From the Archives…now even more relevant as Real Time becomes the norm.
Inaccurate billing and criminal activity – no they are not the same thing – lost the mobile industry $58.4 billion in 2011, according to Juniper Research. Juniper says that if nothing is done to shore up the revenue assurance and fraud management barriers this figure could hit $300 billion by 2016.
Telcos risk undermining the revenue they earn from next generation services by “continuing to not invest in appropriate business support systems,” said Juniper’s Head of Research, Dr Windsor Holden. Mind you, he added that with “sustained investment in RA and FM systems, revenue leakage could fall to 4% in 2016, or $15 billion per year.”
So, that’s OK then. Except it is a little more complicated.
The time for action is, indeed now. In a recent survey by KPMG, 41 percent of respondents (from 137 operators around the world) fail to identify half of the revenue that leaks from their company. While the leakage figure is under one percent for the vast majority of respondents, on one in five admit to leakage of up to 10 percent of revenues. If your company has revenues of a billion euros or dollars, that makes….you get the point.
Part of the problem is lack of authority for the Revenue Assurance group in many telcos, where the function is not centralized and does not report directly to a Board Member.
Another problem is simply the speed and scale of change that a generally small team must evaluate, keep up with and take action to minimize the losses from. In most cases the team is the same size as it was a few year ago, before the fountaining of services and the signaling storm that is threatening to blow networks to shreds.
Revenue Assurance – and Fraud Management – needs to get into the fabric of a company, as ‘marketing’ analytics is now doing, perhaps paving the way. It needs to be managed centrally but each department, knowing that part of the business the best, should ‘programme’ the tools provided by the experts in RA.
With the speed of change and need to spread the accountability and responsibility throughout a modern company, building in-house systems and tools must be re-thought. The Revenue Assurance team should be able to buy the best, most flexible tools from the vendors, in a flexible and modifiable way and then educate the functional teams within a telco to use them to the best of their ability.
And of course, each department should have a Revenue Assurance Manager, who should receive a bonus based on his performance. And, of course, Revenue Assurance has to be, must be, part of the Product Development Group.
Excellent points Steve, thank you. Almost everything that a company accomplishes is based on the culture of the company, which is driven by the people at the top. Probably the best idea I heard long ago was that every dept has its own Revenue Assurance manager and was responsible for making sure what went in came out again. They were rewarded on their performance on top of their day job salaries and bonuses.
Alex:
As with all other core business functions, in the final analysis the behavior and attitudes of the entire enterprise are a reflection of the senior management’s own. If a toleration of the subsidization by customers and shareholders of avoidable waste is sustained, who’s going to volunteer their own bonus to be based on such performance if the Board isn’t even willing to hold the senior management to such a standard? Few, if any, are prepared to stick their head up in such an environment.
This situation is not characteristically different than the analogous one in the Quality domain, where traditional approaches fall back on Quality Control–the final refuge of those who shirk Quality Management and the associated practice of Quality Assurance. Revenue Assurance, as well as all the related practices in Enterprise Risk Management, suffer from the same unimaginative approach to general management.
One of the principal reasons that the TM Forum’s Business Assurance Program portfolio marries Customer Engagement Management and Revenue Management, enabled by Big Data Analytics and real-time end-user visibility, is to offer an end-to-end approach to the complex challenge of balancing the delivery of value to the fabric of Engaged Parties (Customer, Shareholder, Partner, Supplier, Society), especially in the era of Digital Services rapidly overtaking the legacy business models. It is our contention that there is a practical answer to the apparent contending demands each of the Parties brings into the weave.
Steve Cotton
Director, Business Assurance Programs