P age |3

January, 2011

Sutapriya Das

Revenue Assurance – The Intellectual Acuity

AN INSIGHT ON THE NEED OF REVENUE ASSURANCE

 Contents

1. Introduction ………………………………………………..Page 1

2. Defining Revenue Assurance……………………………....Page 2

3. The Approach…………………………………………….. Page 8

4. The Global Revenue Assurance Market…………………. Page 10

5. Connectiva Systems……………………………………… Page 11

6. Conclusion……………………………………………….. Page 12

7. References……………………………………………….. Page 13

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 1. Introduction
The rapid demand and changing economic condition of Global Market always puts any business
in the midst of Challenges. These challenges are to meet the unending expectation of customers
and also to have a steady growth in the bottomline. Customers always desire to have the best
bargain and organizations are witnessing a frequent change in business models, dynamic growth
strategies, and continuous innovation in products and services to be in the race. The rules have
changed, business needs to grow but need to move fast to pick the pace.

With an eye towards profitability, every business entity are focusing more on customer
experience initiative to differentiate themselves. And with this link between customer experience
and profitability Revenue Management along with Customer Lifecycle Management plays a
commendable role in the decision making approach both strategic and tactical in the present era.

This document is just an approach to understand the need of Revenue Assurance (RA) in
Telecom Industry, one among the many where, RA begun to play a decisive role and to have an
insight on the RA players in Global Telecom Market. RA is the fulfillment of the owner’s
expectation to justify all possible revenue that the owner is entitled. In today’s world there is a
common parlance called “COST SAVING” doing rounds in many organizations. But this works
upon to a certain extent to enhance the bottomline. There is always an ever-growing pressure to
recover from the reduction of margins resulted from the global and economic impact, and with it
Revenue Assurance gains the ground to plug the gaps that drains 3% - 14% of total revenue of
any Telecom Service Provider (TSP) annually.

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 2. Defining Revenue Assurance
With the rapid change in the profitability landscape, RA and Fraud Management (FM) which
were previously an afterthought for any business are now being seen as essential aspects of
operations rather than an optional
ional one. Monitoring and controlling the available leakages or cost
has become a prime focus of any service provider. In recent years, the scope of RA has
expanded considerably. Today, a modern RA solution is a robust platform designed to address
such functions as data management, analytics
analytics,, fraud control, workflow, and results visualization.

In common terminology RA can be best defined

defined, as a business activity which focuses on
data quality and business process improvement methods,
methods to improve profits, revenue
reve and cash
flows without influencing demand.
demand

Fig 2.1 : Process Transition of Revenue Assurance with time.

With the passage of time, as the complexity

co increases,, the systems that were effective in the era
of basic telephony services are now inadequate. A complex information flow creates potentiality
potential
for thousands of big & small errors all adding up to a substantial amount of Revenue leakage.
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And thus there began the necessity of RA to address this revenue flow complexity,
complexity which
requires a structured and focused
ocused approach addressing change management challenges while
taking full advantages of systems, business process, skills and organizational synergies.

Therefore in a single statement RA can be defined as

a means to identify and remedy, and thereby
prevent leakages
eakages that results in financial underperformances without seeking to generate
additional sales. Another notable fact is that as leakages are never impacted by economy so a
control on revenue leakages or plugging the gaps considerably helps in the bottomline.
bottoml

According to KPMG Global Revenue Assurance Survey 2009, there exists a very thin
line between ‘leakages as an inherent risk’ and ‘leakages as a business challenge’. And
identification and recovery of such leakages is the delta between these two forms and stronger
the delta greater is the risk.

Fig. 2.2 Identifying Revenue Leakage

Thus RA reflects a holistic approach covering the complicity of all revenue streams prov
providing
full advantages of system and processes giving an overall view of any possible revenue leakage
and furthermore helps
ps not only detecting
detecting, but by preventing problems by fully supporting the
operational works. An effective RA program is a th
thorough
rough understanding of the nature of
revenue leakage. Basically there are 2 major categories of Revenue leakages – Systematic and
Pervasive.

Systematic leakage is an individual problem and impacts many customers for the
TSP.Following can be grouped under systematic leakage –
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 i. Network element error

ii. Rate table error

iii. Billing system coding error

iv. System failure that corrupts customer account data.

Pervasive leakage is associated with a single customer or network component assigned to a

single customer. The individual loss may be minuscule but together the pervasive leakage may
results in far greater loss than the systematic leakages. The following falls under pervasive
leakage –

i. Not billing a customer who has been already provisioned for a service.

ii. Failure to track the customer service record in Billing system

iii. Failure to charge a customer on Package Upgrade because the order did not post
to billing.

Thus with this in view the intent of an overall RA plan must be defined in four different
perspectives :

1. Financial : Quantifying the amount of revenue loss

2. Process : Identifying the areas which incur losses.

3. Customers : Impact on customers

4. Learning & Innovation: Measuring the success of RA and proactive readiness.

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 3. The Approach
The Telecom Markets – the saturated ones or the developing economies or market with multiple
players one thing is common to all, and its innovation be it on the products and services or the
offers on tariff. And in any of these scenarios there is the potential impact on revenue and telcos
may be vulnerable to revenue leakage or revenue stagnation. Thus the need of the hour is that all
TSP should leverage the complete benefits of RA functions. The critical parameters necessary
for achieving the RA objectives are :

1. A dedicated and resourceful team with diverse skills to understand the aspects of telecom
revenue chain.

2. Automated and advanced RA and data analytics tools to efficiently capture and analyze
large volume of data

3. Customized RA methodology based on contemporary business needs and prioritized

coverage of areas.

The following pictorial diagram provides a generic approach to plugging the leakages:

Activity Wise Analyze & Assess by Actionize by Revenue Gains

Process Identify Revenue Measuring taking suitable by plugging
Mapping Leakage Revenue Measure Leakages

Fig. 3.1: Approach to tap leakages

The implementation of a revenue assurance plan requires commitment from all levels of the
Organization and is a strategic effort which is difficult to implement and manage without
methodology and proper tools.

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The figure below gives a balanced View of the Revenue Assurance Plan.

Where are the

Process Process Customer How satisfied are
deficiencies ?? my customers ??

Learning Revenue
How much
Revenue are we Financial & Assurance
losing ?? Culture ??
Innovation
Revenue
Assuarance

Fig. 3.2: Understanding Revenue Assurance

The basic revenue and risk management framework for any TSP is as below:

Fig. 3.3: Basic Revenue Management Framework

The main areas that has been identified by Consultants which are generally Low Risk - High
Reward Areas are :

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 a. Leakages due to unaccounted usage of services

b. Loss due to improper traffic data management

c. Internal leakages due to system and process integrity issues.

d. Customer churn, improper handling and bad debts.

e. Subscription fraud and tampering of Business Process.

f. Unseen loss due to Process inefficiency.

Thus a sound understanding of the planned strategy and operation is thereby required to have a
strong baseline established for design and implementation of a relevant Revenue Assurance
functions.

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 4. Global Revenue Assurance Market
The telecom industry was more of a predictable game in the 90’s. Timely Roll out of new service
areas and expansion of Network with enhanced service platform would more often generate
enough profits for any operator. But in today’s competitive environment, the stakes have been
raised considerably and any investor rates it as one of the riskiest business. Similar is the case for
Indian Market which has witnessed a tremendous change in the bottomline though every month
20 Mn Net additions reflect in the books. The last 2 years has seen tariff coming down drastically
with per second billing being introduced bringing more woes to the bleeding Telecom Industry.
Given the economic pressures due to the ultra-competitive Indian market, revenue assurance
(RA) has assumed a critical role.

Thus in these environment with so many market and competitive forces to play the only telecom
strategy to be in the race is to realize the game has changed.TSP must now not only launch new
services quickly but also should have enormous operational capabilities to bill and provisions
them creatively and efficiently to move ahead. Hence it becomes crucial that revenue leaks,
fraud, customer management and interconnect billing problems don’t sink the business. In other
words there is a growing demand of Telecom revenue Assurance that monitor operational
systems for problems and keep the business steady.

Dittberner in his report named “Telecom Risk Management: The Market for Revenue Assurance,
Fraud, Credit, and Cost Management Solutions” has quoted that nearly 60% of the Revenue
Assurance Market is software (including customization, maintenance, and service bureau work)
and the remainder 40 % is consulting, everything from helping a carrier establish a revenue
assurance and fraud management organization to auditing operations and create effective
business processes.

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Some of the dominant players in the Revenue Assurance Products and Consulting Market are
mentioned below :

Fig. 4.1: Global Players in Revenue Management

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 5. Connectiva Systems
Connectiva Systems is a revenue management software company whose solutions enable
telecom operators to improve business performance, productivity and profitability. It has
developed RA products for Telecom Operators to reap in more financial performance from their
existing infrastructure. The organization was founded in 2001 and is currently rated among the
Top 3 vendors in Revenue Management.

Connectiva offers a range of enterprise revenue and risk management solutions built on open
standard based next generation analytics platform. Built on a “Configure and Not Code”
philosophy, the Connectiva technology framework and application suite offer unparalleled
functionality, flexibility and scalability to help service providers meet their business objectives.
Connectiva’s Products services two industry domains which includes UTILITIES & TELECOM.

Along with the Connectiva’s award winning ONEREViEWTM product it also provides
professional services tailored to match each customer’s unique requirements. From business
consulting to managed services to hosted solution the Company’s offering complement the
Revenue management solution suite and thereby help in delivering a complete package – a whole
product experience to the customers.

Some of the major Clients of Connectiva System includes Zain, Bharti , T Mobile, Idea, BSNL ,
Tunisiana, and many more. And this has been possible only because of their identification and
recovery of more than $500 Mn in revenue leakage. Aside with this domain expertise, award
winning product, end-to-end product and guaranteed ROI commitment, Connectiva is marching
ahead and is recognized as one of the Top 10 fast growing Telecom Software Company.

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 6. Conclusion
According to the TeleManagement Forum, RA is a discipline grouped under enterprise risk
management along with other processes for business continuity, security, fraud, audit and
customer management.

In today’s competitive market we see an increasing number of TSP realizing the need of
predictive business methods and turn them into operational reality. In telecom all processes such
as product management,marketing,collections,vendor management churn & customer
management etc are important to ensure a steady profitability and they use the same closely
correlated data sets. Thus the best way to address such an enhanced business scope is by
providing a single solution framework with the ability to control and prevent risk, measure
performance, and enable effective analysis in every aspect of the business. So any enterprise
driven step taken towards a multi faceted business assurance and optimization discipline coupled
with best practices of an external partner can yield better results and enable operators to gain the
acuity unlocking new profits.

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 References
1. Integrated RA and FMS at Etisalat, Egypt – Connectiva Case Study
2. Revenue Assurance – punctured profits and Fraud management – By Anil Kumar
3. ROCware – Subex white paper
4. A structured approach to revenue assurance finances – By Martin Sjolin, Igor
Damjanovic, Jan Burman
5. Global revenue assurance Survey 2009 results – KPMG International
6. The Rapidly Changing revenue assurance and cost management market – A global
perspective – A Stratecast Report (F & S)
7. Exploiting Analytics – How to improve customer experience? – Insight Research by
Rob Rich
8. Getting the Revenue Assurance Act Together – White Paper Connex Technologies
9. Revenue Assurance scorecard for Telecom industry – Dr.Jacques Carrier
10. Revenue Assurance for Digital Content – KPMG International
11. Revenue Assurance a critical tool for telecom success – By Michael Morisy
(http://searchtelecom.techtarget.com)
12. A Market Research Report & Analysis of Telecommunications Carrier & Vendor
Opportunities – Dittberner Reports (http://technology-research.com/ra.htm)
13. http://www.ossnewsreview.com/telecom-oss/category/revenue-assurance/
14. International Quality & Productivity Centre – Telecom fraud prevention and Revenue
Assurance (http://www.iqpc.com/Event.aspx?id=334512)

sutapriya@gmail.com| Revenue Assurance – The Intellectual Acuity