Wednesday, June 23, 2010

Do I Need to Understand the Telecoms Business to Work in Telecoms? In Revenue Assurance? Part 1

Too often when you ask people, even people who work in telecoms, if they understand how telecoms make money, they look at you like you are stupid. They think telecoms is a business like any other business, and if you don’t understand how businesses work, you should go take a business class.

At the same time, when you ask if people understand telecoms, they often assume you mean do they understand how calls are made and how the technology works – basically they assume you are asking them if they are a network engineer.

Is Running Telecoms Like Running a Chocolate Factory?

But we have had the experience of talking to high level business executives who come into telecoms determined to run telecoms “like any other business.” I have heard of CEOs who come from running a chocolate company saying they can run a telecom like it’s a chocolate factory. He did not really last too long in that job.

Now that may be an extreme example, but it helps make a useful point. I do not know if businesses really are all the same or not, but I do know for sure that the telecoms business model is not an easy one to understand, and many people who work in telecoms do not often understand it as well as they should.

Of course I am not saying that you cannot transition from another industry into telecoms (I have met many many successful Revenue Assurance professionals who have done exactly that), I am just saying people who end up working in telecoms need to understand how the telecoms business model works.

Really they need to understand how and why telecoms make money. In fact, I am finding it hard to imagine anyone who works in a telco who does not need to know this. More importantly, if you are in Revenue Assurance, not only do you need to know this, you need everyone you work with to know this.  

Often the Revenue Assurance job is so difficult is because the people around you do not always understand how telcos make money - much less the important issues we face relating to revenue. The more people around you understand this, and keep revenue top of mind, the easier your job becomes.

So What is the Telecoms Business Model? How Does it Deliver Value?

So fine, you accept that people who work in telecoms need to understand the business model – what is it already, and how does it work?

Well, first of all, we need to agree that telecoms has value, and provides something that people genuinely want and need – that telecoms is useful. You do not really have a business unless you can do that. But telecoms is absolutely all of these things.

Imagine, that even aside from the enormous economic impact of telecoms – allowing commerce, creating jobs, industries and economic activity – there is also a clear personal value that telecoms has.

I was a foreign student for many years, living far away from home. But because of telecoms I was able to call home. Because of our studies and my job, my girlfriend and I lived for many years on different continents, and the way we kept in touch was by being able to call each other every day.

Are Telcos like Banks? Or Retailers? Neither!

Telecoms absolutely has value, but how do telcos make money? First, telcos are not banks. Banks deliver value by being reliable – they double and triple count things, and have redundant systems on top of redundant systems to make sure everything happens the way they are supposed to. Telcos are not like that.

Telco systems fail all the time. So much so that the main KPI (key performance indicator) for network is Mean Time To Repair (MTTR) – basically how fast they fix all the things that break on a daily basis.

But just as telcos are not banks, they are also not retail stores. Retail stores are all about customer service – someone says hello to you at the door, they help you find what you are looking for, and they make you feel good about what you have bought.

And the reason why they do that is because, most of the time, the goods sold at one retail store are pretty much the same as those sold at another retail store. The way they compete is by offering better service to their customers. Telcos are not like that.

If Telecoms Is Not About Customer Service, Then What is it About?

Now it can be tempting to think telecoms are the same way – that all we sell is talk time/minutes, and the way we add value from our competitors is by being nice to our customers and loving them.

Obviously at this point you realize that if telecoms are about customer service, then telecoms must be really bad at what they do and must all be failing – because their customer service is awful. Like I’ve said before, telcos torture customers for fun.

But the reason telcos still have customers and are incredibly profitable, even though customer service is awful, is very simple – telecoms is not about reliability, it is not about customer service, it is about technology.

And in the next post/Part 2, I will talk about how telcos actually make money off of a technology driven business model, and why helping others understand this is key to the Revenue Assurance job.

But until then, I have to admit that I absolutely LOVE technology, and that’s a big part of why I LOVE Revenue Assurance.

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