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October 2011

Revenue Assurance vs.  Business Assurance: Who’s the Rightful King of Controls Software?

Revenue Assurance vs.  Business Assurance: Who’s the Rightful King of Controls Software?

Whoever coined the term “Revenue Assurance“ wasn’t the greatest wordsmith in the world, yet she succeeded mightily because RA has entered the telecom vocabulary.  It’s the subject of several industry conferences, some training courses, plus hundreds of telecom people use the term on their business cards.

But now, one of the foremost suppliers of revenue assurance software, WeDo Technologies, is having second thoughts.  WeDo — along with many of its software competitors — think it’s high time to expand our horizons a bit and start using a broader term called “Business Assurance.“

And here to debate that idea with me is Sérgio Luis Silvestre, vice president of Marketing at WeDo Technologies.

Let me first say that “Revenue Assurance“ is a bit of a misnomer because, depending on the telecom organization, revenue maximization may not be the direct goal.  Maybe improving profitability or delivering a better customer experience is the main mission.  For instance, correcting overbilling problems will certainly cause your revenue to go down in the short run, but the good will of that gesture will hopefully generate greater profits (or revenue) over the customer’s entire life cycle with you.

To me, Revenue Assurance — in its broadly applied sense — is about monitoring, preserving and enhancing the relationship with customers and key business partners.

Dan Baker: Sérgio, let me begin by going back to an earlier blog discussion I had with Guera Romo about organization accountability.  Her concern is that as RA software vendors expand their portfolio to cover new areas, such as collections assurance, people automatically assume those functions should be managed out of RA.  And when that happens, it upsets the employees, policy, and work methods already in place to manage that function.

Sérgio Luis Silvestre: From our perspective at WeDo, that’s exactly the concept we want to challenge.  We are not saying that our business assurance RAID software tool should be managed and run only by the RA department.  No, RA teams were the first teams to use it, but we don’t necessarily see that as the situation going forward, though we do hope that the RA teams will be our strongest evangelists.

The revenue assurance teams are a key community.  But if you look at a telco, retailer, or bank, they are not the only team controlling the business.  You have internal audit, revenue protection/assurance, security and risk management teams.  Then there are the operational assurance teams, management control, strategic planning, etc.  If you look at all those teams, you notice they are not integrated.  Many of the control teams out there are using Excel or simple data marts developed to solve a particular problem, but they don’t have a real tool to look at the wider picture.

For me, it’s clear that a management and control team should leverage our product.  Why shouldn’t the risk management folks be able to use the same tool their RA colleagues have already paid for?

We also see business assurance as being applicable to many industries because the lack of integrated control, trouble accessing the data, issues communicating internally between areas to solve the detected problems and the need to devise KPIs are a cross-industry need.

Fine, then.  It seems that your position and Guera’s are really not that far apart.  I like the idea of a common data platform with multiple control applications on top used by different teams.  It makes sense.  The only problem I have with “Business Assurance“ is it’s quite broad and doesn’t have the industry cache that revenue assurance has.  We struggled for a decade to get people to recognize the importance of RA.  And now we are being asked to carve out a new function: business assurance.  I also question how different Business Assurance is from Analytics or the Smarter Planet, terms that IBM is spending hundreds of millions of dollars to advertise and promote around the globe.

Our point is that the average company spends millions on management systems but a relatively small amount on control systems.  Most of your control teams continue to work on samples and Excel spreadsheets.

Sometimes the system is the problem, but in most cases it is not.  Given the way that different business processes are implemented, it’s not always possible to detect inefficiencies between the systems.  Which information system are you using to give you a different view?  For years, accountants complained: Why do we need internal auditors?  Those auditors have exactly the same skill that we have.  Why do we need auditors?

Well, sometimes it takes a few catastrophic events, like the blow-ups at WorldCom and Arthur Andersen.  Only then does the wisdom of staffing an internal auditor function come into sharp focus.  And in a similar way: if every system works properly, why do we need revenue assurance teams?  Even if the individual systems are working perfectly, there is still room for human error and fraud.

Incidentally, the concept of Business Assurance is not WeDo’s.  We were, though, pioneers in adopting it in the revenue assurance and fraud management space.  Our CEO, Rui Paiva, publicly announced our vision for Business Assurance in May 2009 at our worldwide user group, when we realized how powerful and far-reaching our tool was.  We wanted to take Revenue Assurance, Fraud Management and other control areas tools to the next level.  So we think this concept makes sense not only for us, but for all RA and fraud management vendors.

TRI’s market research certainly suggests that the pure revenue assurance tool market is fairly mature in places like North America.  So companies who sell RA tools need to look to adjacent telecom markets and beyond to sell their products and services.  Still, I could point to areas where control opportunities abound in telecom alone — places like least cost routing, insider/dealer fraud, customer and service profitability analysis, and usage-based cost management, to name a few.  One particular area that I’ve yet to hear much talk about is mobile network policy.  Oi in Brazil has a service delivery platform that makes autonomous decisions about what promotions the customer gets.  Well, controls need to be wrapped around a powerful platform like that.  And when telecoms boost and throttle the bandwidth for individual smartphone users, that’s another area to watch.

At least people are now finally debating the role of business assurance.  Norbert Scholz of Gartner, for instance, says that Business Assurance should include only the corporate side of control and not the operations side.  That’s fine.  People will have different opinions on the precise meaning of these terms.  But that’s what I call a good discussion.  Clearly when RA started, there was a lot of debate about what it was, so having debate is healthy.  Even now people keep forgetting the cost side of Revenue Assurance and still say things like “in the U.S., with its huge bucket voice plans, most of the risk is gone.“ Please don’t make this huge mistake.

At WeDo we clearly acknowledge that the concept definition of Business Assurance (“Business assurance is essentially about using systems to improve operational effectiveness and manage risk“) was not first written by us.  It was the dream to have all the data to control the business.  But people some years ago had no concept that you could control systems like that in an affordable way.  But technology had to evolve and now it’s become possible.

If you look at all the financial crises around the world, it speaks to this lack of control or lack of regulation.

So the key question is: How much are we (CSPs) investing in intelligent control?  We spend tons of money on information systems, but we are not coping with how the business processes and systems come together or how they both interface to the people at the company.  So this is the premise of WeDo’s business: The world is going to start to get more intelligent and agile about controls.

Why did network policy become important?  Because the billing systems — prepaid and postpaid — and the provisioning systems are doing their own job, but not serving the customer.  If provisioning doesn’t communicate with CRM, every time someone calls customer service, you won’t be able to respond to the customer or solve the issue.

How broadly should we paint Business Assurance?  Does it include all control activity in the telecom enterprise?  What are the limits?  Let’s say you are ordering a new router from Cisco.  Did the router arrive in the warehouse?  That would require a control.  Should that be under the purview of Business Assurance?

It definitely should be.  Cisco is a telecom partner.  Ericsson, NSN, Huawei and Alcatel-Lucent also do managed services of the network.  Many operators have totally outsourcing their network.  How can both the vendor and operator control not only the SLAs, but the real assets that are being run by those partnerships?

Today it may be good for me as a CSP to outsource my network.  The business plan looks just fine and I need the cash.  So I outsource.  However, four years down the road, the world changes and maybe I prefer to run the network myself — to in-source it.

So here’s the trouble.  If we don’t make systems that make the outsourcer relationship transparent, it doesn’t work for the outsourcers and it doesn’t work for the operator.  That’s the beauty of setting up and automating controls.

I think it’s important to define business assurance and have some sort of scope in mind, but we shouldn’t be constrained by those definitions.  If a mission-critical system lacks controls, you need to give it controls.  Network asset management is one of those situations.  How much money are the operators spending in maintenance fees for underused or never used hardware in their networks?  It’s tons of money.

Thanks for these insights, Sérgio.  For me at least, you’ve severed the Gordian Knot.  Expanding our vocabulary to Business Assurance or seeking a wider use for control software is logically distinct from the question of who in the telco organization should manage a particular audit or control function.  And whether you call that new animal Business Assurance or Revenue Assurance Plus, we at least agree on one thing: Telecom business controls need to be applied in far more areas that we’ve traditionally conceived.

This article first appeared in Billing and OSS World.

Copyright 2011 Black Swan Telecom Journal

Sergio Luis Silvestre

Sergio Luis Silvestre

Sérgio Luis Silvestre is the chief marketing officer at WeDo Technologies, a leader in Revenue and Business Assurance software and services.

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