Archive for February, 2011

Two unrelated announcements in February served to confirm two major trends in the revenue assurance market.

Growth in managed services

Subex has announced yet another managed services deal, this time connected to the deployment of their ROC Fraud Management System in a Middle Eastern operator. They are also deploying their RA system. See their press release here.

Market segmentation: chasing the smaller telcos

WeDo has launched BASE, an RA tools offering that is designed with Tier 3 mobile service providers in mind. This is aimed at the large number of telcos with less than a million subscribers, and predominantly sell services on a prepaid basis. You can see the press release here.

Conclusions

RA vendors, like the rest of RA, have picked a lot of “low hanging fruit” and are working to broaden their menu of products and services. One way to do that is to refine their offerings to make them more palatable to the telcos that were less well served in the early days of RA. In particular, smaller telcos need solutions that are agile, cost-effective and require less up-front investment to get them working. The trend there is towards delivering software, whether on-site or through the cloud, at an affordable price. This means the vendor must also seek to keep deployment and configuration costs low, so they can still earn a viable margin on each deal. The other trend is towards longer-term and more extensive partnerships between vendor and customer. The vendor is contracted to manage the service for several years, instead of just getting a big one-off payment on installation to be followed by a thin tail of licence fees. This reduces the risk for the customer, whilst helping them to limit their capex and headcount. The main benefit for the vendor is they get more stable income and earn margins based on the whole service they provide, not just on the software they develop. Even when the managed service contract expires, the vendor will benefit from improved customer loyalty, as swapping supplier would also mean changing the team of people running the service. Vendors also suffer fewer headaches caused by those telcos that used to buy RA systems without investing in the people needed to run them.

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Over the years, I have witnessed plenty of arguments about the scope of revenue assurance. It should include this, it should not include that, it will go from here to there… So much humbug. Arguments about scope do not really matter unless you are talking about a specific company with specific challenges. Nobody should design an org chart or set objectives based on an academic argument about scope. What really matters is what would most help the bottom line of the business. Because I take that attitude, I often find there is a wonderful opportunity for the RA function to make themselves more useful by redeploying their analytic skills, although it falls well outside the typical RA scope: improving interaction with customers. Simple examples include understanding what drives goodwill credits or how inbound calls to the contact centre can be reduced through better proactive communication with customers. But there often appears to be a mental block that stops RA people from doing more work of this type. Maybe it is because managing how humans behave will never be 100% reliable or because it cannot be fixed by a system update. Despite that prejudice, it should be a fertile area for RA people to reuse their skills to the advantage of the business. With that in mind, take a look at this interview, which captures just how much difference can be made by better analysis and management of customer contacts.

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Any regular reader knows I like to look at errors – what causes them and what the consequences are – from all sides. Then you get the complete view of what is going on, what is going wrong. So I was tickled to see that somebody had used the phrase ‘revenue assurance’ from the perspective of the agents who receive commission from comms providers. Providers gave more attention to assuring the accuracy of sales commissions in 2010. Commission integrity is a natural extension of the scope of revenue assurance. But once again, we get a reminder that improving accuracy might mean paying more, not just paying less. This time the reminder comes from Bill Power (his real name!) who runs an organization that represents US sales agents. Bill wrote:

It’s tempting to take commission checks and put then (sic) in the bank, but there are mistakes all the time — and very rarely are they in your favor. These mistakes include not being paid, your accounts tagged to another agent, not being paid on all services, not being paid bonuses, etc.

For more of Bill’s advice about revenue assurance for agents, see here.

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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.

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Hot on the heels of yesterday’s post, recent industry news proves the point that customers may not understand, or be happy with, how they get charged for data. AT&T has been hit with a lawsuit saying that customers get charged for data even when, as far as they can tell, they are not using any data services. Read the story here (hats off to Tony Poulos for spotting this story – how does he get the news so quickly?) My superficial reading leads me to feel the suit is without merit, and that AT&T are probably charging for data which is transmitted just because that is how their services work, with no intention to cheat anyone. But it illustrates the point – data does fly back and forwards without customers being clear about what data is being sent or why. That means customers are not clear about what they are paying for – and possibly the telcos are not clear about this either. We live in a world where there are innumerable customer protection laws and regulations designed to make sure customers pay only for what they get and understand what they are getting. The principle applies to so many things – everything from the weight of cornflakes in a box to the electricity recorded at the meter. Why should data communications be different? Because data services are complicated… but that justification will only the take the industry so far.

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