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January 2011

Revenue Assurance Maturity: Report From the Arena

Revenue Assurance Maturity: Report From the Arena

Market research in the B/OSS business is an imprecise science.  Sure, you can create a survey and send it to a hundred carriers.  The problem is that the market is too diverse — telecoms vary quite a bit around size, the markets they serve, the services they offer, and several other factors.

Don’t get me wrong: Surveys are a valuable reference point.  But it’s hard to project survey results more broadly because the samples sizes are usually too small for the market segments you want to examine.

So how does an industry analyst predict things if statistics is out the window?

Ultimately, I think, the value of your research depends on two things: 1) the quality of your own industry experience; and 2) the quality of the relatively few credible experts you speak with to read the pulse of the market.

But how do you find these “experts“ and establish their credibility?  Well, I’ve thought about this a bit and settled on three attributes I consider most important in an expert.

The first is rather obvious — an expertise in telecom, IT, or the particular domain.

Second is the ability to relate that domain expertise to the bigger business picture.

And third, the best experts seem to have a knack for telling stories about their experiences.  They’re like war veterans telling the unvarnished truth about life in the trenches — and they relate both the scary and  humorous moments.  And the guys who can do that are so credible because you can imagine yourself in the situations they talk about.

Eric Nelson is certainly an expert I’d put in the veteran class.  A managing principal at Synaptitude Consulting, Eric is the former CIO of the MSP, Megapath/Netifice (now part of Covad).  He’s also worked for CAP Gemini, TMNG, and held key IT posts at Bell Atlantic, e.spire Communications, MFS, and other carriers.

Most of all, Eric’s a straight-shooting and fun-to-listen-to storyteller.  In fact, I liked his stories so much, I convinced Eric to do an audio seminar for TRI entitled, “Day in the Life of a Telecom CIO,“ with the subtitle: “What you need to know to avoid being thrown out of the CIO’s office.”

In the following interview, Eric gives his take on the progress — or lack thereof — in the practice of revenue assurance and cost assurance.  Along the way, he gives his insights and takes an occasional pot shot at the telecom trends of the day.

Dan Baker: Eric, please tell us how revenue assurance was handled back when you were a CIO at Netifice and Megapath.  And how much progress do you feel revenue assurance has made in the last decade?

Eric Nelson: Ten years ago, Dan, our revenue assurance was mostly ad hoc.  It was basically some finance guys in dark cubicles running very large Excel pivot tables and trying to get at the data.

In those days, service providers  were spending so much time fixing hardcore OSS issues like order flow through, electronic interfaces to third parties electronically, alarm correlation in the network, and customer portals, we just didn’t have time for much else.

So revenue assurance and cost assurance were really an afterthought back then.  You were simply trying to get the bills out the door and ensure they were half-way accurate.

As far as progress made, it really depends on what market you’re talking about.  I mean if you’re an operator in West Africa charging seconds for a mobile money transfer, how relevant are industry standard KPIs designed for a company like Comcast or Verizon going to be?

These are very different markets with totally different RA problems.

And while we would probably rate the cable guys more mature than operators in Africa, some cable guys struggle to understand voice.  In fact, some of them wouldn’t recognize a hacked VoIP call if it walked up and slapped them in the face.

At Synaptitude, we talk to a lot of smaller tier 2 and tier 3 guys.  At one place, we showed them some stuff that was successful at another carrier.  And the guy looked at that and said, “Yeah, I’d like to buy one of those along with a big executive dashboard,“ a very expensive tool.

And I wanted to say, “You’re missing the point.  You’re worried about how you’re going to present the results in a cool, sexy way to management, but you don’t have enough horsepower to go after the root cause of your problems yet.“

You’ve got to walk before you fly.  But that’s where his head was at.

Some other folks were in the middle of a year-long conversion to a new Amdocs platform.  So, great, and what are you thinking about doing with revenue assurance as part of that initiative?  “Oh, no we are too busy converting our customers, so revenue assurance is going to be after the fact.“

Well, guess what.  If you don’t build that capability in from the beginning, it’s going to cost you twice as much and take you twice as long.

So there’s still an education gap and awareness gap out there.

In what areas do you see telecoms doing well?

We’re seeing a lot of adoption — and this was surprising to me — around network cost assurance.  And where is that being driven out of?  The network groups, primarily.

You’ll find network engineers using analytics platforms because where they get hammered all day long is on the cost of their network infrastructure.  They want to be sure there are no stranded assets, no infrastructure not being used, and that they are grooming the network all the time.

Almost everybody we visit has got some sort of wholesale reconciliation in place to be sure they’re not being overcharged.  Almost every engineering group has been cleaning up their inventory too.

Even at the huge telecoms, we see this happening.  We just finished a job for a carrier that operates in over 150 countries.  And we found a staggering revenue shortfall.  Now in the big scheme of things, if you’re a $12 billion company, $100 million revenue recovery is something you notice, but it won’t ruin your day.

Yet recovering that revenue is very complex because you’re dealing with dozens of carriers and trying to put stop orders in place.  But they went through the effort and cleaned things up and now they can better manage their field operations and have become more productive and, more importantly, much more profitable.

Where do you see opportunity for revenue assurance to do more?

I think next-gen wireless is still a big challenge.  I’m talking about things like mobile money and very complex quad play bundles that combine channels of cable, a tiered data plan, plus access to bank accounts.  If you’ve got different thresholds in that bundle and you have to make sure the person is living in that bundle, it’s very hard to assure that.

I think most of the very, very large operators will continue to look to develop solutions internally, with perhaps some spot COTS solutions bolted on.  These large multinational telecom groups have some very complex charge back schemes where there’s a central company that owns the assets and leases them to the in-country operator.  Then there’s usually a shared services group that works for all the subsidiaries.

It’s very complex because of all the intra-company trading, yet it’s very different from the wholesale model.  So they find it difficult to work with COTS packages that don’t easily allow for their unique/specific business model.

One other area of importance within the RA discipline is customer analytics.  There’s a ton of information about the customer that can be used for much better customer intelligence than the old-school data warehouses.

Eric, what do you think of the trend to move profit-margin analysis out of sales and marketing and make it part of the RA group and finance?

I think it’s about time.

Marketing and sales being in charge of margins is kind of like the wolf guarding the chicken coop.  The same guys who conceived the promotion are responsible for reporting on the margins from those promotions.

So why is everybody surprised when the product and marketing guys are saying: “This is a phenomenal success“ and the finance is saying, “I don’t see it.”

Well, the product/marketing guys spend all day long blaming the operations guys, and the operations return the favor.  Finance usually sits in the middle as referee figuring out what the real facts are.

By the way, that’s not unique to telecom.  Just about every industry deals with those issues.

What questions do you ask yourself to quickly size up a telecom’s revenue assurance maturity?

I’ll tell you what, if you’re a Martin Dawes, or Subex, or cVidya, one of the first questions those guys ask is: “Are you still using Excel spreadsheets for revenue assurance?“ And if the answer is “yes,” well, that’s like dangling a tasty bone in front of a hungry dog.

Moving to a database is a sure fire way to improve your RA operation.  And it’s no surprise that it’s on one of the first rungs on the TM Forum’s revenue assurance maturity matrix.

Another good question to ask folks is: “Who else in your organization is using revenue assurance data?“ For instance, are they using it to understand customer behavior or to gain other intelligence?

The answer will reveal a couple things: One, do they have good stuff?  Because the better the information you have, the more people want to use it.

Second, the question tells you about the awareness and acceptance of RA in the larger telco organization.  I mean, if you act like an internal auditor and sit there finding stuff that people haven’t done right, they don’t like that.  They are only going to put up with that for so long, then keep you out.  But to the extent that people say, “Wait a second, you guys can help me,“ well, that shows RA is perceived as a useful partner.

Eric, I’m curious what your gut feeling is for certain industry issues.  What’s your take on cloud computing?  And is it wise for CLECs to move into the managed IT outsourcing business?

I think this cloud stuff is a bunch of hooey.  This stuff has been around since the 1970s when it was about time-sharing operations off a mainframe.  Now it’s about buying CPUs or some sort of processing transactions off a multi-tier architecture.

Like many things in IT, all they are doing is taking a different spin on something that’s been around for a long, long time.  They are just rebranding it, repackaging it, and making money off of those, so good luck with that.  It is the same farce that Web 2.0 was.

As far as managed It outsourcing is concerned, CLECs have been selling to enterprises for a very long time so Managed IT can absolutely work because dedicated IT outsourcing firms like mindSHIFT and All Covered are doing it successfully.  These IT outsourcing companies already resell telecom services as part of their services.  They will provide you a circuit, voice, and it’s all IP-centric.

So why wouldn‘t CLECs try to capture some of this as well?  Today, of course, they are not providing the managed IT services, merely reselling somebody else’s service.  But it’s a great way to promote customer stickiness.  Enterprises like it too because they can buy from one-stop shop and have less vendors to coordinate with.

What sort of telecom business looks most attractive to you today?

Honestly, Dan, if I was starting a company today, I would outsource all my infrastructure.  I would outsource the network and say, “You run this; you take care of it.“  Then I’d find a bunch of smart business guys.  We would probably put together our own warehouse, our own intelligence stuff — that part we would do ourselves.

You could outsource billing, but where you touch the customer, especially the call center, field force and that kind of stuff, I think you’re better off dealing with that yourself because that’s where you need a greater amount of control.

This article first appeared in Billing and OSS World.

Copyright 2011 Black Swan Telecom Journal

 

About the Expert

Eric Nelson

Eric Nelson

A managing principal at Synaptitude Consulting, Eric is the former CIO of the MSP, Megapath/Netifice (now part of Covad).  He’s also worked for CAP Gemini, TMNG, and held key IT posts at Bell Atlantic, e.spire Communications, MFS, and other carriers.

Synaptitude Consulting is an enterprise and IT systems consulting services company.  It delivers transformational solutions to its clients’ most critical business challenges.

Related Stories

  • The Revenue Assurance Game: How the Rules Change in the Era of IoT & Mobile Broadband interview with Rene Felber & Gadi Solotorevsky — Revenue assurance is perhaps the hardest of telecom functions to define because the term is used in so many different senses.  This discussion on the evolving role of revenue assurance was catalyzed by a survey of experts in the profession.
  • Day in the Life of a Revenue Assurance Analyst interview with Michael Lazarou — Revenue assurance is much more than a software category.  It’s individual analysts struggling to help their larger organizations get a handle on system errors and coordination problems.  In this interview, an analyst reveals the many challenges of getting the revenue assurance job done at a small GSM operator in Europe.
  • Revenue Assurance: History and New Beginnings in RA Maturity interview with Daniela Giacomantonio & Gadi Solotorevsky — The Roman Forum was the center of commercial life in ancient Rome.  Now, two millennia later, the Forum lives on in the exchange of ideas across countless professions and  media.  In this interview, two Revenue Assurance experts discuss both the new RA Maturity initiative of the TM Forum and the value of telco/solution vendor collaboration.
  • Versatile, Portable & Corrections-Savvy: Quest for the Swiss Army Knife of Revenue Assurance Software by Mark Yelland — Revenue assurance maturity models are not cast in stone.  Since  best practices will change over time, it’s healthy to explore moving maturity models forward.  For example, great gains have been made in leakage detection, but RA corrections has been harder to master.  The author dreams about seven functions that should ideally come together in a single all-purpose revenue assurance software tool.
  • Revenue Assurance Maturity: Report From the Arena interview with Eric Nelson — Revenue assurance maturity can‘t be easily computed.  How do you  compare the KPIs of Comcast billing with that of mobile money RA in Western Africa?  Even still, this article offers some universal RA wisdom from a straight-shooting veteran of carriers large and small.  Topics discussed include: dashboard or process, COTS vs. inhouse solutions, and tips on gaining internal support for the RA practice.

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  • Day in the Life of a Revenue Assurance Analyst interview with Michael Lazarou — Revenue assurance is much more than a software category.  It’s individual analysts struggling to help their larger organizations get a handle on system errors and coordination problems.  In this interview, an analyst reveals the many challenges of getting the revenue assurance job done at a small GSM operator in Europe.
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