Carriers across the region have finally
started to get serious about revenue assurance and are now taking a
close look at their processes to uncover often gaping holes in their
Arising from the ashes of
the telecommunication's crash following the 1990's boom years, revenue
assurance is gaining momentum as more and more carriers are making
revenue assurance a top priority and taking a closer look at how it can
be used to boost profits.
"Markets have become
saturated. New subscriber growth is almost gone, and they have no new
revenue streams," says Peter Bagge, principal consultant for HP's
Asia-Pacific network and service providers group. "So they have to look
at their processes and their revenue flow, and they need the ability to
control revenue leakage."
He notes that maximizing
revenue by controlling leakage and minimizing fraud will be the next
wave of revenue growth for many operators.
Solutions' director for Asia Pacific Vincent Barry claims that carriers
have been hiding the issue for years but now are starting to realize
that revenue leakage is a serious problem.
recognize that every operator has the same problem. It is now a case of
measuring the size of the problem, then working out a business case and
finding out what the cost of reorganization is and what's the
solution," he explains. How big is the hole? Currently
there are no precise figures of how much revenue has been slipping out
of carriers' pocket. But research by IDC, Giga and Deloitte &
Touch? estimate the extent of the leakage ranges from 3% to 15% of
gross revenues each year, depending on factors such as service type,
geography, carrier type and revenue assurance maturity level. The total
industry-wide annual loss is estimated at up to $140 billion.
of revenue leakage can cover a multitude of factors such as technical
and process issues as well as human error. Other areas
include stolen revenue due to fraud or bad debt, and missed revenue
stemming from improper marketing or problems with product launches.
integrity, credit management and churn prevention are some of the major
revenue assurance issues that telcos have to address to get the problem
under control, says Chor Khee Yang, vice president of audit at SingTel.
chief executive for Asia Kevin Duffey claims that 50% of mobile
operators in Asia are losing 5% of revenue from prepaid customers
because the platform used to control the sending of SMS and MMS
continue to run even after the customer's credit runs out.
often overlooked issue is frequency of meditation, says HP's Bagge.
"There's no real process for handling mediation errors on a daily
basis. Operators may not look at their records until at least the end
of the week," he says. "They have to do something to resolve the
errors, but if they can't be resolved, they just get deleted or
ignored. That's revenue out the window."
area, according to Vinod Kumar, senior product manager at Subex
Systems, is switches not generating call detail records or generating
ones with incorrect/incomplete data such as random timestamps,
incorrect subscriber invoices due to rating issues or operational
Kumar says a wide variety of strategies and
solutions is being used to address these problems. These include using
automated revenue assurance tools to verify invoice and rating
accuracy, identifying billable activity missing from the bill and
ensuring that all orders are being serviced and billed for. Catching
management's attention A survey commissioned by
Azure shows that the core causes of revenue loss continue to be those
related to process, integration, and introduction of new communications
products and tariffs. But the findings also indicate that fraud is
increasingly importance for many in the industry.
report, which surveyed 100 telcos around the world, found that revenue
assurance continues to move up the corporate agenda, and more operators
are taking a coordinated team approach to the problem. Kumar says
revenue assurance has caught the attention of carriers' top management
worldwide. "A critical requirement of a successful RA program -
executive sponsorship - is happening now, and we expect this to
significantly increase the speed and effectiveness of deployments
across the world," he says.
"We are seeing a common
understanding of the RA effort develop across operators throughout the
world irrespective of the geography, though there will always be
differences unique to each region."
operators in the US and Europe have proceeded very fast along the
revenue assurance route and Asian carriers are now in the process of
Across the region, the strategy toward
revenue assurance varies from operator to operator. In some telcos
revenue assurance is coordinated by a dedicated team while others deal
with it on as case-by-case basis by department.
has had its own revenue assurance team for many years," says Chor. "The
team, which covers both the fixed-line and mobile business, is part of
the internal audit group, which reports to the audit committee. Apart
from the dedicated team, there are on-going initiatives taken by line
management across the business to review and monitor revenue assurance
activities. Processes are also put in place to control potential
Kumar says carriers need to have a
comprehensive, well-planned and well-executed program if revenue
assurance is going to be successful. Such a program needs to be
enterprise-wide with automated tools used in conjunction with clearly
defined processes, responsibilities and key performance indicators or
metrics that will be monitored to effect continuous improvement of the
program. "Revenue assurance has to be integrated into the very fabric
of the operational environment to be really effective," he said.
good news is that more and more operators are moving in this direction
and looking at implementing a well-designed program that spans multiple
operational silos and coordinated by a team with cross-departmental
audit responsibilities, Kumar says. "This effort is accelerating
rapidly across the world, and we are already seeing many operators
investigating and finalizing on a clear and comprehensive plan toward
full-scale revenue assurance deployment." Implementation
challenges However, that's always easier said than
done. Operators often confront difficulties in implementing an
enterprise-wide program. These include being able to define
organizational responsibilities, making process changes and balancing
them against business support activities. A lack of backing by top
management is also a key factor.
"The key to
successfully manage the risk of revenue leakage is to identify, monitor
and control the risk," said SingTel's Chor. "This requires commitment
from top management, demonstrated by the allocation of enough resources
to the cause, and implementing appropriate systems and processes to
manage the risk." Then there is the issue of how to tackle
potential leakage problems associated with the advent of new technology
such as 3G and IP.
"The development of
next-generation networks offers huge potential for revenue generation,
but the amount of risk operators will expose themselves to will also
increase dramatically," says Jack Wraith, chief executive of the
Telecommunications United Kingdom Fraud Forum. "We will start seeing
new billing systems based on content, billing systems based services,
as opposed to billing systems that charged on traditional kind of
activities, which will bring a whole new set of challenges." Chor
notes that implementing new technology invariably carries a higher risk
due to teething problems commonly associated with new rollouts and
unknown vulnerabilities that could be exploited. "This makes revenue
assurance implementation more complex and challenging. In practice, the
challenge then is to ensure that a new technology is thoroughly tested,
including running network and service trials before launching it
Given the need by telecoms operators to
quickly introduce new services to maintain competitiveness, Azure's
Barry notes that revenue assurance managers sometimes get a lot of
resistance from sales and marketing people who say, "we can't do that
because customers might not like it" or "we can't do that because it
will slow down the launch and we'll fall behind the market."
as the market starts to embrace mobile commerce, Duffey from LogicaCMG
says it becomes more important to be able to validate that customers
have credit before approving a transaction.
also the cost issue. Revenue assurance, just like every other business
process, has faced an investment squeeze. "That's always a difficult
question. I spoke to some operators and they say they won't be buying
any IT equipment and won't be adding any new headcount," says Barry.
they don't have the expertise, then they're not going to solve the
problem, he says. "It's a difficult circle to break. Unless they spend
money, the situation will be worse."
Kumar says this
makes it difficult for operators to identify the key areas of leakage
that can be caught and addressed with minimal effort and capex.
are facing the challenge of sifting through the vast operational data
landscape for hidden leakage without having to spend an enormous amount
of time, effort and money."
Duffey says that it
takes a while to "overcome operators' sensitivities to spending
millions" on a platform to curb leakage. But when they are giving away
5% to 10% of revenue, he says they usually respond to a "sensitive and