An interesting article from CFO.com.

In my limited exposure to risk management organisation design I have never encountered risk being owned by the CFO. At least, in practice I have never seen it implemented to report to the CFO.

I was speaking with fellow colleagues on the topic of IP services and the implication it has for the Revenue Assurance Department. There was a debate around margins, capex and ROI.

For fixed line, we sell fixed bandwidth at a fixed rate and fixed infrastructure is implemented. Should a subscriber want access to fixed infrastructure that is not in place, the operator would implement that infrastructure at a cost to the specific subscriber. Thus, network expansion is paid for, cost is recovered and ROI is reasonably ensured.

Mobile or wireless services we sell at near fixed bandwidth (give or take congestion), at a fixed price but we do not sell access to specific or fixed infrastructure. Network expansion is a cost shared amongst all users of that infrastructure, when it is used. It is thus factored into the per usage price. Capital expansion is often done in context of QoS or Service Assurance.

To recap some of my master’s study, I differentiated between Revenue Assurance (RA) and Revenue Management (RM) as two different objectives of the RA Department. The RA objective was concerned with complete and accurate billing of revenue already earned and focused on the Operations side (right hand side) of the eTOM model. It is concerned with leakage reduction and leakage containment. RM objectives on the other hand is concerned with demand-management decisions. It requires the organization’s interface with the market with the objective of increasing revenues, and in this sense becomes a complement of supply-chain management, which addresses supply and demand decisions. It is associated with the Planning (or left side of the eTOM model). The term RM is used synonymously with yield management, pricing and revenue management, revenue process optimization, and demand management.

When demand is established it is an RA objective. When demand is not established it is an RM objective.

TMForum definition for RA is “Data quality and process improvement methods that improve profits, revenues and cash inflows without influencing demand.”

The increase in IP services due to smart phone technology requires revenue management decisions to influence demand. Demand is controlled by manipulating price strategies like AT&T did when it changed its fixed price, unlimited data usage billing model to a per usage billing model.

Revenue assurance of IP services is initiated as an RM objective due to the demand pattern not being established. Unlimited usage on a fixed price model does not work. Smart phone and tablet technology has commoditized data services and this has changed the billing model of operators. Before smartphones, RM was the concern of the Marketing and Product Development functions at the operator. They provided new price plans based on usage charges or at least inclusive bundles. Manipulation of price plans affected margins. Marketing and Product Development may not be geared today to deal with the technical and operations demands of capacity planning and management in context of the financial bottom-line. Cost and QoS management is not in their domain either. The question is, if the Marketing and Product Development guys can’t manage this complex process, why should the RA department be in a position to do so? And if they must, what are the implications of this new objective assigned to them? Is this objective assigned to the RA Department?

There are advocates who believe the RA Department to be responsible for RM decisions. Would the RA Department be required to step into the debate of network infrastructure ROI? Does that mean that the RA Department by default adopts a monitoring responsible for ROIs in the company in general? If the Department was only required to monitor and report on these statistics since it has access to the data, what is the responsibility of Network Planning or Management Accounting in the management of ROI?

When a per usage billing model is adopted for IP, it would require usage monitoring and complete billing verification. These two are RA objectives and focus on billing accuracy of revenue already earned in the same way we would do sms or voice traffic assurance. There are challenges with customer queries disputing the data usage where the operator cannot tell the subscriber which sites were visited, etc. And then there is the inevitable “semi” fixed price billing where data billing is done in segments of say 2MB regardless of whether a total of 2MBs were used for a status update on the iPhone…to the painful annoyance of many subscribers.

I think IP revenue assurance in a per usage model is fundamentally similar to normal event tracking done for voice, etc. and most RA Departments set up to monitor and track large volumes of billing events, would by default be able to pick up IP revenue assurance. Fraud management and network exploitation may be different cattle of fish, as we have not started to comprehend what users can do with smart phones. But in context of billing management, the challenge for the RA Department is moving beyond the initial network infrastructure ROI monitoring and Product Development discussion. There may be a different role required in the Marketing and Product Development space. Or a closer collaboration between Product Development, Network Planning and Management Accounting.

Are there views out here that the RA Department should be responsible for setting and monitoring IP margins?

In August 2000, Peter Drucker made a startling prophesy: “The corporation as we know it is unlikely to survive the next 20 years”. Legally and financially, yes but structurally and economically, no.

We are all familiar with the technology explosion happening around us. Mergers and acquisitions further influence the features of combined capability in platforms and services provided. So what are the structural changes that lead to corporations being different today? It is called collaborative networking rather than a vertical integrated organisation with strict reporting lines. This should not be confused with a matrix structure. Matrix work groups still function within a defined structure with fixed reporting lines whereas collaborative networking doesn’t.

Collaborative networking is a feature of organisational culture today and RA is probably one of the most established forms of collaborative networking in operations practice. The network is dynamic and “fit for purpose” with the agility to change the components and how they relate to each other legally and operationally as purpose and context evolves. It is not unthinkable that this method of working could be suited to more formal interdepartmental processes. However, most operations personnel are more confortable working in silos with clear boundaries.

Now, you know my take on the boundaries of the Revenue Assurance function. Why, I spent a whole masters degree on it….. Collaborative networking works well were there are no formal boundaries or where these boundaries seem to move in any given direction and at a speed ill understood by those involved, or affected by it for that matter. It is also true that the RA industry sees the boundaries between RA, RM and Fraud greying. GRAPA just launched a Revenue Engineering course, effectively establishing RA’s role in pricing strategies. Dan Baker commented on upselling capabilities inherent in billing system, which could provide RA the capability of assuming revenue generating activities.

If RA lacks clear boundaries and collaborative networking is seen as a possible answer to formalising the RA engagement, how do we stack up? There are five factors affecting the successful implementation of collaborative networking. Let’s apply these to RA.

1. The network must have unifying objectives. This is best captured in the departmental objectives. What is it that the RA function must achieve and what are the KPIs against which this achievement will be measured? Do these objectives align with the other departments’ objectives and KPIs? For collaboration to be effective, the objectives of RA MUST align with the objective of the rest of the organisation. How often is this the case?
2. The collaborative network has a value proposition that ranges from shared interest to mutual self-interest. The stated value proposition of a legitimate RA function is shared interest and it maps directly to the formal objectives of all parties involved. I know of various examples where shared interests had been neglected in favour of self-interest, mutually, no doubt.
3. The collaborative network has an economic opportunity, which varies in degrees of certainty. Economic opportunity describes how well the network has established a way of monetising the value proposition, including collective currencies of the network members. I have difficulty picturing the collective currencies of RA. Considering the collective currencies of a LinkedIN or Facebook membership. There is a clear exchange of value. I don’t see that exchange of value in RA. True, we have a benefits realisation calculation, albeit much debated but value exchange in one direction can be established. What is the currency coming back into the RA function? Other than sales and employment opportunities for vendors and consultants.
4. The organising mechanism is a method through which the members to the collaborative effort come together and manage or govern themselves. Here I believe we have made good progress. We have formal functions, budgets, industry guideline bodies, relative standardisation in RA technology and well organised conferences.
5. Collaboration intensity is the degree to which activities are coordinated and shared, and resources leveraged for the benefit of all parties. Again, as an industry I think we can tick this one off. Perhaps more work required in the organisation where resource allocation may be a challenge but we have passed the hurdle of motivating why such collaboration is required in the first place.

There are unresolved concerns with regard to objectives alignment, the true value proposition and the economic measure of the value proposition. Consider the newly established Revenue Engineering course or the billing system that has automatic upselling identification capability. It is a fallacy to reason that just because the training course was passed or the upselling system capability is operational, RA automatically becomes responsible for those activities. Aristotle is giggling in his grave. Any person reading this blog objectively would argue that it does not imply RA to take on that responsibility, neither expects it to do so. It merely means that the capability and capacity to do so, exists. Yet, this is not our reality. The greyness overtakes. Like the old adage of a frog sitting in slowly boiling water. It does not leap out but bubbles to a soup.

We make these invalid inferences unconsciously and thus the boundary stays fluid. And next year we continue the debate on the factors to include in an industry standardised benefits realisation calculation. Why? Because our objectives aren’t aligned and our value propositions are not understood or truly accepted. If I don’t like a LinkedIN group, I leave the group. If I don’t find benefit in chatting on-line with fellow researchers, I remove myself from that discussion forum. If I have a Nah-nah amongst my Facebook friends, I delete him from my list. Can Customer Care remove itself from the RA function involvement because the RA analyst hammered it on inadequate bad debt collection methods but failed miserably in identifying failed service activation processes timeously to prevent the Call Centre queue from falling over? No it can’t. So where is collaboration?

I am working on a book chapter in an upcoming academic publication on disruptive technologies.  My focus is on the human capability impacts that disruptive inventions have on operations management practices.  In our RA language it is about the capabilities of CSP operations personnel (non-RA people) to detect, correct and ensure process and data integrity in their own operations areas.  Needless to say I tried to solve world hunger in 20 pages and failed dismally. I must have had about 10 variables in this short study, all of which affect the people capability in some way or the other. That makes for a nice academic study if somebody is keen to delve in.

One thing let to another and I ventured down a bold new road.  Bold and new for the RA community, but perhaps not so bold given academic objectives. When I analysed all the contributors to the CSP personnel’s inability to cope with, or execute accurately its operational tasks, the concept of organisational learning came out.  The objective of the chapter is to identify the reasons for a CSP to create a new function or new roles (using RA as example). I see this as a change in basic business management practices.  The operations areas (billing, customer care, etc) should, in line with general business management theory, have the capacity and capability to execute its operations properly.  Failing which, personnel performance management and human capital processes kick in. Business Management 101.  We know from experience that this is not case. Why not?

Seeing that CSP’s are traditionally leading the disruptive innovations field, the need for ongoing learning is just so much more prominent.  Organisational learning is not about training. One tends to think about it as “sending the developers on a training course”. Organisational learning in this sense is about organisational change management. Embracing the need to change our ways of thinking and doing. To recognize that we lack skills and competencies or that we simply do not have the “zoom effect”.  Core skills become rigid liabilities. Think about a techie with leased line experience, who must now manage IP Networks. Organisational learning leads to the ability (personal conviction and organisational support) to alter the state of our current capacity and capability. This sounds straightforward. How many times have we as RA managers engaged in some form of resource motivation exercise? Countless.

From the literature big stumbling blocks appear to be the upper echelons of the organization and those with a long tenure. They appear to be more set in their ways and less able to see “the bigger picture of the grass root level reality”. The bigger the organisation, the more profound this challenge.

Technology advances faster than human capability. It is a fact of life. Organisations compensate. Some compensate by working its staff to death. Others appoint expensive help but fail to integrate them properly. Most organisations simply change their org structure in the hope that the incapacity and incapability of its force would miraculously fix itself.  Yet others create new roles to pick up fallen pieces or hurry along something of great importance. RA is a compensation intervention. It acts as an intermediary to translate between the technologically competent and the business competent.  At least in context of Business Management 101.  I am wondering how RA could be a learning intervention.

• RA’s role as monitoring agent provides a report with failed processes back to the 3^rd party for which the monitoring was done. If this party were to take this feedback as learning opportunities, the monitoring report would not include those failures in future reports.  Isn’t it one of the RA objectives to report regularly on failed processes and manage this 3^rd party through a dedicated RA analyst to improve the process? The RA auditors specifically look to see what capability the RA team has to manage this interaction with its business counterparts;
• RA’s roles as facilitator and advisor have a similar learning objective. Only, in this case it is as a “teacher”.  A facilitator/advisor does not have the mandate to fix things. The role helps the person who is responsible to detect, correct and ensure…to do just that. Point him where to look, what to look for and how to action it. The role of facilitator/advisor cease to exist when the owner of this process can function on its own. How does this differ from a mentor or teacher? OK, in practical RA this does not happen because our mentorees never learn or there are just so many areas where they need advise that we are perpetually inundated with request for assistance.
• RA’s role as business optimisation agent is in my mind no different from project office resource. Most organisations have a separate PMO cum project management capability. Any improvements not done operationally as part of every day work should go into a project and managed as a project. Continuous improvement is an objective of every department head and should in a generous measure be included in every line manager’s KPIs.

RA’s role as operational fixer is assumed to be included in the roles in the literature even though the description/definition of the roles above suggests non-execution. In non-CSP industries that are looking into RA now, the thought of setting up a parallel structure is incomprehensible. Operations stay accountable for the execution but the first 3 roles (monitoring agent, advisor and facilitator) are real opportunities out there for non-telco people.

I am looking at this parallel structure as either a learning intervention or as a permanent new business management feature. As a learning intervention the roles of Learning needs assessor, Teacher and Mentor need to be properly formalised and managed. I can see where our notion of benefits realisation calculations can come in handy to motivate this approach. In the current trend RA is a permanent parallel structure albeit with an ongoing battle to justify its existence. My question is this. If an RA person or Engineer is expected to continue learning and adjust his/her mindset and skill set, why not the rest of the organisation? I don’t disagree that the parallel structure is current required. The question is whether this should be permanent and if so based on what motivation and at what cost? Cost here does not only refer to financial implication but also the psychological cost of interdepartmental tension, role conflict, etc. Sure, RA through benefits realisation, can pay for itself but if all units in the organisation took on this accountability to learn and adjust, the additional “benefits” would have been included in the profit and not pay for a parallel structure.  I am questioning the operational execution responsibility of RA here. Not the concept of RA or its role as monitoring agent, advisor and facilitator.

This chapter may not be long enough to capture all the other issues affecting the CSP’s management practices. There are a number of other issues I believe contribute to the fact that RA has right to exist. But that’s a story for another day.

Michael Badawy published a definition of technology management in an academic journal and referred to it as “A tweet and two characters”.  His objective was to work through large volumes of research related to technology management and come up with a simple, yet comprehensive definition for the concept technology management. Thus, it had to fit within a 140 characters. Though he missed this by 2 characters, the result was worth the effort.

What is the tweet for both RA and RM? The TMForum RA definition is “Data quality and process improvement methods that improve profits, revenues and cash flows without influencing demand”.  That fits in a tweet. I like David Smith’s definition of RA more “Accurately billing for all transactions, products and services provided in accordance with the tariffs and contracts while managing fraud to acceptable levels and collecting all due revenue”.  David’s definition is more practical and measurable but does not fit in a tweet.

A good definition for Revenue Management by Gross is “An art and science of acquiring knowledge of what the market place really wants and the wisdom to address it effectively”. Not measureable at all but quite a snazzy tweet. I am not sure I saw a definition for Revenue Management from the TMForum.

Was Badawy perhaps on to something when he tried to simplify matters by keeping it short? Or is it possible to still confuse the matter even in short verse? I believe so.

ps. Please contact me should you like more info on the authors mentioned in this post.

The number of related theories that might be applicable to solving my RA research question struck me this week as too numerous at this stage of the game, yet it was not unexpected. Since I am adopting grounded theory again for the doctorate, a recap for new readers. The methodology allows for emergence of findings, which then generates the theory “grounded” in the data that represents its basis.  I took a couple of findings from the previous study and will be developing these in more detail to arrive at some theory for our discipline.  The research is still interested in why we are doing RA and not how we do it.

I was hesitant at first to acknowledge that disciplinary theory of ERM or Finance may explain a lot of what we see and do.  Think about it. RA is RA. RA is not Finance and RA is not ERM today.  It is something else.  So how can I open a statement to say it is either of the two examples, or better yet, something more related to operations management?  Nowhere do we have data that pertinently state this, however when we analyse the available data that is precisely what emerges.  We are a hotpot of odds and ends borrowed from somewhere else.

I followed a discussion on LinkedIn related to how we should calculate the financial benefits attributable to RA’s contribution.  Underlying the different perspective were existing methods for calculating a number, be it financial, risk, etc.  But there was more.  There was the casual reference to a sub set of ERM (managing the risk that something might not have been picked up for x months); financial gain (estimating a future value of something done now); project management (motivation based on best guess future value of effort in exchange for budget to go ahead with the project).  These are known practices albeit that they are not always…hmmm practiced.

In cosmetology (the study of cosmetics) bleeding refers to the application of a substance that does not stay contained in the area it is supposed to. A most common example is lipstick.  Lipstick is meant for lips. It should stay there, not bleed into the upper lip or chin.  This is the image that popped when I read about the possible approaches to arrive at a suitable measure to communicate what recovered loss means.  I am emphasizing recovered loss here.  The fundamental objective that we are addressing in this LinkedIn discussion is how we calculate the actual value of the loss that is now no longer.  As with anything in life, there will be as many views as there are viewers and that is less important than the goal we are working towards. It is inconceivable, and honestly boring; to hope that one uniform view would magically jump out.  Growth comes from diversity when managed well.

If we want to borrow from another discipline, we should do so while acknowledging where we borrow from.  We should borrow in its true form unless we state that, and how, we change it for whatever reason.   Does this make it interdisciplinary breeding?  At the moment we are bleeding.  We are bleeding everywhere where we think we add value and in so doing dilute our value.  I think that part of our inability to truly establish ourselves as a force to be taken seriously, is this fuzzy feeling of familiarity, yet un-belongingness.  We calculate fuzzy future benefits in exchange for funding to do our projects…project management 101.   We put a monetary value to effort in exchange for the right to be….confused identity.  We don techni-color coats or hero capes to represent ourselves where trouble might brew, yet we still grapple with our right of existence.

There comes a time in each person’s life where you no longer have to prove anything to anyone.  You do what you are good at and are accepted for that contribution unless you become a nuisance guest that is asked to leave.  Let us not make RA a nuisance guest. Let’s be humble and accept that we are best at recovering lost revenue and do so in a modest, realistic and thorough manner. That would make us dependable and irreplaceable.  Not an ever evolving, never stable something that remains ill defined.