In Part 1,  I talked about the potential for an RA ‘clock’, which could reverse time for Benjamin Button and I showed the first glimpse. Now let me discuss why this was needed, and bit more detail about it.

Donning the hat of a Product Manager: The Motivations for RevenuePad

Let me share as a product manager of a  Revenue Assurance application what we did to create value for operators (our customers).

The challenges of telecom operators and therefore in an RA department (our Benjamin) are not unknown: shrinking margins, need for improving top line and focus on reducing costs all across. Effectively it is about doing more with less. When we analyzed the effect on ‘Benjamin’ and team (I mean the RA team), it boiled down to finding more and fixing more and therefore proving efficiency of operations (in terms of cost effectiveness as well). But the more tactical or rather operational problems that prevail are:

1. titanic data volumes to be handled and therefore inability to scale beyond reconciliation and analysis of usage data – switch to mediation, IN, and other network elements and such.
2. complexity of existing and newer networks doubled with efforts of maintaining offline and online RA systems. Offline information is always maintained on macro based spreadsheets and or otherwise PowerPoint presentations or Keynotes.
3. knowledge and information management across the board.

The third point is somewhat severe; because:

• even now a large number of RA operations intend to believe that RA is about processing billions of records per day and finding the ‘needle in the haystack’;
• Rating Assurance is about having a parallel rating and billing systems from an RA tool, hoping the RA system would replicate all possible billing systems on the planet.
• Presence of complex tools that have steep learning curve, and well if there key resources leave- all hell breaks lose to find a replacement.

All this leaves the RA team look “like a chicken with its head cut off”. Apologies for the apparently cruel analogy, but I could not find a better way to explain the frenzy in the RA departments around the globe. Personally, I have seen a large Asian operator with over 100 million subscribers put the efforts of over a 100 personnel in RA department to gather inputs from its geography-wide set up into over “2000” macro-enabled MS Excel sheets to showcase performance in terms of leakage detection and recovery. Staggering numbers- but they are true.

Once I was asked, if I had to explain RA to my 85 year old grandmother or a 4 year old kid, how would I do? The answer is difficult, but Subex has created in the answer in the form of RevenuePad. Effectively the RevenuePad had to be instinctively intuitive for any user. How did we do it?

In part 1, I explained, how we enabled mapping the “entire” business structure into the tool. Once the mapping is done, RevenuePad rolls up the complete data from all the underlying KPIs and cases into a simple to use ‘dashboard’ created with the UI principles of progressive disclosure. This makes every non-domain-related personnel understand and drill into the details as and when required. By doing so, we addressed one of the aspects of knowledge management, because now all the quantitative parameters of loss detected, recovered, still recoverable, and time of recovery, across the operational geography has been mapped into one place. But there is one more aspect: strategic directions and objectives are still on powerpoints and key notes- offline documents that are not constantly visible, gathers dust before being referred to after a period of time. Often, therefore the visibility is lost and at times it is necessary to re-do activities to get back on track.

RevenuePad provides a framework where such strategic visions and directions, can be mapped and maintained within the product. In part 1, I used a screen-view which showed how for the business nodes existing (evaluated) RA Maturity could be tracked. RevenuePad takes the tracking one step further with its framework approach. The vision/direction and evaluated maturity now being available as a part of the application and that the performance of the nodes in terms of quantified values are also showcased at a single place, provides the operators (our customers) with the understanding of:

1. where they are vis-à-vis where they need to be
2. how much of the strategic vision has been implemented operationally, and how much is yet to be implemented
3. how the business in totality and each of the business nodes individually have performed operationally over time, based on which a decision to re-evaluate maturity, coverage, performance improvement programs or such can be initiated. Essentially RevenuePad provides the all encompassing view at one go.

That I was using the story of Benjamin, RevenuePad with such views, data and information all put together in an easy to use format, serves as the anti-dote or clock that can help Benjamin recover from an otherwise dying or frenzied state. But strategic viewing of operational performance is also not enough. What is also important is to ensure that operational performance of analysts is improved. Zen, as Ashwin had mentioned in his post, was a part, but there is a second part of improving productivity for analysts, which I would cover in the next post.

Here is a hint, ‘a picture speaks a thousand words’.Let me explain more about RevenuePad next week

TEOCO, the assurance and analytics business headquartered in Virgina, USA, has announced the acquisition of Schema Ltd, a company specializing in Radio Access Network (RAN) optimization and analytics. The purchase price was not disclosed. You can read the press release here.

Schema is understood to be specialists at collecting data from elements like Base Transceiver Stations and Radio Network Controllers. With operators projecting an increasing challenge to satisfy the data demands of their customers within the finite limits of available radio spectrum, TEOCO is positioning itself to combine RAN data with other information they already analyse for customers. The combination will deliver a more comprehensive view of how to improve network efficiency. In the press release, TEOCO boss Atul Jain emphasized both the data synergies and a continuation of his strategy to expand TEOCO’s geographical reach. He said:

Merging Schema with TEOCO’s Assurance and Analytics solutions provides unmatched potential to optimize both the network and business performance for our customers. Similar to our 2010 acquisition of TTI, Schema expands TEOCO’s product portfolio and customer footprint, and dramatically expands our market presence in Latin America and Asia.

There has been a flurry of news from Subex, the Indian RA giant, since they released version 5 of their ROC software. Within the string of positives and negatives, the themes remain largely unchanged from what we have long known about Subex. On one hand, Subex continues to announce new deals with customers. On the other hand, the overhang from their Foreign Currency Convertible Bonds (FCCBs) continues to plague them. Subex has successfully renegotiated their finances before, so there is reason for optimism. However, the context for analysing Subex’s performance has been altered by adverse news about some of their rivals. Recent months have seen the leaking of bad news about two Indian vendors, first Teleonto, then Connectiva. Whilst Subex is much larger and more mature, the saying ‘misery loves company’ might explain some of the rumours currently circulating the industry. Subex has taken on former Connectiva employees, but there are signs of a negative and twitchy mood spreading amongst industry insiders. In such an environment, loose talk about cashflow problems or potential takeovers can spread like wildfire, and Subex’s FCCB difficulties will inevitably fan the flames. But rumours are rumours and should not be repeated as fact. Here, then, is a brief summary of the recent Subex news.

Positives

Subex has made three sales announcements within the space of two weeks:

• An unnamed African group has acquired Subex’s fraud management solution;
• Avea, the Turkish mobile CSP, has bought Subex’s RA solution; and
• Both the RA and fraud solutions have been purchased by an unnamed Middle Eastern operator.

The exact value of the deals is unknown, but two of them are described as being ‘multi-million’. These press releases follow a familiar pattern from Subex, which has kept on announcing new contracts even whilst there has been a decline in similar announcements from some of its rivals.

Negatives

The maturity of Subex’s existing FCCB’s were extended to July 9th; see here. Subex has faced strong headwinds from currency and stock markets, creating a double-whammy of a share price too low to justify the conversion of FCCBs into equity, and inadequate cash to redeem the FCCBs on their due date. Despite the sale of the former Syndesis division, and signs of resilient operating profits, Subex has needed extra time to negotiate a restructuring. Following the precedent negotiated in a 2009 debt-equity swap, the deal will likely see bondholders accept new shares in exchange for seeing their bonds sliced in value and their repayment postponed for another 3 to 5 years.

The Long View

Markets go up and down, and deals come and go. Now might be a good time to remember some wise words from the ‘sage of Omaha’, Warren Buffett:

Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

talkRA has always tried to look beyond the fads of fear and greed that have beset the revenue assurance industry. We have challenged the more extravagant estimates of the growth and value of the RA sector, including those that originated with Subex. talkRA first highlighted Subex’s FCCB risks all the way back in 2008. Now it feels like public over-optimism in the RA market is giving way to an excess of private pessimism. If Subex keeps making sales like it seems to be, and keeps on generating cash, as it seems to be, then the business is fundamentally sound and investors will continue to back it. What is happening is the substitution of a more long-term and realistic outlook in place of the rapid-return, high-risk style of investment which fuelled the rise of RA vendors. In the case of Subex, this will occur somewhat in public, as bondholders will give up on nominal but unrealizable promises in order to recoup more in the long run, and as the original equity holders see their share diluted. Other companies will and should go through a similar process to align expectations to what the market can actually deliver – though the realignment may not be so apparent. Realism is a good thing, even when it means lowering expectations. From the data available, Subex is a solid business which looks likely to generate worthwhile profits in future. Now is not the time for panic, and I anticipate that Subex’s bondholders will share that view.

But what about takeovers? Might Subex be the target for another firm? I doubt it, though it as always a possibility. After all, takeovers occur when the seller’s price matches the buyer’s offer, and nobody can rule out an unexpected or irrational offer. However, there are several factors that count against Subex becoming a target. For a start, Subex is too big to be easily digested by any of its peers. Buying Subex’s shares would also miss the point – the bondholders have effective control over Subex’s fate, at least for the immediate future. A much larger firm might see opportunities to enter into this specialized market, but the difficulties currently experienced by other RA vendors would likely discourage activity until the competitive landscape is clearer. Also, RA products continue to be too much of a niche play to yield obvious synergies for other software firms or for more network-oriented suppliers. There are likely to be easier and cheaper ways for a newbie firm to dabble in RA, or for a current player to grow market share. So I expect the next few years for Subex will look much like the last few: they will keep on grinding out ways to enhance profits, whilst remaining a big fish within RA’s small pond.

Benjamin was afflicted by a weird ailment that he was born old with a lot of old-age sufferings and gradually over time, became young, handsome, bright and vibrant before finally meeting his end by “vanishing”. For anyone who wants to have a quick overview of the story from the ‘Jazz’ era by F. Scott Fitzgerald, here is the link.

Revenue assurance somewhat followed and follows a similar path. Initially it was done the old-age method of billing assurance with lots of manual labor (much like an old man afflicted with ailments) and currently it has come of age as a vibrant community of practitioners (just as Benjamin over the years had grown younger), although the wise men who perform the art of crystal ball gazing to predict markets and growths, somewhat are of the opinion that it is actually a dying market (Benjamin, instead of being an adult, is going to become a child and then an infant and gradually wither away). Essentially, what I mean is, if the predictions are assumed correct, it seems Revenue Assurance is aging backwards. This is why I find the story of Benjamin completely similar to Revenue Assurance, while I am personally of the opinion that RA has got more to do in the coming years of telecom.

Over the years, and in multiple forums, especially in talkRA, we have discussed the challenges RA has to face on a day in day out basis. Industry forums of repute like TM Forum have spent a considerable amount of effort in helping define the scope of work for the benefit of the operators. But then the effort, in real life implementations (and by that I mean the operational procedures and practices for RA in real life telecom operators) may not always have seen the true light of the day as it should have. So what does Benjamin need? Rather what is that remedy for Benjamin which can stop the reverse aging and restore the process of natural growth. In effect, what does RA need to bridge the gap between all the standards and their strategic implications and importance that have been discussed and published for aiding operators, and the operational translation for converting the strategic lookout into operational effectiveness. What is that “something” that could span horizontally and vertically improving operations at the lowest level, and summing the effects to create a strategic viewpoint that would then allow overall improvement.

For Benjamin, it is a clock that can reverse time, and for RA, it is a system that can provide a systematic translation for improving strategic visibility into operational procedures. Being a product manager of an RA tool, I am going to share with you a series of articles about how we created a ‘clock’ for RA.

The first thing need was to improve strategic visibility into operational procedures. Some of curious questions that have often bother senior executives in telecom :

1. How much am I losing?
2. How much am I recovering?
3. Do I have visibility into “everything”? what am I ‘missing’
4. How quickly RA is scaling to cover areas being missed now?

RevenuePad answers these in the following ways :

1. For understanding how much one is losing RevenuePad puts a quantification methods for all the operational KPIs; which means, if a threshold is violated, a loss quantifier formula (howsoever complex it may be) is used to calculate the leakage.
2. Once a loss has been detected through a KPI threshold violation, a trouble ticket is raised within the system in the form of case management. Closure of the case follows by ensuring the recovery is accounted for). RevenuePad rolls up the recovery up to the strategic viewpoint.
3. Providing visibility: RevenuePad uses the TM Forum assurance areas like a lot of other tools, but what its also adds is the capability to map the organization structure in the form of a “tree”/hierarchy. For example, if the operations, are geographically spread across multiple lines of business and service lines, (which is the case for telcos), the same structure would be mapped into the system in the form of a tree, along with allowable tolerance limits of leakage (if at all) per node.But this is just the beginning of capabilities. I will elaborate on this later, because for the first time, there is an aspect of enterprise wide RA Maturity that has been addressed, which would need time to address and therefore the separate post
4. The fourth question was “How quickly RA is scaling to cover areas being missed now?”: To address this, RevenuePad first tracks how quickly cases have been closed which essentially means, how quickly revenue recovery was done. The quicker a node stabilizes w.r.t the parameters of : leakage detection, recovery, and final losses, the stable the business mode becomes w.r.t the configured KPIs. Essentially by tracking the performance of the nodes along these lines, RevenuePad showcases

• if the node is stable,
• if the node is stable, is it covering all the aspects of the areas that it needs to cover, if NOT
• it is time to add more controls and coverage, because the remaining controls have been stabilized.

So, essentially, RevenuePad allows gauging if a node is “quantitatively mature”.

Read next week’s post to find out more.

Recent events in the revenue assurance world have highlighted some of the downside risks of relying on proprietary software. One of those risks is that a vendor with opaque finances might unexpectedly go bust, leaving telcos with unsupported software and no visibility of the source code. As such, the soft launch of a new open source RA project has come at the perfect time to generate a lot of interest. The launch is ‘soft’ in the sense that it was not intended to be broadly publicized, but the rumours have already spread rapidly, confirming the widespread desire for open source RA code. Spearheaded by Ahmad Fairuz Ali – better known on the internet as ‘dakmatt’ – the project has already released a Python-encoded reconciliation which can be downloaded from the project home at Sourceforge.

Dakmatt is keen to emphasize that the code is still at the ‘pre-alpha’ stage. More work needs to be done and at this crucial time he is looking to build momentum by recruiting more coders to his project. If you want to help, then start by finding out more at Sourceforge or through dakmatt’s blog.

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?