Eric Priezkalns is a founder of talkRA. He is a widely recognized expert on risk management and business assurance for communications providers. After a successful full-time career, Eric now splits his time between occasional consulting projects for trusted customers, and his many other passions. Eric was Director of Risk Management for Qatar Telecom and has worked with Cable & Wireless Group, T-Mobile UK, BSkyB, Worldcom UK, and Nawras, as well as advising various software developers and system integrators.
Eric is a qualified chartered accountant; he trained whilst employed by the Enterprise Risk Services division in Deloitte's London office. His Masters in Information Systems was earned with distinction, and he holds a first-class degree in Mathematics and Philosophy.
In 2006, Eric was already a popular speaker at conferences, but he decided to reach out to a broader audience with the first blog dedicated to revenue assurance. Many have since copied him, but none have matched his output.
Eric was the first leader of the the TM Forum's Enterprise Risk Management team, a founding member of the TM Forum’s Revenue Assurance team, and he developed the original Revenue Assurance Maturity Model. In the UK, Eric is known for his critique of billing accuracy regulations. In Qatar, Eric was a founding member of the National Committee for Internet Safety. Eric currently serves on the committee of the Revenue Assurance Group, and he is an editorial advisor to Black Swan.
Posted by: Eric in News, Opinion
When I saw Stratecast’s 22 predictions for the comms industry in 2015, my first thought was: it is easy to make fun of them. On the one hand, they predict that broadband regulation will be a big deal in the USA. Err… I think anybody – and I mean literally anybody, not just telco employees – who follows US news would have noticed US President Obama making a YouTube video asking for lots more broadband regulation. So this Stratecast prediction falls into the ‘sun will rise tomorrow’ category. On the other hand, another big story that closed the year was the so-called cyberwarfare between North Korea and the USA. Obama was involved in this story too, talking big about Sony’s handling of the malicious hacking of their systems, which was quite likely conducted by operatives working for the North Korean government. This culminated with lots of fuss about freedom of speech, as the entertainment company withdrew their comedy film about North Korea’s leadership from cinemas, and premiered it via the internet. But amongst their ‘secure networking’ predictions, Stratecast made no mention of increased government interaction with the private sector in order to prevent malicious hacking sponsored by enemy nations. So the report includes at least one blindingly obvious prediction, whilst failing to include another blindingly obvious prediction!
But then I had to think again. I was drawn to read the report because of this prediction:
Margin Assurance becomes a management discipline as purpose-built analytics help address core business needs.
I was going to lampoon this prediction for lots of reasons:
- Does this mean margin assurance was not a ‘management discipline’ in 2014, or the year before, or the year before that? When I joined Cable & Wireless in 2007, colleague Guy Howie was building superb tools to assure margins. And in 2010, when the TMF RA team started talking about extending the definition of RA to include margin assurance, I chided them because the original definition had been consciously written to include activities like margin assurance within the scope of RA. In short, margin assurance has long been a management discipline. Different telcos progress at different rates, but there is no need to insult everyone who has been doing margin assurance for many years by suggesting that people will only start doing it properly in 2015.
- What does the phrase ‘purpose-built analytics’ mean, and how does it reflect actual trends? Has there long been proprietary analytic software that could be used for margin assurance if the right data was supplied? Yes. Have RA vendors long supplied analytics suites incorporating functionality to perform ‘margin assurance’? Yes. Have real telcos been actively using such third-party software to assure their margins? Yes. Is it the trend in software to build analytic solutions designed to satisfy specific narrow purposes? No. On the contrary, the trend is towards general-purpose analytical capability being made more widely and easily available for flexible use all around the telco.
- The need for margin assurance is apparently prompted by tightening margins. But what is new about that? Margins did not suddenly narrow in 2014. Margins have been eroding for many years, depending on the maturity of the market in which the telco operates. The rationale for this 2015 ‘prediction’ has been valid for a decade, so why make the prediction now, and not before?
But then, I had a change of heart, and decided not to make fun of Stratecast. I read the full text of their prediction closely, and realized Stratecast are not guilty of making bad predictions. They are guilty of much worse: of making vapid predictions that rely on weasel words. You might think they are predicting something, but they are predicting nothing at all, because it is so hard to imagine an outcome that would clearly contradict it. Here is everything they had to say about margin assurance in 2015:
Rising from the roots of revenue assurance and fraud management, Margin Assurance is a business discipline focused on maximizing profits.
So far, they have predicted nothing, and said nothing interesting. But they did demonstrate inconsistency in how they capitalize words.
CSPs globally continue to see rising costs as data volumes increase from the roll-out of new network technologies, and through engagement in changing business models, including a sharp increase in partnerships.
Still no prediction. And nothing interesting.
CSPs are also seeing flat revenues or at least revenues that are not rising as quickly as their costs.
***Yawn*** Please tell us something we do not know already.
The result is tightening margins.
***Really big yawn***
Using the right analytical tools associated with the right types of data,
As opposed to the wrong tools, with the wrong data? How stupid do they think we are?
the Margin Assurance discipline in 2015 will
At long last, a prediction is coming!!!
become engrained in all major Operations and Monetization processes.
And that was it. That was all they said on the matter. But what does ‘become engrained’ mean? It means nothing. If you have been doing margin assurance for the last 10 years, Stratecast could argue it was not sufficiently ‘engrained’. And whatever margin assurance you conduct by the end of 2015, that could argue it is now ‘engrained’. In ‘major’ stuff. Though not necessarily in the ‘minor’ stuff. You will do it for major stuff like your processes, as opposed to all those non-processes telcos have for operating things and making money. The more you look at the words spouted by Stratecast, the less there is to see, until you realize you have analysed pages of documentation that told you nothing at all.
I closed the talkRA review of 2014 by saying the increasing complexity and interplay of several key trends in assurance made it impossible for me to predict what will happen in 2015. An honest analyst admits the limits of their knowledge, and when they can no longer make reasonable extrapolations from the data they possess. Sadly, Stratecast lack that integrity, and feel obliged to make predictions even when they have no idea what will happen, and no data to support their hunches. What happens in 2015 will be determined by what you do, not by what they say. So go ahead and do something of substance, without wasting time on empty predictions.
Posted by: Eric in Opinion
In Auld Lang Syne, Scots poet Robert Burns poses a question: should old acquaintance be forgot, and never brought to mind? The answer is no! So, old friends, new acquaintances and fellow travellers, let us remember who did what during the last 12 months of telecoms business assurance and risk management.
Keynote, makers of test equipment, purchased Meucci, specialists in detecting bypass fraud, for an disclosed price.
Public concern over surveillance prompted Vodafone’s Group Privacy Officer to openly challenge the legality of various government spying programs.
In a positive move, WeDo appointed Raul Mascarenhas as their new Vice President with responsibility for pushing business assurance to companies outside telecoms. In a less positive move, somebody from cVidya started trolling talkRA.
Law enforcement in Bangladesh arrested 44 people and seized USD128mn from telecoms fraudsters.
Mobile World Congress prompted lots of companies to make announcements. We understood the upgrades to the Lavastorm FMS and to the WeDo FMS, but were mystified by cVidya’s press release.
Mike Willett asked why I founded talkRA, so I told him.
WeDo’s annual results showed a 12% rise in revenues. Meanwhile, they sold their Praesidium consulting division to sister company Mainroad.
The annual Trendlabs security report highlighted the rapid spread of mobile malware.
A former GRAPA insider exclusively told talkRA that Papa Rob’s training organization had made staff redundant and was on the brink of collapse. GRAPA’s subsequent inactivity validated those suspicions.
cVidya turned Hadoop, the open source big data technology, into an enabler for their software.
BBC undercover cameras revealed London’s black market for stolen smartphones.
WeDo’s annual user event was successful, though there were hints that the format would need a major overhaul next year, to involve customers and targets from outside the telecoms sector. Despite this being their biggest conference yet, and despite taking on increased responsibility for sister companies within Sonae’s SSI division, WeDo CEO Rui Paiva still appeared incredibly relaxed.
Telstra Global and Subex received an innovation award from Global Telecoms Business, for their project to unify billing operations with a common implementation of Subex’s ROC partner settlement solution.
The annual results from Subex showed that the business is fundamentally sound and on an upward path, but still weighed down by debt.
The TM Forum published version 2 of the RA Maturity Model. I slammed it for asking biased questions.
Subex CEO Surjeet Singh exclusively talked to talkRA about his plans to turn Subex into a USD100mn turnover business within the next three years.
The UK Revenue Assurance Group extended its record as the longest-running meeting of telecoms RA professionals, anywhere in the world. Attendees of their Summer get-together celebrated the 10th anniversary of RAG with a slice of birthday cake!
American journalist Ryan Block called Comcast because he wanted to cancel his internet service. Comcast’s Customer Service Advisor had other ideas. Block taped the conversation; it took just two days for 4 million people to listen to their exchange.
Basset, the Swedish revenue management firm, was acquired by a Canadian software conglomerate for USD10mn. No mention was made of their business assurance offerings, raising questions about the prospects for other peripheral players in this market.
The ongoing farce of UK billing accuracy rules reached a nadir when the regulator scrapped the toughest accuracy measures in the world, whilst pretending this was necessary to make bills even more accurate than before.
Mara-Ison Connectiva underwent a rebrand that placed more emphasis on their analytics offerings.
Tony Poulos left his role with the TM Forum to become a market strategist for WeDo. Meanwhile, WeDo’s parent division, SSI, augmented their umbrella of risk offerings by strengthening their holding in security business S21sec.
Against the background of changing markets and evolving relationships between business assurance and disciplines like analytics and risk management, I asked talkRA readers what they expected from this website in future. The general conclusion was that they wanted more of the same!
In one of the most heavily-read posts of the year, an anonymous RA practitioner slammed the management team in his telco for being obsessed with inefficient short term leakage targets instead of making fundamental changes to prevent future losses.
Street protests forced the Hungarian government to suspend a new internet tax.
A poll of talkRA readers demonstrated a pronounced division between those practitioners who believe revenue assurance and fraud management should be in the same department, and those who insist they should be kept apart.
Vodafone withdrew a USD23k bill they issued to a victim of organized crime in Barcelona, after a lawyer intervened to argue such bills cannot be legally defended.
American politicians Barack Obama and Ted Cruz both said misleading things about net neutrality, making it sound like it is about technical standards or censorship or the speed of downloads, when mostly it is about who gets billed for the internet.
Subex held their annual user conference in Istanbul, and I went along to chair the event. The audience enjoyed it so much that we closed with an impromptu dance on stage!
Ghana’s government promised a crackdown on simbox fraud. The Communications Minister said this was to protect Ghanaian businesses from missing important calls because of misleading CLIs. Everyone else thought it was motivated by the government’s desire to collect more stealth tax from callers.
Despite the telecoms industry spending USD354bn on network capex in 2014, a survey conducted by the TMF’s Network Asset Management team found that 57% of telcos do not know which network assets are failing to meet financial targets.
By popular demand, Lee Scargall returned with a new lunch time teaser.
Telcos are changing. Assurance is changing. The market for assurance software is changing. We know that we must constantly live with change, but those changes can be hard to predict. For the first time, I feel totally unable to speculate what will happen in 2015.
To say we are at a tipping point would be too simplistic, as it implies foreknowledge of which way our markets might tip. We are balanced on the point of a needle; the industry will fall into new patterns of doing business, but nobody can be certain of the direction we will fall. The rising complexity of threats will force assurance to become more closely aligned to security, but it is unclear how this will be realized in practice, or if businesses are prepared to make the investment necessary to mitigate increased risk. The relationship between telcos and other businesses will alter, but whilst the paradigm for the telco business model is under strain, it is not clear which paradigms will succeed it. Big Data creates the potential to understand and think about business like never before, but that does not mean that human behaviours and decision-making will change to take advantage of it. Public concern about surveillance is on a collision course with the business imperative to accumulate and protect intellectual property, and nobody knows if governments will side with the interests of the public, with the interests of business, or only with the interests of the government itself. And the virtualization of networks will change the practical realities of assurance, but there is no settled opinion on whether it will affect its principles or priorities.
There is a Chinese saying: “better to live as a dog in an era of peace than a man in times of war.” However, our most peaceful years are behind us. In 2015, I expect the battle for the future of communications to heat up considerably, waking the sleeping dogs and calling men to arms. People will dislike many of the changes to the industry, but we must face them.
One thing is certain. We will be giving talkRA a facelift, and revising the scope of its coverage to maintain its relevance. As our world gets more complicated, knowledge becomes even more valuable. We intend to continue providing a valuable service to communications professionals, giving them news and views they will find nowhere else, whilst making sure the service evolves to anticipate and support changing needs. To find out more, you had better stay tuned!
Posted by: Eric in News, Opinion
Would you invest in a business that loses money? Probably not. Or, at least, you are more likely to invest in a business that makes money. That is why investors read the numbers reported in the press, and rely on auditors to check financial statements. What if you already own the business, and were considering investment in some new machinery? Again, you might buy the machinery if you thought it would generate profits, but not if the cost outweighs the returns. That is why accountants go to a lot of trouble to map costs to assets, and hence determine which assets are driving profits, and which are not worth keeping. So would you make a major investment decision, knowing you will be ignorant of the returns generated by the investment? That is exactly how most telcos are run, according to a new report from the TM Forum. Net global capex network investment is estimated to have cost USD354bn in 2014. In response, the TMF’s Network Asset Management team conducted a survey into how telcos track and manage their network assets and the returns they generate. The findings make for grim reading, including the fact that 57% of surveyed telcos had no data on whether existing assets were generating a positive return or not.
I found the survey results to be confusing in some respects. For example, 29% of telcos stated they do not bother to measure any returns generated by assets, after they have been deployed. But what are the other 71% measuring, if more than half of telcos have no data to determine if an asset is underperforming? Perhaps they are measuring returns across a class or category of assets, which may be some help but still fails to provide sufficient detail to improve future investment decisions.
The conclusions about data integrity were equally grim. On average, respondents believed their network inventory records and fixed asset registers were only 74% accurate. Their expectations were also low, believing that accuracy levels below 90% would still be ‘acceptable’.
Reading between the lines, I draw my own conclusions from the messages about poor data quality and scrappy methods for measuring returns. Determining the profitability of a network asset would involve a lot of hard work, so mostly we do not bother. This is understandable from the perspective of the poor schmo who is asked by his unreasonable boss to generate numbers without receiving the data, tools, and thanks that such a task demands. But from a collective, corporate perspective, this blind spot in decision-making is nothing less than insanity. How many of you have worked in a telco where the stationery cupboard was locked to prevent people using too many staples, or where your phone calls were scrutinized to determine they were all made for genuine business reasons? These things are controlled because they are easy to control, but the values involved are trivial. In contrast, the amounts spent on network capex are enormous, but hardly anyone can say where the money was best spent, or where the telco failed to generate the results it hoped for. If we do not gather the knowledge, we cannot learn from the past. In the case of network asset expenditure, that means we are doomed to repeat our most expensive mistakes.
It is funny how governments get really keen to protect their people, when this coincides with threats to the amount of tax they collect. Ghana’s Communications Minister, Dr. Edward Boamah, has promised a crackdown on simbox fraud; you can read the story at GhanaWeb. Boamah said he was keen to screw more tax money out of people making phone calls… ahem, I mean he promised to keep the cost of international calls artificially high because it is a great way to make money… ahem, I mean he was deeply concerned that…
People are losing businesses because when you receive a call it appears [with a] Ghana number… sometimes you think it is somebody calling you to ask for [a] favour so you don’t even pick, so you miss an important call.
Yeah, right. Who would doubt that missed calls caused by inaccurate CLIs is a top priority for Ghana’s government?
Posted by: Eric in Opinion
Some events are so memorable that people will always recall where they were, when they experienced them. I will never forget where I watched Germany’s 7-1 World Cup semi-final victory over Brazil. It was in a seafood restaurant in Portugal, accompanied by Tony Poulos, international telecoms personality extraordinaire, and Sérgio Silvestre, WeDo’s Chief Marketing Officer. We had spent the day at WeDo’s Braga office, discussing their product suite and development plans. At the end of our work, I commented that the semi-final was that night, so it would be good to eat somewhere with a TV. That evening, as the goals flew in, our jaws dropped, and I found myself applauding the Germans along with the other diners. Whilst the screen was filled by the shocked faces of Brazilian fans, my sympathies were mostly with Brazil’s goalkeeper, Júlio César. He had been a hero in earlier games, blocking penalties and keeping his team alive. But he was overwhelmed by the German tide. It was oddly appropriate to watch that game in the company of two of the best advocates for business assurance. That is because business assurance is to telecoms what the goalkeeper is to football.
In football, the goalkeeper is the last line of defence. When everything else has failed, he is tasked to make the save. And when the ball finds the back of the net, it is easy to blame the goalkeeper, saying he has not done his job. But when the ball finds the back of the net seven times, it becomes clear that the goalkeeper is only one player in the team. He can influence the result, but is not responsible for it. The same is true for business assurance, and leads to the greatest mistakes when setting targets for a revenue assurance or fraud management function, and the worst foolishness when measuring their performance. Was Júlio César responsible for Brazil’s defeat? No. A different goalkeeper might have made another one or two saves, but the Germans had so many chances they would still have won. So why measure a business assurance department according to how much the telco leaks, or by how much the department saves? When it comes to leakage, we are measuring the performance of the whole business, not of one section. And the business will most reliably win if it has a strategy to prevent leaks occurring, not by depending on an incredible goalkeeper and expecting him to make a series of miracle saves.
Even the worst goalkeeper will make saves, if his team allows enough shots on goal. At the same time, no goalkeeper is good enough to save every shot. So the best defensive policy is to not allow the opposition any opportunity to shoot. By the same token, the best policy in telecoms is to prevent the mistakes that lead to leakages. However, this requires something more than a goalkeeper. It demands a strategy for how to defend, and for the whole team to play their part in executing that strategy.
A goalkeeper is expected to react to whatever comes his way, whichever direction it comes from. I have often said that assurance is the goalkeeper of telcos, and the metaphor reflects the realities of how most telcos approach assurance. However, the problem with the analogy is that it emphasizes the passive aspects of assurance. It suggests that business assurance is there to make saves at the last moment, by leaping this way and that, without having any plan or design. Goalkeepers respond to events on the field of play. As the Brazilian team showed against Germany, energy and passion are not substitutes for organization. Brazilian players ran around without discipline. They had no sense of what their defensive responsibilities were, or how to work together to impede the Germans and win the ball back. The German team, in contrast, showed how effective a team can be when everybody understands what they are meant to do, and how they will work towards their common goal. Good defence requires more than the individual brilliance of the goalkeeper or the desire of outfield players to make as many tackles as possible. Defence requires leadership. The same is true for business assurance.
Goalkeepers can be leaders on the field of play. A good goalkeeper will talk to his teammates, telling them what they should be doing. If he needs to rapidly bark instructions to a fellow player, it is understandable that he may sometimes be loud and abrasive, and might temporarily upset his colleague. But that is better than having a goalkeeper who is too timid, and who leaves the outfield player unaware of the risks around him, leading to a goal being conceded. Assurance functions need to be respected, when they give directions to others. If nobody else can see the gaps in the defensive line, it is vital that business assurance speaks up, and is heard. Sometimes it needs to shout. Being in a unique position thanks to the data they receive, business assurance must tell others what they see, and how this should be translated into definitive steps that will improve the company’s defences.
Whilst goalkeepers give instruction during a game, even this form of proactive intervention is not enough to organize a reliable defence. Before the game begins, each player needs to know their defensive duties. The coach must have an effective strategy, and he must be able to communicate it to his players using language that they understand. And after the strategy is communicated, it will need to be reinforced through training. It is not enough to speak to people in abstract and theoretical terms. Asking people to be good is pointless, if they do not know how to be good. You have to show people what you want them to do. That involves making them deal with specific scenarios during their training. It also means their real-life performance should be analysed and critiqued. This is also true of telcos, where we understand that the role of the coaching team is fulfilled by the telco’s executives.
Whilst the head coach is responsible for all aspects of attack and defence, there may be other coaches with more specific focus on aspects of defence, and on how the goalkeeper plays. At the same time, the coaches should be harmonious, and work from a common understanding of how the team will play. Neither the attacking nor defending strategies will succeed, if they contradict each other. So if an executive team fails to devise a defensive strategy, or if they make demands which are contradictory, then the goalkeeper cannot be responsible for the losses that will inevitably follow. This is true even though the goalkeeper is the one who recovers the ball from the back of the net, and hence becomes the easiest person to blame.
Continuing our metaphor, business assurance increasingly needs to step up to a coaching role. Diving around and making flashy saves is not a long-term strategy for the success of the individual, or of the team. We also need to advise on the company’s strategy, as well as its tactics and operations. That is the only way to properly identify and address the defensive risks that are the root cause of leakages.
The strategic voice of assurance will never be the loudest one in the corporate team. The head coach – the CEO – needs to listen to many voices, and to determine the balance between attack and defence. The CEO needs to find ways to win games, in addition to avoiding defeat, and that will always mean taking risks in order to win new revenues, as well as taking sensible precautions to secure existing revenues. When listening to many voices, the CEO cannot avoid being influenced by the quality of the advice he receives from different quarters. If an attacking coach gives very good advice, and a defensive coach gives mediocre advice, then it is right that the attacking coach should have more influence over the team’s overall strategy.
Business assurance often has a uniquely advantageous view of how the whole team is performing. The data collected should be turned to strategic advantage, not just used to identify and fix operational faults. Like a goalkeeper, we see things that others might not. But it is not enough to have good information; we must also give good advice. That means synthesizing the information we have into realistic proposals for improving the teams’s defensive strategy, whilst understanding these improvements should not compromise the other objectives of the team. If we do that, we deserve to be coaches, and will need to make fewer saves. Otherwise, we will only influence results whilst standing between the posts, during those moments when we are the last line of defence.
By using the analogy of a football goalkeeper, I hope I have communicated some complicated points using a language that is easy to understand. In that respect, I am also trying to be a coach. Coaches succeed if players intuitively comprehend what they have been asked to do. The coach should choose his words to best suit the language understood by his players; the coach should not expect the players to learn difficult terminology or strange ideas just because that is how the coach likes to talk. The history of business assurance shows we can be very good at coaching. The word ‘leakage’ is a great example of how we have used intuitive language to express complicated ideas, and hence to successfully influence how others think and behave.
Business assurance has grown from nothing to a mainstay in telcos worldwide. The phrase ‘business assurance’ shows we are expanding well beyond the founding scope of revenue assurance and fraud management. At the same time, we can do more. If we do not keep pressing forward, we will become increasingly irrelevant, and deserve to be relegated to obscurity. It is not enough to complain that others do not understand, or that execs spend too much time talking to their marketing people. If we use the information we have, and speak to people in a language they are comfortable with, we will persuade.
We are more than a safe pair of hands, fit only to dive around and catch the ball. We also have brains, and voices, and we can help the business to organize itself and adopt winning strategies. Any CEO can imagine himself the coach of the Brazilian football team, and being in a situation where scoring a goal is meaningless, because his team is already seven goals behind. They understand that attack will not bring victories, if there is inadequate defence. But they may never have received good advice, that quantifies some of the risks faced by the business, and offers pragmatic solutions to its worst defensive frailties. We can help them. If we are good coaches, we not only succeed as goalkeepers. We will succeed as goalkeepers because we will need to make fewer saves, but we will also become more important to the whole team.