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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt
the world to himself.
Therefore all progress depends on the unreasonable man.
George Bernard Shaw, English Playwright
The software tools and best practices needed to tackle operational problems are getting better all the time. Yet whether or not a carrier organization makes actual progress depends largely on the resourcefulness and drive of a few dedicated business assurance (BA) professionals and teams.
Striving for operational excellence is not an easy road however. BA warriors are up against a lot because the larger organization usually has other, “more urgent” priorities to spend money on.
Yet I’m convinced that our industry’s climate change towards higher service complexity, fresh business models, and a greater reliance on analytic skills is a perfect environment for BA professionals to thrive.
Not convinced? I’ll admit that the opinion of an industry observer like me is at best second-hand, but when the career of a telecom executive kind of proves the point, well, that’s much more convincing.
When we last interviewed Kathy Romano, she had the very challenging job of heading up revenue assurance for Verizon’s FiOS service. Under her direction, Verizon broke new ground in RA by proactively catching and resolving errors in the narrow window between the billing cycle’s end and the actual sending of invoices to customers.
But last year, Kathy left her RA post to head up Verizon’s Payments. Always one to love a new challenge, she got her wish because the new job is an awesome responsibility that cuts across the entire Verizon business: wireless, wireline, consumer, business, everything.
Learning about the many operational challenges in Payments is a key take-away from this interview. But just as interesting, I think, is hearing Kathy’s insights on setting goals, leading her team, and making critical decisions. These are lessons that apply to a host of back office problems. Enjoy.
|Dan Baker: Kathy, it’s great to connect with you again. It would be wonderful if you could first give us some insight on some of the key challenges in the payments area.|
Kathy Romano: Dan, it’s actually a fascinating area because most people think payments are so simple, but they really aren‘t.
In my world, I’ve got payments coming in from hundreds of different sources whether it be somebody mailing a check, paying on our website, paying on their bank’s website, paying at a Verizon retail location, or maybe walking up to an independent third-party collection agent.
So as these payments come in from all different directions, there’s a myriad of systems those payments need to get to. At Verizon, you’re talking multiple billing systems, some with multiple instances.
Now if the customer gives us a payment stub or document with the right account number on it, fine, it’s pretty straightforward. But anything else is a guessing game to some extent because you are trying to figure out what the customer intended.
On the backend, if something happens and the payment doesn‘t get applied in the normal course of business, the next best action to be taken is to initiate a payment investigation and apply the payment correctly, and as quickly as possible.
So, we are looking to manage all these processes. The other side of it is recurring payments. For instance, a customer sets up payments to be taken out of her account every month. The way it works in our system is that flows off an order. So, just like in revenue assurance, if the order process was flawed, incorrect information can have a ripple effect.
|I can imagine that there are lots of moving parts in the payment area: lots of opportunities to improve processes, but tell me: is there a particular area you’re been really keen to focus on?|
Well, certainly one of the big initiatives I’m driving is a more flexible front-end payments platform that makes movements between billing systems more efficient.
Here’s the issue. Historically when a payment is received, it’s matched to a particular system and a lock box address is set up saying that payment X is meant for billing system Y.
Now the complications come because we are a big company with many different businesses. Our customers view each business unit at Verizon as seamlessly connected with Verizon the parent company. So they will often mix their payments methods and send us payments without account IDs, convinced that Verizon can easily figure it all out.
And I guess that’s the price of being a big company. We can‘t expect our customers to understand the complicated processes going on behind the scenes. But, if anything, the variety of payment options will increase, not decrease, in the future, so we need a better way to allow customers to pay us any way they like, and for us to be able to identify and get payments to where they belong.
Take our large business customers as an example. They will make a single payment that’s meant to be applied across, say, three or four billing systems, but in today’s world when the payment comes in, it’s applied to only one lock box. Then, later on, somebody needs to go in manually to separate the payments and send them to the correct places.
That method doesn‘t work for me. That is not the way we want to operate. So we have designed a system that will be built over the next couple of years that takes the payment processing out of the billing systems and raises it to an upper layer so that the payment can come into that level and go to whatever billing systems it needs to without having it first mapped to an individual billing system.
This approach gives us much greater flexibility. We will no longer need four people doing manual hand-offs that reverse it in one system and then journalize it in the other. The new system will basically dip down, pull something out, and drop it down into the next room of this common platform.
And it gives you better visibility to see every payment that’s been taken in across the business. That’s hugely powerful because when there are customer issues around payments, you can do automated searches instead of having people look through a bunch of systems to figure out what happened.
|Kathy, a lot of Black Swan readers are in revenue assurance. And knowing that’s where you hailed from, I’m sure many of them are curious how transferable your RA skills were to payments.|
To me, I’m more or less filling a similar role. Having a skill and background in revenue assurance brings two key things to the table. First, you understand systems, how they work, and where the risks are inside the system processes.
And second, you learn to control the customer experience through those kinds of techniques. What we do is still all back office. So I am not worried about whether we are talking to the customer the right way. But what I am concerned about is responding quickly enough to a customer’s concern.
When a customer calls us with a problem that flows back to my back office team via a ticket, I want to be sure we keep the customer informed. But if we take 10 days to reconcile a customer’s issue and we don‘t inform him of the status as we go, you can bet the customer is going to keep calling back which costs the company money. So, if we can turn it around within a day and at the end, notify him that it is done, we’re not only delivering better service, we are actually saving the money we lose whenever the customer calls back repeatedly to find out the status.
|What about revenue assurance tools. Can you use those in Payments?|
Yes, revenue assurance tools are very applicable in payments because we do a ton of reconciliation. When you get a payment in one place, you’ve got to look where to apply it to an account and you’ve got to look for it in your bank deposit. Anytime you are try to match record-to-record and look for exceptions, the revenue assurance tools are perfect for that.
Anything that is bottom-up, where you are trying to match record-to-record, the record gets to all of the places that you needed it to go. Those are the places where it makes sense to use the revenue assurance tools. Now at Verizon we’ve got tens of millions of payments every month, so with those volumes, RA systems make a lot of sense.
|I had a great interview with Eric Priezkalns recently with the title, Mishandle my Telecom Career and his point was that people need to stretch themselves a bit -- even add a little positive stress to their work environment to promote some professional growth. It’s another way of stating that Verizon motto I love: ‘Make progress every day.“|
In any large organization, there are people who are afraid of change. Positive things are happening here at Verizon. The new attitude here is that change isn‘t negative. In fact, change can actually energize your organization to grow and make things better.
One of the big issues with change is that many of the issues seem too big — they look insurmountable. Yet I tell my team: consider the possibilities. Consider all these things you have been complaining about forever. Well, what if we can find a way to fix at least some of them, wouldn‘t that be great?
But even though you know the results you gain will be achieved step by step, you need to pursue a larger vision. You need to define what you perceive as an ideal cure to problems. Move as close to that ideal as possible, within reasonable cost constraints, of course.
You don‘t say: “Let me change a little bit here and a little bit there”. To me, you have to define your full vision. You have to define where you are trying to go because if you don’t, it’s not going to happen.
So I am very clear with my team that we will not spend money on little things. We are building towards the strategy. If there is a little thing that builds towards your strategy, that’s fine. But we are not going to waste money on little things that improve productivity in small amounts: we need to move toward the larger goal.
|How much of what you’re trying to achieve is around getting your hands on new systems and automating lots of things?|
Automation and systems are a big part of what we do, but you also need to optimize your processes. You have to find that fine balance between where you need human beings involved and where you can do things systematically.
Let me give you an example. In this past year, we have replaced all the systems that process check payments received in the mail. Now the vendor we selected for the new system had a piece of software to automatically read the dollar amount on the check. And the idea behind this software feature, of course, was to reduce the number of people doing manual entry because the standard procedure was to key in the amount two times to increase accuracy.
So saving data entry people sounded great, but when we tested the automated check reader, we found that if the dollar sign on the check was misaligned, it would sometimes pick up the date number instead of the true dollar amount.
Now the vendor’s attitude was: “Well, in any automated system you are going to have some occasional error.” But I knew that using such a system could lead to major customer issues downstream. After all, the date has no relationship at all to the dollar amount so the discrepancies are liable to be huge.
Here’s the point. If I was only concerned with optimizing the check processing piece, a check reader that produced “occasional errors” may have been acceptable. But looking at the payment process end-to-end perspective, I knew it would have been a big mistake.
|Seems like that rule applies to many back office operations. Doing the right thing entails putting yourself in the shoes of the customer.|
Yes, and I’m not saying our Payments systems and processes are perfect. Sometimes we don‘t always understand what the customer really intended based on what is sent to us. And data entry keyers make mistakes too. That’s why we key check entries twice, but if somebody can’t read it well the first time, it can also be misread twice. It happens.
The Payments area is like Payroll: if anything goes wrong, it turns into a big issue quickly. Conversely, when you’re doing your job well, nobody notices that you’re even there.
In the meantime, there’s a lot of optimizing work to be done, so I’m loving the fact that I’m busy and have a lot on my plate. It really is a lot of fun.
Copyright 2013 Black Swan Telecom Journal