Today’s guest post is by Ahmad Nadeem Syed, Director of Revenue Assurance and Fraud Management at Mobilink. When long-standing talkRA contributor David Leshem argued why people are more valuable than tools, he prompted a flurry of replies, both agreeing and disagreeing with David’s opinions. Ahmad was amongst the respondents, leaving a thoughtful comment that said neither is more valuable than the other, because value is generated when tools complement people. He finished his comment by asking that the next talkRA blog on the topic should discuss that theme of the complementary combination of people and tools – so I invited him to write it! Ahmad graciously agreed, and here is his article on why we should focus on the combination of people and tools, rather than dwelling on each element separately.

In the Stone Age, human needs were limited to eating and sleeping. Their food comprised of available wild animal meat, fruits and vegetables. They used stones or wooden arrows for hunting and long sticks for plucking fruit that was out of reach. We can see the apes doing the similar thing even today, while breaking a coconut.

The activity incorporates three things: (1) the goal – the instinct to survive; (2) the people – the Stone Age human; and (3) the tools – stones and wooden arrows. Imagine various situations; there are hungry people with available tools but not knowing (the skill) how to aim and throw the stone or arrow at the prey. In another situation: there are hungry people with skill, but no tools available with lot of food available. In both the situations the ultimate goal of survival is not met if the variables become constant.

With the passage of time, the goals kept moving and growing from survival to comfort to luxuries, both vertically and horizontally. This necessitated having more and better tools coupled with people having advanced skills who are able to use these tools for the purpose of achieving the desired goals.

Come to today’s modern age; if it can be called modern in the eyes of the generation coming after say 50 years, in the wake of rapidly changing human needs and the technology. Humans have always been more and more dependent upon technology with the passage of every moment, may it be personal, social or business life. The mobile phone, for example, has become an essential part of our lives. Some are using the latest smart phones, and some are still content with only voice and SMS. Both classes have developed the skills to use these tools to meet their varying needs. Can anybody today imagine toady’s life without mobile phones, and in reverse, lot of mobile phones but no people?

The computers are integral part of any business, but then we need people with varying skills to develop the applications and run the computers. Can anybody imagine any business today with lots of people but no computers or vice versa? Some may argue some small businesses still rely on pen and paper, but then these are also tools.

PNTdiagramI call this the PNT (People-Need-Tool) phenomena. People are meant to live, and so they have needs, and tools allow them to meet their needs. Once the first set of needs is met, another set of needs become a necessity and therefore another set of tools is required.

Let me mention a busted myth here. It was commonly said that automation will cause widespread unemployment as computers will replace the human. But the reality is different. As the business and social needs increased, the way of managing these sectors changed, generating and using high volumes of data. Handling of these data volumes require better, high performance and sometimes specially designed computers/tools. The operation of these tools needed skilled people, therefore the automation instead of creating unemployment, paved the way for IT education and thus generating new opportunities.

Let us take the examples of telecommunication. I work for a GSM operator, where network elements are producing over a billion CDRs on a daily basis. These CDRs are processed by mediation, IN and billing systems. As the head of the Revenue Assurance and Fraud Management team, where I have a highly skilled team of analysts and IT professionals, I use very high performance RA and FM systems to ensure that no revenue leakage occurs. I will be completely stuck, the day either my key people are absent, or any of my key systems goes offline.

I therefore believe in people and tools being a complementary combination, without any preference.

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People keep asking me about Subex, the Indian business assurance vendor, like I should know all about its inner workings. Or rather, they ask like I should know about its inner workings and know if there is any truth to this-or-that rumour which floats around those internet chatrooms for people who talk a lot about share prices. I find this odd. Firstly, I do not work for Subex. Although I try to keep an eye on their business, if they intend to keep a secret hidden in their headquarters in Bangalore, I am unlikely to discover the secret from my vantage point in the UK. Secondly, internet gossip about share prices is about as reliable a source of information as that ubiquitous internet spam which begins by saying: ‘here’s one weird tip to…’ and ends by saying something like ‘…remove all wrinkles from a 90 year old face’ or ‘cut your tax bills in half’ or ‘purchase an iPad for less than $10′. If you take internet chat seriously, then you must be in the wrong line of work. Unless you are following my internet chat, in which case you are a very wise person indeed and you are bound to have a successful career. That is because I only tell you good stuff. And that is because, when I want to find out stuff, I ask people who might know the answers. So I asked Subex CEO Surjeet Singh what he thought about his company’s last set of results, and his objectives for the business over the next few years. Here are some excerpts from our conversation…

Eric: Surjeet, you may remember that I already reviewed Subex’s financial results for last year, so I don’t want to discuss numbers, but I’d really like to know which element of last year’s results pleased you most, and where you feel there is greatest room for improvement.

Surjeet: What made me happy was the 24/25% EBITDA margin we attained. It was vital that we steadied the ship and, as part of the turnaround, rapidly moved to a situation where we demonstrated that Subex is a profitable business. So the EBITDA margin pleased me. Where we need to improve is when we compete for business in Europe. We feel we’re dominant in Asia and the Middle East; during the last 14 months we had seven transactions in that part of the world which were in the three-to-five million dollar range. But in Europe we didn’t win as much as expected.

Eric: what’s holding you back in Europe?

Surjeet: Historically Subex has been weaker in Europe. Subex hadn’t developed the same touchpoints with prospective customers in that region. Also, Subex’s poor results in the past, and rumours about our financial status have had a negative impact in Europe which we haven’t experienced elsewhere. Management has focused on making better in-roads into Europe, and I’ve asked Vinod [Kumar, Subex COO] to be hands-on with this. I think we’ve improved a lot in the interim.

Eric: I get the impression that Subex is feeling more optimistic about growth than it has for a while.

Surjeet: We’re running the business with the future in mind, ensuring we’re financially sound and planning to generate a good return for investors. And we’ve had some good news relating to that: Subex received an investment grade credit rating from Fitch. With the future in mind, we’re putting together an advisory board of industry professionals – including ex-CEOs who know telcos and people like that. They will guide us in terms of development and delivery. And we’re managing money internally like we’re managing an investment portfolio, with three-year targets for each element of the portfolio. That way, we use our money wisely, concentrating on the areas where we pursue growth, and not spreading ourselves too thin, trying to do too many different things.

Eric: Which elements of the portfolio are you investing most heavily in?

Surjeet: We have invested heavily in asset assurance, the management of network capex and opex. You already know how important asset assurance is to us; we’ve invested in making it a success. Analytics is also important to our new portfolio. As for vertical expansion, we’re working on a test bed that will see us develop our products for use in utilities. We preferred to concentrate on utilities rather than financial services companies because we feel it will be easiest to convert our tools for use in utilities.

Eric: The possible downside is that utilities are not known as fast-changing businesses.

Surjeet: No, but they have the cash, and we expect there will be plenty of change in utilities during the coming years. They will want to make use of the data they collect.

Eric: You alluded to targets over a timeframe of the next few years. Can you be more specific?

Surjeet: I want Subex to be earning $100mn revenue annually, with a 25% EBITDA margin, within three years from now.

Eric: Can I quote you on that?

Surjeet: Please do.

Eric: We often talk about managed services as being important to how you’ve changed the revenue profile of your business. Long-term managed service contracts makes your revenues more predictable, and less volatile. Subex has increased the share of revenues from managed services to an extent that rivals have not been able to match. Can you comment on why that is?

Surjeet: Customers want bundling, and they want it to be quick and efficient. Subex reset its own revenue cycle to ensure we can quickly and efficiently bundle products and services, in order to please customers. It’s a very important competitive advantage for us.

Eric: To be clear, I sometimes talk about outsourcing as being one end of the spectrum that is labelled ‘managed services’, but when you talk about Subex supplying managed services, you’re not really talking about outsourcing of revenue assurance and fraud management. However, I admit that I previously predicted there would be more outsourcing by this point in time, and I assumed that Subex would take the lead because it would give your business the deepest ties with your customers, and hence the greatest predictability for your revenues. Am I right in thinking you’re not already an outsourced supplier of revenue assurance and fraud management – in the sense of employing the people who do assurance on behalf of the telco? In other words, you’re bundling hardware with software, but the telco still employs the people who do revenue assurance and fraud management for their business. Is that right? Might that change in future?

Surjeet: You’re right. We don’t currently provide a fully outsourced service for revenue assurance or fraud management. When I talk about bundling, I’m talking about bundling hardware and hosting with the software. However, I think we are on an evolutionary path with our customers. When you’ve provided a bundle of software, hardware and hosting for several years, and you provide that bundle smoothly and efficiently, the customer becomes more open to the option of full outsourcing. Full outsourcing is something I could envisage happening at the level of a telecoms group, and I foresee it will be viable to make such an outsourcing deal in the next year or 18 months. Previously groups have tended to have a variety of fraud management and revenue assurance suppliers across their entities, but we’re reaching a stage where Subex is the supplier to every subsidiary of a group. That makes it far more viable to do outsourcing at group level.

Eric: So you’re suggesting that the trend towards shared service centres in telecoms groups is also a potential enabler for outsourcing? If a group runs a shared service centre for revenue assurance or fraud management, where it’s pooling work done on behalf of all the operating companies, then that lends itself to the possibility of simply outsourcing the work of the shared service centre?

Surjeet: That’s right. We don’t see the trend towards shared service centres as a threat to Subex’s business model, because it also increases the opportunity to outsource. If a group can decide to implement a shared service centre for its revenue assurance and fraud management, it creates a real possibility that they might do a 10-year deal to outsource that function, allowing Subex to take care of every aspect of the function, from the software that is used, to the payroll for the staff who work in that team.

Eric: A 10-year outsourcing deal? So you’re really thinking long-term about Subex’s future revenues.

Surjeet: We’re really thinking that far ahead.

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The UK Revenue Assurance Group is meeting tomorrow, and there is a full agenda for those attending, including talks and workshops on:

  • how one international telco implemented its own in-house Decision Support System for RAFM;
  • the adaptation of assurance techniques to optimize network capex;
  • how to involve the RA team with new projects;
  • a case study on how Enterprise Risk Management contributes to assurance in one major British telco; and
  • a comparison of how to manage revenue risks in telecoms, financial services and retail.

And if that was not enough, the group will be celebrating 10 years of its regular triannual meeting! With cake!

The UK RAG gets is name because it holds its meetings in London, though anyone with a relevant professional interest is welcome to attend. International members of RAG may not be able to fly into London to help us blow out the candles on the birthday cake, but they can still take advantage of the exclusive content in the member’s only section of the RAG website. The latest addition is the audio recording of a presentation on how Tesco Mobile, an MVNO, manages its revenue assurance.

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The relationship between people and machines has been a recurring theme on talkRA. I discuss the tension between people and machines a lot. But I think the tension is not really between people and machines. The tension is between people who treat other people like human beings, and people who treat other people like machines. People are varied, difficult, unpredictable, individual, and demanding. It would be convenient for a business to have 500 employees who all behave the same way, and 5 million customers who all behave the same way. But people are not like that. Whether we talk about software, controls, or processes, there is a danger that somebody with little empathy for real people, and divorced from the consequences of their decisions, will make terrible choices that then become hard coded into the ‘rules’ of the business. These decisions may look good from the cold, abstract perspective of a spreadsheet, but can be terrible for the human beings affected by them. The end result is the kind of customer experience shared below.

American technology journalist Ryan Block called Comcast to cancel his internet service. After ten minutes of arguing with Comcast’s ‘retention specialist’, he decided to record the remainder of the call, capturing the final eight minutes. Afterwards, he shared the recording on SoundCloud, where it took just two days to reach 4 million people. Why did 4 million people take an interest in Block speaking to Comcast about cancelling his service? Because Comcast’s representative repeatedly demanded an explanation for why Block wanted to cancel his service – in the obvious hope that Block would simply give up and remain a customer. Listen for yourself…

I wanted to talk about this incident because these examples must be balanced against any data-centric analysis of how to boost revenues, reduce churn, and so on. This recording is also data. Unfortunately, it is the kind of data that is hard to compress into numbers and spreadsheets. But it is still vitally important data if we want to understand how well the business is performing. And this data says: “avoid Comcast as your service provider, because they treat customers badly.”

The recording also says that Comcast treats its staff like machines. Whilst the customer thinks they are talking to a human being, who has some discretion over how they behave, the customer might as well be speaking to an IVR. Comcast’s representative behaves like a slave to the rigid rules he is expected to follow. That means the employee is required to ‘save’ the customer by any means possible, even if the customer is absolutely determined to leave.

A statement issued by Comcast puts the blame solely on their representative, saying:

The way in which our representative communicated with them is unacceptable and not consistent with how we train our customer service representatives.

However, others have questioned Comcast’s corporate attitude. When Comcast tweeted to say they would take ‘quick action’, Block tweeted back:

I hope the quick action you take is a thorough evaluation of your culture and policies, and not the termination of the rep.

And somebody claiming to be a former employee of Comcast used Reddit to share a much more comprehensive analysis of why Comcast’s representatives would behave like this:

If I was reviewing this guys calls I’d agree that this is an example of going a little too hard at it, but here’s the deal (and this is not saying they’re doing the right thing, this is just how it works). First of all these guys have a low hourly rate. In the states I’ve worked in they start at about 10.50-12$/hr. The actual money that they make comes from their metrics for the month which depends on the department they’re in. In sales this is obvious, the more sales you make the better you do.

In retention, the more products you save per customer the better you do, and the more products you disconect the worst you do (if a customer with a triple play disconnects, you get hit as losing every one of those lines of business, not just losing one customer.) These guys fight tooth and nail to keep every customer because if they don’t meet their numbers they don’t get paid.

Comcast uses “gates” for their incentive pays, which means that if you fall below a certain threshold (which tend to be stretch goals in the first place) then instead of getting a reduced amount, you get 0$. Let’s say that if you retain 85% of your customers or more (this means 85% of the lines of businesses that customers have when they talk to you, they still have after they talk to you), you get 100% of your payout – which might be 5-10$ per line of business. At 80% you might only get 75% of your payout, and at 75% you get nothing.

The CAEs (customer service reps) watch these numbers daily, and will fight tooth and nail to stay above the “I get nothing” number. This guy went too far, you’re not supposed to flat out argue with them. But comcast literally provides an incentive for this kind of behavior. It’s the same reason peoples bills are always fucked up, people stuffing them with things they don’t need or in some cases don’t even agree to.

I find this account of Comcast’s rules to be credible. Comcast may have a rule saying their reps should not argue with customers. However, nobody is this overzealous unless they are motivated to be like this. In other words, something in Comcast’s rules, procedures and incentives is motivating this human being to be so dogged at retaining customers. Without a financial incentive, it would be normal for the rep to just do as Block asked, cancelling the service and ending the call as quickly as possible. Arguing for nearly 20 minutes shows that the rep has something personally at stake. In this case, the rep has too much at stake.

Whilst Comcast’s motivational techniques might deliver good results on their spreadsheet – there is no doubt this kind of high-energy ‘retention’ strategy will influence some customers – there are also downside consequences for real people which may not be shown by the data that management looks at. No matter how much data we think we have, when it comes it comes to marketing analysis, customer service, satisfaction and loyalty, we need to remember how difficult it is to reduce people’s attitudes and behaviour to numbers which computers can calculate. Decision-makers who ignore human consequences do not deserve respect, whether they intend to disconnect a batch of old services, and wait to see if any customers complain that they have been affected, or whether they give a salesman a big bonus for results, then plead ignorance of the salesman’s unethical tactics.

Data can be clean and straightforward, making it pleasant to work with. Much of business assurance is rightly oriented around data. Manipulating and managing data contrasts with the messy business of how people think and act, which is difficult to record, measure and describe using rules and formulae. But telcos exist to serve people, and business assurance professionals should always keep that in mind.

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Imagine this advertising campaign…

Good news for all PhoneyTel customers!!!!

Previously your bills were only 70% accurate. We’re very sorry about that. We let ourselves down, and we let you down. Presenting mistakes in 3 bills out of every 10 is simply unacceptable.

We listened when you told us we needed to improve. So that’s what we did. We’ve improved. We took a hard look at ourselves, and we’ve changed the way we work. We’ve invested in our people, in our process, and in our technology. Now we can promise you the standard of performance that you expect from us, day in and day out. With thanks from our technology partners, we’ve just completed a project to resolve our accuracy problems. And that’s why we can proudly boast that PhoneyTel bills are now…

(drum roll)

90% accurate!!!!

That’s right. Your bill is only going to be 10% wrong, when previously it was 30% wrong. That’s the quality of service you deserve, and PhoneyTel is glad to give you what we think you deserve.

That would be a ridiculous campaign! Or maybe not. Consider the following excerpt from the website of a leading global supplier of ICT solutions…

Loss of revenue due to billing & charging complexity, inaccurate data input, invalid correction & discount control, ineffective payment collection, and bad debt management remain a major challenge for operators. The primary causes of revenue leakage include network configuration changes, tariff configurations, and poor system integration during the CDR processing cycle…

…Through [our] understanding of the revenue cycle, [we] can help operators reduce the potential impact and risk of revenue leakage through its revenue assurance processes, tools, and expertise…

…[We were] able to improve the billing accuracy for a certain African operator from approximately 70% to 90%, leading to fewer customer complaints.

I may not be a customer of a certain African operator, but excuse me as I still feel entitled to complain about such extraordinarily low expectations. Who, in all seriousness, thinks 90% accuracy is something praiseworthy, even if it is an improvement on what went before? Customers complain more about overcharges than undercharges, so it is hard to know what “70%” accuracy really means in this context. But whilst 90% accuracy sounds better, it still sounds lousy. Nobody should be seeking credit for delivering such inaccurate bills. That would be like a thief expecting you to thank him, because he took your wallet, instead of stealing your car.

Mistakes will always happen, but accuracy is not so hard to deliver that anyone should think a 10% error rate is tolerable. In a way, I am pleased that this supplier has been so transparent. However, I am more upset that they feel no embarrassment at being associated with such a low level of delivery.

Who is the supplier? (Drum roll…) Huawei. They may be fringe providers of RA services, but sloppiness at the fringe hardly suggests a robust core. Huawei employees, including the people who wrote this promotional spiel, should ask themselves a question. How happy would they be, if they learned that their payroll was 90% accurate?

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