think I am ready to reach out to my banker and my local retailer and let him know about my concerns and make sure they ask and communicate my concerns to the top of their organization. In today’s globally and socially connected world, news travels fast and given how hard it is to build trustful customer relationships, one would think every business from the local mall to Wall St should be asking if they are doing what they need to identify and protect their number one digital asset – Their data.

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Posted in Data Governance, Data Integration, Data Privacy, Data Quality, Data Services, Data Warehousing | Tagged , , , | Leave a comment

Takeaways from the Gartner Security and Risk Management Summit (2014)

Last week I had the opportunity to attend the Gartner Security and Risk Management Summit. At this event, Gartner analysts and security industry experts meet to discuss the latest trends, advances, best practices and research in the space. At the event, I had the privilege of connecting with customers, peers and partners. I was also excited to learn about changes that are shaping the data security landscape.

Here are some of the things I learned at the event:

  • Security continues to be a top CIO priority in 2014. Security is well-aligned with other trends such as big data, IoT, mobile, cloud, and collaboration. According to Gartner, the top CIO priority area is BI/analytics. Given our growing appetite for all things data and our increasing ability to mine data to increase top-line growth, this top billing makes perfect sense. The challenge is to protect the data assets that drive value for the company and ensure appropriate privacy controls.
  • Mobile and data security are the top focus for 2014 spending in North America according to Gartner’s pre-conference survey. Cloud rounds out the list when considering worldwide spending results.
  • Rise of the DRO (Digital Risk Officer). Fortunately, those same market trends are leading to an evolution of the CISO role to a Digital Security Officer and, longer term, a Digital Risk Officer. The DRO role will include determination of the risks and security of digital connectivity. Digital/Information Security risk is increasingly being reported as a business impact to the board.
  • Information management and information security are blending. Gartner assumes that 40% of global enterprises will have aligned governance of the two programs by 2017. This is not surprising given the overlap of common objectives such as inventories, classification, usage policies, and accountability/protection.
  • Security methodology is moving from a reactive approach to compliance-driven and proactive (risk-based) methodologies. There is simply too much data and too many events for analysts to monitor. Organizations need to understand their assets and their criticality. Big data analytics and context-aware security is then needed to reduce the noise and false positive rates to a manageable level. According to Gartner analyst Avivah Litan, ”By 2018, of all breaches that are detected within an enterprise, 70% will be found because they used context-aware security, up from 10% today.”

I want to close by sharing the identified Top Digital Security Trends for 2014

  • Software-defined security
  • Big data security analytics
  • Intelligent/Context-aware security controls
  • Application isolation
  • Endpoint threat detection and response
  • Website protection
  • Adaptive access
  • Securing the Internet of Things
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Posted in Big Data, CIO, Data Governance, Data Privacy, Data Security, Governance, Risk and Compliance | Tagged , , , , , , , , | Leave a comment

Data Obfuscation and Data Value – Can They Coexist?

Data Obfuscation and Data Value

Data Obfuscation and Data Value

Data is growing exponentially. New technologies are at the root of the growth. With the advent of big data and machine data, enterprises have amassed amounts of data never before seen. Consider the example of Telecommunications companies. Telco has always collected large volumes of call data and customer data. However, the advent of 4G services, combined with the explosion of the mobile internet, has created data volume Telco has never seen before.

In response to the growth, organizations seek new ways to unlock the value of their data. Traditionally, data has been analyzed for a few key reasons. First, data was analyzed in order to identify ways to improve operational efficiency. Secondly, data was analyzed to identify opportunities to increase revenue.

As data expands, companies have found new uses for these growing data sets. Of late, organizations have started providing data to partners, who then sell the ‘intelligence’ they glean from within the data. Consider a coffee shop owner whose store doesn’t open until 8 AM. This owner would be interested in learning how many target customers (Perhaps people aged 25 to 45) walk past the closed shop between 6 AM and 8 AM. If this number is high enough, it may make sense to open the store earlier.

As much as organizations prioritize the value of data, customers prioritize the privacy of data. If an organization loses a customer’s data, it results in a several costs to the organization. These costs include:

  • Damage to the company’s reputation
  • A reduction of customer trust
  • Financial costs associated with the investigation of the loss
  • Possible governmental fines
  • Possible restitution costs

To guard against these risks, data that organizations provide to their partners must be obfuscated. This protects customer privacy. However, data that has been obfuscated is often of a lower value to the partner. For example, if the date of birth of those passing the coffee shop has been obfuscated, the store owner may not be able to determine if those passing by are potential customers. When data is obfuscated without consideration of the analysis that needs to be done, analysis results may not be correct.

There is away to provide data privacy for the customer while simultaneously monetizing enterprise data. To do so, organizations must allow trusted partners to define masking generalizations. With sufficient data masking governance, it is indeed possible for data obfuscation and data value to coexist.

Currently, there is a great deal of research around ensuring that obfuscated data is both protected and useful. Techniques and algorithms like ‘k-Anonymity’ and ‘l-Diversity’ ensure that sensitive data is safe and secure. However, these techniques have have not yet become mainstream. Once they do, the value of big data will be unlocked.

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Posted in Application ILM, B2B Data Exchange, Data masking, Data Privacy, Data Security, Telecommunications | Tagged , , , | Leave a comment

The Power and Security of Exponential Data

The Power and Security of Exponential Data

The Power and Security of Exponential Data

I recently heard a couple different analogies for data. The first is that data is the “new oil.” Data is a valuable resource that powers global business. Consequently, it is targeted for theft by hackers. The thinking is this: People are not after your servers, they’re after your data.

The other comparison is that data is like solar power. Like solar power, data is abundant. In addition, it’s getting cheaper and more efficient to harness. The juxtaposition of these images captures the current sentiment around data’s potential to improve our lives in many ways. For this to happen, however, corporations and data custodians must effectively balance the power of data with security and privacy concerns.

Many people have a preconception of security as an obstacle to productivity. Actually, good security practitioners understand that the purpose of security is to support the goals of the company by allowing the business to innovate and operate more quickly and effectively. Think back to the early days of online transactions; many people were not comfortable banking online or making web purchases for fear of fraud and theft. Similar fears slowed early adoption of mobile phone banking and purchasing applications. But security ecosystems evolved, concerns were addressed, and now Gartner estimates that worldwide mobile payment transaction values surpass $235B in 2013. An astute security executive once pointed out why cars have brakes: not to slow us down, but to allow us to drive faster, safely.

The pace of digital change and the current proliferation of data is not a simple linear function – it’s growing exponentially – and it’s not going to slow down. I believe this is generally a good thing. Our ability to harness data is how we will better understand our world. It’s how we will address challenges with critical resources such as energy and water. And it’s how we will innovate in research areas such as medicine and healthcare. And so, as a relatively new Informatica employee coming from a security background, I’m now at a crossroads of sorts. While Informatica’s goal of “Putting potential to work” resonates with my views and helps customers deliver on the promise of this data growth, I know we need to have proper controls in place. I’m proud to be part of a team building a new intelligent, context-aware approach to data security (Secure@SourceTM).

We recently announced Secure@SourceTM during InformaticaWorld 2014. One thing that impressed me was how quickly attendees (many of whom have little security background) understood how they could leverage data context to improve security controls, privacy, and data governance for their organizations. You can find a great introduction summary of Secure@SourceTM here.

I will be sharing more on Secure@SourceTM and data security in general, and would love to get your feedback. If you are an Informatica customer and would like to help shape the product direction, we are recruiting a select group of charter customers to drive and provide feedback for the first release. Customers who are interested in being a charter customer should register and send email to SecureCustomers@informatica.com.

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Telecommunications and Data: What If Your Fiancée Flunked Finance?

About 15 or so years ago, some friends of mine called me to share great news.  Their dating relationship had become serious and they were headed toward marriage.  After a romantic proposal and a beautiful ring, it was time to plan the wedding and invite the guests.

Telecommunication and data

Lack of a Steady Income Stream is Not Romantic

This exciting time was confounded by a significant challenge. Though they were very much in love, one of them had an incredibly tough time making wise financial choices. During the wedding planning process, the financially astute fiancée grew concerned about the problems the challenged partner could bring. Even though the financially illiterate fiancée had every other admirable quality, the finance issue nearly created enough doubt to end the engagement.  Fortunately, my friends moved forward with the ceremony, were married and immediately went to work on learning new healthy financial habits as a couple.

Telecommunication and data

Is financial folly a relationship red flag?

Let’s segue into how this relates to telecommunications and data, specifically to your average communications operator. Just like a concerned fiancée, you’d think twice about making a commitment to an organization that didn’t have a strong foundation.

Like the financially challenged fiancée, the average operator has a number of excellent qualities: functioning business model, great branding, international roaming, creative ads, long-term prospects, smart people at the helm and all the data and IT assets you can imagine.  Unfortunately, despite the externally visible bells and whistles, over time they tend to lose operational soundness around the basics. Specifically, their lack of data quality causes them to forfeit an ever increasing amount of billing revenue. Their poor data costs them millions each year.

A recent set of engagements highlighted this phenomenon. The small carrier (3-6 million subscribers) who implements a more consistent, unique way to manage core subscriber profile and product data could recover underbilling of $6.9 million annually. A larger carrier (10-20 million subscribers) could recover $28.1 million every year from fixing billing errors. (This doesn’t even cover the large Indian and Chinese carriers who have over 100 million customers!)

Typically, a billing error starts with an incorrect set up of a service line item base price and related 30+ discount line variances.  Next, the wrong service discount item is applied at contract start.  If that did not happen (or on top of those), it will occur when the customer calls in during or right before the end of the first contract period (12-24 months) to complain about the service quality, bill shock, etc.  Here, the call center rep will break an existing triple play bundle by deleting an item and setting up a separate non-bundle service line item at a lower price (higher discount).  The head of billing actually told us, “our reps just give a residential subscriber a discount of $2 for calling us”.  It’s even higher for commercial clients.

To make matters worse, this change will trigger misaligned (incorrect) activation dates or even bill duplication, all of which will have to be fixed later by multiple staff on the BSS and OSS side or may even trigger an investigation project by the revenue assurance department.  Worst case, the deletion of the item from the bundle (especially for B2B clients) will not terminate the wholesale cost the carrier still owes a national carrier for a broadband line, which often is 1/3 of the retail price for a business customer.

To come full circle to my initial “accounting challenged” example; would you marry (invest in) this organization?  Do you think this can or should be solved in a big bang approach or incrementally?  Where would you start: product management, the service center, residential or commercial customers?

Observations and illustrations contained in this post are estimates only and are based entirely upon information provided by the prospective customer and on our observations and benchmarks.  While we believe our recommendations and estimates to be sound, the degree of success achieved by the prospective customer is dependent upon a variety of factors, many of which are not under Informatica’s control and nothing in this post shall be relied upon as representative of the degree of success that may, in fact, be realized and no warranty or representation of success, either express or implied, is made.

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