Dan Baker of the Technology Research Institute (TRI) and Black Swan has published a comprehensive new report into Telecom Analytics and Big Data Solutions. The report covers 42 different vendors, clarifying the variety of products and services on offer. Dan sidesteps the problems caused when words like ‘analytics’ are overused, breaking the market down into coherent sub-markets, and explaining the differences between each vendor’s offerings. In an excellent interview for B/OSS World, Dan also points out what telcos have in common, not least that:

…”big data” is nothing new in telecom networks; in fact, telecom practically invented big data volumes. But just because telcos own terabytes of data doesn’t mean they know how to manage them well.

The report can be purchased from here.

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WeDo, the Portuguese suppliers of business assurance software, have announced their FY13 revenues were EUR61.5mn (USD83mn), up 12% compared to the previous year. This continued growth consolidates their position as market leaders. EBITDA rose 36% to EUR11.8mn (USD16mn). There was no mention of profits.

The company identified Southern Europe, Middle East and Africa as the regions that contributed most to growth. They also reiterated their strategy of expanding sales to the retail, energy and finance industries, claiming they now have 31 non-telco customers. On Thursday, Chief Marketing Officer Sergio Silvestre separately mentioned that sales to non-telecoms customers now generates about 10% of WeDo’s revenues. WeDo’s continued expansion outside of telecoms comes as no surprise; in January the firm created a new VP role with responsibility for developing their business outside of telecoms.

WeDo’s strong performance suggests their corporate strategy is working and hence needs little change, or further analysis. There are signs that the market is contracting overall, which makes WeDo’s results especially impressive. In his choice of words for the press release, CFO Fernando Videira hinted at some underlying softness in the market (my emphasis):

This level of continued innovation, top line growth, as well as sustainable EBITDA growth, is evidence that WeDo will continue to gain market share and to be the biggest and most robust player in Revenue Assurance and Fraud Management software in the world.

Videira went on to signal the scale of WeDo’s ambition, saying he wanted revenues to reach USD100mn by 2015. It is also worth noting that WeDo’s messages have changed subtly over the years. In the past, they asserted themselves to be leaders in the sphere of revenue assurance, excluding fraud management. Now they clearly prefer to measure their performance against the combined RA and FMS market.

Having attained the position of market leader, WeDo can exploit the advantages this confers, compared to their rivals. As the customer base grows, the same expenditure on maintaining and developing products represents a smaller proportion of the revenues they receive. WeDo also benefits from the viral marketing effect of loyal customers recommending WeDo to their peers, or seeking to purchase relevant WeDo products when they move to a new employer. WeDo’s keenness to tell telco people about their non-telco sales may partly be motivated by the hope that practitioners will continue to advocate business assurance and WeDo, even if they leave telecoms to take jobs in other sectors.

In summary, WeDo’s strategy is established, coherent, and appears to be succeeding. That allows their management team to focus on execution, making high quality sales, and sustainably improving their income.

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A former insider has leaked some good news for fans of professionalism in revenue assurance, and bad news for fans of the Global Revenue Assurance Professional Association. The reliable source told talkRA that dwindling revenues have forced Papa Rob Mattison to cut GRAPA’s costs to the bone. As suspected, the departure of former GRAPA tutor Louis “I LOVE Revenue Assurance” Khor was a sign of GRAPA’s financial difficulties. Former GRAPA customers have contracted a bad case of ‘once bitten, twice shy’, leaving Papa Rob unable to secure repeat business. In turn, Khor had to leave because he was only paid on a piecemeal basis for the classes he taught. GRAPA’s Marketing Director (the woman responsible for all their email spam) has also left, and even members of Papa Rob’s family have decided to get real jobs elsewhere.

However, we should not rejoice too soon. Papa Rob and his wife Brigitte are like a pair of zombies. When one career/scam comes to its unnatural end, they revive themselves by proclaiming Rob to be a world-renowned expert at something else. Let us not forget that this couple have also described Papa Rob as: an internationally recognized expert in databases, data warehousing, objective technology and data mining; a sought-after speaker at database conferences around the world; a leading international authority on knowledge management; and a best selling author. This makes me wonder how many copies need to be sold, before Rob and Brigitte consider a book to be a ‘best seller’. Neither I nor my talkRA colleagues are best selling authors. But on Amazon, our revenue assurance book has consistently outsold Mattison’s RA manual.

Some recent GRAPA graduates

Papa Rob’s brain was too small for a satisfying meal, said these GRAPA pupils

It must be admitted that there are still some signs of continued life at GRAPA. An advert for a replacement member of staff was recently advertised on Craigslist, paying USD10 per hour. However, those of us with long memories will recall that similar GRAPA jobs used to pay USD12 per hour.

GRAPA is not dead, but it should be buried. This so-called association, a marketing front for Mattison’s pre-existing consulting and training business, has done irreparable harm to real revenue assurance professionals. Papa Rob spread the irresponsible lie that anyone, with only a bare minimum of training, should expect extravagant pay raises and promotions in return for performing basic revenue assurance reconciliations. In truth, by setting absurdly low standards for qualification, and allowing inexperienced chancers to describe themselves as masters of the topic, they have encouraged an oversupply of under-qualified candidates, chasing an inadequate number of low-paid jobs.

There is one lesson we should learn from Rob Mattison and GRAPA. Papa Rob made some quick cash for himself, but he did not build anything which generated sustainable value in the long run. He has never done the hard work to educate himself, which is why he believes he can be a world-class expert on everything. In turn, he never expected hard work from his students. At GRAPA, he created a few low-grade, short-lived jobs for people without any relevant qualifications or experience, but these jobs did nothing to enhance the CVs or future prospects of the people who filled them. Instead of making revenue assurance a vital activity which rewards its elite practitioners, he turned it into a zombie profession, shambling from one meal to the next, with no sense of direction or purpose.

The obituary for GRAPA is long overdue. Real professionals need to tell their GRAPA-qualified peers that they have embarrassed themselves. We need to kill their zombie careers. When we do that, we give life back to the people who occupied those zombie careers, by giving them the chance to enjoy real professional growth instead. Not everybody’s career will survive. But those that do, will prosper.

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The Electronic Privacy Information Center has complained to the US Federal Trade Commission about Facebook’s proposed purchase of Whatsapp. Their concern is that the 450mn Whatsapp users have not agreed to, and would not choose to agree to, Facebook’s exploitation their personal data.

The FTC’s response will give an important indication of the value of personal data obtained via a corporate takeover. Facebook has already said they would run Whatsapp as a separate business. However, given that Facebook monetizes data by using it to target advertising, there is no doubt that the data possessed by Whatsapp would be valuable to them. The acquisition begs further questions too. If the purchase goes ahead with legal constraints over how Facebook can use Whatsapp’s personal data, government authorities still have a very poor track record when it comes to detecting violations, and hence enforcing the rules they advocate. In Europe, the push towards forcing businesses to recruit Data Protection Officers indicates the authorities are incapable of enforcing laws if businesses do not police themselves.

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Take a deep breath, as what I am about to write might shock you. Some software developers who talk about risk management are lying to you. Or at least, they do not tell you the whole truth, by refusing to comment on the things they cannot do, or do not understand. New proof comes from a software developer that knows a lot about about risk management. Palisade has been making risk management software since 1984. Headquartered in New York, and with offices in Tokyo, Sydney, London and Rio de Janeiro, they sell cost-effective risk management software to all sorts of customers – because many big businesses have more sophisticated risk management than that found in telcos. Palisade’s tools are based on Monte Carlo simulation, and they have just released a new case study about Enterprise Risk Management in MegaFon, the Russian telco.

Monte Carlo? Some readers will not know what Monte Carlo simulation is, including readers who have some risk management responsibilities in their job description. That was why I slipped the phrase into the text. I want to provoke people into thinking about all the risk management tools and techniques they currently know nothing about. Revenue assurance should teach people that our failings stem from the limitations of our knowledge. And yet, whilst we recognize this truth, telecoms risk management suffers from an insular viewpoint. Some narrow people claim to have broad expertise on every subject, including the whole of risk management. In truth they know only a telecoms-specific view of the world, and can only thrive because telcos are so far behind other industries when it comes to implementing risk management. They are like false prophets, giving instruction to a small band of people who live on a remote island. Whilst they claim to have knowledge of the universe and its mysteries, they have no knowledge of the world beyond their island. The quickest evolutionary path is for telcos to learn how other sectors manage risk. Or in this case, we can also learn from MegaFon’s example.

Put simply, Monte Carlo techniques reveal the likelihood of different outcomes by setting up a game, and then rolling the dice repeatedly, to see which outcomes win most often, and which lose most often. In this context, the game is a mathematical model of an organization or a project, and the role of the dice is played by a random number generator. If we estimate probabilities for a variety of factors that will influence the results of an organization or project, we can then use random numbers to run multiple simulations of how the causal factors interact, in order to map the distribution of overall results. As such, we can quantify the range of risk in any decision, and hence alter decisions according to our appetite for risk.

A poker player cannot determine which cards he is dealt, but a good poker player wins more often than a bad poker player, because he makes better decisions. In the same way, we cannot control all the factors that influence our business, but we can make better decisions if we methodically measure the influence of factors outside of our control. The MegaFon case study helps to explain how to do that in practice.

Here are some key extracts from the case study, explaining how MegaFon uses Monte Carlo techniques to manage risk in their budgeting process:

Each branch [of MegaFon] states the risks it faces, such as competition, changes in legislation that will require it to operate differently, price increases and changes to staffing costs. They also calculate how much each budget will be over or under the forecast.

The risk management team at MegaFon’s headquarters amalgamates the information from each of its offices and simulates possible scenarios… allowing the five critical factors most likely to significantly affect the company’s gross revenue to be identified and therefore mitigated.

In addition… minimum, best case and median budget figures and the probability of their occurrence… are compared to the budget plans to determine whether the forecast is too aggressive or not ambitious enough.

As well as budgeting for business as usual, MegaFon uses their Palisade Monte Carlo tools to help them make better decisions for capital investment:

In 2012, MegaFon took the decision to invest in a large construction project with the aim of minimising its operating costs and improving network quality and control over technical operations.

Two potential locations were shortlisted and the management team used Palisade’s software to make an informed decision on the optimal one. It first used Palisade’s TopRank to perform sensitivity analysis to identify the factors in each location that would have the most influence over the total cost of the project.

From here, the team used @RISK to forecast how these critical factors might change. This allowed MegaFon to understand the most likely Net Present Values (NPVs) for each possible location and identify the risks for building or not building (i.e. opportunity cost) each data centre.

@RISK allowed MegaFon to use graphs to show easily how NPV and cash flows could change over time, and the probabilities of those changes occurring, rather than the static number that they would have had to rely on without the risk analysis tool.

This is a beautiful example of how to manage risk in a telco. Hence, it is tragic that so few telcos use techniques like these. The tragedy is even greater because some telcos listen to software firms that push ‘risk models’ that do not deserve the name. In the meantime, MegaFon is using tried and tested techniques which have already been automated, making them accessible to risk managers who do not have the time to build a Monte Carlo model from scratch.

Dmitry Shevchenko, Head of Risk Management at MegaFon, is quoted:

“Palisade’s decision support software is a well-balanced and flexible instrument that can be applied to a wide variety of situations, making it ideally suited to managing risk across the enterprise.”

Compare that to the misnamed ‘risk models’ found elsewhere, and we see why they are not genuine models of risk. There are many kinds of risk across the telco, and the models will be different for each telco. Some of the so-called ‘risk models’ being pushed at telcos only model one or two specific kinds of risk, and the models are inflexible, implying all telcos have a similar risk profile. Why would any risk manager use software to model only one kind of risk, in a way that forces him to use the same generic model as every other telco, when there is software that allows him to model every kind of risk, and to build a model that is specific to his company? I assume there is only one answer to my rhetorical question: the risk manager did not know there were other, better, tools that he could have used.

Mike Willett recently interviewed me for the talkRA podcast, and I fear I may have offended some people when he asked my thoughts about revenue assurance managers seeking to become risk managers. I was blunt. I said the problem was a lack of training, and the danger was that under-trained people may take on responsibilities without having an appreciation of the gaps in their skillset, and how that will alter their perception of risk. Already, I know that under-trained and under-skilled individuals are being given risk management jobs in telcos. This is not a good thing for their business, nor for the individual. Whilst it may feel like a promotion, the undertrained risk manager must push back, and ensure they have the skills needed for the job, or their failures will have serious implications for their business, their colleagues, and themselves. They need to find trustworthy advisors, and not just listen to the comforting, convenient nonsense spewed by the false prophets. When speaking to Mike, I drew upon an analogy coined by Abraham Maslow:

If you only have a hammer, you tend to see every problem as a nail.

There is no doubt that RA practitioners have some very useful skills that can be applied to manage risks more generally. They possess some powerful tools. But they do not have as wide a range of tools as they need in their toolbox, if they are genuinely going to manage the range of risks implied by a job title like ‘risk manager’. It is no good to turn around later, and make the excuse: “it’s my job to manage this risk, but not that risk”. Was it clear from the job title which risks were being managed? Was it clear from the job description, and the list of responsibilities? And where the risk manager decides they are not responsible for a certain kind of risk, who is responsible for identifying situations where the company faces a risk, but nobody is managing it? These are big questions. And once again, the telco world is being misled by people who, lacking any answer to the big questions, refuse to acknowledge them. They offer answers, but only to those questions where they already have an answer.

Techniques like Monte Carlo simulation should be in the toolbox of every risk manager, so they can be used when they are the best tool for the job. I hope this brief and excellent case study from MegaFon and Palisade helps to open some eyes to the limitations of the tools being used by some telco risk managers. There is a general rule for risk, which states we cannot manage a risk until we have identified it. Let us be honest with ourselves, and admit to the gaps in our knowledge, skills, and tools. When we do that, we create the possibility of improving our performance, and closing those gaps.

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