Friday, June 4, 2010

Profitable/Strategic Revenue Assurance = Revenue Engineering

Especially for the Revenue Assurance Professional whose day to day job is about finding leakage and revenue risk, the idea of Revenue Assurance being “profitable” can sound like an odd idea. And yet, Revenue Assurance departments are like every other department in the telco – they need to prove they are delivering real value in order to maintain, and even grow, their budget and headcount.

If you’ve ever had a conversation with your CFO, you know that his/her priority is always on new things and new investment – that’s because telcos are about new things (I’ll talk more about this in another post). CFOs don’t want more cost in their organization, they want things they can invest in. They find it very difficult to justify more spending just to recover leakage, especially if that spending could otherwise be invested in lucrative new products and services likely to bring in more revenue than could ever be recovered by an army of people doing leakage recovery.

So in my opinion, one of the best ways for Revenue Assurance to deliver value is to not just protect a telco’s bottom line, but by helping add to the top line. This means optimizing revenue from existing lines of business – by assuring margins and profitability, as well as proactively helping engineer new business models that guarantee high margins.

That’s where I think the strategic aspect of Revenue Engineering comes in – and I’m sure there are people who doubt Revenue Assurance can ever be a strategic function, but I disagree.

The reason is very simple. Almost every other department in the telco is a “silo” – where often for legitimate reasons, team members focus and specialize only on what they do and have no idea what happens outside of their department. Revenue Assurance is not like that, and it cannot afford to be like that. That’s what makes us different, unique and special – our job requires us to be involved in every part of the telco, especially if it’s involved in the generation of revenue.

This means if we are going to assure Mediation, that we can’t just “assure Mediation” – we have to know that the information being fed into Mediation is accurate. This means getting to the root of CDR generation at the switch level. In the same way, if we are going to ensure that new products and services are billable, accurate to customer expectations and do not create churn events, we need to put useful and sensible controls around marketing.

But it is precisely because Revenue Assurance goes everywhere and has to “know everything” that it can be so useful at a strategic level. Think about all the things Revenue Assurance does that are not “traditional” leakage recovery – and I guarantee that if you’re not doing some or all of these, that you’ve met someone at a Revenue Assurance event who has:
  • Line of Business Margins: Interconnect, Roaming, Content
  • Asset Margins: BTS/BSC, Softswitches, FTTN/FTTH
  • Outsourced Partnerships: Triple/Quad-Play VNOs, Outsourced IT/Network, Channels
  • New Technologies: 3G/4G, Location Based Services, NGN, UMTS, Prepaid systems, Convergent Billing
  • Marketing: Churn Mgmt, Subsidy Risk Mgmt, Campaign Controls
  • New Product Development: User Acceptance Testing, Product Design Discipline, Billing Assurance Architectures 
The thing is that these things are not random things that Revenue Assurance ends up doing because your CFO was bored one day, or because no one else wanted to do them. These are all activities that leverage Revenue Assurance’s core forensic skills in identifying risk, quantifying risk and designing appropriate controls based on management’s appetite for risk.

What ties all these disciplines together is that when Revenue Assurance teams master many or all of these skills, they are perfectly placed and positioned to design new business models – to create ways of billing and charging for services that appeal to customers and are immensely profitable.

And you have to realize, this is the real key to how and why some telcos are so consistently successful in launching new products and services – because “Revenue Engineering” to them is very simply just how things are done on a daily basis.

These telcos understand that it’s not enough to have great technologies that work, or great marketing that engages customers and gains market share – that the successful commercialization of new products and services is really what brings those two things together so the telco can generate revenue and profit. And telcos are realizing that some of the best qualified people to do this, are the Revenue Assurance Professionals who practice Revenue Engineering.

That’s why I LOVE Revenue Assurance.

Take a short 10 question survey to find out if you have been practicing Revenue Engineering all along, without even knowing it!

Listen to Louis talk to Corey about Revenue Engineering, and why it is the science and future of Revenue Assurance.

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