David Leshem

David is an expert in telecom and utilities enterprise solutions: billing, profitability, business intelligence, customer retention, churn and revenue assurance.

David has worked with major carriers all over the world creating an enviable track record in improving the bottom line of telecoms companies. He brings in-depth expertise to fixed-line, MNO and MVNO businesses, helping them to get the best in pricing, margin reasonableness reconciliation, cost-effective customer retention and acquisition and multiple revenue stream assurance.

David has international experience in addressing the financial challenges faced by telecom providers. This is delivered in alliance with PwC's telecom advisory practice.

I read Eric’s post about how the TM Forum has reduced the importance of people within their new Revenue Assurance Maturity Model. As both a founder of Compwise, a software business, and as a human being who helps big businesses to analyze their data, I wanted to explain why I feel the TM Forum has made a mistake.

For the last couple of years I have switched sides, wearing a client’s hat instead of a vendor’s one. One financial institution, an issuer of various charge cards (a.k.a. debit cards, credit cards, prepaid cards et al) asked me to check their product portfolio and assess their profitability.

At some point I had found myself conducting a typical RA audit assignment where the billing is rather complicated, including about 7 or 8 bill cycles (per TRX, daily, weekly, monthly, quarterly, semi annually, annually and a sporadic one). The tool I used for this audit was Microsoft Excel – with some reliance on “a little helper” assisting me with advanced Excel functions, as my command of Excel is fairly basic. The principles I followed were same as used by any auditor or RA practitioner working in telecoms.

I had analyzed one product only, analyzing the revenue streams, of what is called a 4-party model, which in practice involves around 6 or 7 parties. My analysis revealed hundreds of thousands of dollars in incorrect charges submitted to the financial institution.

I guess if I had procured dedicated software, implementation et al, this would produce better results than my humble use of Excel. However, for zero investment in software, and within a very short time frame, it is far more effective to get 90% of the value that can be saved, rather than waiting for 99.9% of savings to be delivered after the long timeframes involved in a tender, proof of concept, procurement negotiations, purchase and implementation of a specialized solution.

This also means the incremental value added by a specialized solution is not the 99.9% of savings that are reported by the tool. The incremental value is the 9.9% it delivers above the 90% that I could deliver using Excel (minus the costs of engaging me, but plus the costs of purchasing the solution).

Down the road, the data I used for my audit was exported to a BI tool. This makes it easier to analyze the data and find the same mistakes. Today there is a new generation of BI tools, which are agile, cheap and lightweight.

But whilst tools are becoming cheaper and more powerful, it is too easy to focus on the cash costs of tools and to neglect what people need to do, but tools can never do. We often take people for granted, even though people may be part of the problem that needs to be solved.

In my project for the financial institution, the most complex component was to establish the organizational consensus and acceptance for the project. It was obvious the process and the resulting findings would radiate on various departments and some stakeholders might feel concerned with the findings. The key challenge was not the technical part but rather the internal sales process, applying sensitivity in order to create an organizational joint effort where the goal is achieving an improved level of audit and control as well as improved risk management. This obstacle has nothing to do with technology. It is all about people. The source of the challenge lies with people, and only people can overcome it.

Lastly, I recall a situation 7 years ago when I was still running Compwise, selling specialist solutions to telcos. TMN developed an internal tool for churn analysis, with the help of their local IT partner. Based on their CDRs and tariffs, TMN’s in-house tool delivered 90% accuracy compared to the 99.9% accuracy of the Compwise churn simulation tool. TMN invited me to a demonstration of the results. My response was… “well done”. For them, 90% accuracy delivered the right return for their stakeholders. Who am I to argue otherwise?

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Every so often I like to check in with the websites of the various RA providers. Of course, when I do I know that I should not expect to find much actual information, since finding a fact on these sites is like finding a marble in a kiddie pool full of oatmeal. Instead, I visit simply to be entertained, and I’m rarely disappointed — especially when it comes to the press releases. Here’s a bit of the inside story on how a press release is put together as well as a dramatization of what may have happened between the lines:

ACT I

RA MANAGER @ CSP: You guys are insane! Why would you want to change something that’s working?

HEAD OF SALES @ RA vendor: Wow. I mean really, wow. You think the RA system is perfect? I’m blushing!

RA MANAGER: Yeah! Well, I mean, it’s kinda weird looking, but we’ve already got all the features configured for it and stuff. Not only that, but we’ve also got all the team members trained and getting used to the screens just right. If you make a new release we’re going to have to figure that stuff out all over again. That could take weeks.

HEAD OF SALES: I see. But don’t you want the RA system to have more advanced features, and to be smarter and faster?

RA MANAGER: Not really, we just run the system as is. Reports are kinda OK I guess. We got used to it.

HEAD OF SALES: Oh. Well, at any rate, don’t worry. You’re gonna love the new release.

RA MANAGER: Whatever.

ACT II

HEAD OF SALES: We need a totally new fresh look and feel!

R&D LEADER: [Dropping mouse in surprise] What? Why? What would make it fresher?

HEAD OF SALES: Selling more of them, that’s what! What do you think this is, a commune? We’re to behave as a publicly-traded company! You know what our valuation right now? Four cents a share! [Digs in pocket, grabs some pocket change and throws it at the R&D LEADER.] You know what I did just there? I just bought thirty-two percent of the company! Someone could buy us out right now for less than it costs to do a load of delicates at the laundromat! There are literally people standing in front of vending machines right now and asking themselves, “Hmm, I could buy this bag of peanut M&Ms, or I could own half of a world class leading RA vendor.” And you know what they’re doing? They’re buying the freaking candy!

R&D LEADER: All right, all right. But think for a minute. Even small changes are a major pain in the ass, and those changes cost money. What about a skin redesign?

HEAD OF SALES: You don’t think we’re doing that? We just hired an ex-Big 4 ex-telco industry expert. But there’s only so much we can do there. We’ve got one of the better names in the industry and there’s only so many modifications for the new release we can afford. Man, those competitors have it so easy!

R&D LEADER: Okay. What about a system name change, some thing with ‘cloud’ or ‘distributed’ in the title?

HEAD OF SALES: Wow, you’re a genius. You wanna be head of marketing? I think you’d be great at that. Idiot. Scalpel is already the perfect name! We’d be nuts to change it! It’s sharp and precise! Do you know how many names we went through before we picked it? Paring Knife — too culinary. X-Acto Knife — already trademarked. Samurai Sword — too ethnic. The Hedge Clipper — too landscapey.

R&D LEADER: All right, how about this? We move the menu from the left side of the screen to the right and we call it the “Righty.”

HEAD OF SALES: Where the hell are you gonna put the favorites?

R&D LEADER: Uh, we’ll make a new facility?

HEAD OF SALES: Do you know anything about RA systems at all?

VizorrugR&D LEADER: No! I told you that when you hired me from Innovate Novelties Corporation.

HEAD OF SALES: Yeah, well call me crazy, but I thought the guy who invented the vizor rug might know a thing or two about innovation.

R&D LEADER: Well, I’m doing the best I can.

HEAD OF SALES: I know you are. [Putting his arm around R&D LEADER.] Hey, look, I know I’m being tough on you. I’m under a lot of pressure is all. I’ve got this RA vendor breathing down my neck like a teenager on a date. I just wanna make a hit out of this thing, you know?

R&D LEADER: I know.

HEAD OF SALES: Great. I knew I could count on you. Now let’s have a new release!

[They high-five]

ACT III

HEAD OF SALES: So here it is, the new release.

RA MANAGER: Cool. Menu options are a little cheesy. Why is the menu on the right? What are we supposed to do about the favorites? Where are my reports and analytics?

HEAD OF SALES: Just try the new fresh features on the right.

RA MANAGER: Oh. Well thanks.

HEAD OF SALES: No problems!

FIN

For an example, I was very happy to read that Wedo has a new patent on Distributed Risk Management Solution, it really makes my day. Would they like to receive unsolicited advice? Of course they would. Well, my advice to them this morning is to search for SLP Infoware patents which are owned by Gemplus which are owned by Gemalto. Gemplus had over 2,400 patents that were issued about 10 years ago covering device resident CLTV analytics, Retention, Churn, Risk management et al all at the device level.

What would be your association when I ask about your user experience with Windows 95? Or even better with Windows 3.11? Mine would be plain and simple bordom. It done the job, we had a myrad of apps on our desktop and we struggled to find our way to do a simple task. In a way, Windows 7, while far from being perfect, is more advanced, many apps are web based, weather, clocks, email even the office suite. Yet our mobile phones remind me Windows 3.11. Telcos are like the PC motherboard, it is vital but no one cares about it.

Why this long intro anyway? Well, my point is that all the RA vendors had beaten the the term business assurance to death, but what business they assure? IT firms should innovate. See Google. See Waze. See Coke!

Business progresses through innovation, not regression. Take for example company like Coca-Cola which is in a B2B business and concerned with streamlined ops and cost cutting and was top innovator comes with mobile solutions in Brazil. See the cooperation between Coca Cola and Ogilvy.

As a result Coke Lands First Appearance on Fast Company Ranking. In case you had missed the connection – Brazil is Wedo’s center’s of gravity and ops.

IMO small and medium players have to innovate to remain relevant. When was the last time an RA vendor demonstrated innovation? Any RA vendor? Business assurance leaders do little to stand to the true meaning of their title. What business do they intend to assure?

Telcos and consiqently RA vendors should know pretty well what apps I use often, how I use them – and then what? Had the RA vendors thought about providing value with this insight, can this be converted to new revenue streams or customer value? With all the insight can they improve the user experience? I hadn’t seen evidence yet, so can they? At least they can try.

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Our recent discussions about revenue assurance, business assurance (or whatever we call it these days), confirm the one constant in the telecom industry: that it is in a state of constant change. An article in the Wall Street Journal addresses the SMS-related revenue stream and its decline, which has/had generous profit margins of 80% compared to the 35% typical for voice.

The most interesting comment was made by KPN’s Chief Exec:

“It’s not cool anymore to SMS”.

KPN also reported that its youth-oriented brand, Hi, saw an 8% decline in outgoing SMS or text messages per customer in the first three months of this year compared with the first quarter of 2010.

You have heard me say this before, but I will say it again: in my opinion the way for RA practitioners to remain relevant and justify their relevance is to offer a way to address these kinds of challenge, and not to just continue doing what has worked for RA over the last 15+ years. RA is no longer the new kid on the block. We can tell that from the debate about its name. The TCFKARAV (The Companies Formerly Known As Revenue Assurance Vendors) have grown out of their schoolboy shorts and want to put on long trousers. As it matures, RA needs more than a change of name. RA needs to take on more serious responsibilities.

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Recently I had the opportunity to conduct an RA assignment for/with a British carrier that had invested heavily in a proper set of RA solutions about 3 years ago. The amount of leakage spotted was rather impressive. As a result I had decided to list below some myths regarding RA and to challenge them.

1. “Empirical RA efforts, prior to TMF maturity model were less effective”

Empirical RA efforts have numerous weaknesses as they rely solely on the common sense of the RA team and the support they receive from the upper management. However even the most sophisticated and well defined RA initiatives would not thrive without these elementary activities, which IMHO are entirely non-trivial.

2. “Advanced dedicated software solutions are fundamental for proper RA execution”

Software solutions are important as they allow us to focus on the “what” rather than forcing the RA team to struggle with the “how”. Yet, dedicated software requires a tendering process, internal lobbying with IT, procurement, implementation, integration, training and operating the software. Somehow it seems that 90% of the effort is still allotted for the means rather than just focusing on the job itself.

3. “RA conferences are an import platform for ideas sharing and empirical know-how exchange”

Few would argue that RA conferences have little merit. However these few would be primarily: vendors; consultants; and RA managers that hope someone will spot them whilst they give their speech on the podium, and offer them a promotion with a rival carrier.

4. “In the early days of RA there was much more fun”

Yeah, sure.

Any further suggestions for additional myths?

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On 1 April 2010, UK regulator Ofcom announced significant cuts to future mobile termination rates (MTRs). The result is that MTRs will fall by a whopping 88% on average, from their current average of 4.3 pence per minute (ppm) to just 0.5ppm by 2015.

This is interesting because of the scale of the change. BT must be whooping it up, though they should realise that F-M substitution gets a boost as price levels get closer still. I expect to see a relative closing of on-net off-net prices; more complete bundles; increased dominance of Any Time Any Network price models. MNO margins will suffer but I also think this will dampen future demand for voice over mobile broadband applications which were surely coming as mobile data starts to deliver.

One can challenge by asking whether mobile operators one day gang together and try to ‘punish’ fixed-line users, by increasing the rates of calls made to fixed lines?

Even though this sounds like a joke, until a couple of years ago C&W used to punish pre-paid customers, by charging call terminating fees to pre-paid customers at higher rate than post-paid. While it was impossible to tell the call originator who is who. So, my reply to the joke would be: “never say never”.

IMHO RA is so hopelessly reactive, they find out about things after they happen and then react.

It would be a real shift for RA to work with Regulatory people to anticipate changes in inter-carrier charging in order to come up with effective models to maximize returns.

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