For the second year running Charlie Thomas, CEO of RA firm Razorsight, has been named one of the ‘Smart 100 CEOs’ in the Greater Washington region. The Smart 100 list is compiled by Washington SmartCEO magazine. You can read the press release here.

Razorsight is a revenue assurance and cost management vendor based in Virginia, USA. Thomas joined Razorsight in 2004 and became CEO in 2005. Razorsight announced improved revenue figures for 2009 but the business is best known for the USD 4.5m payout following a 2008 court judgement that Razorsight stole software code from rivals TEOCO.

It has been a tremendous start of the year for Subash Menon, boss and founder of Subex. He has negotiated his way out of the looming overhang of FCCBs, has slimmed the business after the takeover of Syndesis and has got Subex back into profit. So how does he follow up that hat trick of successes? By putting his money where his mouth is and showing his faith in his own business. Like other shareholders, Subash will see his stake in the company diluted by the deal with owners of the FCCBs. To address this, he has bought newly-issued shares, as he explains in this interview. You can also see the video of the interview here. Buying shares is good - it shows confidence in his company - but Subash went a step further still. The shares will be bought at a premium to the market of 30%. In other words, he is buying not at the current market rate, but at the same rate as the FCCB holders agreed as the conversion price for their bonds. It is a magnanimous gesture, an impeccable example of good governance, and a supreme statement about the future of Subex. I take my hat off to Subash Menon.

More good news for Subex followed soon after, with the announcement of a multi-million dollar order for their cost management software by a North American Tier 1 operator. To complete the second hat trick, it looks like the majority of analysts are upbeat about the future share price of Subex, which has had its ups and downs. They are not all positive, but some analysts are very positive about Subex’s future; see here, here and here.

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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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…

After a good run over the last year, Subex shares dipped 8% in trading yesterday. Other Indian tech firms were also down, but an 8% fall suggests that Subex’s share price is more volatile than the norm.

Following the bad run which saw ECtel eventually delisted and merged with cVidya, is this a sign that markets struggle to price tech solutions they do not really understand? Investors and analysts are not alone in struggling to put a price on products like revenue assurance. The TMF has identified the goal of robust valuation of the economic benefits delivered by revenue assurance, which may be of some use to vendors, at least when chasing sales. However, I doubt this will greatly change the perception that RA vendors remain a relatively risky investment. Part of the conundrum lies in the closing the gap between the one-off ‘hit’ of benefits when a new system is sold, and the ongoing benefits that the RA community would like to show it delivers. If RA vendors could shift to earn a higher proportion of their revenues from ongoing licenses and services provided to the same customers year after year, that might help change how investors perceive their business model. Of course, that also means less sexy P/E multiples and more robust dividend yields if RA vendors decisively move from the ‘buzz’ of offering something new to a more steady model of generating recurring income from long-term partnerships with telcos. In that sense, RA vendors are like a microcosm of the telecoms industry - pulled between the differing advantages of presenting themselves as companies that represent exciting growth opportunity or businesses that grow more slowly but generate robust revenues even during an economic downturn. That means there will be pressures no matter what direction RA vendors set for their businesses.

It looks to have been a good year for revenue assurance software suppliers Connectiva. The news is that they have opened a new office for their headquarters in New York, expanded their operational base in Kolkata, and taken on two new senior executives. You can read the story here. The firm, which obtained USD17m in additional VC finance late in 2008, has increased its headcount by 100% over the course of 2009.

2009 was heralded as the ‘year of revenue assurance’ by some - especially those with an interest in talking up the market. In reality, we have seen some RA vendors cutting costs whilst struggling to sustain their order books, whilst firms like Connectiva appear to have got stronger. Unlike some other vendors, we do not see public data on Connectiva’s revenues and profits, so comparison is difficult. However, a pattern has emerged. The RA vendors which tend to have done best have most of their staff based in countries where access to an educated and skilled workforce is cheap and plentiful. Rivals with staff in more expensive nations have found it harder to compete in a price-sensitive market. This pattern applies across the global telecoms industry and is not unique to RA. For example, Israeli BSS giant Amdocs has been cutting staff in its home nation and hiring in India and China. Earlier this month Amdocs announced plans to build a new R&D and operations centre in Tianjin whilst their CEO said jobs that had been moved overseas would not return.

The question for RA vendors in 2010 is whether their strategy will be to shift their workforce to low-cost regions in order to sustain margins, or whether some will break the mould and start to offer truly differentiated products which can command a premium price. If a business can do both, it will be in the strongest position of all.