Guest

Guest blogs written by friends of talkRA.

talkRA has always accepted anonymous posts and comments, because we appreciate that businesses can be obstructive, or even vindictive, when employees dare to say something negative. Today’s guest post comes from an experienced analyst who wishes to remain anonymous. It tells a story of a telco whose management culture is unwilling to fix fundamentals because they prefer to deal with symptoms instead of causes. The irony of revenue assurance is that it is inherently a ‘bad news’ function, discovering and reporting mistakes and failures, in order to resolve them and improve the business. Such a role can only succeed if management teams are willing to tolerate and respond to bad news. talkRA also understands the need to vent frustration. Hopefully this critique will reassure other readers, facing similar circumstances. Know one thing: you are not alone!

I have been in the Revenue Assurance and Billing world for over a decade, and worked across multiple operators, both fixed and wireless. The first company I worked at is still the most mature example of RA I have seen to date. This really hit home when I looked at how my current employer does RA. They are a large operator, but they are missing many of the key attributes I would associate with a mature RA function. Starting with the basics:

Usage/Traffic Assurance: They have CDR counts and file matching for most switch types, but all are reconciled manually on spreadsheets with no alarms! Their methods are stuck at eyeball 1.0, and they wondered why we didn’t notice a switch losing 40% of its call records one day!

Suspense: Suspense is semi-monitored or maintained by multiple parts of the organization such as RA, Billing, Ops or 3rd party contractors. There is no real logic to where everything is. The split of responsibilities reflects the history of organizational change, like a river erodes the valley, meandering through the path of least resistance, but with no overall plan.

Rating Assurance/Test Call Generators: There is very poor coverage, with only basic call types being tested. You have to question a control that hasn’t found any errors in three years!

Non-Usage Assurance: This was probably their strongest area, for the products they assured. The biggest weakness? The products they didn’t cover! The relative strength of this assurance is no surprise, as it is easy to implement controls that compare how many assets you have in the inventory, with how many you bill for.

Coverage Model/Controls Matrix: Errrrr, nope. If completed this would look like a scene out of a horror movie, with a sea of red across the graphs.

New Product Development: It would be nice to be proactive rather than reactive, and have reporting requirements submitted before the launch of a product/service. Somebody tried to do this, but it doesn’t contribute towards a target, so it became one of those jobs that people did when they had spare time. And guess what? There is never spare time.

This isn’t the first operator I’ve worked for, but I’m thinking what the hell have I got myself into. It’s not that I don’t enjoy the challenge, because I’ve always thrived on the challenges, at every operator I’ve worked for. It’s not that we don’t have the resources, because we employ an army of people. It’s not that we don’t have the talent, because we have some of the best minds in the industry.

The real issue is that – and you probably picked this up already – the RA function is like a scene out of Jerry Maguire

showmethemoney

This RA function is being used as a cash cow to make up for financial shortfalls within the business, and to accelerate people’s careers. The targets are difficult, with strict rules on the benefits that can be claimed. As an example, any control which has been run for more than a year is classified as protective, and doesn’t contribute.

The team always seem to pull it out of the bag and hit the numbers, but this behavior reminds me of the theme to an old TV series, The Littlest Hobo.

Maybe tomorrow we’ll wanna settle down, until tomorrow we’ll just keep movin’ on… to the next leakage! This operator never settles down and builds a foundation for its RA. It just digs for goodies, then moves on. There is no interest in fixing root causes, establishing permanent controls or proactive measures. The operator treats leaks like plants that grow wild: take as much as you can from each field, then come back a few years later and re-harvest the same issues once they have grown back.

There you have it… a long time has passed since the birth of RA, and still a large operator can’t get the basics right. Why? Because senior management love the money!

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In this guest blog, Dan Baker of the Technology Research Institute and the Black Swan Telecom Journal addresses a question raised two weeks ago: should talkRA continue in its current format, change with the times, or step aside to make room for others? Dan’s analysis is as thought-provoking as always…

Eric’s recent post “The End of talkRA” provoked a good discussion. And those who commented are eager to keep talkRA — or its successor — alive and well. I think this is mostly a tribute to Eric’s industry expertise and skills as a writer and moderator.

And yet, as Eric admits, “things have changed”. The business assurance software vendors serving the market are expanding in many directions. But that doesn’t mean RA and related issues are solved. New issues are entering the scene all the time.

The telecom market is evolving at a rapid pace today. Huge issues are there to be discussed, i.e. how to operate and position the business in the new IP-centric, 4G/LTE, big data, and enterprise-serving business where the boundary line between service providers, OTTs, and vendors is rapidly blurring.

So I’d like to see talkRA’s focus shift to cover these broader strategic issues. It will give Eric and everyone else plenty to talk about.

And this migration should be fine because I believe the core talkRA readership is not wedded to RA alone. Here’s my take:

  1. Readers are focused on operations and have a wide-ranging view of the telecom business. And they work in the carrier, consultant, and software camps.
  2. They are analysts or managers of analysts who seek to help the business in whatever areas deliver the biggest payoff for their companies and their own careers.
  3. The watchwords are “business rules” and “alignment of operations with the business”. To me, the simplest explanation of this philosophy was given by Ed Shanahan, the former manager of RA at TMNG.
  4. They are eager to work with software tools, but they know there’s no such thing as putting the business on auto-pilot. Telecom evolves too quickly and every major software advance requires analysts, consultants, and experts to step up and intelligently direct the analysis and interpret the results.

OK, so here are my suggestions for talkRA’s future:

  1. Participation, and more participation. If 50 expert readers of talkRA contributed a short guest column every year, you’d increase the value of visiting talkRA quite a bit and it would provoke some very nice discussions. How can we promote more participation?
  2. Surveys. Daniel Peter mentioned this and it’s a great idea. And my inclination is to support quick in-line surveys. I also think an annual “State of the Practice” survey is worth having and sharing. Here’s a good example from the publication, A List Apart.
  3. On Black Swan Journal, we do not have comments or commentary, so I’m looking for ways of doing that, and perhaps integrating with talkRA in some way would achieve that.

So these are my thoughts. Eager to hear reader and Eric’s comments.

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Today’s guest post is by Ahmad Nadeem Syed, Director of Revenue Assurance and Fraud Management at Mobilink. When long-standing talkRA contributor David Leshem argued why people are more valuable than tools, he prompted a flurry of replies, both agreeing and disagreeing with David’s opinions. Ahmad was amongst the respondents, leaving a thoughtful comment that said neither is more valuable than the other, because value is generated when tools complement people. He finished his comment by asking that the next talkRA blog on the topic should discuss that theme of the complementary combination of people and tools – so I invited him to write it! Ahmad graciously agreed, and here is his article on why we should focus on the combination of people and tools, rather than dwelling on each element separately.

In the Stone Age, human needs were limited to eating and sleeping. Their food comprised of available wild animal meat, fruits and vegetables. They used stones or wooden arrows for hunting and long sticks for plucking fruit that was out of reach. We can see the apes doing the similar thing even today, while breaking a coconut.

The activity incorporates three things: (1) the goal – the instinct to survive; (2) the people – the Stone Age human; and (3) the tools – stones and wooden arrows. Imagine various situations; there are hungry people with available tools but not knowing (the skill) how to aim and throw the stone or arrow at the prey. In another situation: there are hungry people with skill, but no tools available with lot of food available. In both the situations the ultimate goal of survival is not met if the variables become constant.

With the passage of time, the goals kept moving and growing from survival to comfort to luxuries, both vertically and horizontally. This necessitated having more and better tools coupled with people having advanced skills who are able to use these tools for the purpose of achieving the desired goals.

Come to today’s modern age; if it can be called modern in the eyes of the generation coming after say 50 years, in the wake of rapidly changing human needs and the technology. Humans have always been more and more dependent upon technology with the passage of every moment, may it be personal, social or business life. The mobile phone, for example, has become an essential part of our lives. Some are using the latest smart phones, and some are still content with only voice and SMS. Both classes have developed the skills to use these tools to meet their varying needs. Can anybody today imagine toady’s life without mobile phones, and in reverse, lot of mobile phones but no people?

The computers are integral part of any business, but then we need people with varying skills to develop the applications and run the computers. Can anybody imagine any business today with lots of people but no computers or vice versa? Some may argue some small businesses still rely on pen and paper, but then these are also tools.

PNTdiagramI call this the PNT (People-Need-Tool) phenomena. People are meant to live, and so they have needs, and tools allow them to meet their needs. Once the first set of needs is met, another set of needs become a necessity and therefore another set of tools is required.

Let me mention a busted myth here. It was commonly said that automation will cause widespread unemployment as computers will replace the human. But the reality is different. As the business and social needs increased, the way of managing these sectors changed, generating and using high volumes of data. Handling of these data volumes require better, high performance and sometimes specially designed computers/tools. The operation of these tools needed skilled people, therefore the automation instead of creating unemployment, paved the way for IT education and thus generating new opportunities.

Let us take the examples of telecommunication. I work for a GSM operator, where network elements are producing over a billion CDRs on a daily basis. These CDRs are processed by mediation, IN and billing systems. As the head of the Revenue Assurance and Fraud Management team, where I have a highly skilled team of analysts and IT professionals, I use very high performance RA and FM systems to ensure that no revenue leakage occurs. I will be completely stuck, the day either my key people are absent, or any of my key systems goes offline.

I therefore believe in people and tools being a complementary combination, without any preference.

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Daniel Peter of Mara-Ison Connectiva contributes today’s guest post, which revolves around a common challenge for revenue assurance and fraud management: measuring the benefits that are delivered. However, Daniel steps back from the usual headlong rush into calculations and equations, and first poses a much more fundamental question. What kind of value should revenue assurance and fraud management seek to deliver?

I have been thinking lately about the fundamental attitude of telcos towards Revenue Assurance and Fraud Management (RAFM). My recent interaction with RAFM Managers and System Integrators suggests that every dollar that’s being spent on RAFM is questioned; while cost consciousness is good for a telco’s short term profitability it might lead to loss of strategic advantage when unfavorable decisions are made on RAFM spending.

RA is not a mere hygiene factor but provides strategic advantage to the telco. I have also seen discussions in certain RA forums where they discuss, “whether cost of RA is higher than the leakage detection”, “what is the ideal payback period for RA System”, “what is the breakeven point for RA System”… This made me wonder whether the tools and techniques for breakeven analysis and payback period are the right approach for the investment/expenditure decision on RAFM.

Competitive forces for telcos are on the rise with regulators making concepts such as MNP mandatory; while consumers enjoy better features and services it puts tremendous cost pressure on the telco (margin has become very thin). This margin pressure has also affected the investment or budget allocation decision on Revenue Assurance and Fraud Management – for both people and technology. RAFM is a cost center and it’s being targeted by the management as a potential area to cut down cost just as they do to areas that are not core to the business; but RAFM is core to telco. Another interesting observation is that investment in RAFM is very different from an investment in a new software system or marketing campaign where short term return-on-investment calculation should be the driving force for decision making.

When a telco invests in an OSS, there’s a decision making process in place where the business and IT jointly participate in selecting the vendor. This approach helps the management in ensuring that the allocated budget has served the purpose, certainty on increasing profitability and securing the return on investment.

There are various tools and techniques to calculate RoI. For example, a telco planning to launch 4G LTE will perform breakeven analysis to determine the Break Even Point (BEP) for the incremental revenue generated from 4G LTE. Cost of cannibalization is factored in for this example as the subscriber would unsubscribe from the GPRS plan (Cost of cannibalization is the decrease in profits as a result of reduced sale of the existing product; customers are moving to the new product. From GPRS to 4G LTE in our example) BEP provides the number of incremental units the telco has to sell to cover the expenditure which means if the firm sells less than the BEP, they lose money. BEP is the point where the telco generates zero profits from that investment which means revenue is equal to the total expenditure at that point.

Payback period can also be assessed using breakeven analysis as we can forecast how long it will take to get to the breakeven point. When the payback period is very short, there is a risk that the return on investment is lower; in other words the return on investment is assured and the rate of return can also be quantified. It’s mandatory that the decision maker hit that number otherwise that expenditure will be classified as a bad decision. When the units sold exceed the BEP, it is fetching profits from the investment. Breakeven analysis is a good tool to assess whether an investment should be made or not and whether it’s feasible to achieve the BEP within an acceptable time frame. Tools like these are very helpful for investments/expenditures that yield direct results within a short period and the revenue stream is straight forward.

Now the question to answer is, can we consider tools such as these to make decisions on investment in RAFM? According to TMF, the objective of the Revenue Assurance Management processes is to establish an enterprise-wide revenue assurance policy framework, and an associated operational capability to resolve any detected revenue assurance degradations and violations. While all these can be quantified and measured, the question we have to consider is whether the telco should use a short-term RoI analysis such as Breakeven for RAFM?

In my opinion, measuring RoI for RAFM with tools and techniques such as Breakeven Analysis should be avoided, as RoI for investment in a plant/machinery/network expansion is focused on production and sales whereas RAFM function exists to provide strategic advantage and the returns are long-term although identified leakage in short-term can justify the expenditure in RAFM. Unlike investment in network expansion, the object of the RAFM function is different. Telco should assess the key outcomes of RAFM and not calculate RoI solely based on leakage detection. RoI for RAFM based on leakage detection focuses on how much leakage the investment has found and how many dollar worth of fraudulent practices have been found, which is an indicator of loss of qualitative focus.

RAFM by nature is number focused but the return on RAFM should be qualitative focused. RA leads to increased revenues but leakage detection from dollar spent is not the right approach. Telco should assess the risk areas RA is addressing, do a what-if analysis to quantify the potential loss (in terms of revenue leakage, quality of service and fraud should the risks go unnoticed), the satisfaction the board has over the reported revenue and the confidence the customers have on the bills sent to them and deduction in their prepaid vouchers have to be considered. All these translate to strategic advantage and have to be considered while evaluating the value addition from RAFM.

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In today’s guest post, Daniel Peter of Mara-Ison Connectiva highlights a risk addressed by few revenue assurance teams. It is common practice for telcos to keep up-front customer charges low, with the intention of generating a return from subsequent service fees. Daniel questions if RA can, and should, do more to monitor this financial exposure.

Recently I came across a challenge faced by a telco in the MEA region during my discussion with their RA team. Typically RA teams are well versed in the traditional switch-to-bill assurance like provisioning failure, missing calls/events and rating/billing error etc, but they are not equipped to handle risks that fall outside of this path. They lack the tools and the skillset to handle new risks. This issue was highlighted in a recent blog by Eric. He says that RA managers possess very powerful tools but do not have the wide range of tools to manage the full range of risks implied in by the title ‘risk manager’. I agree. Techniques like Monte Carlo simulation should be in the toolbox of every risk manager.

A telco’s financial risk increases with the addition of complex and dynamic service offerings. One new area of increased risk is selling devices bundled with postpaid/prepaid plan. As technology evolved from 2G to UMTS to LTE, the corresponding advancement on the device side has been fascinating. I still remember affluent people in India carrying imported Motorola DynaTACs in early 1990s. Few could afford to buy them, and there was hardly any network to support them. Mobile phones have since become the talk of the town, and we have seen the rise and fall of several mass manufacturers of handsets. In mid-1990s, Cellular (GSM) network was launched in India and started becoming popular with Nokia 3310 series taking the lead in the market. Then we have seen the beginning of the smart phone era with the rapid addition of new features and services like a camera by Nokia, mail services from Blackberry, mobile operating systems, powerful mobile processors and bigger storage and the whole mobile internet. Then came Apples’s iPhone that changed the landscape completely, reinventing the smartphone model. Google’s Android platform was another game changer which basically made life impossible without mobile phones. While this revolution is playing out for the subscribers, behind the scenes we find that the telcos operations have not kept up with the times. For majority of operators in the emerging markets, the RA departments are still functioning within the boundary of conventional switch to bill assurance mindset.

Whilst devices have become more expensive over time, service costs have steadily gone down. For example, the call charges in India are less than a cent (US$0.01) per minute whereas a decent smart phone ranges from US$200 to US$1000. With this evolution, the risk profile for the operator has changed. As devices are bundled and subsidized with service, the operator now has a significantly larger exposure. That means the focus of RA departments has to move beyond conventional switch to bill assurance.

Telcos take huge financial risk when they bundle devices with their talk/data plans. In effect they are entering into a finance/lease arrangement with the subscribers. The RA team I had interacted is still struggling to measure the cost, risk and return associated with the financing leasing and the handset upgrade options provided to the customers. This issue is beyond switch to bill revenue leakage scenario and the risk drastically affects the bottom-line. A different methodology and approach are required to address the risk.

I strongly believe the RA team has to adopt a proactive and predictive approach to assess risk and prevent revenue leakage using data science techniques. Data science typically gets a detailed view of the problem by collecting attributes that are ignored in the conventional analysis. It also looks at the problem from different dimension. This provides an edge to the business as preconceived notions are eliminated and behavioral aspects of the customers are understood using data. This aids prediction. Data science has been around for very long time and is on the rise owing to the rapid growth of big data technology and analytics profession. Techniques such as decision tree analysis, goal programming, Monte Carlo simulation, and Naive Bayes classifier are widely used in data science practices and could be helpful for the RA team.

While a finance company will have standard models of risk calculation for leasing and financing purchases, a service provider like a telco has a different goal and path to profits. Some telcos in America and Europe already have RA controls that address risks that go beyond the conventional scope of RA. But all telcos, whether in developed or emerging markets, should assure the bundles they offer to customers. This is a challenge but the good news is that the tools are available and the skill sets can be acquired. But first, we need to realize the challenges we face.

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