I LOVE Revenue Management Too! – Part 1: Return of the BOM

I promised in a previous post to talk in more detail about Revenue Management, but realized I had to talk about Revenue Management in relation to Revenue Assurance, before I could really get to Revenue Management the way I wanted to. But all that’s done now, so here we go, ready to talk about Revenue Management.

I know I keep saying that everything in telecoms is always about new things and always about change. But when I hear about Revenue Management, it just reminds how in this great industry called telecoms, some “new” ideas end up simply being great “old” ideas that eventually start making sense again.

I don’t know how much all of you know about the history of telecoms but, especially in the past when telcos were mainly incumbent state monopolies and product lines were stable and margins were high, there used to be a position in the telco called the BOM, or the Billing Operations Manager.

Who Was the Billing Operations Manager (BOM)?

The BOM often reported directly to the CEO, and was usually regarded as the second most powerful member of the executive team, next to the Chief Technology Officer (CTO). The BOM was the person responsible for the integrity of everything in Bill­ing Operations.

The BOM was responsible for making sure that the CDRs were generated by the switches. They ensured that mediation processed the CDRs successfully. The BOM was king of running the billing cycles, and usually had credit and collection responsibilities. In short, the BOM had absolute full operational and financial responsibility for the capture, pro­cessing and collection of revenues.

(If you want to read in more detail about the BOM, you can find sections on it in our standards book, pg. 2, pg. 4, and pg. 140)

What Happened to the BOM?

But at a certain point, especially when telecoms business and charging models got more and more complex, BOMs were no longer as desirable as they once were.

Once the billing operations domain stopped having a simple straightforward model, it became inefficient for billing operations to make sure things worked perfectly for each new product (because the BOM was ultimately responsible). This was especially true when new products were being created literally every day.

In this new environment, having Revenue Assurance be a redundant and support function seemed to make more sense and be more efficient than for it to be a management function under the BOM.

This way, instead of having to make sure everything works perfectly the way it is supposed to before going to market (which can be expensive and delay product launches) that risk could be identified, quantified and managed according to management’s appetite for risk – through Revenue Assurance.

From BOM to Revenue Assurance, and Back to Revenue Management

This made a lot of sense, because not all new products succeed, and often time-to-market was more important than having things be perfect. But even in following a Revenue Assurance model, it’s difficult for a real practicing Revenue Assurance team not to have any operational responsibility.

Yet the more we hear about “new” Revenue Management, we hear that one of the main priorities of Revenue Management (as opposed to Revenue Assurance) is revenue stream integrity, which often means testing configuration changes before they go live.

Another priority is change management, so that whenever configuration changes are made, or situations change (interconnect rates shift, billing/charging rules need alteration), Revenue Management teams have to be notified and sign off.

In most telcos we’re aware of, even those who have embraced Revenue Assurance rather than Revenue Management, teams often still retain responsibility when it comes to testing or change management, or both. From experience, they’ve just found that the risks that emerge from handing those responsibilities over tends to be beyond management’s appetite for risk.

Are We All BOMs Now? Probably Not

More and more, this need to have operational responsibility has grown in certain telcos and environments. In fact, at a recent conference in London, I met someone who was literally a BOM – he was the billing manager, but he also had revenue management responsibilities.

It’s clear that, especially in telcos where the complex conditions that a Revenue Assurance model requires to function cannot or do not exist, Revenue Management tends to be the better solution. It’s also clear that in telcos that have a very low appetite for risk, Revenue Management is almost certainly the right choice.

Does this mean all telcos should move back to a BOM model, which is what Revenue Management is? Probably not. Is it a viable alternative to a Revenue Assurance model? Clearly it is, because there are professionals putting it into practice.

Does this mean you need to substantially change the way you approach revenue streams in your telco (basically your Revenue Posture)? Maybe, but that should be your decision and the decision of your management. Because you know better than anyone else what your telco really needs. And you’ll hear more about this in my next post.

In the mean time, you just need to remember that the choice between Revenue Management and Revenue Assurance is not an either/or choice – in most real-world environments, you’re going to be doing some of both. The real decision, the real choice, is deciding what mixture of the two is optimal, given the specific conditions your telco faces.

In the next part of this series on Revenue Management, I’ll be talking in more detail about what Revenue Management really involves, as well as why and how it can be a viable alternative, in certain areas, to Revenue Assurance.

And if you were to ask me which I LOVE more, Revenue Assurance or Revenue Management, I’d have to reply the way parents reply about their children – I LOVE them BOTH – EQUALLY!