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October 2012

Precision Clockworks: How Revenue Assurance Synchronizes with the Business at Swisscom

Precision Clockworks: How Revenue Assurance Synchronizes with the Business at Swisscom

Switzerland is renowned for its culture of engineering, craftsmanship and organization.  The obvious examples are watch-making, cheese, and chocolate, but here are a couple others:

  • The Schweizer Garde is a corps of Swiss men responsible for the security of the pope at Vatican City in Rome.
  • The country is so small and secure that its seven federal councilors of the Bundesrat -- the country’s heads of state -- take public trains to work and hardly ever need bodyguards.

Even Mother Nature has given Switzerland a special place in her heart.  The nation boasts Aletsch Glacier, Europe’s longest glacier at 22 kilometers.  Then there’s the Matterhorn of Zermatt, the mountain whose pyramid-like shape seems to symbolize the balance of nature and engineering.

About Swisscom

Swisscom Ltd.  is the leading telecom operator in this affluent nation of 8 million.  Though Swisscom has no significant rival in the fixed line biz, it’s required by law to provide equal access to its wireless competitors.  Here’s a quick rundown of Swisscom’s mobile rivals:

Mobile Operators of Switzerland

The other strength of Swisscom is its breadth of services.  It offers the full gamut from fixed and mobile voice to fast internet and digital TV.  In the TV market, Swisscom squares off against one large national operator, Cablecom,  as well as several regional cable companies.  Another interesting fact: Swisscom’s website is the most visited in the country.  Oh, and Swisscom also runs a healthy IT services business serving corporate clients.

Joining us now from Swisscom is Marco Pollinger, Head of Revenue Assurance.  In our interview Marco delivers insights on how Swisscom manages its revenue assurance function for maximum effect.  Among other topics, he discusses the company’s innovative RA organization, and how it screens new services, performs pre-production bill audits, and coordinates with corporate risk management.  Think of this interview as a rare chance to view the inner workings of a Rolex watch.

Dan Baker: To begin, Marco, I understand the way the revenue assurance function is managed at Swisscom is rather unique.  Can you explain how you are organized?

Marco Pollinger:  Sure, Dan.  To lay the groundwork a bit, organizationally we fall under the finance department.  Reporting directly to the CFO, my boss is the head of central controlling and business assurance, which includes overseeing our fraud assurance team.

The scope of the Revenue Assurance Team includes all revenues of Swisscom (Switzerland) Ltd.  It includes private customers, small and medium sized companies, corporate business and also 150 wholesale and MVNO partners.

I guess our unique approach is to manage RA using two teams: a Strategic and a Technical team.  Let me explain what these teams do, starting with the strategic RA team.

The Strategic RA Team

The Strategic RA team is six people and that’s what I head up.  We’re focused on risk assessment of every revenue stream and also documenting our RA procedures to show how it works including the many systems involved.  Each of us on the team has a deep knowledge of finance, technical, auditing, and operations.

On the strategic side, we need to have a wider focus, so we don‘t look at historical leakage risks alone.  We do deeper risk assessments and make proposals to initiate projects to mitigate our risks.  RA case handling is also managed by the strategic team.

Finally the strategic team is involved in the revenue assurance clearing/endorsing of about 95% of technical platform changes and new service launches at Swisscom.  As we analyse each project, we ensure that the leakage and overcharge risks are already reduced before launch and the right control points are identified.

The Technical RA Team

Our technical team (about 7 people), which is a part of Network and IT Operations department focus on the technical definition of controls and their implementation.  For instance, when new services are being launched like LTE and Machine to Machine, they will be involved in the project to analyse the technical impacts and to implement new or adjust existing controls..

The technical team also worries about how RA results are visualized and they support the RA tools for the operational business.  We feel it’s key that the operational business review any control that gets an alarm.  Now while there are many controls implemented by Technical RA, the operational business also implements many controls on their own.

The Revenue Assurance Work Flow

So now let me walk you through the flow of revenue assurance work.

It typically begins when the Strategic Team identifies a risk and a need for a control to reduce that risk.  We then discuss this with the operational business and the Technical RA Team so we all agree on how best to implement.  The technical RA team then takes the ball and implements the control including alarm visualization, threshold and monitoring frequency definition.  Later, as alarms are received, those go to the operational business who first investigate and attack any leakage or overcharge if it in fact exists.

If it’s a true leakage or overcharge, then the Strategic RA team goes into action and leads the resolution of the problem which could include: informing customers, adjusting controls, making a recovery, and informing management.  Depending on the complexity we decide how the customer is going to be informed.  For instance, by phone, notice on the bill, special customer letter, etc.

What are some of the operational and business challenges that occupy a lot of your energy in revenue assurance?

Dan, the very fast implementation of new products is definitely the toughest challenge.  The Swiss market is quite saturated and as we try to gain market share against our rivals, we need to be very fast to market.  So RA plays a key role in helping marketing launch quickly and minimizing the risk of revenue impact  lots of coordination is required around improving project processes and inserting business controls.

Like many operators, we believe that mobile usage revenue is going down and revenue from flat or recurring fees is increasing: we believe postpaid will eventually settle to around 80% of all revenue.  So that keeps us busy monitoring revenue across the value triangle of bills, contracts, and networks.

Most of our business today is already postpaid and with our new products we try to increase this even more.  For example, this summer we started a new mobile product family called Infinity featuring several plans billed at flat rates.  The major difference across those plans is the amount of bandwidth -- data, voice, and SMS are included in all the plans.  Besides other goodies, we do offer one incentive for the highest prices plan, namely 200 free minutes of international calls from abroad.

So how is it that you ensure products are launched with minimal revenue assurance issues?

Well, that’s where our project clearing role comes in.  RA is a part of the product creation and improvement process at Swisscom, where all the products are passing through.  RA reviews the project and based on the revenue risk impact provides the project team with a decision of “Go”, “No Go”, or “ Conditional Go”.  In case of conditional Go, the project is provided with a risk map and the required measures to be taken to cover the risks.  The flow of our activity is shown in the diagram below.

Revenue Assurance Clearing Process

Revenue Assurance Clearing Process

To illustrate, let me explain the role we played when the business wanted to change our wireline billing system a couple years back.

With the billing system, there were risks on both sides of the billing system decision.  For example, if the billing system was not launched, you risked not being able to introduce some attractive new services, meaning you would lose customers.  On the other hand if the new billing system completely failed and you lost the ability to bill for two months, cash flow was in jeopardy and might have an impact to pay your suppliers.

So RA was focused on the operational Revenue Assurance risks and figured we needed to add certain controls before we rolled out the new billing platform.  At the beginning of the project, we worked with the billing project steering board to define what RA risks they were willing to take.  Then shortly before the launch, we calculated the RA risk and determined that the risk was actually higher than the acceptable risk appetite the steering team said they could live with at the beginning.  That’s why we gave the new billing platform project a “No Go”.

Finally the project management decided to take the risk and to launch the project because the time to market was very critical.  So there’s often a trade-off between different risks and time-to-market.

During the whole project our input was constantly given to the corporate risk management team who added other risks.  So this gives you an idea how we coordinate different risk assessments to enable better decision making.

How does RA interact with your executive management?

The management of Swisscom supports the RA effort very much.  They see the added value it brings.

The RA strategic team has regular exchanges with the corporate strategic risk team.  The corporate team is looking at overall risks at Swisscom.  And we are focused on operational risk management from an RA perspective.

On a yearly basis, we discuss with the corporate team our risk map.  And they, in turn, merge the picture of operational risks with their own to advise the CEO.

Then there are the standard reports that senior managers have access to.  We reveal the number of leakage cases, including prevented leakage, overcharges, and prevented customer impact on overcharge cases.

What kind of software are you using in revenue assurance?

We have different software in place depending on the product, the risks, and the history.  And we are quite satisfied with the commercial tools we have in place, for instance, cVidya’s MoneyMap which is used for selected activities and implementation of innovative controls.

Still, our aim is not to consolidate on one commercial tool.  In fact, several of our own tools are also used to perform revenue assurance tasks.

While it would be nice to have one RA tool that provides all is needed, we’re not yet convinced the expense and risk would justify that.  In German, we talk about an Eierlegende Wollmilchsau [translated as an Egg-Laying Wool-Milk-Sow], a mythical farm animal that delivers everything you want.

I think the quest for an all-purpose tool is an eternal one.  Mark Yelland talked about it here in a recent column.  Marco, I want to thank you for the many interesting ideas you’ve given us to think about.  Are there any other innovations we haven‘t discussed you’d like to mention?

A couple things, Dan: our preventative billing checks and annual risk assessments.

Preventative Billing Checks

First, we conduct a pre-production check on our bills, then later follow up with a check on the bill after it issued.

In the past we had a team who looked at bills manually.  The bills were looked at by product and by marketing/project team.  And we made sure that every product was checked at least once a year.  We found that practice to be very efficient at finding mistakes and preventing actual customer and/or revenue impact.  Building on that experience, we recently automated our invoice checks so we can now examine a lot of bills every month for every product.  The manual checks of bills are still done — but focused on new products which are not yet possible to automate.

This standardized process is now part of the RA control framework.  The checks are performed by the billing operational team.  Every month we find some minor points to analyze and correct.

Risk Assessment of Revenue Streams

The second innovation I think people will find interesting is our annual risk assessment of individual revenue streams.  Every RA manager is responsible for several of the 26 revenue streams we defined:  Mobile Prepaid, Swisscom TV, Roaming, Internet, Value Added Services, etc.  And each year those streams are analyzed in depth to assess the risks.

We then focus on the top risks per stream and document the required measures to mitigate those risks.  The goal is having these measures implemented during the following year.

We would like to thank cVidya for introducing Marco to Black Swan.

Copyright 2012 Black Swan Telecom Journal

Marco Pollinger

Marco Pollinger

Marco Pollinger is Head of Revenue Assurance at Swisscom (Switzerland) Ltd.  Since joining the company in 2002, he’s held several cost controlling duties and responsibilities.  Chief among them was the introduction of activity-based costing for the mass-produced products of the Network & IT division, leading a subproject in a strategic programme, and acting as a team leader in controlling services.

In 2009, he joined the company-wide Revenue Assurance team and he was first responsible for reducing the risk of revenue loss within the Wireline products (voice traffic and access fees).  As a special task he introduced KPIs for Swisscom’s preventive activities within the product development process.  In early 2011 Marco was promoted to his current Head of Revenue Assurance post.   Contact Marco via

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