I LOVE Revenue Assurance

CFOs Want to Predict The Future - Here’s How With Revenue Assurance!

2010-10-28T07:27:00.000-07:00

When it comes down to it, CFOs are primarily concerned with “do I have enough money to run the business.” They may delegate that responsibility to the controller, or to various Line of Business managers, but the fundamental need to ensure that the business has enough money to function effectively does not go away.
Because of this, CFOs are constantly looking to any indication of how the business is doing, and ways to forecast a telco’s performance in the coming months. Hard as it is to believe, CFOs are not opposed in principle to losses or leakage (though no CFO will admit to actually being happy about them). They are more concerned when these losses are not detected early and only become evident months after they actually occur. This leaves CFOs no time to plan for how to address them - through adjusting the budget in line with such real-world conditions.

A CFO's Worst Nightmare

When your revenue figures are suddenly far less than projected based on your forecast and your sales figures, you end up with large cash flow problems that severely affect how the business can be run. Huge sudden unexpected shortfalls in revenue due to revenue loss or fraud that were also undetected and not represented in the sales figures, are often a CFO’s worst nightmare. These shortfalls can lead to severe cost cutting, or borrowing large sums/re-capitalize at extremely short notice.
If a CFO knows that losses are occurring, or are going to happen, they can plan and adjust the budget accordingly. CFOs deal with losses all the time, what they don’t like are SURPRISES. This is why they use whatever tools available to forecast how the business will perform in the coming months, in the hope that those forecasts turn out to be accurate and meaningful by the time revenue is finally accounted for.

Planning, Forecasting, Wishing, Hoping

One of the key planning tools a CFO has is the budget, which is effectively based on a forecast of sales activity for the coming year. A forecast of sales activity is borne out/proven by the actual sales numbers that occur. This in turn is an indication of how much revenue will be received (once service is delivered), and the amount of profit that will be made after direct costs are taken out.
But even though forecasts are regarded as an educated guess based on past performance, they are incredibly important, because that is what the CFO uses to plan until interim numbers (like sales figures) come along. These interim numbers allow the CFO to make adjustments and re-assess the budget. Of course in the end, revenue and profit will be accounted for – but by that time it’s often too late. The earlier a CFO can make decisions, the greater effect those decisions will have.

But Marketing and Sales Say We’re Going to Do Better Than We’ve Ever!

Realistically, the only way CFOs can have confidence in the forecast of sales is by implementing marketing assurance, so they know what the marketing people tell him will be the “lift” from their activities will have some actual relationship to reality when the sales figures come in.
But in the end, what CFOs are most concerned about is not forecasts, or even sales figures. They are concerned with the revenue that comes from rendering service. More importantly, they are concerned about the profit this revenue represents. In particular, this manifests as the margin a telco earns once direct costs (such as payments to interconnect/roaming partners) are paid out.
In effect, forecasts and sales figures are simply ways that CFOs can help themselves judge/predict how well the company is going to do once the accounting is done – for instance at the time of a periodic trial balance. These management accounting balances help a CFO get a sense of whether the sales numbers were really a good indicator of how things were going.

The Beauty of the Truth – or Reality

The way a CFO can ensure that the sales numbers are a good indication of reality is through revenue stream assurance (leakage control) and margin controls. That way when the final margin/profit is calculated and accounted for, there are no big surprises that can reasonably occur. This is because, to a large extent, whatever was sold was billed and realized, and done so in a way that is in line with the margin assumptions that were made.
This is the key value that Revenue Assurance can provide as a finance function that reports to the CFO. Revenue Assurance can give the CFO confidence that the numbers being used to forecast, adjust budgets and make business decisions are actually useful and accurate and not random numbers that have no relationship with reality.

Big Money, Big Decisions, Big Problems

When a CFOs get funds, decisions need to be made such as:

Do I ring fence those funds because I know there will be substantial losses coming, or bad debt that will never be collected?
Do I invest the money in new equipment, more marketing, hiring more staff etc. because the forecast/sales figures indicate a potential huge rise in revenue and a need for increased capacity to capitalize on it?"

If CFOs are not sure of the forecasts and whether the sales figures will be borne out by the revenue figures, they have to play it safe. They may then miss market opportunities, because they never know what surprises are in store, hidden in the overoptimistic forecasts and inflated sales figures that ultimately manifest as lower than expected revenue due to leakage/fraud. And even when bad things do not happen, and no surprises pop-up, that is still bad, because the CFO is left with money he could have spent but didn’t, which represents dozens, even hundreds of missed investment opportunities. That ultimately manifests as lower future/expected revenue over time.

At the other extreme, a CFO can overspend and not have enough money to run the business by the end of the year because he trusted the forecast and sales figures that ended up not being borne out by the final revenue numbers. This cash flow problem will mean reduced budgets, staff cuts, and an inability to invest in potential future revenue streams. And all this because revenue assurance wasn’t involved in ensuring the figures were accurate, had integrity and not subject to large amounts of fraud or leakage that lead to surprises and abrupt needs to borrow money or drastically reduce costs.

How Does a CFO Determine Their Appetite for Risk?

The question is not whether a CFO needs this assurance, its how much assurance does one need. Depending on the revenue of the company, and the potential upside gains of focusing attention and capital on new investments/opportunities, a CFO may say that a variance between forecast and sales, and between sales and revenue of $10 million USD for a quarter, is acceptable. Most of us would say that’s high. But if a telco can realistically expect an upside potential of $50 million USD profit each quarter by continuing with investments at their current/optimistic levels rather than being conservative with expenditure, a CFO may say that amount of variance (and potential loss) is more than acceptable.

But as CFOs want more accuracy in terms of the numbers they use to plan, the more they will want to invest in a function that helps them have more confidence in those numbers. The more accurate those numbers, the more faith they can have in them. The more risks that can be safely taken and managed, the more investments can be made to generate potential future returns. And that’s what CFOs really want – they want to be able to invest in things that grow the business, and to be able to do so without unreasonable fear that it’s the wrong decision.

That’s why I (and CFOs!) Love Revenue Assurance!

What Can Revenue Assurance Learn From Military Signals?

2010-06-28T06:51:00.000-07:00

Because I am a Revenue Assurance guy, I would like to think that I am someone who believes in rationality. I think decisions made in the telco should be based on facts and logic, rather than internal politics. Decisions should be about what is best for the telco, not who the most powerful person is in the company. In saying that I am not trying to be naive - I understand that politics is part of how corporations work.

But I also know that the more business decision come to be based on politics rather than logic and facts, the less likely it is that those decisions will be the right ones for the telco. While I am not saying I have some secret answer that will solve this problem, I am going to say this problem reminds me of something I used to encounter when I was in the army.

Can You Hear Me Now?

One of the things the army taught me, especially when I was an officer, was how to use what they called "signals." Basically most people nowadays would understand this as high powered walkie talkies - though the technical term for it is half-duplex radio.

This means that only one person on a given frequency can broadcast at any given point in time. When you are not broadcasting, you can listen to what others are saying, but when you are talking, you cannot hear anyone else.

This is old technology and it was very easy to disrupt - if you knew the right frequency, you could jam it. All you had to do as the enemy was broadcast on that frequency, and no one would be able to talk to anyone else. But while this kind of jamming was easy, it also meant we knew when the enemy was doing it.

Playing with Fire, and Live Ammunition

If the enemy was being more more sneaky, however, and especially if they had the intelligence capability to find out more about the culture of your unit and how it worked, they could very easily use what we might nowadays call "social engineering" to disrupt the unit and cause problems.

And these would not be small problems. Army signals are used to order artillery and air strikes. It is used to tell large numbers of troops where to go and what to do. If a unit's signals were to get compromised, it often meant many of your best friends end up in harms way, or being the target of friendly fire, bombs or shelling.

The thing is that people in the army are not stupid, so they develop ways to ensure this does not happen, or at least ways to make sure it can't happen so easily. But because they were using relatively simple technology, most of these controls involved personal discipline and following procedure.

Procedure Has Reason, Discipline is Not Optional

If you work in IT, or IT auditing, you know what triple-A/AAA is - Authentication, Authorization and Accounting, and that is basically what "signals" discipline involves (maybe not so much the accounting, but certainly the first two).

Whenever someone wants to contact you or give you an order, you need to challenge them, and they need to authenticate themselves - they need to prove they are who they say they are. Based on that authentication, you know what they are authorized to tell you to do (send air strikes, move to a new location, etc.)

The problem happens when that discipline breaks down. And you know as well as I do - the people who most often break rules or fail to follow discipline can be the ones with the highest rank (ie: top management!). Sometimes you get unit commanders who don't care about signals discipline and who just start yelling into their radios, "don't waste my time," "just do it," or "you know who this is, don't be stupid"

Bad Habits Make Bad Things Happen

And when that happens, what these commanders are doing is bypassing authentication - we cannot be sure if you are who you say you are. And if this becomes a habit, everyone gets trained to do exactly the wrong thing - accept peoples voices and shouting as authentication.

Enemy intelligence agents start to figure these patterns out really fast. And if this culture exists in a unit, you are suddenly going to get this shouting commander asking you to do strange and stupid things - orders you have to obey. And it is only later everyone realizes those commands are coming from the enemy. Usually by then it is too late.

The Role of Professionals in Controlling Management

What does this have to do with telecoms and corporate culture? A lot. Most companies have standards of professional behavior, and they also have policies and procedures designed to prevent bad things from happening. These things don't just apply to professionals - they have to apply to management and executives.

Why? Because professionals can only cause so much damage - it is the executives and top managers who can end up making catastrophic decisions to bypass controls, decisions that hurt everyone who works in the company. That was what happened in companies like Enron - and it was the professionals, a small group of internal auditors, who eventually found out the truth.

To me, that is part of what being a professional is really about - having respect for rules that helps keep everyone a little safer. Just imagine if someone in your telco managed, because they are an executive, and because of the force of their personality, to bypass logical controls such as those around procurement etc., the damage they could do not just to the telco, but everyone who works there.

Listening to Logic, Decisions Based on Facts

But just on a more day to day basis, what I am talking about is making sure that the Revenue Assurance function, one that exists purely to look for risk and to calculate how big the risk is, is never taken for granted. Their facts should never be pushed aside just because people do not want to or cannot handle the reality of a situation - that a deployment is not cost-effective or a campaign is too risky.

It is usually when the professionals give in and fail to enforce policies and procedures that exist for everyone, even the CEO, that some of the worst things happen to telcos. But I know that Revenue Assurance professionals know better.

And that is why I LOVE Revenue Assurance.

Help! I Just Got a Job Doing Revenue Assurance!

2010-06-25T12:02:00.000-07:00

Every once in a while, one of GRAPA's members will send me an e-mail that says exactly that. They are suddenly asked to do a Revenue Assurance job, and they are looking to us for advice.

Many Reasons, One Response: Emergency Revenue Assurance (or Louis to the Rescue!)

The circumstances can be very diverse. Sometimes, the old Revenue Assurance Manager left abruptly, and they needed someone in a hurry to replace him/her. Sometimes it is something else.

In some cases the person they pick to do the Revenue Assurance job is from another department - internal audit, fraud, finance, billing, IT, network, etc. - but they had heard of GRAPA before, or they had met me at a conference.

And because they do not have a history specifically doing Revenue Assurance, they are looking for someone to help them understand what the job is and what they should be doing. And of course, because I LOVE GRAPA members, I treat it as an emergency and try to help them as best I can.

Read the Books, Tell Me More

Of course the first thing I do is tell them about our Revenue Assurance Standards Book, as well as our (older, but still very useful) Revenue Assurance Handbook. If they speak Spanish, I tell them about the Spanish translation of our Standards Book.

Next I ask them a few questions. Usually all they have managed to tell me is that they have this new job and then they ask me a question about how we think their department should be run. But I know from experience that usually what they are looking for can be any number of different things, so I need to find out more in order to really help them.

Are they asking who they should report to? (usually the CFO) What should be the scope of the department? ie: what they should or should not be doing? How they approach other departments and interact with them? Also, is this a new department? Or are they inheriting it from someone else? How many people are there in the department already, and what is their background?

The "Condensed" GRAPA Standards!

But even before they answer any of those questions, I try to give them some sense of what GRAPA recommends in terms of our standards and standard approaches. Not everyone has time to read our books before they have to give answers to their management!

So first and foremost for us, Revenue Assurance is always about rationalization. Revenue Assurance cannot ever cost more than we are going to save doing Revenue Assurance. This also means that we need to understand the operational environment, understand how revenue comes into the telco, and prioritize accordingly.

Both books I recommend talk about this in terms of Revenue Mapping and/or Noise Analysis – this is how you figure out where to start, what your priorities are, and what is the threshold of spending for your department (the point when you are spending more than you could ever get back).

Not Just Priorities and How Much, But Who Are We? What Are We Like to Work With?

Next, Revenue Assurance is about Consensus and Sovereignty. We are not internal audit, we are not the police. We need to work with operational teams (billing, mediation, interconnect, network etc.) – not be there to tell them what to do or make them look stupid. We are here to help.

This means that operational teams stay in control and stay responsible. If things go well, they get the credit, but if things go wrong, they are still responsible.

The worst thing that can happen is RA gets into a position where it gets blamed for all the leakage/fraud in the telco. Fraud/leakage happens somewhere, and the manager of that department is responsible, not you. That said, we are always ready to help when these departments have problems.

We can help, but we are professionals, and we do not go where we are not invited. If they have problems, we can help, but it remains their responsibility.

Maintaining Boundaries, Managing Scope, Management's Appetite for Risk

This is how you manage the scope of your department – if operational teams are not asking for your help, you cannot help them. If they do want your help, they need to help convince management to give you the budget and headcount you need to help them.

In this way, the key role of RA is to find risk, quantify it (calculate how big the risk is) and then tell management about it (with the agreement of the operational team). If management says it is okay – that the risk is acceptable, we do not worry about it.

Management sets the appetite for risk – saying what is acceptable or not is not your job. However, if, after you quantify the problem, they think the risk is too high, you can help design and create controls for the operational team to implement and monitor.

Do I Create More Work For Myself By Designing Controls?

RA is not a security guard. It is not our job to monitor controls. The operational department is responsible for what happens in their department, they need to monitor what they do. We can help them find problems and create controls if management says so, but we cannot be responsible for departments we do not run.

Unless they want to report to us, as well as give us their budget and headcount, we cannot be responsible for what they do!

By doing things this way, it becomes a lot easier for Revenue Assurance to make friends and have people cooperate with you (they are coming to you for help!). Because you cannot really do your job if they do not help you understand how things work, and they do not tell you when they have problems, or they do not let you help them find problems.

Convincing People You Only Want to Help is Hard Work!

In order for you to do all those things, you cannot be “threatening” to them, and you cannot “tell them what to do” or “make them look stupid.” If you do, they will stop cooperating, and you stop being able to do your job.

Usually by this point I start to realize that my e-mail (like my blog posts!) is starting to get too long, and I stop, so they actually get the chance to tell me more, and answer my questions!

And I do not know about you, but just like how I describe it above, if you work in Revenue Assurance, the best feeling you can have is that you have helped someone - that you have made their life or job easier. And especially if the people I try to help tell me it made a difference to them, it just reminds me why I love doing my job.

And why I LOVE Revenue Assurance.

Should Revenue Assurance Tell People Their Ideas Don't Make Sense?

2010-06-25T07:29:00.000-07:00

Just because my last post was about how Revenue Assurance should deal with people who are not very good at their jobs, I thought it made sense to talk in this post about how to deal with departments who come up with strange ideas - often ideas that do not make sense.

Finding Strange Ideas to Disagree With

For better or worse, in my personal experience, I have heard about this happening most between Revenue Assurance and Marketing/New Product Development. But obviously what I am talking about applies to any department Revenue Assurance works with. But just to be clear, I am not saying these departments always come up with bad ideas, I'm just talking about how to handle it when they do.

The reason I think this kind of conflict or disagreement happens so often with marketing (and I talk about the differences in culture between Revenue Assurance and Marketing in a previous post), is that marketing's job exists mainly to come up with new ideas all the time - as fast and as many as they can think of.

This is neither a good nor bad thing, it is simply their job and they tend to be good at it. They have to constantly come up with fresh new ideas to help sell your telco's products. Often times these will be great ideas that make a lot of sense and everyone agrees will be profitable and attract customers. But not all the time.

No One is Perfect, They Need Help and Advice

Sometimes they come up with ideas that don't make sense to anyone - ideas that you think no one would actually want (especially not customers), and that you are worried may actually cause harm to the telco. And we all know there are bad things that can happen when marketing campaigns go wrong.

I have heard of marketing campaigns/new products that (not on purpose) cause customers to churn. I have heard of campaigns that cause the telco to lose money. I have even heard of campaigns that cause the network to fail - so no one can make calls.

But that's not the worst part. The worst part is that marketing/new products is very expensive. So when things go wrong, you are actually spending money in order to lose money, or to make bad things happen to your telco.

Can Revenue Assurance Predict the Future? No!

At this point the temptation can be for you as Revenue Assurance to step in and say "I can see the future," "I know what's going to happen," or "You are stupid, I am smart, I can obviously do your job better than you can." And when something has just recently gone wrong, people might actually listen. But that is not what you want.

The problem is you do not necessarily know better than they do. You certainly cannot see into the future. I am not saying you should not trust your gut instincts that tell you something is a bad idea, but when you are trying to convince people that a marketing campaign/new product is a bad idea, your opinion doesn't matter - only facts matter.

More importantly, you do not want to volunteer to be responsible for something that belongs to someone else. The more you force your opinions on other departments, the more chance you will get blamed if something goes wrong. And because you have no real control over what they do, it can be their fault, but you still get blamed.

What Do I Do, If I Don't Argue? Act Like a Professional

So the short answer to the main question of "what to do when you see ideas that don't make sense" is not to argue and express your opinions in a subjective way ("I think this is stupid," "I think this won't work," "No one is going to like this").

The way you act like a professional is by offering a professional assessment of the idea in a way that makes use of your core skills. You are not a marketer or a product developer. You are Revenue Assurance. You find risk, find out how expensive the risk is, and you create controls if management says the risk is too high.

And that is how you can contribute usefully to these processes. The idea may be stupid, and not make sense, but it is not your job to say that. You are also not going to be effective saying that. More importantly, you may well be wrong. Marketers (hopefully) are professionals too, and you have to trust they are good at their jobs.

Revenue Assurance Handles Risk, and Only Risk

But you still have to trust your instincts. If you think a plan is risky, you can point that out. You can say there is a high chance of something bad happening, and you can calculate, if that happens, how much it will cost. As long as you can do this honestly, and with integrity, you are doing a good and useful job. You are being helpful rather than being unprofessional and arguing.

After you tell management and the marketing team about the risk, and how expensive it could be, your job is done. If they decided they are willing to take the risk, that is their decision and you cannot make their decision for them or force them to change their minds.
If things go right, then you were wrong, but you did not stop a successful thing from happening. If things go wrong, people are going to ask you "how did you know that was going to happen?"

And your response will be very simple "I work in Revenue Assurance. It is my job to know."

Being Right is the Best Way to Make Friends

Of course, after this happens a few times, people will actually start listening to you and asking your advice. In particular, sometimes management will say that the risk is too high. At that point, you can once again do what Revenue Assurance does best - you can create controls to manage the risk.

For example, if a department wants to pre-activate roaming for every sim card they sell - that is a big risk. If management is okay with this huge risk, they can go ahead, but you warned them. If they see the risk is too high for them to take, you can help find some way of making the plan less risky - or some other way of achieving a similar effect (advertising at airports, border crossings, making roaming activation easier etc.).

You Have to Know Things to Be Right

Now, all this sounds good, and all makes sense (at least I hope so). Our job as Revenue Assurance is not to argue with people, it is to provide them with the facts they need to make a decision. But how can we actually do this, how can we actually deliver? If you have never worked with marketing before, how can you help them understand risks better than they can?

This is where integrity plays a big part in what Revenue Assurance does. You cannot promise things you cannot deliver on. You cannot be too greedy and try to do all this at once. These are political and social skills that you develop over time, as well as knowledge you learn about the various departments you work with.

If you don't understand marketing or new product development, you cannot pretend or try to help them. Instead, if you really want to move into these areas, you must be patient and plan and educate yourself. So that when you are ready, you will be able to execute your plan with integrity.

But if that is how you approach these situations, with professionalism an integrity, I find it hard to believe good things will not come of it.

That's why I LOVE Revenue Assurance.

What if Your Revenue Assurance Problem is a Person?

2010-06-24T11:48:00.000-07:00

If you work long enough, especially in telecoms, you bump into incompetent people. And I am not talking about people who are new and have not had time to figure things out yet - that I can understand - I used to be one of them! I'm talking about people who have been doing this for a while but still cannot seem to figure it out, and probably never will.

Working in Revenue Assurance Means Meeting All Kinds of People

And again, I am not trying to be unkind about your friend who tries hard and just needs a little more time to figure things out. I am talking about the people you meet doing the Revenue Assurance job - because you end up all over the telco - who you have no idea how they got the job or how they are still doing it.

When it comes down to it, do you really want to work with people who do nothing to add value to your company? Or worse, who make things harder for everyone around them and cause more trouble than do actual useful work?

We Hope For the Best, but Prepare for the Worst

We all start out being generous and kind, and giving people the benefit of the doubt - that is what we should do. But at a certain point, some people just end up being hated by everyone around them, because they don't do anything useful, and just create work for everyone else around them. And especially if you work in Revenue Assurance, you have enough to do without people making your life and your job even more difficult than it already is.

It took me a while to figure it out, but at some point I just realized why there are people like this, especially in telecoms. Telecoms is such a successful industry, and there is so much money everywhere, and so many opportunities for advancement and promotion. So every once in a while, someone stupid gets lucky and falls into a pit of money or gets promoted beyond their ability to do anything useful. And because they were lucky, and do well, they suddenly think they are a genius, even though they're idiots.

Personally, I don't begrudge anyone who does well. If you managed to do well for yourself, that's great, and everyone should be happy for you. But when these people say "I have done so well, I must be a genius," you and I know that is not necessarily true. It could be true, but success is not proof.

Being Lucky and Being a Genius Are Not The Same

The problem is that even though telecoms is such a successful industry, there are times when bad things happen and telecoms goes through hard times. But that is also usually when the lucky stupid people suddenly stop being lucky and start being stupid again. The problem is they cannot figure out why they are not making money or doing well anymore, when the reality is that it is because they are stupid and are not very good at what they do.

And that is okay - it doesn't make them bad people. I've remained friends with people I thought were useless at their jobs. But would I volunteer to work with them again? No.

Sometimes, when things go wrong, these "geniuses" just do not realize that telecoms is about change and new things - so they keep doing the thing that made them lucky the first time even though it's no longer useful anymore. But there are many other kinds of incompetence - and really, you know it when you see it.

So What Can We Do? Who Do We Tell?

Revenue Assurance people see this more often than most, because we deal with so many people in the course of our jobs. The question is, what should you do about these people once you find them, and should you do anything at all?

The answer is very simple. You are not helping anyone by pointing out someone is incompetent. If they really are incompetent, then you are not the only one to realize it. If you have ever tried to tell management about these people, you know it is not useful. They know who is incompetent and who is not. You telling them does not help them. It is not useful.

Why Do Useless People Keep Their Jobs?

There are many reasons why people who are not good at their jobs stay there, and are kept there by management. More often than not, even though they are mostly useless, every once in a while they do something useful.

It is also the case where even though they are useless, at least they are trained and understand the position - and hiring someone new would involve even more problems to get them trained.

Sometimes there is just not enough talented people around for you to hire, or as bad as this person is, the person before was worse.

But make no mistake. As time goes on, because management knows they are not useful, they will very naturally get to the point where they are just more trouble than they are worth. We do not have to do anything. In the end, we are professionals, and deciding if people are useless is not our job.

Patience, and Professionalism

You just have to trust that if there are still useless people around you, management is doing the best they can with what they have. That person will not be there for long, you just have to patient and professional.

The worst thing we can do as professionals is bring negativity into the workplace. People are stupid, that is okay, they won't be there for long. We are also not victims - it is not everyone else's fault except yours - it is not management's fault. We take responsibility for what we do and how we act - no one else can do that for us.

Other people's responsibility belongs to them. As long as we do not create a negative environment around ourselves - resenting other people for being stupid and useless, complaining all the time - we continue to be professionals and focused on delivering value to the telco. That is at least part of what makes us different from useless people - and this is something I am very proud of.

And that's why I LOVE Revenue Assurance.

Do I Need to Understand the Telecoms Business to Work in Telecoms? In Revenue Assurance? Part 2

2010-06-24T07:24:00.000-07:00

In Part 1 of this post (which you might want to read first), I talked about how telcos are not like banks and not like retailers, that the telco business model is based on technology. Part 2 will now talk about how telcos make money based on that technology focused business model.

Technology, Technology, Technology

When the way you deliver value to your customers is through technology, your business model is going to be different. If the reason why people value what you produce is because it is "technological" and new and innovative, it means you have to continuously provide that value, and do so persuasively.

Telecoms customers are not going to accept warmed over technology that is just "a little different" from what you or your competitors did yesterday. They want genuinely new things and they want it all the time. Keeping up with that pace of innovation is clearly possible, telcos do it all the time, but if your business model is structured that way, there will be limitations and problems.

This is true of any strategic business decision you make - choosing one way of doing things over another means gaining advantage in some way, but being less efficient in other ways.

Do You Choose Your Business Model? Or Does it Choose You?

In this regard telcos have no choice. In order to be in this industry and give customers what they really want (technology), they have to make it work somehow, or they need to find another industry to work in. This means living with the consequences of being a telco, and simply dealing with whatever inefficiencies come with that business model.

When your business model is all about innovation and bringing things to market as fast as humanly possible (not just new technologies but new products people will pay money for) it is not going to be easy. More than that, it is going to be chaotic and messy.

Have you ever complained about that aspect of working in telecoms? I have. But that is what happens when we choose to work in this industry. Are there telcos where things are not chaotic and messy? I'm sure there are, but I am not sure you want to work there - I'm not sure how long those jobs are going to last, because they don't understand the business model.

Surrender is Not an Option, Hope is Not a Plan

Am I saying this means you should work without any kind of structure? Absolutely not. Chaos and messiness means there is even more need for structure, not less. But can any structure ever make telecoms not be chaotic and messy? If there is I have never heard of it.

So what structure can allow telecoms to make money, produce real value, give customers the innovation they want, but not drive those who work in this industry to tears on a daily basis? That's really two questions so I'll answer the first one first.

Making money from telecoms is relatively easy. If a hundred years of telecoms history has taught us anything, it is how to monetize a service that customers genuinely think has real and lasting value. But these proven formulas still have to be implemented well - preferably by people who understand them.

Subsidy-Based Customer Acquisition/Retention

If you have ever asked yourself why telcos offer free/cheap handsets/customer equipment, the answer is simple - because that's what helps you get customers, especially when you are constantly offering new products that are expensive to produce. You subsidize offerings up front, but recover the cost of the deployment over the life of the subscription.

The reason telcos can offer cheap/free on-net calls, or unlimited calling for family and friends, is for a similar reason. Customers like it, and so the subsidy is useful. Where telcos actually make money in these situations is on interconnect, when customers call people on other networks, or overseas.

This model also creates an incentive for groups of customers to stay on the same network. And with a large pool of users, the chances of high revenue on incoming interconnect goes up. So if you have ever asked why interconnect rates are so expensive, or why your telco is so concerned about the assurance of interconnect, now you know why.

(Obviously there's more to it that just the two examples above, but I'll talk about this more soon.)

Useful Structure Means Less Chaos, Faster

So that is how telcos can make money, even if they are constantly having to create new technologies and products. The question then is how do telcos actually deliver these technologies and turn them into customer-ready products? And how do they do it without driving their employees crazy?

The short answer (and again, I will elaborate on this more soon) is structure. The way you make an inherently chaotic and messy process into something actually useful and do-able is by imposing useful structure that does not get in the way of the creative process, but instead makes it go faster and increases the chances of success.

Because when you impose structure on something, the people who did not have structure before are not going to like it. One of the reasons why they do not like it is they assume the structure will make things go slower. But we do not want things to go slower - not if we understand the business model. And so we design structure that, as much as possible, fits in with a business model that demands speed.

Revenue Assurance: Masters of Change, Believers in the Business Model

Obviously I am going to have to say more about this, and I will, but even at this point it should be clear to everyone reading - once you understand the business model and understand how telecoms make money, you start to understand what you have to do and how you have to approach things.

People who do not understand this, or who do not believe it, are working on assumptions that make it very difficult for them to be successful or happy in this industry.

But me? Obviously I am a believer. I am so much a believer that I am trying to convince other people, like you, to be a believer too. That is how much I am convinced that this is what telecoms is is really about. And I have to be convinced, because I work in Revenue Assurance.

Revenue Assurance is the place in the telco that has to deal with the most change, because Revenue Assurance is where all the changes - that happen everywhere in the telco - end up. Other people make changes, and we have to deal with it. That's our job. So if Revenue Assurance does not believe in change, who else is going to?

And that's why I LOVE Revenue Assurance.

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

2010-06-23T09:38:00.000-07:00

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.

How Doing Revenue Assurance Can Be Like Jumping Off a Cliff

2010-06-22T13:02:00.001-07:00

I don’t know if it’s because I used to be in the army or because Chinese or Singaporeans just tend to have a cultural sense of hierarchy, but I think I have always (mistakenly) thought that power comes from the top of the organization, from the boss or manager – and that it is the job of professionals to simply do what they are told and make sure the boss is happy.

But the more I am in Revenue Assurance, the more I start to question this way of looking at the world. Of course the members of executive team are very powerful and they have to set the strategic direction of your company. They make decisions that affect everyone, and it is the job of professionals to execute those decisions.

You Don’t Know Everything, How Can Your CFO?

However, I think we make a mistake if we assume that just because someone is in a management position, that they know everything you know and more. Many times, top level managers cannot possibly know everything – and in many ways they do not need to or want to.

Just that realization alone can be pretty earth shattering – because if you are like me, and have always assumed people in authority knew exactly what they were doing, the idea that they are relying on you to help them can be confusing, if not downright terrifying.

But at a certain point, even the best managers have to rely on smart, capable professionals to advise them and help them address specific issues. Especially with something like Revenue Assurance, which can be such a specialized function in the telco, you have to ask yourself - what are the chances your CFO actually knows how your job is done and what it is you are supposed to be doing?

And if things have not gotten scary enough, this is where it can feel like you are falling down a rabbit hole and it is never going to end. Because if management is not in a position to tell you what your job is, and you are not able to tell management what your job is, very bad things can happen.

Working in a Vacuum, Inventing Your Own Job

I do not know if you have ever been in situations like this before, but I certainly have. When you get hired into a job and not only do you not really know what your job is, it seems management does not know either.

In those situations, what usually happens is people fall back on what they know. Most people don’t naturally look to do things they do not know or are not comfortable in. So, for instance, if you have a background and education in IT, you turn your job into an IT job.

The problem then depends on whether what you’re doing is actually useful to the organization – and if all you are doing is making things up based on stuff you already know, the chances of it being useful can get pretty slim.

If The Job is So Difficult, Who Can Do It?

Now I’m not saying that this means you should never take on a job that has no clear boundaries, or you need your boss to have done your job before you can do it.

As I’ve said, what are the chances your CFO really knows how the Revenue Assurance job is done? If he did, he probably wouldn’t need to try and hire talented people to come in and help him do it.

The moral of this story though, is not to say jobs like these, as the Revenue Assurance job can appear to be sometimes, are impossible to do, or somehow not worth doing. I am just saying that it requires the right kind of people, who are going to approach things in a positive and useful way.

The Pioneering Spirit of Revenue Assurance

I said it above, most people don’t naturally look to do things they don’t know, or aren’t comfortable in. But Revenue Assurance professionals aren’t “most people.” These are people who are constantly putting themselves in a position where they are not the experts, where they do not know everything.

They are constantly having to do a difficult and often hard to understand job in environments they are not necessarily familiar with. Imagine having to help assure a billing system without previously having experience in telecoms, much less billing. Yet Revenue Assurance professionals do things like this every day.

Because Revenue Assurance professionals are people who keep themselves open to new things, and are willing to learn. After all, they work in telecoms, and if you are not willing to try new things you do not always understand, you probably should be in a different industry. And you probably should not be doing Revenue Assurance.

Revenue Assurance – A Special Breed of Professional

I really believe that it takes professionals of special character and mindset to do this job – and that makes me happy. If it was easy, then anyone could do it – but it is not. So when you do manage to get it right, you know you have really achieved something.

Jumping off a cliff can be scary, but sometimes it can also be really rewarding, and really fun.

That’s why I LOVE Revenue Assurance.

Why Your Telco Hates My Voice/Data Habits – And Why Revenue Assurance Should Care

2010-06-22T11:47:00.001-07:00

Hi, I’m Louis, and I “abuse” your network. Or at least that’s what my service providers tend to tell me. But as a Revenue Assurance Professional, I also know why they think that way – and I’m here to say they are probably on the wrong side of history.

I don’t pay for voice service anymore. Not even on my mobile. I do occasionally pay interconnect charges when I call my family in Singapore, but even when I do I’m paying a third party and not my service provider.

Many Flavors of “Legal” Consumer Bypass

That’s because in the US, Google has launched a service called Google Voice. And with Google Voice, I get a free phone number/DID (Direct Inward Dial), for which I pay no monthly recurring charge (MRC), nor incoming call fees. So basically the people who call me on my Google Voice number are paying (through interconnect termination fees to Google, presumably) for my phone number.

With Google Voice, I also pay nothing for calls anywhere in the US. This is because Google Voice offers “call-back” service, where you initiate calls online. This way, you receive an incoming call, pick up, then Google Voice makes another incoming call to whoever you’re calling.

And because incoming “landline” calls are “free” in the US regulatory environment, neither party pays. Usually the one calling would pay for the call (as in the above example), but in this case no one “initiates” the call – both calls are incoming. Yet network/calling capacity is still being used. Someone is bearing the load of terminating these calls.

As a consumer, this makes me happy because I’m getting something for free that I used to pay for. But as a Revenue Assurance Professional, I worry about how big the risk is from these activities and how it affects telcos’ bottom line.

Free Calls Everywhere, Setup and Data Costs Only

Google also recently bought Gizmo, a VoIP provider. Even before the acquisition, Google Voice was integrated with Gizmo. This meant that my Google Voice number is really just a proxy or forwarding service for my VoIP (actually SIP) service with Gizmo.

Like most SIP or VoIP services, Gizmo allows free calling within their network (like Skype to Skype calls) – so when I’m on my hour long commute to and from GRAPA’s head office in the Chicago suburbs, I can make free calls back home to my girlfriend the entire time.

If I was being particularly naughty, I would set my family up the same way in Singapore, and I would be able to make free calls to them too.

The difference between this and other services like Vonage etc. is that there is no monthly recurring charge or subscription – the only thing I pay for is the equipment (so I don’t have to call from a computer) and the monthly internet/broadband fee.

When I do pay a provider for interconnect (eg: to Singapore) that provider is Gizmo or Google, not my mobile provider. If I worked for a telco that only sold circuit based voice service (if any still exist), I would be very afraid.

Worst For Cellular Providers?

Probably the most expensive kind of bypass I commit (for the telcos) is when I use the 3G connection on my smartphone to make the calls (I use an application called Fring).

Most mobile networks do not yet have as much data capacity as they have circuit calling capacity – which is why wireless backhaul in the US is going through such a huge boom as cellular providers rush to keep up with exponential growth in data usage (admittedly from a very low base).

Now, I am not saying that mobile providers here should allow me to make free circuit calls just so I will not clog up their data network, but that’s not an entirely crazy idea. Because the more I add to their data usage, the sooner they have to make expensive infrastructure improvements.

The problem is that they cannot devalue their circuit calling capacity, because that is still their primary revenue stream. The good news is they are at least still selling me a data connection, and they are charging me a premium to only have data service (instead of having both data and voice).

How Big/Real is the Problem?

The truth is that the level of technical expertise required to do all these things is prohibitive for most people – not everyone is like me, and willing to live with unstable hardware and software environments while trying to see if I can make things work.

And from a broader perspective, it has not been the case that prepaid calling cards used by foreign workers and students all around the world have somehow destroyed telecoms by diverting interconnect revenue.

Consumers typically have a number of trade-offs they make in determining the value of a service. For some people, not having to buy a prepaid card to make international calls is worth the price of paying the interconnect rates charged by their telco.

More to the point, someone in the telco is weighing all these potential bypass scenarios and optimizing pricing in order to maintain the healthiest margins possible. However, if you are reading this, and you do not think it’s you – that probably is not the best sign.

Revenue Assurance to the Rescue, Spotting Trends, Managing Future Risk

Because at the end of the day, we cannot just assume that someone else in the telco is calculating the risk and making these determinations. And when it comes down to it, who is better placed to do this kind of complex modeling than Revenue Assurance?

That said, these kinds of bypass scenarios do point to larger trends in the industry that we in Revenue Assurance ignore at our peril. Certainly in enterprise services, there has been a trend towards “including voice” in the sale of very high speed connections (1Gb/10Gb symmetrical) that service, for example, a large building or campus.

And as more customers come to value their broadband data service more than their voice service, they start to expect cheap or free calls over their data connection.

When it comes to trends like these, telcos have to stay ahead of the curve and understand the risks of either not doing anything and being overtaken, or doing too much too fast and cannibalizing your own revenue streams for no returns.

If you are worried, don’t be. Talk to your Revenue Assurance professional – he/she will be able to help you – that’s what they do.

That’s why I LOVE Revenue Assurance.

What is the Key Performance Indicator (KPI) for Revenue Management?

2010-06-21T06:10:00.000-07:00

I’ve been writing a lot about Revenue Management recently, and you can read part 1 and part 2 of my posts on it, as well as this one and this one.

And just to be clear, while I do try to “define” or clarify what I think Revenue Management is in those posts (and this one), this is a blog after all, and sometimes I’m just thinking out loud.

In the weeks and months to come, GRAPA will probably come up with a formal definition of Revenue Management, but in the mean time, I’m just trying to help people understand it as I find out more about it myself. If you’d like to participate in this discussion by commenting, all the better.

Why Are KPIs Important?

Before we really start talking about KPIs for Revenue Management, I just wanted to remind myself and everyone reading why KPIs are important - because KPIs are the objective measures we negotiate with management to measure if we are doing a good job or not.

At the end of the day, it doesn’t matter if you’re best friends with the CFO, everyone likes you, you get praised by top managers for all the good things you do – when it comes to budget time, if your KPIs don’t show how well you’re doing, your budget and headcount is going to be affected.

“Revenue At Risk?” Forensic Case Load? Isn’t That for Revenue Assurance?

I’ve talked before about how leakage is often not a very useful KPI for Revenue Assurance – and certainly I don’t think it is a useful KPI for Revenue Management, for many of the same reasons.

In that post, I proposed that “Revenue at Risk” or the RA team’s forensic case load were both better KPIs for Revenue Assurance, and depending on how you view Revenue Management, using these as a starting point is certainly going to be more useful than leakage.

But obviously if we’re not clear on what the definition of Revenue Management is, and I don’t claim to be any kind of expert, then KPIs can be difficult to pin down. Part of the problem is that if we knew the KPI, we could much more easily define Revenue Management based on that KPI!

KPIs for The “Operationally Responsible”

In part 1 of my post on Revenue Management, I tried to define it in terms of “operational responsibility.” But part of the reason I’m not sure about this anymore, is that the KPIs for an operational department are usually speed and accuracy – certainly that’s the case for postpaid billing.

In that environment, management just wants to know that the bills are sent out on time, and that those bills are, for the most part, free of errors (within an acceptable range).

So if we were to really run wild with this definition of Revenue Management being “operationally responsible,” it would be logical to say that their KPI in relation to the “revenue management” of billing operations, is the speed and accuracy of billing. Exactly like it was for the BOM/Billing Operations Manager of old who made sure things were done right the first time every time.

The thing is that, even with departments that fully embrace Revenue Management, I’m not sure this is true or accurate.

Speed and Accuracy?

I recently met a Billing Manager, who also had “Revenue Management” responsibilities. In that example he is probably responsible for the speed and accuracy of billing, but not necessarily because of his “Revenue Management” responsibilities.

He is probably making sure there is minimal revenue loss by doing things right the first time every time, but if he was just the billing manager, he would probably be doing that anyway.

This doesn’t necessarily mean “operational responsibility” isn’t a useful way of understanding Revenue Management, but it doesn’t clearly describe the KPIs involved.

Monitoring and Reporting

Which brings me to what I talked about in part 2 – thinking about Revenue Management as a monitoring and reporting function.

Even in this scenario, Revenue Management probably has “responsibility” for operational departments in scope, and are probably held accountable for problems. However their main role is exactly monitoring and reporting, just as the main role of Revenue Assurance is forensics.

In this situation, which is what I’ve actually seen more practical examples of from GRAPA members, Revenue Management may have to answer for issues within billing, mediation, interconnect, network etc. but they are not “operational” in actually being measured on whether service is delivered well, or on time.

Their main function sounds like it should be reporting on the “accuracy” (rather than speed) side of these operational department’s KPIs – ensuring revenue is accurately accounted for.

Getting Revenue Right, The Effectiveness of Reporting and Controls

At which point I have to start asking questions more than I have concrete answers to give.

Does this mean that the KPI for Revenue Management is the speed and accuracy of their reporting?

That they should be measured on how timely their data is in order for management to make decisions/changes? Should they be measured on how accurate their data is – not just if it is correctly reported, but if it effectively measures the revenue position of the telco?

And does this mean that, just like with Revenue Assurance, a good indicator for Revenue Management is “Revenue at Risk” – ie: the revenue not lost due to the controls/monitoring put in place?

Similar Objectives, Different Methods?

I suspect that answer to all those questions is a big firm yes. Because while Revenue Management and Revenue Assurance are fundamentally different ways to dealing with the same problem, the problem is still revenue risk, or leakage, or revenue loss or whatever you want to call it.

And the best way to measure this is not leakage, but Revenue at Risk.

But just as another key indicator for Revenue Assurance is the forensic case-load, because it measures how much and how fast Revenue Assurance is performing its primary function, so too the speed and accuracy of reporting would have to be a key indicator for Revenue Management.

If You Monitor, Are You Responsible?

I am starting to convince myself that Revenue Management is exactly about monitoring and reporting, and that the operational responsibility that can come with it is simply an indication of that posture, rather than the reason for it.

If you are in charge of monitoring how well something is going, more often than not you’re going to be in a position to try and make things better when you see a problem.

When Revenue Assurance leaves control monitoring to the operational team, that is because when that team responds to alarms, they are the ones who have to do something about it in order to prevent problems in their own systems/processes.

If Revenue Management is monitoring controls, then they are the ones responding and eventually pushing for corrections or policy changes.

I know this is a really wonky and geeky post, but it gets me excited – and that’s how you know I LOVE Revenue Management and Revenue Assurance.

I LOVE Revenue Management Too! Part 2: The Giant Planet That Eats Everything!

2010-06-18T13:25:00.000-07:00

I’ve talked previously about Revenue Management, especially in relation to “operational responsibility” and how it tends to be a return to the BOM (Billing Operations Manager) model.

But I recognize that there are many many perspectives on Revenue Management, and I wanted to look at another aspect of it that has to do with it becoming a centralized point of reporting and responsibility within the telco.

I don’t know how many of you remember the original Transformers The Movie – the animated one, not the recent Michael Bay movies. But in that movie, there was a giant planet that ate other planets, called Unicron.

(And if there are any film geeks out there, you should know that planet was voiced by Orson Welles, the guy who directed Citizen Kane –it was the last role he played before he passed away.)

Anyway, the reason I bring it up, is because when I listen to some people talk about Revenue Management, that’s what I picture in my head – a giant planet that eats everything in its path.

Revenue Management, Smash!

Because what these people talk about is all the things (on top of what they call “Revenue Assurance”) that are part of Revenue Management, and that have to be included in Revenue Management. It’s as if they want Revenue Management to take over the entire telco, devouring it!

They talk about adding in “finance, network life-cycle, CRM, supply chain, ordering/provisioning,” and more and more stuff down to “regulatory compliance, revenue recognition and audit compliance with IFRS/SOX etc.”

And if you know me, I’m all for Revenue Assurance expanding its scope into more areas, like designing new revenue models, optimizing margins on lines of business/assets, implementing finance controls on marketing etc. But at a certain point with what I read, it stops being realistic, and my mind goes back to the giant devouring planet.

“Taking Over the Telco” and “Operational Responsibility”

But I think what’s at the base of all this is something these people don’t always talk about. The reason why they think Revenue Management can “take over the telco” is that they view the function as mainly a monitoring and reporting function.

What they’re talking about still has aspects of “operational responsibility,” in that by monitoring every aspect of the revenue chain, they may often be held responsible for the revenue generating aspects of all the departments they monitor.

Regardless, I’m going to focus on the monitoring and reporting aspect, since I’ve talked about “operational responsibility” enough for the time being.

Who Monitors the Controls?

When we talk about Revenue Assurance, I always talk about how operational departments (billing, mediation, interconnect, network) need to remain responsible for their own domain.

This meant that while Revenue Assurance could design controls for them that help control revenue risk, the operational departments would still be responsible for monitoring the controls. After all, they are responsible for their own department, not Revenue Assurance.

Revenue Management sees it the other way – that operational departments should not monitor their own controls, and that should be done by the Revenue Management team.

And this is certainly a legitimate way of looking at things. Especially if you understand that most Revenue departments are never going to be “pure” Revenue Assurance or Revenue Management, but an optimized mixture of the two depending on their specific situation.

Can I Monitor Every Control Everywhere?

So this aspect of Revenue Management I can actually accept and get on board with – especially if the specific environment of the telco demands it. Someone has to monitor the controls, and if it’s better, easier and cheaper for Revenue Management to do it rather than the operational departments, who am I to say differently?

If this means Revenue Management ends up having to take on responsibility for these departments when it comes to revenue, that’s fine too.

The problem is that I don’t think you can usefully and practically monitor any and every aspect of telco operations just because your primary function is monitoring and reporting, whether it has to do with revenue or not.

This is Not a “Fat” Joke

Maybe you can, and I’m just not thinking big enough, but I’m happy with Revenue Assurance and Revenue Management the way they are, and with the idea of them expanding scope in ways that are practical, useful, and clearly deliver value to the organization.

I don’t need to be a giant planet that eats everything in its path.

You might even say that’s why I LOVE Revenue Management just as much as I LOVE Revenue Assurance.

Revenue Assurance is from Mars, Marketing is from Venus

2010-06-17T12:52:00.000-07:00

Let me try to describe a marketing person at a telco. And obviously I’m me, so don’t take this too seriously.

The Most Responsible People in Telecoms

I think telco marketing people are the most responsible people in the telco. They

approach things in a very structured way
very careful how they spend money
always thinking about consequences of their actions
imagine all the things that can go wrong and help manage risks

Absolutely not, right? In fact they are the exact opposite of all those things.

They are the ones who come up with all kinds of strange ways to bill and charge for things (unlimited plans, variable billing, friends and family, etc.) that we as Revenue Assurance end up having to make sure works. :)

Artists, Spin Doctors, Lovers

So if marketers are not all the things listed above, what are they? They are artists. They want to create campaigns that are so beautiful and lovely, that when look upon them, you just want to cry. They are also very difficult to hold accountable, whenever you tell them about the effect their campaign had, they somehow make it sound like they meant to do that.

So when you tell them that their campaign over-promised on something the telco couldn’t deliver, and too many people signed up and the network goes does because of it, they say “but that means the campaign was successful doesn’t it?”

They are also strange in that they come up with all kinds of strange things that don’t make sense (I’ve heard stories of people trying give away plastic lawn furniture if you sign up for an account!), and they constantly want to “give things away” to customers – basically so they will love us and be “loyal” J.

These are stereotypes, and they’re probably unfair (yet somehow, still funny!), but there are stereotypes about Revenue Assurance people too, especially when it comes to Marketing.

Evil Bean Counting Police Robots

Revenue Assurance people are supposed to be the evil bean counters from finance who come into departments and act like the police, telling people everything they’re doing wrong and making everyone look stupid. We are here to stifle people’s creativity, we’re here to turn them into mindless robot slaves who produce boring marketing that’s useless.

While what I’ve described about marketing people above isn’t entirely true, I have to say this image of Revenue Assurance people is entirely untrue – or should be untrue if you’re doing Revenue Assurance the way it’s supposed to be done.

When it comes down to it, Revenue Assurance is not “in charge” of marketing – we don’t tell them what to do. Yet marketing teams have real needs and they have real problems – they have expensive marketing campaigns that fail, they create huge fraud and revenue risks with their new plans/products, they produce marketing that damages the reputation/brand equity of the telco.

How Revenue Assurance Can Help Marketing Solve Their Own Problems

What we in Revenue Assurance say is “we can help.” We can help make marketing less of a “random” process where you don’t know if you’ll succeed or fail. If marketing asks for our help, we can help implement finance controls that don’t stifle creativity, but rather helps harness it in the most useful ways.

We can help – if we’re asked – to turn marketing into a reliable and consistent department that manages the risks of what they do, minimizes the cost and risk of campaign failures, and makes marketing campaigns more consistently successful.

Because at the end of the day, marketing remains in charge of marketing, we are not going to “take over the entire telco.” But when marketing is in charge, they feel the pain when things go wrong. When they feel that pain, they should know, Revenue Assurance is there to help.

Revenue Assurance Speeds Up Marketing?!?!

And we are not going to “help” by making things slower, and more predictable, and less creative. No. We are not here to tell people their ideas are stupid and they won’t work. No way. Our only job is to figure out where things can go wrong, and help you understand how much money you can lose because of it. That’s what we do.

So if the level of risk we discover is acceptable to management, then marketing can go ahead. If not, we can create controls that can minimize the risk, or say the expense of the campaign is better spent on another campaign with a different risk profile.

The idea that all this can make things go slower is a reasonable assumption, but that doesn’t make it true. More often than not, Revenue Assurance makes things go faster. Yes, I said it. Revenue Assurance can actually accelerate the marketing process.

Turning Marketing into a Reliable, Consistent, Creative Process

Because when you have a clear structure and standards-driven way of monitoring how marketing does and measuring what they do, a lot of the trial and error, a lot of the randomness, comes out of the equation. You can’t tell me if that happens, getting successful marketing campaigns to go live won’t go faster, rather than slower.

Now, of course things get a little more complicated, and there are a lot of details that have to be filled in about how all these things can/should be done – but that will happen in the weeks to come as I write more about this.

In the mean time, I don’t know about you, but what I’ve described above makes me want to say, I LOVE Revenue Assurance.

Revenue Optimization – High Value, Hard Revenue, “Superstar” RA

2010-06-14T13:10:00.000-07:00

Every once in a while, I hear someone in Revenue Assurance talk about how they worry they are doing the Revenue Assurance job so well, they are “working themselves out of a job.” While I understand why they might think that way (and I talk about it more in a previous post), I completely disagree with anyone who says that.

I am convinced Revenue Assurance will never work itself out of a job, just because the better you get at doing Revenue Assurance, the more things you realize you can do to deliver value. And that’s exactly what GRAPA members all around the world are telling us with Revenue Optimization.

Successful Revenue Assurance Always Expands Scope, Lowers Costs

When these Revenue Assurance professionals are successful and good at what they do, management always seems to find other problem areas where they need help, at the same time realizing that Revenue Assurance has exactly the skills needed to help. The good news is that with these new responsibilities usually come with more budget and more headcount for your department.

I want to pause here to say though, that just because management gives you more budget and headcount, doesn’t mean you should be doing/spending more to assure areas that are already well controlled. If, based on management’s appetite for risk, certain areas like billing, mediation, etc. already have a reasonable level of controls, there’s no reason to do more.

Especially if there’s not a compelling business case, those resources should be used in areas where there will be a large and clear return on investment, and that’s what Revenue Optimization is all about.

Do CFOs Want More Cost? Or More Investment? Moving to High Margin/High Cost Areas

In fact, if certain areas are well controlled, and controls have been institutionalized, there are usually cost savings to be had, rather than need for more budget. Because when it comes down to it, your CFO doesn’t want you to bring him/her more cost or expense for something that’s supposed to be under control.

On the other hand, CFOs are always willing to invest in things that deliver more value and more hard revenue.

The business case for Revenue Optimization is clearest in two main areas – optimization of high margin Lines of Business (LOB) and optimization of margins on assets. When it comes to Lines of Business, we’re talking about interconnect, roaming, content etc. When it comes to assets, it could be anything from BTS/BSC, softswitches to FTTH/FTTN.

When it comes to optimizing these areas, the value and benefit doesn’t just come from the fact that these are high cost, high margin areas. Especially when telcos are subsidizing or taking lower margins on other aspects of their business (on-net calls, cheap/free customer equipment, bundle discounts, etc.) these high margin LOB become all the more important.

These Areas Are Important/Valuable, But Also Difficult/Complex

But the reason Revenue Assurance gets involved isn’t just because there’s value to be had and a clear business case for action, it’s also because these are complex, difficult to understand areas often lacking transparency, clear control points or standardized approaches and controls.

Often times, people know these areas have problems, but they don’t even know where or how to start looking for issues, much less how to solve them. Is it just me, or does that sound like a challenge Revenue Assurance was designed to tackle? And the kind of problems we tackle all the time?

This mixture of high value/high returns, along with complexity and lack of transparency, doesn’t just exist in these high margin LOBs – it’s often as big a problem with optimizing the utilization of network assets.

Asset Margins on New, Expensive, High Volume Assets

This is especially true when it comes to relatively high volume assets (where there are many of each item on a network) such as BTS/BSC, softswitches, FTTH/FTTN. With these assets, deployment/maintenance is expensive, and it can become very difficult and complicated to determine the margins/revenue generated by each individual component.

It often doesn’t help that many of these components tend to be new, and telcos have to make decisions on whether or not to deploy them before the technology or market is even stable or established.

Yet if the telco is going to ensure it is making the most of its assets and not over-spending in areas that are not justified, these determinations have to be made, not least if the telco is going to implement innovative billing/charging models such as BTS Billing that can provide a market advantage while maximizing asset utilization.

Revenue Assurance Professionals = Telecom Superheroes

I will bet you anything, if you tried to explain all this to anyone else in the telco other than Revenue Assurance, they would just curl up into a ball and cry because of how complex and difficult this kind of forensics/analysis is. Yet Revenue Assurance professionals all over the world are doing these things every day.

I don’t know if it makes you feel good about yourself – I know it makes me feel good about myself – knowing there are these problems in the telco that are so important and valuable, yet often only Revenue Assurance has the skills to solve.

Anyone who understands this is never going to imagine they would ever “work themselves out of a job.”

And that’s why I LOVE Revenue Assurance.

Churn & Revenue Assurance Part 2: “He’s Just Not That In To You”

2010-06-11T10:13:00.001-07:00

My suggestion is that you read the first part of this post first before reading the rest of this: Churn & Revenue Assurance Part1: “Breaking Up is Hard to Do”

Perception is Reality – “I Think it’s Good, So it’s Good”

When you sell a service, customers’ perception of value is largely determined by marketing and the power of your brand – by what you think you are getting. A good example of this is when you’re the largest/oldest carrier in the market, and your brand is strong, people assume you must be the best, with the best coverage, customer service etc.

That’s why telcos spend so much money on advertising, because that’s how customers understand the value of what they receive. It is only over time when the brands of new entrants become established and clear in people’s minds, that “old” and “first” stops meaning “best.” This is also why telcos always want to be the first to market with new products and services.

So because we as customers perceive value through marketing and branding, even when we encounter bad customer service, we don’t necessarily switch providers – partly because we don’t believe the other provider could possibly be better.

If I was trying to be funny, (and if you had read one of my older blog posts) I would even say that if your brand is strong enough, you can torture customers for fun.

Price is Too High, Service is Too Expensive

When people complain about price, it’s usually because they don’t fully see or appreciate the value they’re getting from the service.

I recently tried to change my broadband provider because I thought it was too expensive. But after having so many problems with the new provider I was trying to switch to, I began to see how valuable my old, expensive and reliable connection was.

Because you have to realize, customers never think the price is too high when they hear about all the cool new things they can do on their phone and they sign up for it.

If they can check their e-mail on their phone, they’ll pay for that. If they can use Facebook or Twitter on their phone, they’ll pay for that. If they can get the ring tones they want, they’ll pay for that. If they can get their favorite music, radio or TV shows on their phone, they pay for that too.

You have to realize – telcos don’t charge based on how much a service costs. Partly this is because figuring out costs in telecoms is incredibly difficult. But it’s also because telcos know they can charge based on what customers are willing to pay.

SMS/text messaging technically doesn’t cost anything – it uses the SS7 signaling protocol that’s usually used to set up and tear down voice calls. SS7 was never designed to “deliver service” or payload. But people are willing to pay for the service, so telcos are more than happy to charge for it.

Is Churn or Customer Experience Part of Revenue Assurance? One is, One isn’t

The reason I’m so interested in this, and why you should be interested in this, is simple. When I go around to Revenue Assurance conferences, I keep hearing about a push towards “Customer Experience” and improving customer service. And I get confused, because I don’t see what that has to do with Revenue Assurance.

I’m not going to say telcos shouldn’t be trying to improve customer service or they shouldn't be trying to offer their customers more value. But if you’re going to say you are doing those things because your telco has a churn problem, I’m going to say churn and customer service have very little to do with one another.

Because when it comes down to it, I’m in Revenue Assurance, and if you work in Revenue Assurance you believe in actually being logical, working with facts and rationalizing how money gets spent.

If fixing customer service would really have a huge effect on churn, and it would really affect either the top or bottom line of the telco, I would be all for it. But I’m not convinced it does, and that’s not what I’ve been hearing from GRAPA’s members.

If I hear differently or if I learn differently, I will gladly admit I am wrong - but I don’t think I am. If you want Revenue Assurance to be involved with churn, I’m all for it. I think we should be involved in churn management and marketing. If you want Revenue Assurance to be part of “Customer Experience,” and improving customer service, I’m going to say that is out of scope.

I work in Revenue Assurance, and the job of Revenue Assurance is to either assure the bottom line of the telco, or help add to the top line. Churn management absolutely does that. Market Assurance absolutely does that. I have seen no evidence that “Customer Experience” does that.

And that’s why I LOVE Revenue Assurance.

Churn & Revenue Assurance Part 1: “Breaking Up is Hard to Do”

2010-06-10T10:15:00.000-07:00

Before you read this post, you might also be interested in a previous post: Do Customers Want Telcos/Technology to Slow Down or Speed Up? A Revenue Assurance Perspective.

I’m sure most of you will have broken up with someone before, or been dumped by a former girlfriend or boyfriend. Honestly, I don’t really know what that’s like, because I’ve been with the same woman, my first girlfriend, since I was 17 – we’ve been together now about 14 years.

But I know what my friends tell me about their love lives, and I know how these scenes always play out on TV and in movies. And the situation of breaking up with someone sounds a lot like the situation with Churn – something I, like everyone else, absolutely have firsthand experience of.

And as a Revenue Assurance guy, I’m always going to be interested in something that affects the wallet share and revenue of the telco.

“It’s Not You, It’s Me”

When you break up with someone, you can’t always put into words why you want to break up, and you certainly don’t tell the other person what the real reason is – “I don’t like your hair” “your parents are evil” “you snore” “I think I can do better” “you don’t make enough money” or whatever.

Instead you want to sound reasonable. You want to sound like you’re a rational person making a logical decision.

So you say “it’s not you, it’s me” “we’ve just become different people” “we’ve just grown apart” “I don’t want to be a burden to you” “you should find someone you really want to be with” “we can still be friends” – none of that’s true, but that’s what you say in that situation because you want to sound reasonable.

And I’m telling you that’s exactly the situation when customers churn. Because we’ve all heard it before. When the retention department asks them why they are leaving, customers always only say one of two things – the customer service was bad, or service is too expensive/costs too much/price is too high.

Are Customers Liars? Or Are They Stupid? Neither!

What I’m saying to you is that when customers say price/customer service, they’re lying – if not to you, then to themselves. Just like when you break up with someone, when you churn, you want to sound rational and reasonable. And at the point of cancelling service, blaming price/customer service sounds logical.

But who can blame customers for doing this – you certainly don’t blame your ex-boyfriends and girlfriends for trying to be nice to you and not pointing out all your faults when they dump you.

So why do customers really churn? When they are interviewed in detail, or are brought in for focus groups, that’s when the real truth comes out. That’s when you discover that the problem is much, much more complicated.

Because you start to wonder if customers are stupid – it turns out they cancelled service because “my phone was an ugly color” “my sister said the company is evil” “my mother thinks the radiation is bad for you.”

What I’m telling you though, is customers are not stupid.

The real issue here is that telcos are service providers. We are not selling physical products you can touch and hold and look at, that have a real physical presence and effect.

When I buy a generic/non-branded drug like ibuprofen or acetaminophen, it still works exactly the same as Advil or Tylenol. When you buy a car, you can say it looks ugly, the engine is too loud, the door fell off – it’s not so easy to say that about a service like voice or data or content delivery.

That’s all I have time for right now, but be sure to look out for the second part of this post, where we talk about customers’ perception of value, the real cost and price issues in telecoms, and whether “Customer Experience” should be part of Revenue Assurance.

Until then, all I have left to say is I LOVE Revenue Assurance.

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

2010-06-09T08:00:00.000-07:00

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!

Revenue Management vs. Revenue Assurance – Expensive/Simple vs. Rationalized/Complex

2010-06-08T10:08:00.000-07:00

This is a follow-up on my previous post “Are Telco Revenue Assurance Teams Responsible for all Revenue Loss and Fraud?” Because when writing that post, I realized that in order to really talk about Revenue Management, like I had promised, I would need to first talk about it in relation to Revenue Assurance.

This is because Revenue Assurance and Revenue Management are not meaningless buzzwords that just happen to share the word, “Revenue,” in common. They are in fact just two different ways of describing the Revenue Posture of a telco (more on that coming soon).

Are You Operationally Responsible?

Based on our experience, when you compare Revenue Assurance to Revenue Management, the main difference is whether the team (regardless of name) is operationally responsible. And by that, I mean whether your team is basically “in charge” of whatever operational team is in scope – e.g.: billing, mediation, interconnect, network, etc.

If those teams report to you and you not only get blamed when something goes wrong with them, but you also get credit when things go right with them, you are operationally responsible. If you are available to help, but the ultimate responsibility for those systems and environments lies with the operational managers (billing, mediation, interconnect, network, etc.), then you are not operationally responsible.

The simplest way I can put it, is if you ARE operationally responsible, then you’re doing Revenue Management. If you are are NOT operationally responsible, then you are doing Revenue Assurance. That does not mean you are either doing one or the other – you probably do a bit of both, again depending on your “Revenue Posture.”

I will talk about that, and Revenue Management, more in upcoming posts. For right now I will focus on Revenue Assurance.

Being operationally responsible is neither a good nor a bad thing. It is simply a decision by management that we as professionals need to accept – as long as we can execute that decision with integrity.

But deciding between Revenue Assurance and Revenue Management, deciding between operationally responsible or not, is like any other strategic decision. When you make this decision, you are consciously saying that you will be less efficient and effective in some way, in order to gain benefits in other ways.

Revenue Assurance, A “Redundant” Function

And that is certainly the case with Revenue Assurance. By not being operationally responsible, Revenue Assurance teams think of themselves as a redundant function (again, this is neither good nor bad) whose main task is to identify risk, quantify risk, and create controls based on management’s appetite for risk.

But, because they are not operationally responsible, they are a support function rather than a line function – there is no line on the company accounts that shows how much revenue comes in from their operations because they do not have “operations.”

This means that Revenue Assurance teams are not responsible for billing, mediation, interconnect, network etc. – on the contrary, those departments are “clients.” This is a huge difference, because Revenue Assurance cannot work by “telling” these operational teams “what to do” – Revenue Assurance has to work by building consensus, trust and mutual cooperation.

At the same time, operational teams must recognize the value Revenue Assurance brings to their operations and actively seek out the help of Revenue Assurance to help them solve problems. And the only way they will do this is if they are the ones held responsible for any revenue loss or fraud that occurs in their environment.

Cost vs. Benefit, Revenue Assurance vs. Revenue Management

The benefits of the Revenue Assurance model are clear – by being a redundant function rather than a management function, Revenue Assurance tends to be more cost effective. Revenue Assurance allows for a clear rationalization of how much gets spent identifying risks, quantifying risks and creating controls based on management’s appetite for risk.

In contrast, Revenue Management tends to be more expensive, because rationalization is much more difficult. When you’re directly responsible for revenue risk, loss and fraud, you tend to take a brute force approach and make sure everything is done right the first time, every time. This is effective, but that kind of desire for perfection is usually expensive.

In general, Revenue Assurance is a much more complex and subtle function than Revenue Management – it requires skilled, consensus-building managers and analysts and the right corporate environment. It also requires a real commitment on the part of management, the Revenue Assurance team as well as the operational managers, in order to make it work.

If any or all of those resources are not available, or that environment cannot be created, it can become very difficult to perform Revenue Assurance, making Revenue Management the easier, simpler, but more expensive, choice.

Revenue Assurance also functions according to management’s appetite for risk – and if that appetite for risk is high, or it changes over time, the team’s assurance activities must be flexible enough to adjust. Revenue Management assumes very little appetite for risk, which is again why it tends to be more expensive and less rationalized than Revenue Assurance.

Expensive/Simple vs. Rationalized/Complex

In the decision between expensive and simple (Revenue Management) vs. rationalized and complex (Revenue Assurance), telcos choose what is best for them in their unique situation.

In some cases, an extreme of either could be entirely appropriate – teams doing only Revenue Management or only Revenue Assurance. But in our experience, most telcos have a mix of both, depending on their situation, their environment, and their appetite for risk.

When we talk about Revenue Posture in the weeks to come, we’ll have benchmarks to help you figure out how much Revenue Management or Revenue Assurance you do – not just so you can understand and find out what you’ve been doing, but find out how you can adjust and optimize how you move forward.

Until then, you should know, I LOVE BOTH Revenue Management AND Revenue Assurance.

Are Telco Revenue Assurance Teams Responsible for all Revenue Loss and Fraud?

2010-06-08T06:46:00.000-07:00

Recently I was talking to someone who has a long history in manufacturing, and I was trying to describe to him what Revenue Assurance was all about. Once I described the job to him, as well as the problems and issues associated with it, the first thing he said was – that sounds a lot like quality assurance in manufacturing.

And the more I listened to him talk about the problems quality assurance departments used to face in manufacturing, the more I heard the same problems Revenue Assurance departments tend to face today in the telco.

The best example of this is where even now in some telcos, Revenue Assurance teams tend not to get credit when things go well in the operational departments they support (billing, mediation, interconnect, network). And yet whenever there’s revenue loss or fraud found in those departments, Revenue Assurance teams are the ones held responsible.

And the more my friend talked, the more I realized how much Revenue Assurance teams can learn from the lessons of quality assurance to solve problems like these.

What this person was saying is that in the past, when manufacturers found problems with the quality of their products, they would blame the quality assurance team. After all, their department name was quality assurance, so if quality was not being assured, it must mean they’re not doing their job. Sound familiar?

But very quickly they found that blaming the quality assurance team didn’t do anyone any good, except make the quality assurance team miserable. Quality was still not improving.

The real problem was because while quality assurance was being held responsible for quality, they were not able to hold other operational teams responsible for decisions those teams made that might affect quality. One example is where because procurement was buying sub-standard parts, there was almost no way the finished product was going to be good quality.

But procurement wasn’t going to volunteer that fact to quality assurance, because they didn’t care. And the reason they didn’t care was because they weren’t being held responsible for buying sub-standard parts – quality assurance was. In fact procurement was being rewarded for cutting costs, even though it meant an inferior product that could not be sold.

So even if, after a great deal of forensic work, quality assurance found out the problem was in procurement, they couldn’t really do anything about it. They were not in charge of procurement and couldn’t tell them what to do.

They only thing they could do was complain to management, and get procurement in trouble. But that meant that in the future, procurement would be even less cooperative and more secretive about any mistakes they made or problems they caused.

So really, quality assurance was being held responsible for something they could not possibly be held responsible for – because they were not the ones actually, operationally, responsible.

In many ways, that is a problem Telco Revenue Assurance departments can tend to face today. Often times Revenue Assurance is not operationally responsible for billing or mediation or interconnect or network. Despite that, they are the ones blamed for problems caused by those departments, just because the problem has to do with revenue and revenue loss.

In this situation, the solution can seem very simple – just make Revenue Assurance responsible for all those departments, and have all those departments report to Revenue Assurance. And if that sounds crazy and unlikely to you, it shouldn’t, because that’s what used to happen in the telco.

In the past, billing used to report to someone called the Billing Operations Manager, or BOM, who was responsible for the integrity of the revenue streams. But I’m going to talk more about this in another blog post, because that’s almost exactly what Revenue Management is all about. Right now I'm going to focus on Revenue Assurance.

The solution that manufacturing companies decided to use was a different approach – they did not make everyone who could affect quality report to quality assurance. Instead what they did was “make quality EVERYONE’s responsibility” – this meant that if you made a decision that affected quality, you were the one held responsible for it.

Quality assurance could help you find those problems and help you fix them, but in the end if anything went wrong, it was the fault of the operational department (e.g: procurement, in the example above).

And from what my friend told me, this is how quality assurance is still used in manufacturing, and it has been incredibly effective. So much so that no one even questions any more if operational departments have the responsibility – of course they do, they are the ones who need to be held accountable for the decisions they make.

So while I don’t think the comparison is perfect between manufacturing and the telco, between quality and revenue, and I don’t think “making revenue everyone’s responsibility” is the only solution to this problem, I think there is a great deal that Revenue Assurance departments can learn from this example, and more generally from other industries.

While telcos are unique organizations, that does not mean they have to re-invent the wheel in everything they do – we don’t have to make all these mistakes ourselves in order for us to learn from them. Other people have made mistakes in the past, and we should learn from them. Especially if we work in Revenue Assurance.

That’s why I LOVE Revenue Assurance.

Do Customers Want Telcos/Technology to Slow Down or Speed Up? A Revenue Assurance Perspective

2010-06-07T12:39:00.000-07:00

When I present at Revenue Assurance conferences, I like pretending to be stupid – largely because, being a relatively young guy, it’s often difficult for people to take me seriously and believe I know what I’m talking about.

One of the ways I pretend to be dumb is I tell the audience I love working in telecoms because telecoms is about old things – it’s the same stuff we’ve always done, it’s boring, predictable and nothing ever changes. By that point the conference organizers are usually looking nervously for a way to yank me off the stage, until they realize I’m just joking.

The other way I pretend to be dumb, is I talk about why telcos exist – I say that telcos are here to perform science experiments, that we’re artists looking to create perfect things of beauty, and most of all, that we exist because we love our customers.

But the truth is, whether we in Revenue Assurance actually love our customers or not (and you know me, I LOVE everything), we work in a special industry called telecoms, and in telecoms, we torture customers for fun.

Now that may be a bit harsh (and hopefully a bit funny), but it’s absolutely true – I don’t know of a single person who’s never had a bad experience getting their telecoms services to work the way they’re supposed to. And obviously this matters to Revenue Assurance, because when customers churn, that absolutely affects your telco’s revenue share.

But whatever the implications for Revenue Assurance, you have to know I’m not saying any of this means we should actually torture customers for fun, and I’m certainly not saying telcos shouldn’t do their best to improve customer service – I’m just saying there’s a reason why things are the way they are.

And the reason is because telecoms is not about old things, it’s always about new things. When you have new things all the time the way telcos do, I don’t know if it’s humanly possible not to have things be messy and chaotic. But if that’s the case, why are telcos so obsessed with doing new things, even when it causes so much pain for their customers?

In my opinion, the truth is that telcos actually do love their customers and are being as responsible as they know how, by giving customers what they really want. Because despite what anyone might say when they’re cancelling their service (usually prices are too high and customer service is bad – something I’ll address in another post), telco customers only really want one thing – they want what’s new, and they want it now.

They want new technologies, they want new price plans, they want new services, new gadgets, new phones, new functionality – all they want is new new new new new. And they want it now now now now now.

And because we who work in the telco really do love our customers (especially if we’re in Revenue Assurance), we give them exactly what they want – as much “new” as they can handle, as fast as we possibly can.

If we didn’t do that, we would be ignoring what our customers most want and what they trust us best to do. And you know as well as I do, that customers are willing to let us torture them for fun, as long as they can get the newest thing as fast as possible.

So the next time you complain about how your job as a Revenue Assurance professional is so difficult because things always change, remember this: the tail cannot wag the dog and we cannot do things backwards.

If we work in telecoms, things are always going to be new. So if you want to work in this industry you’ve got learn to love change and love new things as much I do. Because when it comes down to it, I have to love change and new things, because I work in Revenue Assurance.

And that’s why I LOVE Revenue Assurance.

Profitable/Strategic Revenue Assurance = Revenue Engineering

2010-06-04T11:28:00.000-07:00

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.

Revenue Assurance Professionals “Are All The Same”

2010-06-03T11:00:00.000-07:00

I have to admit that, in part, this blog post is an excuse for me to post pictures of my lovely new niece who was born last week (coming up below). But it is also an excuse to talk about something I’ve noticed a lot in meeting Revenue Assurance Professionals at conferences, GRAPA events etc.

I believe there’s a particular type of person who ends up doing the Revenue Assurance job, or at least a certain type of person who keeps doing it long enough and well enough to become Revenue Assurance Managers.

When I first met some of GRAPA’s members, the first thing that struck me was that these are people who live very ordered lives – these are people who like things to be rational and make sense, and so are naturally drawn to a job where they help make that happen – Revenue Assurance.

But in many ways that’s probably just natural, because people who are good at certain things tend to have similar personalities, and I absolutely think that’s the case with Revenue Assurance Professionals – they are fundamentally logical people.

But it’s more than that. I began noticing that many of the GRAPA members I met were past their 20s, had been married for a while and also had young children. Now, I should be the last one to talk, since I don’t necessarily fit into those descriptions (except for my age), so obviously those are not the only kinds of people who do Revenue Assurance, or are good at it. I’ve also met great professionals who are younger or older and in various situations.

At the same time however, there are also certain ways in which I am very much like those people, since I’ve been with my partner for close to 14 years – and as I mentioned above, I just became a proud uncle of a lovely new niece (though my brother and sister-in-law will be the ones actually doing the work, which suits me just fine).

Regardless, I’d like to think that there is a reason why so many people who are in stable relationships, and who make the huge decision to be responsible for raising children, end up doing Revenue Assurance. And I think it’s as simple as Revenue Assurance is about being responsible and having real integrity – so much so that those are the kinds of people who do it. I don’t know why, but I am very proud of that.

Do I think this means you should panic if you’re not like the kind of people I described? Absolutely not. Do I think only people who are a certain way can do Revenue Assurance? No way.

But do I find it comforting to know that this job is so similar in so many ways, regardless of where you are in the world, that it attracts and retains people who are a certain way? Absolutely. These are logical, rational, responsible people who have real integrity.

And if you don’t believe me, just look around the next time you’re at a conference, GRAPA event, or any other gathering of Revenue Assurance Professionals – I’m betting you’ll be surprised. At the same time, if I’m wrong – feel free to tell me!

Because if the question is whether, even in a crowded room full of telecoms people, I could pick out the Revenue Assurance professionals – I’d like to think I could do that very, very easily. Because Revenue Assurance professionals are in a class of their own, and they certainly would stand out, wherever they are.
And that’s just another reason why I LOVE Revenue Assurance.

A Long, Sustainable Career in Revenue Assurance

2010-06-02T11:00:00.000-07:00

When I was at a conference in London recently, I heard many Revenue Assurance professionals (most from western European telcos) saying they had revenue risk and leakage relatively well controlled, so they were no longer discovering or recovering huge amounts of leakage. They regarded this as bad news. Others who were not in that position, and still discovering large amounts of leakage, also seemed worried when they heard this.

And this is the real worry many of us face in doing the Revenue Assurance job. If I end up being really good at my job, am I really working myself out of a job? If I find revenue risk wherever it may be, and I not only recover leakage, but properly control risk so it stops being a problem, am I making my job more difficult? Will I get to the point where I’m doing so well, I make my position one that no longer delivers value?

The thing is, I hear this concern all the time and I’m here to tell you the answer is absolutely not!

The way I see the Revenue Assurance profession is that it is so important to the telco, it will never be “optional.” Telcos are always going to need Revenue Assurance professionals. This is because the skills we have are so unique and so useful – and what we do delivers so much value for so little budget and headcount, that as long as we understand what our real job is and how to do it well, we are always going to be valuable to our organizations.

Part of how the telcos I’ve talked about got into this position, where their budgets were being questioned because they were no longer recovering huge leakages, is because their Key Performance Indicator (KPI) was leakage.

They had been measured on the amount of leakage in the telco, and when that measure went down, it supposedly meant they were doing a better and better job. But at a certain point, the amount of leakage was so low, there was very little they could do to “do better.”

I don’t think this is because the professionals in those departments suddenly stopped being good at their jobs, far from it, I think it is because leakage is not a useful measure of what Revenue Assurance does.

First of all, the most unique skill Revenue Assurance professionals have is our ability to apply forensics – we are very good at identifying risk, quantifying risk, and then, if management says that risk is too high, creating controls to monitor the risk.

Monitoring those controls, and keeping track of them, is not necessarily part of our core competency and should be handled by the departments who have operational responsibility.

If there needs to be a control on Billing or Mediation, Billing or Mediation should be the ones monitoring the controls. Those are their departments, and they have to be responsible for them. We as Revenue Assurance can help, but we cannot do their job for them.

So a more useful measure of how well Revenue Assurance is doing, is the amount of forensic work it is doing – bringing in cases, looking at incidents and alarms, and investigating.

Another good measure of how well Revenue Assurance is doing is, instead of looking at leakage, to look at Revenue at Risk. This is because Revenue at Risk measures how much potential leakage has been controlled based on the controls implemented. I’ll talk about the details on how to calculate Revenue at Risk in another blog post, or you can refer to our standards book, but clearly it is a positive way of measuring Revenue Assurance rather than the negative measure of leakage.

But it is not just about new ways of measuring what Revenue Assurance does, it is also about understanding the true value Revenue Assurance brings to the telco.

Especially when revenue risk is well controlled, that should be an opportunity to expand the scope of the department to do more things – not spend more money doing something you already do well. Because in that situation, not only should you be looking to spend less on your traditional activities, you should be moving on to higher value targets where your unique skills can be of most help.

And we see GRAPA members doing this wherever we go – they are not only performing forensics and looking for margin losses in interconnect and roaming, they are assuring margins on assets such as BTSs and other infrastructure components. They are introducing finance controls on marketing to get that process under control so that there are fewer failed campaigns, and more campaigns that are more successful.

But the greatest success stories we hear about are when GRAPA members assist with new product development. And when they do so they are not just making sure from the beginning that these new products are billable or assurable – sometimes they are even part of the decision not to do so in order to bring products to market faster. In other situations they are even making this process go faster because they have more end-to-end knowledge of the revenue stream than anyone else does in their “silo.” They have this knowledge because they have a full view of revenue risk across the organization – because it is what they do.

So I think if you are good at what you do but are at all worried about your job or your position in your telco, I’m telling you not to worry. What you do is so important that the only way you can end up in trouble is if you don’t really understand what you do and how you should be doing it. But once you know that, you’ll be able to deliver value to your telco for years and years to come.

That’s why I LOVE Revenue Assurance.

I know I’ve brought up a lot of different issues without elaborating on them in detail – but don’t worry, that’s what I’ll be trying to do in the weeks to come!

I LOVE Revenue Assurance!

2010-06-01T11:00:00.000-07:00

Hi – I’m Louis, and I love working in Revenue Assurance. And when I say that, I’m not trying to be funny, or ironic, or over-dramatic – I really love what I do for a living and I think if you work in RA, you probably do too.

When Rob (GRAPA’s President) said to me, “Louis, I want you to write a blog about this stuff,” I was a little nervous and unsure. I’m a smart guy, but I’m still pretty young (early thirties), and though I’ve been in telecoms for a while now (I used to be an analyst with New Paradigm Resources Groups, a Telecoms Research and Consultancy firm), I’ve only been working in Revenue Assurance (here at GRAPA) for a little under two years. What can I tell a community of experts on this subject that they don’t already know? In particular how can I keep up with Rob, who has 30 years experience in this industry?

But the more I thought about it, the more I realized: I’m like so many individuals, all around the world, who all of a sudden find themselves in a job that has “Revenue Assurance” in the title. I’m like a lot of people in their early thirties, who come back to the job market with a great education and an interesting work history (I used to be an Officer in the Singapore Armed Forces, before teaching at a University), only to find out people think I can do this strange job I’ve never heard of called Revenue Assurance. Even though I worked in telecoms previously, and I could sort of guess RA had something to do with the BSS side of telecoms, I can say honestly now, I had no clue what I was getting myself into.

Yet the more I learn about Revenue Assurance, and really the more people I meet who do this job, the more I love doing what I do. The people I meet are really so passionate about what they do, it is not even close to funny. Maybe people think you’re strange, or a geek, or a nerd for feeling this way, but I know that just like me, the professionals I’ve met wake up excited in the morning to come to work and do a Revenue Assurance job.

Because it’s exciting, and it changes all the time, and it’s incredibly challenging, hard and difficult – but when you get it right, and you do good things, it feels amazing. And you’re not only doing good things for your boss and your company, but you’re making things better for the people around you, who work with you – and that can be the greatest feeling in the world.

“I got it right” “I did a good job today” “I made a difference in someone’s life” “It helps make the long hours and hard work worth it.” That’s what I hear from the professionals I meet, when we sit down and just talk about why we love doing what we do. And that kind of real commitment, to being good at what you do, and being proud of what you do – that’s something everyone wants, I don’t care what your job is.

So that’s what this blog is really going to be about – why revenue assurance matters, why we as revenue assurance professionals can make a real difference because of what we do, and why we should wake up every morning and end every day being proud of what we do, and being proud of how well we do the job.

I know I haven’t yet given you many details, but that will come in the posts I’ll be doing in the next few weeks and months. This blog is going to be a little technical, a little political, a little touchy-feely, but it’s also going to be a lot about how revenue assurance can be done better, approached better, and most importantly, it’s going to be about how inspired I feel doing this job, and why you should too – if you don’t already!

Until I talk to you again, let me just say this one more time: I LOVE Revenue Assurance!