Inaccurate billing and criminal activity – no they are not the same thing – lost the mobile industry $58.4 billion last year, 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.
For a full sized map of the History of Revenue Assurance, click here.
In light of the principles of process flow being the way to organize work (as opposed to departmental “silos”), as laid out in TM Forum’s Business Process Framework, I would suggest that “each Department should have a Revenue Assurance Manager” is an approach associated with lower levels of TM Forum’s RA Maturity Model. The higher maturity approach of requiring the process “owner” to have RA controls designed in during the Product Development process stage (not a “Product Development Group”) and practiced in the Operations process stage is not only more effective than a pseudo audit function, but more Lean and thus more likely to be affordable and therefore budgeted.