Archive for June, 2010
Posted by: Eric in Opinion
In a recent interview, Avi Basu, CEO of Indian RA vendor Connectiva, revealed some of his thoughts on how revenue assurance and service assurance complement each other:
One of the major challenges operators face as they evolve their networks to support Internet, VoIP and multimedia services is their inability to trace transactions end-to-end across the networks.
Complete, real-time visibility of the transactional data is essential for effective network management as well as service and revenue assurance.
You can read the interview with Avi Basu here.
Linking service assurance and revenue assurance makes sense from a technical perspective. The idea that service assurance will converge with revenue assurance is not new; a number of commentators have pointed out the potential data and systems synergies over the years, though delivery has lagged the principle. The idea is also echoed in Subex’s mirroring of the Network Operations Centre with a Revenue Operations Centre. However, the trend towards real-time processing of transactions has enhanced the business case for dual-role monitoring of transaction data for both revenue assurance and service assurance. But we should not forget the obstacle to alignment created by organizational and cultural divisions. If revenue assurance monitoring is performed by the Finance function of a communications provider, this will create challenges for connecting it to a technology and operations-led function responsible for service assurance. That said, quality of service is a vital element in understanding what drives revenues and customer satisfaction, especially as we move to all-IP networks. For excellent service and maximized profits, communications providers will need to grow revenue and service assurance out of their distinct silos and see the relationship between them in terms of the whole of the customer’s experience.
Posted by: Eric in Opinion
Why should Risk Managers make friends with Billing Managers? I can think of three reasons:
- Many risks, if not managed properly, manifest themselves in symptoms captured by the Billing Manager. DSO, billing adjustments, goodwill credits, leakage… the Billing Manager is exposed to many of the indicators of root failures that come back to inadequate operational, financial and sometimes even strategic risk management.
- Billing Managers often end up sympathetic to the need to manage risk, precisely because they are forced to deal with the result of inadequate risk management. Indeed, the development of risk silos like fraud management and revenue assurance is often aided by the Billing function. In many providers, such silos actually grew out of the Billing team.
- We all know of horror stories where the pressure to launch a new product was not matched by enthusiasm to devise a suitable billing solution. I have even known whole communications providers whose ‘revenue assurance’ to-do list could be neatly summarized by one task: implement a proper billing system! If a recurring failure to deliver adequate billing does not count as an example of rotten risk management, then I do not know what does.
One of the greatest causes of uncertainty is lack of information. Not having sufficient data also means risks cannot be quantified. Because Billing is a key nexus of data – bringing together vital information on revenues, direct costs, debts and customer satisfaction – it provides a key resource to aid the management of risk.
It is heartening to see that many Billing Managers are conscious of the advantages of proactive risk management. I recently wrote an article for BillingOSS Magazine about the connections between Enterprise Risk Management (ERM), Billing and the risk silos. The article begins on page 14 and the magazine is available online from here. The connections were also underlined by the TM Forum when setting up a collaborative team working on ERM. The TMF’s ERM team grew out of the TMF’s Revenue Management program. To find out more, you can visit or join the TMF’s ERM community here.
Billing are often left to clean up the mess when upstream decisions, processes, data and systems go wrong. Like so much of life, the people who most appreciate the need to think ahead are the people who otherwise have to deal with the consequences!
Previously talkRA reported how slip-ups by Bell Canada’s revenue assurance program actually resulted in the company overcharging its customers. Now the Canadian Radio-television and Telecommunications Commission has issued its decision about what went wrong. The Commission confirmed that more than one customer was overbilled, although it was satisfied with the steps Bell Canada has taken to inform customers about the error and to reimburse them for it. You can read their full decision here.
My conclusion: sloppy revenue assurance cost Bell Canada a whole lot more than revenue leakage. They angered customers, damaged their reputation, and ended up spending a lot of money clearing up the mess they made. Of all functions, revenue assurance should take the lead and act with the utmost care and attention. Good RA is not just about boosting the bottom line – it is about setting an example for how everyone can run a better business. Bell Canada’s RA let their business down, and let the RA industry down too.
Posted by: Eric in Opinion
As previously rumoured, US cost, routing and revenue management vendor TEOCO has made a formal bid to take over Israeli OSS vendor TTI Telecom. TEOCO is offering USD 3 per share, a premium of 50% that values TTI at USD 58 million, in an all-cash deal that would take TTI off the Nasdaq. However, there is still the prospect of another buyer coming in; TTI may solicit superior offers until July 9, though TEOCO will have the right to match any such offer and would get an undisclosed break-up fee if their offer is ultimately rejected. You can read about the deal in the TEOCO press release.
The combined firm would have over 600 staff and 75 communications provider customers. The deal makes sense for TTI’s shareholders. With significant consolidation in the OSS sector this year, TTI alluded to the competitive challenges as one reason why it is in favour of the deal. TTI CEOs have come and gone in the last few years, but it was unclear if TTI would be able to keep pace with the R&D of rivals and thus develop future growth products. The benefits to TEOCO are less obvious, though I think the key to the deal is that it greatly expands TEOCO’s international footprint. To date, the bulk of TEOCO’s customers are in North America. Acquiring TTI will extend their reach into Europe, Asia and Africa.
Posted by: Eric in Opinion
Estimating the size of the revenue assurance market is complicated by many factors. Some of these I write about on a regular basis: the lack of transparent accounts for privately-owned companies; the difficulty of estimating the extent of the market supplied by ‘in-house’ developers; and the different definitions of what to include and exclude. One factor I tend to overlook is the role of the big companies that dabble a toe in the waters of revenue assurance but for whom RA is only a trivial slice of their total revenues.
To give a few examples, there is Ericsson, which is as comfortable at offering their revenue assurance service line as they are at selling video calling solutions, and HP can supply RA software as well as printers. Nokia Siemens Networks seems to have a business pitch for revenue assurance rooted firmly in the past (claiming leakage rates of 5% to 15%? – most reputable vendors have given up on extreme scare story tactics) but aspires to build a strong SI capability with niche expertise. Meanwhile, I have previously been critical of how Nortel tries to make money from revenue assurance by essentially selling the secrets of how their equipment works. If you paid for the equipment, you should get the info on how it works, without needing to pay Nortel a second time and dressing that up as revenue assurance. One business that I always thought would only venture tentatively into revenue assurance is Israeli billing giant Amdocs. As revenue assurance is – rightly or wrongly – often taken to be the discipline that sorts out what is wrong with billing, Amdocs need to tread carefully in case they are accused of being like Nortel, and trying to double their profits by fixing flaws in the systems they sold in the first place. Nevertheless, I see Amdocs are recruiting an RA consultant in the US. When reading this news, thoughts turn to what must be going through the minds of RA specialists and fellow Israelis cVidya, who borrowed heavily in order to build up their presence in the US and whose backers have many links to Amdocs.
For the big fish companies like NSN and Amdocs, the people they offer as RA experts may only do RA as a part-time job. They may spend just as much time project managing the implementation of billing platforms or trying to streamline provisioning. That does not mean they are not RA experts – but they tend to favour a certain flavour of revenue assurance over all others. Whether expert or not, they reopen the question of what to include in an assessment of the size of revenue assurance, and highlight the difficulty in valuing a market where some numbers are never published and others are lost in the insufficient granularity of a big business’ annual reports.
The role of the big fish players in the marketplace is also hard to judge. They tend to be novelty plays, with a few customers here and there but no real pretension to build RA market share and happy to pocket some quick win profits wherever they can by making sales to customers too daft or lazy to research and identify alternative suppliers. But with their financial firepower and scale, they could be much more, and try to exert a more dominant influence, especially if they decided to takeover some of the niche vendors. There are doubtless some niche minnows who would only be too happy to be gobbled up by a big fish. That none of the big fish has swum down this route suggests that they simply do not think it good business; they do not want to take a risk on RA for the relative return they expect. Instead, the big fish prefer to skim some profits whilst minimizing their investment, by reselling the software of a white label supplier or hiring and firing consultants in response to guaranteed sales. That, in itself, tells us something about the size and profitability of the RA market, both today and tomorrow.