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September 2011

PwC on the Business of Revenue Assurance Consulting & Mentoring

interview with Dan Stevens & Tim Banks

PwC On the Business of Revenue Assurance Consulting & Mentoring

People forget that the market for revenue assurance (RA) consulting has a long history — much longer than for RA software.

Back in 2001, when the independent RA software market was just getting on its feet, I wrote a research study and found that PwC was already doing a gangbusters business in RA consulting.

In fact, it was PwC and a few other auditing kings who convinced the large telcos to put more audit controls around billing and provisioning and to carve out dedicated staff organizations to run RA.

Through the years, I’ve had some good conversations with PwC’s North American RA team who told me what was going in the U.S. and Canada.  But I always felt guilty because I knew PwC also had active practices in Europe and elsewhere that I knew nothing about.  That’s one reason why — 10 years later — I was pleased to hook up with Dan Stevens and Tim Banks, two senior managers in PwC’s global Risk Assurance practice with a home base in the U.K.

I found Dan and Tim by reading a fine industry report they co-authored, entitled The Transformative Journey of Revenue Assurance.  In the interview, they offer some great advice and perspective from their global engagements.

Dan Baker: To start off, Dan and Tim, it would be great if you could explain how PwC typically works with clients in the area of revenue assurance.

Dan Stevens: Dan, as you can imagine, our projects vary quite a bit, but I think a two-phased project we did for the CFO of a multinational operator will give you some perspective on how we advise clients.

To begin with, the CFO was troubled because he wasn’t quite sure how much revenue leakage he had across his various group operations.  And so the first value we provided was to show him that his organization already had reasonably good controls in place and that it wasn’t a complete disaster zone.  So that initial assessment was an important visibility scan for the CFO.

After that, we identified where we believed leakage existed, quantified that, and helped them develop a plan to address it.  Then we put in a detailed governance framework with objectives, organization structures, job descriptions and reporting requirements.  From a performance and value-measuring perspective, we also put together KPIs for operating, coverage and value reporting.

So when we walked away from the project, the CFO had an RA model for the group — both the strategy and the operating piece of that.

Tim Banks: The next phase of the same project described in the point above was getting the client’s new RA department defined and an operating model agreed.  A problem (not unique to this organization) was finding the resources that were needed to operate the RA model with the technical capability in revenue assurance.  The people who were newly hired into the positions were very competent in other areas, but they lacked some of the specialized skills required in RA.  So our approach was to have the new RA staff team up one-on-one with PwC revenue assurance experts.  At first, the PwC consultant would take the lead in one area and the local RA person would “shadow“ him but also contribute fairly significantly to the actual doing of the work.  Then in the second stream, we actually reversed the roles so that we would shadow them: They would take the lead and do the work, and we’d be there to support them.  This knowledge transfer approach proved successful and helped embed the whole revenue assurance way of working within the organization.

That mentoring approach is highly interesting.  Did you get involved in selecting those people for the job, too?

Dan Stevens:  No, the client hired and interviewed the people using their own process and interview procedures.  We simply advised them on the roles that were required for the type of function they wanted to operate, the type of skills needed to deliver those roles.

It’s never simple to just find a person from the broader telco environment and put them into a RA role.  There needs to be a genuine interest from the person who is going to do the job because it’s very analytical, very technical, and those people are few and far between — especially those who understand the networks and billing systems which is paramount to being successful in identifying issues that may impact revenues.

Sounds like that engagement was a very big one.  Do you take on projects of different scope?

Dan Stevens: A number of our projects are of limited scope, but most are bigger engagements.  An example is an operator in Australia that was implementing a new strategic billing system.  They wanted the comfort level of knowing that the bills produced in their new e-billing system would be in line with the old system.  They wanted to ensure there would be a very limited customer impact during the migration.

In this case, the tool we leveraged was not a revenue assurance tool per se, but a data analytics one.  We worked with the client to actually build an independent billing system and we pushed over 7 million customers‘ worth of data CDRs, monthly recurring charges, and other ad-hoc charges through that independent system.  We then used that to compare the old and new systems to make sure that the new system was working as it should be.

There’s an ongoing debate over how much data you need for revenue assurance.  Some people say sampling data works just fine.  Others say you should do full-blown data crunching.  What’s your take on this issue?

Tim Banks: We get asked about sampling all the time by clients.  Once again, it varies depending on the needs of the business, its risk appetite and available budget.  There is no one single method, and there are many different approaches that can be taken when undertaking data analysis.

One organization we worked with was processing over 1.5 billion records a day through its RA systems whilst in another the needs of the business meant that they only took small sample sizes of data at regular intervals.  Both organizations were right in their approach for what they were trying to achieve and the level of assurance they needed to provide.

On one project, the client asked us to validate the roaming fees that they were paying to and receiving from third parties.  When we asked them for a sample of data, they only gave us one day’s worth of data.  Well, there was no way that we could provide a good quantification from that.  Unfortunately, they were unable to provide us with more.

At the Australian firm bringing in a new billing system I spoke of, we received every single call data record (CDR) and monthly recurring charge for a particular month, for every single customer, because it was critical to the success of the project that we could validate that the new billing system was going to be correct.  But that was an exceptional case.

At some operators, the board chief technology officer, or head of network operations, wants a daily assurance check which means 100 percent CDR validation, which for them was about 1.5 billion records a day that we monitored through our software.  The operator wanted that added level of comfort.  Other boards are quite happy with a sampling approach; therefore, we don‘t need big heavy tools to do it.

So in general, the amount of data you use depends on the risk, the duration of the project, the availability of the data that the client can provide us.

As you engage with clients, you get a chance to see how commercial, off-the-shelf software tools are being used in revenue assurance.  What are you seeing?

Dan Stevens:: In our view, operators are getting mixed results from commercial RA software.  A client had selected one of the big-tool vendors to help them out with their usage processing and provisioning reconciliations, but they didn’t get a good level of support so they have reverted to their former in-house solution.  In other cases, however, clients are quite satisfied.

Much depends on the risk appetite.  From the outlook of small operators, the return on investment for those software tools isn‘t there.  They are better off pulling together some good programmers and structured query language (SQL) people.  Once they build the in-house tool, they get the ability to track, sample and test.  What they don’t get with that approach is the 100 percent assurance level that some of the large organizations need.

Many organizations around the world have limited RA skills and resources.  In those situations, managed services RA can be attractive.  And I think many of the software vendors are well-equipped to deliver that.  The operator, meanwhile, doesn’t have to invest in overhead costs.

There’s an expression: “horses for courses.“ Racehorses perform best on a racing course that’s suited for them.  Whether commercial software is suitable or not depends on the operator’s risk appetite, budget, and the level of assurance its executive board is looking for.  Of course, at PwC we never recommend a particular tool, but we are certainly free to give our opinions of the experiences we’ve had working with the tools.

Finally, I’m curious where you see growth opportunities in the RA sector?

Tim Banks: It’s very much geographical.  In some areas of the world — especially developing countries — there is definite growth and extensive interest in revenue assurance.  Many of these countries are some 10 years behind where some of the western European countries are in respect to RA.  In other areas, the operators are more mature so the question being raised is: What will revenue assurance do to continuously improve on the value that it delivers?

Traditional RA activities should always be embedded in an RA operation but CEOs and CFOs are now beginning to ask “what else can my RA team provide me in the way of value?“ As we discuss in our industry paper, the mature Revenue Assurance functions are playing a central role in many telcos.  They are in the unique position to provide top-level executives with significant insights not only on how profitable their products and customers are, but also how network performance issues are affecting revenue.

So we’re carefully watching our clients’ needs and the market as a whole to find out where the best pockets of opportunity lie.  We’re very optimistic though, that this is a very fruitful place to be.

This article first appeared in Billing and OSS World.

Copyright 2011 Black Swan Telecom Journal

 
Dan Stevens

Dan Stevens

Dan Stevens is a senior manager in the PwC Revenue Assurance practice in London, with more than 12 years experience in the telecoms industry.  Prior to joining PwC, Dan worked for Telewest Broadband (now part of Virgin Media) in their Revenue Assurance department.

PwC is one of the world’s largest providers of assurance, tax, and business consulting services.  Every day, 161,000 PwC people in 154 countries work hard to build strong relationships with clients and understand the issues and aspirations that drive them.   Contact Dan via

Tim Banks

Tim Banks

Tim Banks is a senior manager in the PwC Revenue Assurance practice in London, with more than 13 years experience in the telecoms industry.  Prior to joining PwC, Tim worked for Vodafone leading their Revenue Assurance departments for UK and the global Group.   Contact Tim via

Black Swan Solution Guides & Papers

cSwans of a Feather

  • Opportunities & Obstacles: Consultant Luke Taylor Muses on the State of the Telecom Risk Assurance Business — interview with Luke Taylor — A rambling discussion on the state of the risk assurance business with Luke Taylor, independent consultant in telecom revenue/fraud assurance and solution requirements and marketing.
  • A WeDo Conference Talk: Consulting & Analytics: Improving your Business Today, Enhancing it Tomorrow — interview with Carla Cardoso & Bernado Lucas & Thomas Steagall — Leading risk management consultants explain their mission and walk-through RA, subscription fraud, and collections cases.  They also explain how analytics and machine learning can supplement process optimization.
  • PwC on the Business of Revenue Assurance Consulting & Mentoring — interview with Tim Banks & Dan Stevens — Revenue assurance consulting firms offer a broad range of services to clients these days.  The article explains the practice of mentoring RA mangers and providing a CFO with visibility on the status of an operator’s business controls.  Perspective is also offered on the value of RA software and the opportunity to broaden the RA practice scope.
  • Ericsson: Revenue Assurance Consulting With an NGN Flavor — interview with Thomas Steagall — Helping operators detect billing and provisioning problem is merely table stakes in the RA services business these days.  The article discuss why operators need to ramp up their RA function with service experience and group-wide financial health monitoring.  Advise is also offered on: key RA maturity questions, risk-and-reward contracts, and how to extract greater value from software investments.

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