Archive for October, 2007
Posted by: Eric in Opinion
It seems the TMF liked my last article about revenue assurance in Latin America so much that they asked me to write another. This one is specifically about how Latin American operators are rising to the challenge of assuring wholesale costs and revenues. Here it is first, before the TMF has a chance to publish it. I am so good to you – always giving you the good stuff before everyone else ;)
Start with a tiny error, like undercharging a call by one cent. Repeat the error millions and millions of times. That one cent multiplies into an awful lot of money. If revenue assurance is the discipline that detects and prevents processing bugs that cost telcos money, then wholesale products represent the ultimate revenue assurance challenge. Small variances add up to big losses, not least because partner telcos may take deliberate advantage. So how closely are wholesale costs and revenues monitored in Latin America?
Dr. Gadi Solotorevsky, leader of the TM Forum’s Revenue Assurance team, believes that Latin American operators have risen to the challenge:
“Most Latin American RA managers tell me that they no longer see inter-carrier settlement as a high risk area. Although some years ago it was very problematic, nowadays they check it, but they do not find any significant problems. This is quite surprising, especially when compared to Western Europe. Many European RA managers view inter-carrier settlement as a high-risk area in which significant leakages are found time after time.”
At the same time, the combination of liberalization and strong growth is putting new pressure on wholesale carriers in Latin America. As markets get liberalized, telcos find themselves needing better systems and processes to manage billing and settlement with an increasing number of counterparts. They are also under regulatory pressure to open up and connect networks in the shortest time possible. New operations have to ensure that their new systems work correctly and can keep a track on what they owe. Established carriers need to be able to manage more partners using their network. The absence of a credit history between telcos means more care is needed in managing relationships. Failings in a partner’s systems may make reconciliation and agreement of balances more difficult, so it is vital that each carrier has complete confidence in their own numbers. That means extra attention must be paid when businesses upgrade their interconnect and wholesale billing systems, often as a direct consequence of market liberalization. There are also other challenges emerging for revenue assurance, as controls need to be extended to cover traffic for newer products like MMS and VoIP, and inventive revenue-share arrangements complicate the calculation of who owes what to whom.
When settling interconnect, one of the oldest problems has been to get agreement on the amounts owed. Unlike domestic customers, other telcos have the means to determine their own calculation of the amounts they owe. Disputes between carriers are rarely reported publicly, but insiders know they occur surprisingly often, even though it usually takes a difference of 5% or more before invoices are questioned. Start-ups are hence particularly at risk, as they are most likely to rely on the billing integrity of the more established networks they connect to. There is also a message here for other kinds of wholesale customer – including content providers and any business involved in revenue share arrangements – that they too need to invest in the technology and processes to protect their business interests. Relying on the occasional audit of their partner’s business may seem like a cost-effective alternative, but anyone with experience of how hard it is to determine the root cause of disputes, or to perform audits of unfamiliar telcos, will know this to be a risky approach. Employing auditors to ask questions is no substitute for recalculating bills using independent data.
The risk of wholesale leaks is amplified because other telcos may take advantage. A mistake with a pricing plan or number range may be exploited by another telco to greatly reduce their costs. Some telcos may even generate artificial traffic for the sole purpose of making money. In this case, the aim is to send calls around a loop to exploit pricing quirks; the generator of the traffic can make more money from the call being terminated on their network than they get charged for transiting it through the intermediary network. As the Latin American market grows, so does the potential for unscrupulous businesses to exploit telcos. For this reason, any wholesale provider needs to be constantly vigilant that all prices are designed to earn positive margins and that there are no unusual spikes in the traffic they carry.
In Europe, new revenue assurance departments often spent several years focusing on retail and corporate products before broadening their scope to cover wholesale. In contrast, revenue assurance departments in Latin American providers have taken a more balanced approach from the beginning. Many have always included wholesale revenues and costs within their scope, giving them a head start. They need to keep moving forward in order to keep pace with change, as the complexity of wholesale settlement is increasing. The good news is that revenue assurance practitioners in Latin American operators are aware of the risks. However, they need to keep their executives motivated and focused on the management of those risks. In revenue assurance, the worst damage is done by leaks that go undetected. The Latin American market is transforming itself, and telcos must stay on guard. When small errors add up to big losses, they cannot afford not to.
Posted by: Eric in Opinion
There is no time to take breath as the consolidation of the revenue assurance industry continues at a hectic pace. Portugese outfit WeDo Consulting has acquired UK-based risk and security consultancy Praesidium for an undisclosed sum. Read here and here for the announcements on WeDo’s and Praesidium’s websites respectively.
Last month, WeDo claimed the crown of “world leader” in revenue assurance after they acquired Cape, the Irish vendor. Praesidium is small in comparison to that deal. The 10 Praesidium employees will be retained, taking WeDo’s headcount to 380. However, it shows that WeDo’s ambitions are far from satisfied, and suggests they are trying to increase penetration into English-speaking markets and other parts of the world where they have tended to lag behind. Praesidium’s niche consulting skills should also enable WeDo to lever further revenues from their existing customer base. Presumably both sides see the deal as an ongoing win-win. Praesidium’s management and team will be unchanged, and will operate as a new business unit within WeDo. We shall have to wait and see if WeDo’s rivals rise to the challenge, and try to respond through further acquisitions and mergers. My bet is that they will – for as long as they can still find targets to acquire.
Posted by: Eric in Opinion
When I switched my broadband supplier, I was left without service for a few weeks because a third party business had backlogs and was unable to deliver the router on time. So what did I do? I demanded a ‘goodwill’ credit of course. Because of the way my multi-play provider is organized, the credit did not go against my broadband, but instead went against my existing television bill. The value of the credit was a fixed proportion of the cost of my television subscription. The failure of that third party to deliver the router is possibly never tracked by the supplier, but they had to pay heavily for it. Worse still, if anyone in management at my broadband supplier asked how about credits for broadband products, chances are nobody would be able to give them answer. The value of broadband credits would be absorbed into the credits for their direct-to-home television service. That is a recipe for wasted money because nobody can tell where the root problems lie. Even when products converge, suppliers need to keep separate data for separate products. Only then can they work out which products are causing complaint and hence less profitable than first assumed.
Posted by: Eric in Opinion
Thanks to Guera Romo of MTN in South Africa, who wrote the following comment on my post about TMF vs. GRAPA: Which Home for RA Standards?:
“Yes, I know the TMF issued standards and have been using these although they are a bit high level. I guess it is because most of this is driven by vendors who will give enough to make you interested without giving away their IP.
The bit that I have seen on the GRAPA site does not lead me to believe that standard would come from this community although it is refreshing to see operator representation here.
I just believe there is more to RA than TMF and GRAPA. Attending conferences always leaves me a dire need for more “substance”. Where are the real goodies that make the board members sit up and pay attention?”
What a good question. But on the other hand, is anybody surprised if the answer is “nowhere”? Yesterday a conference organizer asked me about associations for revenue assurance. I told her about GRAPA (yes, incredibly I do tell people about GRAPA without prompting, despite my reservations about how they are run and why they exist), the TMF and the friendly social club for operators that calls itself the UK Revenue Assurance Group. But after those three I was unable to cite more examples. Probably there are some other countries where people working in RA get together on a regular basis (although the UK is unusual in having so many national and international telcos headquartered so close to each other). You could also argue that user meetings for suppliers like Subex Azure and specific forums in the Fraud sector make for sizable congregations of people with specific interests within the revenue assurance universe. However, other than conferences it is hard to think of any more examples where revenue assurance people from different businesses interact with each other. And even then, as Guera points out, the interaction leaves many of us wanting more “substance”. So my best guess is that the substance is, frankly, nowhere to be found. Why is that? Maybe we should ask the opposite – is it reasonable to expect any more substance to this topic we call revenue assurance?
The thing about revenue assurance is that the principle motive is profit. It is a business activity. Nobody does it just because they love it (apart from me and a few other freaks, perhaps, and you have to be cynical even about people like me). So to generate content, and then to share content, there has to be a profit motive. There are lots of kinds of profit as well as direct financial rewards, of course. Which is lucky, because nobody is going to get rich writing a book called “How to help big telecoms operators make a bit more money” or “How to help big telecoms operators make a lot more money”. The former book is not sexy enough, and nobody would buy it. The latter book would have to be a lie. You can be sure it would be a lie for the same reasons that you know people who write books entitled “How To Easily Make Millions and Millions of Dollars” make more money from selling the books than they did from following their own terrible advice i.e. they would not waste their time selling books if they knew a better way to make money. As well as making money directly, other forms of profit include the prospect of enhanced future or indirect financial rewards, in other words the benefits that flow from marketing and reputation building. But writing books and selling advice to a tiny audience is probably a terrible way to make money (even Rob Mattison must struggle to find enough gullible people in the world, and once he is finished there will be very few left for the rest of us). Other kinds of profit are less tangible: status, glory, respect and other euphemisms for feeding the ego. But, geez, that hardly is a way to pay the bills, and flying over all the place to share your wisdom takes time and money. Also, the more time you spend flying around the world sharing your wisdom, the less time you spend doing proper work and learning how to do your job so you actually gain some wisdom to share when flying around the world. So be suspicious of any prophets of revenue assurance who have no obvious motive to help your business be more profitable, help you get recognition, help you get a pay rise, help you get a promotion, or help you do anything else which you hope will deliver zillions of dollars to your telco. Because you cannot trust the motives of someone like that.
There is another kind of motive for telling people things, of course. It is the same motive as the one you find in those forums where people share tips on the new kinds of fraud. The important word in that sentence is “share”. To get something of value, give something of value. The problem with some people who “share” knowledge of revenue assurance is that they are just repeating the same old lame nonsense they previously heard someone else say. Regularly when I go to conferences I also find I meet people who say “I know nothing – I just came here to learn.” “Great,” is what I think when I meet them, “they expect me to lavish hours of free advice on them, for absolutely nothing in return.” Because that is exactly what they do think. They maybe spent a thousand dollars of their company’s money to go to a conference, and so they expect me to make it worthwhile even though there is almost no way that I could ever generate a return on giving them free knowledge. Even if they did want to pay me for my time as some form of gratitude or quid pro quo for the advice I gave them for free up-front, chances are I will be busy working somewhere else during the narrow range of dates when they have a budget they can spend in my direction. So sharing only works well between equals, who have useful experience, who trust each other, and who think that they are speaking to someone who is as willing to be open as they are. The thing there is that neither person is a prophet and neither is a follower. They have to be equals to make that work. This is the challenge for revenue assurance if it is to develop that “substance” that Guera was asking for: we need a meaningful number of people, who are approximate equals, and are open, and honest and willing to share, and willing to work together. Playing the numbers game is easy – advertize one prophet willing to stand up before a crowd and soon enough you will collect a crowd of people who came there hoping to get something for nothing. But after a while even that crowd is going to realize that, usually, you get nothing for nothing. Or as the phrase goes in my Yorkshire vernacular: “you don’t get owt for nowt”. The trick is to get numbers of equals who all believe that they will benefit it they all share.
Of course, there is nothing that the lost prophets of revenue assurance hate more than being in a team. Teams are things they want working for them, not with them. Being part of a team means you have to compromise. You also have to share the credit. The Merriam-Webster dictionary definition of teamwork is
“work done by several associates with each doing a part but all subordinating personal prominence to the efficiency of the whole”
It is not hard to see why people wanting lots of publicity are not too keen on teamwork. But you need teamwork to respond to the challenges posed by revenue assurance. There is nobody who knows everything about revenue assurance. Revenue assurance is, after all, a multi-disciplinary field. It embraces accounting, auditing, software development, database management, data integrity, process mapping, corporate governance…. the list goes on and on. No single person can claim to be an expert across every element of revenue assurance. Anyone who makes that claim is a liar. The problem with the lone prophets is that they just talk about the things they understand and pretend the rest is irrelevant or try to bluff their way through it by repeating what they heard other people say. There is a phrase that goes like the following: when a man’s only tool is a hammer, every problem looks like a nail. So gurus with database skills want to solve every revenue assurance problem with a database, gurus who develop software always want to develop new software to solve each problem, gurus who… you get the idea. A long time ago I wrote some code in C and C++, but I do not pretend to be a skilled software developer. I have written some SQL queries, but I am not expert at that either. I am a qualified accountant, but spending years working in revenue assurance obviously means I am not the best accountant. One thing I do know is that you have to know your own limitations and be willing to allow some problems to be solved by other people using skills you lack. There may be many ways to skin a cat, but only one will be quickest and cheapest. A good revenue assurance professional puts the interests of the telecoms business before his owns – he drives them to do what they most need to do, not what he is best at doing. So teamwork is a problem for revenue assurance, as lots of people are in competition by offering lots of different ways to skin the same cat. Getting one to admit that their way is not always the best way is going to be hard, but is necessary if we are going to get some genuine teamwork.
So if the substance seems lacking, that is my opinion why. And in case you did not notice, I gave my opinion for free. I broke the Yorkshireman’s rule and gave owt for nowt :) Multiply the amount of time I spent writing this by my usual rates and this advice should be worth a good few hundred dollars. But you got it for free. Strangely enough, though, if you do not make people pay for something, then sometimes they do not value it. They just take it for granted and assume it will always be there. So prove me wrong, people. I could put a little button so you can make a donation to this website through PayPal. Then, like Radiohead, I could encourage you to pay whatever you think my material is worth. But, unlike normal people like Rob “Guru” Mattison, money is not what I am asking for here (remember, I admitted I was a freak in the third paragraph). Nope, just give me some info. Tell me something interesting that I might not know. Better still, tell me and everybody else who reads this blog. I dare you. But I will not pay you. Which is why I am not expecting to get much more “substance” from the rest of you than I have previously :( But I would love it if you proved me wrong. If enough people started sharing what they know, perhaps some day we might even find that we work like a team. So be honest: does being part of a team motivate you? If not, expect to wander the revenue assurance wilderness alone, or else decide to follow a prophet – but you can safely assume any prophet you meet is just as lost as everyone else.
Posted by: Eric in Opinion
A year ago I wrote my first blog on the topic of revenue assurance. So this is a good time to review its progress. Since I started keeping a track, the blog has had readers from 102 different countries, and the readership has steadily grown. Not surprisingly it is most popular in my homeland, the UK. Sadly, the blog has not yet had any visits from Uzbekistan, Namibia or Greenland. But a glance at the top ten countries suggests that the readership is mostly drawn from revenue assurance suppliers. India, Ireland, Israel and South Africa all feature heavily, which is not surprising when you consider that these are all key hubs for software development. During the year, I have written 165 entries. The number one complaint has consistently been that my blogs are too long (some complaint – I do not force people to read them…) At least that means there has been no shortage of things to write about. So, all in all, it has been a pretty good first year.
But it is a long way short of good enough. Do I blame myself? NO! The fault lies with you, dear reader. “Wait!” I hear you cry, “what did we do wrong?”. It is not what you did do, but rather what you did not do. In my first blog, The RA Truck Stop, I asked to share some intelligent conversation about revenue assurance, because no self-appointed big shot really does know it all. But instead I have a soapbox that I use to give a monologue. Obviously people read this stuff. Web analytics do not lie (unless, of course, people deliberately type in the URL and then look away from the screen). After weeding out all the spam and the anonymous cranks there were just 28 genuine comments to the blog all year. That is one comment per every six blogs. Or one comment per every three-and-a-half countries. Strangely, I get more emails about the blog than I do comments on the blog, which is nice for me but not a lot of help to anyone else reading. I am not holding Suriname, Iran or Angola responsible for the shortfall in the number of comments, as they exceeded expectations just by visiting the site. No, there are some big guns out there who have yet to wake from their slumbers and start to share their insight with the rest of us. Come on you Indians, Irish, Israelis and South Africans, I know you have more to give. The Brits could try harder too. And as for the Yanks, well, perhaps I can forgive you because you seem to write more books about revenue assurance than every other country put together, although that is just the efforts of one man ;) The blog has plenty of acquaintances, but not enough close friends to help celebrate its birthday. I promise you would learn more from each other than from listening to a wally like me. If you start commenting in serious numbers, I will put up a proper forum and then we can really get the debate going. Blog is one year old, going strong, and ready to make more friends. So do not be shy – we all want to hear what you think!