Archive for February, 2012

Information about cVidya, the Israeli revenue assurance vendor, is so minimal, scatty and unreliable that even when you collect it all and piece it together, you rarely get a full or convincing picture of how their business is doing. But, thanks to a slip-up by Hezi Zelevski, their Vice President of Corporate Development, it has now been revealed that cVidya experienced zero revenue growth over the last two years.

Last week I blogged about cVidya’s announcement that 2011 revenues were up 25% from 2010, and how Globes had reported their total revenues were in the range of USD60M to USD70M. In the blog, I pointed out how Alon Aginsky, CEO of cVidya, had claimed that the merger of cVidya and ECtel had created a business with combined revenues of USD50M. And yet, Hezi Zelevski, touting cVidya for yet another round of venture capital funding, has revealed:

…the 300-employee company is doing about $50 million in revenue and doesn’t need additional money for day to day operations. It does see opportunities to grow even more rapidly than its 20 percent internal rate by making additonal acquisitions.

Excuse me? They are doing about USD50M in revenue? That is a lot less than the USD60M-70M that Globes reported. It is also echoes the words of Alon Aginsky, who said he was running a USD50M business following the January 2010 merger with ECtel. My gut tells me the lower number is the one to be trusted. This is the number being pushed to potential investors. We can anticipate that they will get a slightly more accurate story than the rest of us.

Hezi Zelevski was quoted for a promo piece in TechJournal, ahead of cVidya’s attendance at the Southeast Venture Conference. If what he says is true (and I believe him) then USD50M revenues for 2011 compares to USD50M revenues for 2009 which leads to the conclusion that, overall, cVidya’s revenues have not grown over the last two years. However, the promo piece in TechJournal also said:

Since its acquisition of Ectel in January 2010, Cvidya has seen its revenues grow 25 percent and saw significant growth in its customer base in 2011.

Excuse me? Last week we were told, in many different places, that cVidya’s 2011 revenues were up 25% on their 2010 year end revenues. Here we are told they are up 25% since the merger with ECtel in January 2010.

There are only two possible ways that cVidya has experienced 25% growth in revenues. One possibility is that cVidya revenues fell by 20% in 2010, and then climbed again by 25% in 2011. Do the math: USD50M revenues for the 2009 year end falls to USD40M for 2010, which grows to USD50M for 2011. Overall that equates to zero growth. The other possible explanation would be that Alon Aginsky lied about the combined firm having USD50M revenues at the 2009 year end. At the time I speculated that the combined ECtel-cVidya revenues were likely to be around USD40M and that cVidya had exaggerated when stating they had the largest share of the market by revenues. If the 2009 year end revenues had been USD40M, that would fit with the TechJournal version that post-merger revenues had grown by 25% to a current level of USD50M. However, I think the former theory is more likely to be closer to the truth. At the end of 2010 cVidya said nothing about growth, which makes me think they kept quiet about a difficult year following the merger.

Whichever way you look at it, cVidya’s reports about its revenues are very suspicious… and not very impressive for a firm that sells ‘revenue intelligence’. Because there are so many contradictions, at least half of what we hear is untrue. How can I be so emphatic? I am just a simple risk manager, and risk managers do their work by gathering as much data as they can about uncertainties, in order to assess risk as best they can. But when the data is this contradictory, you cannot trust any of it.

After revealing how little we know about cVidya’s revenues and growth rates, what have we also learned about cVidya’s business strategy? That it is a mystery too! Globes suggested that Goldman Sachs may be screening potential buyers for cVidya. However, in TechJournal, Zelevski is quoted as saying that cVidya would use a new cash injection to make acquisitions. So right now, we have no idea if cVidya’s management team is trying to buy, sell, or maybe do both at the same time. If the combined cVidya-ECtel revenues fell by 20% in the year following merger, and they spent another year just getting back to where there were, then that is not a management team that should be encouraged to engage in more M&A. Do not forget that they obtained a huge cash pile from ECtel but seemingly they have used it all and now need more cash. Zelevski suggests the firm has broken even and they have fabulous rates of organic growth. Well, if the management team has discovered the knack of great organic growth, and have got costs under control, then why not let them prove their worth by showing current investors a repeat year of spectacular growth, culminating with profits for the first time ever? That way the company might actually fetch a decent price when put on sale. If they can maintain current growth rates, they will soon be number one in the market, beyond dispute. There is no need for cVidya to buy another loss-making company. With rivals in difficulties, cVidya would be better off picking up disgruntled customers without wasting money on buying an unwanted business. After all, they report impressive growth in the number of customers they serve. If you believe what cVidya’s management team says about their firm, then it makes no sense to give them money for M&A which will just bog down the business in a mess of integration for another year or more. And if you do not believe what cVidya’s management says about their firm, then why would you give them money?

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Lebara Mobile has chosen Aricent Group for Revenue Assurance in 7 countries and therefore a press release was quite in order. The last line in the first paragraph reads:

The multi-country solution has ended revenue leakage and reduced operating expenditure through a more agile and responsive IT infrastructure.

I must have missed the memo. We have advanced to the level of ending revenue leakages! And this is not just a possibility – it has already happened.

I just imagined myself as RA manager having this conversation with my CFO.

Me (leaning forward): Sir,I am committing my efforts to eliminating revenue leakage.

CFO: Oh, you don’t say!

Me: Totally abolish it. I will leave no stone unturned.  I mean, no CDR unaccounted for.

CFO: By when?

Me: End of current financial year.

CFO: You do realize we are in Feb and our financial year ends on 31st Mar?

Me: I am well aware. That’s why we just upgraded our RA tool.

CFO: My prayers are with you.

Me: Thanks. What’s that list that you are scrutinizing?

CFO: It’s just a list of people we wish to get rid of.

Me: We are downsizing?

CFO: No, we are just getting rid of bull-shitters and peddlers of hog-wash.

Me: Looks like it has 39 people. Those idiots are that many?

CFO: You have no idea. I will shortly add the 40th person as soon as you close the door behind you.

Me: If we can eliminate revenue leakages and also get rid of those 40 pests, this company will be on its way to the big league.

CFO: It sure will.

Me: OK. See you later

CFO: Don’t count on it.

I exit the office wondering what he meant by that last statement. But I cant be bothered. I am going to eliminate revenue leakage.

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Dan Baker, research director and owner of the Technology Research Institute, has released his new report into telecoms business assurance. The 635-page report provides a comprehensive guide, covering revenue assurance, cost management and fraud management, as well as the newer assurance activities that have evolved in the business assurance hothouse. Aimed at both vendors and managers working in telcos, the report includes research gathered from around 70 interviews with industry experts, and presents profiles of all the significant players in the market. And talkRA is very pleased to make the report available to our readers. To review the extensive table of contents and the deliverables included with the report, please take a look at our very own dedicated micro-site.

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WeDo, the Portuguese business assurance vendor, has secured a UK and European patent for a new data collecting technology; see their press release here.

The new product is described as a “Communication System with Distributed Risk Management Solution (DRMS)”. Details are limited, but the purpose is to gather data about communication activities using a novel technology that is suited to decentralized IP networks. By the sounds of it, the technology will be levered to enable IP network variations of offerings for revenue assurance and fraud management, and possibly also for legal intercept of traffic and management of content.

The importance of securing patent rights has been underlined by the intensity of recent patent battles between big high-tech corporations, and also by the increasing threat posed by patent trolls. Depending on the existence of alternatives to WeDo’s new data gathering technology, this little story may be revealed as a big factor in any future valuation of WeDo’s business. It definitely shows that WeDo are thinking ahead by investing in R&D.

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Our story begins with Farmer Joe who has a beautiful daughter Janet. Farmer Joe decides to bequeath the family decorative pin to Janet on her 20th birthday. Now Janet, in a fit of unbridled joy decides to run around a haystack holding the pin towards the heavens. Suddenly,in a scene far too clichéd to be coincidence, she trips and the pin falls into the haystack…

Now begins the daunting task of “finding the pin in the haystack”. Janet is faced with a dilemma which would be quite familiar to RA analysts the world over – how do we find the pattern which highlights the root cause (or the pin, if you are a farmer’s daughter who goes by the name of Janet) within a world of millions of CDRs.

Of course, the solution is to cut the haystack into smaller cubes and search smaller segments for the pin. Does this sound familiar to you, my RA analyst friend? It should – because this is the way we attempt to find the root cause today. When your system presents you with millions of CDRs (or, God forbid, meaningless summaries), we tend to break them into smaller sets which have seemingly similar patterns. Then begins the back-breaking task of finding the elusive pattern that indicates the root cause – an endeavor that involves quite a few cups of strong coffee, pointless mails and shattered dreams regarding deadlines and analyst efficiencies.

But hey, this is how we do Root Cause Analysis the world over right? We would reduce our effort by managing the problem size right? Well, it gives me great pleasure to say that the winds of change are blowing. Today, I would like to introduce to you to a fundamental paradigm shift in Root Cause analysis which would effectively transform the way we do RA.

Let’s imagine for a second that Janet decides to find the pin by placing a powerful magnet over the haystack. Consider how much time and effort she saves, as compared to breaking the large haystack into smaller stacks. Consider how sure this solution is, as compared to the possibility of not finding the pin even after breaking the haystack into smaller segments.

Now imagine such a magnet for RA. A magnet that presents the analyst with all the hidden patterns in a problem set (discrepant CDRs). Imagine how this would change your day in terms of boosting analyst efficiency, achieving cost efficiencies as a department, being prepared to handle new and upcoming technologies and always staying one step ahead of the curve.

That magnet has a name, and its name is “Zen”. Subex recently launched ROC Revenue Assurance 5, and along-with RevenuePad (which my colleague Moinak would write about), Zen is one of the fundamental pillars of this ground-breaking solution.

Zen is an automated Root Cause Advisory engine which provides, for the first time ever, machine intelligence for pattern identification and presentment. What makes it revolutionary is that the engine is programmed to sniff out patterns with minimal involvement from the analyst. Give Zen two data sets, and it will tell you exactly why some CDRs in data set 1 are not present in data set 2. This also involves telling the analyst what percentage of the total data set can be linked to any particular pattern. Since pictures speak louder than words, here is a sample illustration:

The future of Root Cause Analysis

 

 

 

Zen is essentially a data analytics engine for ROC Revenue Assurance 5. Based on the discrepant sets identified as the result of an audit, Zen automatically fires up the pattern analytics engine. As Zen works on identifying the patterns, it also works on linking the patterns to specific CDRs (to ensure that an audit trail would be maintained). Finally, Zen presents the analyst with a comprehensive view of:

  • All identified patterns in the discrepant data set
  • Distribution of how many CDRs are linked to which pattern
  • Historic event indicators to further guide the analyst towards the root cause

Zen is keyed towards two “Intelligent” actions:

  • Pattern Analytics
  • Analyst Feedback integration

We refer to Patterns as “Areas” and the learning from past investigations as “Reasons”. Why do we need both, you ask? The answer is fairly simple – the same pattern (or Area) might have presented itself for very different “Reasons”. A simple example of Subscriber profile between HLR and Billing might clarify this point.

An analyst, on performing the HLR vs Billing subscriber reconciliation, finds that 20 subscribers on the HLR are not present on the Billing platform. Now, in the absence of provisioning logs, he/she might surmise that this is a simple case of provisioning error and forward the information to the relevant teams.

However, if the same discrepancy is seen next week for the same set of subscribers, it might be prudent to address the possibility of internal fraud as well. Here we see an example where the same pattern (20 subscribers are missing repeatedly in billing but are provisioned on the network) might be due to two distinct “Reasons” – Provisioning Error or Internal Fraud.

Zen helps you tie it together. Reasons are incorporated into the Zen engine based on “Acknowledgments” received from various teams. This helps to ensure that “False Reasons” are minimized. In this manner, Zen becomes a repository of Analyst intelligence to address the world-over issue of Knowledge Management in RA.

Zen is a virtual analyst who never sleeps, eats or goes on vacations. For sure he will never leave the team (taking his accumulated knowledge with him).

In conclusion, I want all of us to take a moment to step into Janet’s shoes. The pin is in the haystack, and the stack is getting bigger and bigger all the time (due to burgeoning volumes and technology/product complexity). The timelines to find that pin are ever-shrinking, and cost reduction is the call of the hour globally.

How is your team planning on finding that pin?

 

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