The TM Forum has issued a new report on revenue assurance, entitled ‘Revenue Assurance: The Hidden Opportunity’. The report is the sixth in their ‘insights business intelligence’ series and builds upon the data they obtained from their industry-wide revenue assurance benchmarking exercises. The report is available from here and is free to members of the TMF. I have been digesting the report’s findings over January; read on for my review.

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Although I am a European, I am glad to see that an ambitious Indian businessman can take on the rest of the world and be a success. There should be no geographic barriers to talented entrepreneurs. The turnaround of Subex shows Subash Menon, Subex’s founder and boss, still deserves to be ranked in the top league of self-made businessmen. If you had asked me a year ago, I might have questioned if Menon would still be at the head of the business he created. When things turn sour, heads roll, and even the man who gave his name to the business can become dispensable. Menon kept his head during the dark times, and we can now see the results.

Subash Menon established himself to be pioneer of the Indian software business. Not content to buy up small firms, he was prepared to set his sights higher and look for big deals overseas. Subex’s purchase of British firm Azure was a success. Subex’s purchase of Canadian firm Syndesis was not. It would be a shame to see a success story like Subex ended by one big miscalculation, so it is a relief to see the business is getting over the indigestion caused by swallowing the overpriced Syndesis. In the past, I have been keen to look past the upbeat stories about Subex and examine the less than healthy fundamentals following the acquisition of Syndesis. Now, the situation is reversed. Not enough credit is given to Subex’s management for slimming their business down and getting it into shape. For me, the most telling sign that Subex keeps moving in the right direction comes from the ratio of EBITDA to revenues. Take a look at the trend revealed by these figures:

EBITDA/total income quarter ended Dec 08 = 21.4%
EBITDA/total income quarter ended Dec 09 = 22.7%
EBITDA/total income 3 qtrs ending Dec 08 = 13.3%
EBITDA/total income 3 qtrs ending Dec 09 = 18.6%

If you want to read more about the story of Subex’s revival, I recommended you look at this article from livemint.com. In it, we hear Subash Menon say his firm had ‘fallen off the cliff’ after the purchase of Syndesis. Most tellingly, he pinpoints the mistake of financing the purchase using debt instead of equity. In his words:

“The learning is that a software company should essentially use equity for acquisitions”

It takes a big man to make a big mistake, fix it, and admit to it. After falling off the cliff, Subex is now climbing back up it. Having survived their fall into the abyss, Subex and Subash Menon are set to get right back on top.

Following their merger with fellow Israeli RA vendor ECtel, cVidya announced they would be

the leading global vendor in the Revenue Intelligence category, in terms of market share, revenues, installed base and product portfolio.

I blogged straight away about the difficulty of verifying cVidya’s claim, highlighting in particular that rivals WeDo and Subex might claim to be the top revenue earners in the sector. cVidya’s figures are not publicly reported, so that is where I thought the story would end. However, Israeli business news outfit Globes has once again let slip some useful information about Israel’s revenue assurance companies. In the Globes story about cVidya’s purchase of ECtel, they reported
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The leaner, meaner Subex has posted good results for Q3. A while ago, Subex press releases liked to talk about the top line, not the bottom line. Now the focus has reversed. The leaner Subex looks like its annual revenues will be much closer to USD100m than the USD120m+ that had been its forecast only a few years ago. But now that Subex has a much lower cost base, profits and EBITDA have rejuvenated. In Q3 Subex made a profit after tax of USD 8.7m over sales of USD 25.1m. With Subex’s management saying they have resolved their FCC overhang, they can look forward with increased confidence thanks to their strong fundamentals.

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Podcast: Play in new window | To download, right-click and save/download link

Mark Yelland joined me for talkRA podcast number 10. Mark has just co-written a new book with David Sherick, entitled “Revenue Assurance for Service Providers”. You can obtain the book from Amazon.com by following this link. The book is also available from Amazon.co.uk and Authors OnLine. We talked about Mark’s experience as a revenue assurance practitioner and how he has translated this into practical advice which is especially useful for the smaller operation that wants big RA results without necessarily needing to buy big RA systems. You can listen to the full hour-long conversation at talkRA.com, or by subscribing to the talkRA podcast through iTunes.

Revenue assurance vendor cVidya has announced they have completed the purchase of fellow Israeli business ECtel. You can read the announcement here. The merged business will operate under the name of cVidya. One sign that the old ECtel brand will be rapidly killed off is that the old ECtel website has already been taken down.

In an interesting spin on the story, the announcement emailed to customers said that:

The acquisition of ECtel positions cVidya as the leading global vendor in the Revenue Intelligence category, in terms of market share, revenues, installed base and product portfolio.

That is a pretty mighty claim. How do they know? Comparing product portfolios is pretty subjective, especially when you are talking about an arbitrary ‘category’ of products like Revenue Intelligence - a phrase I have not seen used before. Comparing market share and revenues can be objective, but you need data to do the comparison. An RA firm should understand that more than most. One of the problems with comparing RA vendors is that about half of them are privately owned, meaning they make no public announcements about revenues. cVidya fits into that category, and the delisting and acquisition of ECtel means ECtel’s numbers will no longer be public either. The public has never seen reports of cVidya’s annual sales or earnings so we cannot verify their claim. Then again, cVidya has not seen the comparative numbers for other privately-owned vendors, making me wonder how they decided they are the biggest. Even sifting through the figures that are reportedly publicly is difficult. The information reported may be abbreviated because the business is part of a group, or the vendor may have other revenue streams that complicate a like-for-like comparison.

This is not the first time the RA industry has seen contentious assertions about who is biggest. I have written before about how Subex and WeDo had competing claims to be the biggest revenue earners in RA. I concluded that post by saying Subex’s RA revenues were higher, if you counted fraud management as part of RA. Following that post, WeDo dropped me a line to say I should have excluded FMS from RA and then they would have come out on top. With cVidya now saying they are biggest, it will be interesting to see the response from the guys in Lisbon and Bangalore…