Revenue Assurance for Telecoms Webcast Transcript
Date: 7th July 2010
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START OF RECORDING
Operator
Good morning ladies and gentlemen. My name is Anna and I am the
Webex Producer for today’s webcast on Revenue Assurance and
Telecoms.
Please note that today’s webcast is being recorded and will be
available for playback.
I would now like to hand over to the first speaker of today’s webcast
Mr Sean Collins, KPMG’s Global Chair for Communications and
Media. Please go ahead Sean.
Sean Collins
Thank you Anna.
Good afternoon everyone. Today’s webcast is the first in the series of
webcast planned by KPMG under Communications and Media space.
I am Sean Collins and I lead the Communications practice for KPMG
across the globe. With me is Romal Shetty, who is Communications
Head in KPMG India and leads one of the 9 Telecom centers of
excellence KPMG has across the globe. He will be spearheading the
webcast today based on his multi-geographical experience across over
30 countries spread over last 14 years. But before I hand over to him,
let me provide you with a brief overview of the survey – post which
Romal will take us through the survey key findings.
Before I hand over, let me just take you through one or two of the key
survey findings.
I have been involved in telecoms for over twenty years and in those
very early days I recall learning about acronyms like CDR and the
importance of revenue assurance. Twenty years later revenue
assurance is no less important than it was then.
In those days it was about the problems caused by legacy systems,
disjointed systems in the incumbent telcos. These days we are talking
about revenue leakage in developing countries, which is growing very
fast and therefore you have scalability issues, and in the developed
markets, where the industry effectively has gone ex-growth for the
past few years. What we are seeing therefore is concern over revenue
stagnation and a need by those telcos to maximise their revenues
wherever possible.
So, whether it is developing countries or developed countries, the
reason may be different, but the revenue challenges are of the upmost
importance.
Furthermore, telecoms as an industry, as all of you will recognise,
continues to evolve, technologies change, products are introduced and
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these are all new challenges for billing systems. Over that period we
have seen some major telcos, Bharti Airtel is a very good example,
turning into marketing orientated companies.
Telecoms used to be based on technology. These days they are based
a lot more on marketing expertise. That in itself gives rise to further
challenges as to how well the technology is integrated with the rest of
the business. Those are among the reasons that led us to think about
carrying out the survey, and in particular to see how functions like
revenue assurance are adapting to those changes.
Revenue assurance of course can directly influence both the topline,
the revenue line, and the bottom line, profitability. That’s why it is so
important to telcos in the modern world.
It also has of course a challenge, revenue assurance, has the challenge
of keeping itself updated and educated because technology change is
never ending and it has to keep in close parallel with trends in the
industry and thereby make itself relevant to the business.
So the survey which we undertook during August to October 2009
was very much aimed to cast a light on the current issues and position
of revenue assurance and it was very much our aim that it should be
aimed at Chief Executives, Chief Financial Officers as well as
Revenue Assurance Heads.
The survey, as you will see on your screen, was pretty extensive, 86
respondents from 74 operators in 46 countries. It was indeed a very
extensive survey.
Again from the graph in front of you, you will see that we had a pretty
equal spread of participation from the three major geographic regions
of Asia Pacific, the Western world of Europe and America, and Africa
and the Middle East. So good participation and also if you look to the
bottom lefthand corner of that screen you will see that the majority of
participants but by no means all of them were large scale operators.
What it really means is that we managed to get the market leaders in
each of the geographies to participate in the survey. So the survey in
other words has real substance and the findings have real and
substantial meaning to everybody who is participating in this call.
Before handing over to Romal, one final world, Romal will take us
through the presentation and at the end of the presentation there will
be an opportunity to have a Q&A session and I am very much hoping
that as many of you as possible will participate in that Q&A.
So over to you Romal.
Romal Shetty
Thanks Sean.
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Revenue Assurance for Telecoms Webcast Transcript
Date: 7th July 2010
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So it is good morning, good afternoon, as well as I think good evening
in different parts of the world right now.
So taking the webcast forward we shall present the survey findings in
four key categories: That is the extent of the revenue leakages, the
enablers to an effective RA function, the levels of empowerment and
some of the key insights revealed by the survey.
If we move on to slide number six, as mentioned by Sean, I have been
working for the last fourteen/fifteen years executing various revenue
assurance engagements across the globe and was not surprised with
the survey findings that revenue leakage still remains a key challenge
for operators across the globe.
While evaluating the degree of revenue leakages, we covered an end
to end RA cycle of the extent of total leakages across business, the
extent of leakages getting identified by RA and subsequently how
much of the savings is actually recovered.
We noted that leakages were prevalent across all geographies, but
drivers like lack of timely identification or lack of successful recovery
differed across geographies.
So if we look at some statistics the first one being revenue leakages as
a percentage of total annual revenue. This of course excludes fraud
and bad debt. There seems to be a clear distinction between the
developed and developing markets.
Developing markets indicated leakages greater than 1% and up to
10% in some cases, whereas developed markets indicated strong
trends on lower revenue leakages. This could also primarily be
attributed to a lack of availability of information on leakages in
developing markets.
Further -ASPAC stood out here with about 30% respondents stating
that they did not have information on the extent of leakages.
Another interesting insight in this survey was that the C-level actually
felt that the extent of leakages were higher than what the RA heads
had estimated. So there seems to be a perception difference between
the C-level or the C-level Management and RA heads.
Coming to the second statistic on contribution of fraud to total
leakages, all regions whether developed or developing, indicated
significant challenges. While we had the Middle East and Africa
reporting fraud leakages up to 10%, we had ASPAC and Europe and
America stating that close to 40% respondents did not have fraud
information.
This highlights a severe challenge faced by operators because
availability of data is a bare minimum foundation for an RA function
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to work effectively. The problem here could be twofold, either there
is a lack of data with business or there is a lack of conversion of data
to meaningful information for revenue assurance purposes.
Also what this indicates is that leakage could probably be at a higher
percentage than the 1% to 3% which has normally been indicated in
the survey because in a number of cases we actually don’t have the
information on the extent of leakages.
Moving on to leakages identified by the RA function and recovered
through successful billing, the trends indicated by the survey are not
very encouraging. Majority of the respondents stated that less than
50% of the leakages are identified and further out of these less than
50% are subsequently recovered.
This trend is common across regions with over one third of
respondents in the developed markets also stating the same. This
highlights that probably we have reactive RA functions where
leakages are identified after considerable time gaps leading to a low
probability of recovery. This might also mean that focus on capturing
leakages at exposure stage may not be adequate.
The other reason for such trends could be that the exact root cause for
leakages is not articulated or determined, leading to continued
leakages and inability to recover lost revenue from subscribers or
partners.
The difference in recovery of leakage between the developed and the
developing markets is also probably because of the prepaid and postpaid mix. The developed markets, have a larger percentage of postpaid, and in post-paid, even if there is a leakage, it is always easier to
subsequently go and bill the customer. But in a prepaid market once
the leakage is done it is very difficult to go back and pass the debit on
to a customer because generally the business is not in agreement with
the same.
Coming to the next question of self-funding status of the RA function:
Is RA actually self funding? That is, is the cost of operations less
than the benefits derived? However, despite all operators saying that
the cost of operations is negligible, very few operators stated that they
are actually self funded. More than 50% operators in ASPAC and
Middle East and Africa and about 30% in Europe and America stated
that they were not yet self funded.
Further it was interesting to note that many of these operators will
take more than one year to be self funded. ASPAC again had
maximum operators, close to about 30% who said that they will take
more than five years to be self funding.
Another interesting point was that operators that are more than ten
years in existence, the operators who have been there for a larger
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amount of time, only 3% actually said that they were self funding and
about 15% only expected to be self funded next year.
Newer operators seem to be self funded and about 33% expected to be
self funding in the next one year. This highlights that the older
operators either might be dealing with legacy issues or rebuilding the
function vis-a-vis the change environment.
Moving on to slide number seven, the key enablers for any effective
RA function includes having the right skill set with the relevant
Domain knowledge, the right tools to manage complex and multiple
system interfaces and the right methodology underlined to leverage
the skills and tools deployed.
When asked to evaluate the RA function on various parameters like
tools, skill sets, methodology, coverage, quality of work etc. RA tool
was noted as the least satisfactory element by Senior Management as
well as the RA Head. While varied RA tools are deployed by
operators across geographies, RA heads and Senior Management were
not completely satisfied with the application of the tools.
This further gets validated by the findings of the survey for the top ten
RA challenges where availability of RA tools was voted amongst the
top three challenges.
In our experience, we have seen that where tools have failed is where
an RA tool is used as a plug and play solution. When it is used as a
plug and play solution and it is believed that all leakages would be
identified, it actually does not work. Where we have actually seen it
succeed is where the tool vendor, the business and the RA function
work together, customise the tools significantly to meet the specific
business requirements of the operator and then actually deploy. That
is where we have actually seen it succeed. So maybe a part reason for
this, for the RA tool people not being happy is probably because it is
more used as a plug and play and does not involve significant
customisation.
Also the other important aspect of RA tools - one of the RA tools
which is currently deployed by leading companies is RA dashboards,
which typically gives an indicator of various kinds of leakages across
the revenue cycle, and these dashboards are actually available to the
Senior Management as well as the business.
When looking at the question of whether the RA team possesses
requisite skill sets and which of these skill sets are missing in the RA
function currently, RA heads and Senior Management across
geographies stated that they possess only partial skill sets necessary
for the RA function.
Technical skill sets, which typically is the skills with regard to the
network elements, the mobile switching centres, emerged as one of
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the key skills missing. The observation highlighted a new trend or an
insight into the RA function, which is that earlier audit and assurance
personnel were part of the RA teams and were trained in Domain
knowledge; with the changing business scenario and increasing
technical complexity, the function has now become dependent on
technical skills; as a result, technical professionals are being inducted
into the RA function and being trained in audit and investigative
skills.
The skill set challenge is further aggravated by lack of cross
functional teams. This is validated by the finding which is on your
screen right now. Currently the way the RA function is structured it
has only certain skill sets and not a mix of resources from different
business teams. Borrowing the skills from other functions happens in
few and far cases. ASPAC had 66% of respondents stating that no
cross functional team existed vis-a-vis about 35% in Europe and
America.
However it was interesting to note that the Middle East and Africa
had 87% respondents stating that existence of complete or partial
cross functional teams. One of the key reasons for this trend is the
perceived positioning of the RA function in the organisation. It is still
considered as an assurance function. It has still some miles to be
covered for it to be seen in the light of a business function where it
works in full tandem with the business giving direct contribution to
the top line and bottom line.
Only when an RA function is considered at par with other functions
job rotation and resource sharing will become easier. Cross
functional teams is also a function of the culture prevalent in the
organisation. One of the leading practices, which very, very, few
telcos actually follow, is where they have some of their star
performers, some of their best talent, which actually are inducted into
the RA function. One of the reasons being RA actually has probably
the widest view in the revenue cycle and doing a stint in the RA
department actually gives a view to the entire revenue cycle.
So what these companies do is put some of the best performers in the
RA function for about a couple of years and then they move back to
business so it helps these people get a better understanding of the
revenue cycle as well as to understand a better assessment of risks in
the revenue cycle.
This lack of skill set is also forcing operators to outsource the
function and borrow skill sets from external vendors. While this trend
is not prevalent across, it has started picking up in developing
markets.
[presenter dropped off line]
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The key areas where for example some of the skills are being picked
up is more on the network audit side of it where typically most skills
are getting borrowed from vendors.
Moving on, when we look at the average sample size of data analysed
by the RA function and the extent of quantification for the issues
identified we noted that more than one-third of operators analysed
less than 5% of the chargeable events and nearly half of the
respondents indicated that they quantity leakages only for critical
issues.
My experience across leading companies is that only when we
quantify leakages—and quantification of course is dependent on a
company’s philosophy: Some companies quantify on an annual basis,
some try and quantify the actual leakages, some quantify on a
monthly basis.
Whichever the philosophy, it is important to quantify because without
quantification neither Senior Management, neither Board, neither
Audit Committee, neither the CXO Group, actually pay attention to
leakages. So therefore it is very important that we actually spend
some time arriving at a philosophy which every member of the
company agrees to and then quantify these leakages.
One of the strong and positive trends that came across in the survey
was that some of the operators have started applying revenue risk
assessments for RA review and scoping. This means prioritised RA
reviews in tandem with business needs and risk. This could follow
the model of “value at risk” where maximum assurance is being
provided for areas of maximum vulnerability for leakages.
Overall close to 40% of operators applied annual risk assessments for
RA reviews and ASPAC led this positive trend with 56% of operators
following this practice. This highlights that there are steps being taken
in silos to enhance the RA function to the next level. It is critical to
look at such initiatives and develop an integrated roadmap for RA
enhancement to the next level.
Some of the best in class companies perform a value assurance model
analysis to identify the extent of revenues for which assurances are
being given and also some of them perform an RA benchmarking or
an RA maturity assessment to understand how they fare against some
of the leading operators in various aspects of whether it is on the
tools, whether it is in the skills, whether it is on the charges and
events which they are covering as a sample, all of that, a maturity
assessment is done and then a roadmap is sort of driven towards how
could they actually improve the maturity from a basic stage to a more
advanced stage.
This now brings us to the next theme of where is RA function
currently and where does it actually want to be. In this section, we
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look at the degree of empowerment the RA function has got and the
areas of focus it has within its scope. We seeked answers for
questions such as does RA have visibility right up to the topmost
level, does RA restrict itself to only detection of leakages, does RA
help the business to identify margin enhancement opportunities in
complex business environments.
We will first look at the scope areas within RA, existing and
expected, and then we shall discuss the degree of visibility the RA
function has within the organisation.
If you look at the core objective of RA and the expectation of the RA
function, prevention and detection of revenue leakage still remains the
primary objective of the RA function with 79% of Senior
Management and 87% of RA heads listing it as the highest priority.
However, in the future, while RA heads want to focus on
enhancement and cost savings along with leakages, Senior
Management rated focus on revenue reporting as a succeeding
objective for the future. This could primarily be because Senior
Management is not convinced about the current effectiveness of the
leakages being identified and also probably because it is a CFO area
to focus on revenue reporting.
Moving on to the question of whether there is an integrated plan to
transform RA from its traditional role to the desired role. The
traditional role is typically which is more leakage based and leakage
identification to the modern role where a number of respondents
actually want to be in the area of cost saving as well as margin
enhancement.
The majority of the operators were keen to transform the function but
only few could support their intentions with a well laid integrated
plan. 35% are still working on a plan and another 18% have not yet
started implementing the plan.
It is critical in a changing business scenario, and telco is probably the
most dynamic environment which we live in, that RA functions move
from a leakage detector to a business advisor. The absence of an
integrated plan or the required RA transformation despite clear
intentions for the same positions RA as a tactical function rather than
a well articulated long-term strategic and directional function. This
clearly indicates that RA is still considered a support function and not
a strategic one.
I will talk later in my presentation about the positioning as well.
Also as mentioned earlier, RA transformation is dependent on the
culture of the organisation. Such a transformation requires more than
just a functional overhauling. Currently across regions and
irrespective of scale and maturity of the operators, motivation to assist
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RA to take on a greater role is limited. It is essential that
organisations also adopt a fresh mindset to allow for all business
functions to accept revenue assurance’s demanding role within the
organisation.
Now coming to the question as to who has the ultimate responsibility
for managing RA and who does RA ultimately report to. The function
in a majority of cases is under the Finance domain with direct
reporting to the CFO across regions. Some operators in the Middle
East and Africa and ASPAC stated that the ultimate reporting also
goes to the CEO after CFO, indicating joint business as well as
finance related focus. However, visibility currently is restricted to up
to the CEO level only.
Beyond the CEO level, close to one fifth of the operators indicated
emerging visibility to the Board and Audit Committee. Noted
reporting to the Board and Audit Committee was maximum in Africa
and the Middle East region and least in the ASPAC region.
One of the things I think good companies and good telcos do is, while
there may not be a direct reporting to the Audit Committee or the
Board, it is important that on a periodic basis at least a status update
should be given of the RA function as well as some of the key
revenue leakages which have been identified across the function.
This is a good practice and Board and Audit Committee members as
well do appreciate the shared knowledge of RA functions and the RA
leakages identified.
We live in interesting times and as Sean mentioned today it is not just
about voice, there are non-voice services, there are various aspect
which are getting converged, there is converged billing happening,
there are various commerce applications being integrated, value added
service applications being integrated. The whole environment is
extraordinarily dynamic and there are a number of functions which
are managed by vendors which brings us to the question which we
asked in the survey which if there was a formal review mechanism to
evaluate RA procedures established by the vendors and if there is a
claw back clause including the vendor agreements.
The survey indicated that the majority of respondents do not have
formal independent RA review mechanisms for third parties along
with adequate claw back clauses. With a changing environment,
operating environment, where outsourcing is picking up, especially in
the developing markets, inclusion of third party vendors in
comprehensive RA reviews is critical. It is important to hold such
vendors accountable for losses suffered by the company owing to
operational inefficiencies. These reviews can be carried out and can
vary from periodic vendor self assessments supported by full-fledged
independent validations.
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What we noticed in some of the leading practices is that the RA
procedures that actually, whenever somebody takes over and today
some of the key critical functions like the networks, like the billing
systems and IT systems, are actually managed by third party vendors,
you see leading telcos actually include revenue assurance procedures
in their contracts and also include the right to audit as well as have the
claw back provisions—that is where there has been a fault identified,
indeed a mistake, due to the negligence of the vendor, there has been
revenue lost, the same has been passed on back to the vendor.
So it is important that you actually cover vendors as well under the
clause of RA, and especially because in an outsourced environment,
which is probably what the world is moving now significantly
towards, we should have adequate safeguards and RA should have
adequate safeguards to ensure that those risks are covered.
Finally here is the last theme for the day, which is some of the key
insights which were revealed by the survey. The survey tried to
indicate the areas across the revenue cycle where leakage points were
maximum, where basically the RA heads supported that this is where
they felt that the leakage points were maximum. The top three
leakage points were new product development, CDR processing cycle
and the network element configuration.
RA functions consider leakage sources that are network or system
intensive to be the most vulnerable. With the rapid introduction of
new products and a very limited turnaround time, consideration
changes and incomplete synchronisation across multiple systems
[inaudible] may lead to the override of a valid business rule in any
one of the systems.
This also goes in tandem with the earlier set of finding where
operators indicated that technical skill was lacking the most and the
result it finds more difficult to deal with leakages arising out of
technical or system issues.
Prepaid came across as the most vulnerable revenue stream. I think
one of the reasons is also because I think there is a significant amount
of skill set available when it comes to post paid billing systems, also
post paid because it gives a lot of time. Prepaid billing systems are a
little more black box in nature. Not too many people understand all
the functionalities of a prepaid intelligent network system and hence
this probably is also the reason why most people seem to consider that
it is because of lack of skill sets, because of lack of understanding,
that prepaid is one of the most vulnerable areas. This is also
important in the scheme of things as new subscribers now in most
areas of the world are prepaid rather than post paid subscribers.
Moving on, when you look at the key challenges of the RA function,
the top three challenges were information availability, the degree of
awareness and empowerment and the RA tool availability. Lack of
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influence and lack of good tools impact data availability. This in turn
impacts positioning. And it is a vicious cycle which needs to be
broken. Further, lack of technical skills can also lead to suboptimal
utilisation or leveraging of all parts of the benefits from the tool.
Operators need to [inaudible] simultaneously invest in enhancing the
overall positioning as well as the function overall. These initiatives
have to supplement each other and cannot supersede one another as it
will then defeat the overall purpose of aligning the RA function with
business objectives.
I mentioned about empowerment earlier. I think empowerment and
positioning are two very important aspects. The organisation needs to
empower RA, but also I believe that the positioning of RA needs to
change. Today, you probably don’t see too many RA heads actually
moving on to become a part of the CXO Group. I think that is very
important because unless we change the positioning, and I think this
the RA Function itself has to do, of how we can better position itself,
how we can probably educate more CXO Group members of what
exactly it is trying to do, how it actually helps the companies because
only then, will the positioning improve and empowerment happen.
And the benefits of empowerment is that RA can do a number of
more activities and a number of critical and prioritise critical activities
to help the organisation in an overall perspective.
Finally we asked the question on whether fraud management is part of
the RA function.
While bigger telecom operators have an
independent fraud management function, it is still a part of the RA
function across medium and small scale operators. The responsibility
of identifying and assessing frauds for these operators, medium and
small scale operators, lies within RA. Hence the requisite tools and
skill sets capable of identifying fraud leakages also need to be
incorporated into the RA function for these companies.
Fraud and RA complement each other whilst fraud requires
specialised skill set and should be separately inducted in the
organisation in the long run. But it is is critical for RA professionals
to have basic investigative skills as most often than not leakage
indicators lead to detection of fraud.
It is very, very, important that RA and fraud co-exist and one of the
things which we have seen in leading operators is also the extent of
communication between the RA and fraud teams. And places where it
has failed is where you actually have silos where fraud and RA work
completely separately, do not share certain findings, which ultimately
results in a very, very, large scale fraud and people have lost a large
amount of money on this.
So it is important to have these two functions, have separate skill sets
within each of these functions, and have an alignment for them to
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work together so as to respond to either detecting or to recovering
from a fraud quickly.
We have now completed our presentation and I will open to
discussion on any queries or views that you may have with respect to
any of the topics discussed.
Owing to the time constraints if we are unable to address your query
during the webcast please feel free, you can mail a query to Yuki
Tobinaga that ytobinaga@kpmg.com and we will get back to you
with a response shortly.
Question and Answer Session
Caller from KPMG in Netherlands
I am responsible for the Revenue Assurance Department here and
I have a question with respect to the future goals of becoming
more involved in margin enhancement etc. I wonder what your
perspective is on the cooperation of the revenue assurance
specialist with other financial functions and marketers if it comes
to margin analysis and cost reduction.
Romal Shetty
In the future I think as RA moves from just identifying revenue
leakages, I think it is very important to work with business and
finance and specifically you mentioned about marketing and sales to
give certain insights about consumer behaviour, about profiling of
subscribers, about the way, subscriber behaviour is, to actually ensure
that these are some areas where for example margins could be
enhanced.
I think revenue assurance does a lot of analysis of data so traditionally
it has been done purely from a leakage perspective, but I think the
analytics now can be combined with business intelligence. It provides
key insights into the business and that will probably help various
products where margins can actually be enhanced. While they will
not take on the responsibility of enhancing margins completely—that
is the job of the business to do—but I think RA is in probably one of
the best positions to provide a suitable level of intelligence to help
companies in developing and designing products and monitoring
these products on a regular basis to see if the margins are enhanced.
KPMG Caller
In our particular situation we still have a huge challenge in
assuring the revenue due to all technical and commercial
innovations and we have defined a specific financial role called
Business Control which is responsible for the support of the
business in analysing its margins.
Romal Shetty
I think if you look at the survey findings also I think most people still
tend to stick to revenue leakage reduction probably because of the
complexities which are happening and the introduction of new
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systems like you mention, their leakage detection probably remains
the highest priority but I suppose over a period of time this is a very
new trend, it really hasn’t taken on significantly but we are just seeing
pockets of certain companies where the focus is also now increasing
to margin enhancement.
KPMG Caller
In Holland we see a trend of increasing outsourcing of network
and ICT environments. This causes an inherent risk of decrease
of detailed knowledge within the operator. We all acknowledge
the fact that sufficient knowledge of these aspects of the business
are required to assure your revenues. My question would be
what would be the best practice in gaining sufficient assurance
across the whole revenue cycle while big parts of that particular
cycle are being outsourced to vendors.
Romal Shetty
I am based out of India so where we actually have a significant
amount of outsourcing which actually happens especially on the
networks on the IT side so whether it is the Ericcson’s of the world or
the Nokia Siemens as well as on the IT side, whether it is the IBM’s
or some of the other global vendors.
So some of the best practices which we have observed: One is doing
independent validations across the outsourced third party to see
whether for example [inaudible] there are any leakages and to decide
either it is a combination of an external vendor or an in-house and an
external team working together to review all of the vendor processes
and look at for example if there are any leakages.
The second portion which I also mentioned was to actually have in
the contracts detailed revenue assurance activities which they need to
do, that is the third party, needs to do and it has to satisfy certain key
performance indicators so that they are contractually bound and third
they actually have claw back clauses which means that if there are
any revenue leakages owing to the negligence of the third party
vendor then they need to, for example, pay back that money.
So those are periodic assessments having contractually designed
revenue assurance procedures which the third party, we are not just
talking about what the company needs to do but the third party needs
to do on its own on a periodic basis which KPI define and if there are
any leakages then they will penalty claw backs on the same.
KPMG Caller
Probably that practice can be enriched by implementing in that
particular contract a right to audit or for instance a SAS70 Type
2 report.
Romal Shetty
Absolutely. The right to audit is a part of all of those contracts.
Sean Collins
Anymore questions please?
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Swisscom Caller
I just would like to add reports regarding slide six where the
revenue assurance is a funding function. One point that I would
like to add there is that one output from the key points that the
review has pointed out was that revenue assurance with more
than ten years are not self funding revenue assurance was the
result. One point that I would like to add, as much as [inaudible]
is the revenue assurance function, revenue assurance then is
working at prevention and not the detection or the leakages that
are being detected, not that high because the work is focused on
the prevention. Being part of development of new products and
being part of new platforms that are being [inaudible] or in the
OSS or VSS area.
I think that is the most important thing to show this difference of
mature revenue assurance is then to quantify the prevention that
has been achieved or the prevented loss because otherwise
revenue assurance with more than ten years, at a mature level,
won’t be funding function if the report is just done and findings
and records revenue.
Romal Shetty
I think you have given a very valuable insight. I think it is absolutely
right what you are talking. In terms of actually where RA actually
prevents certain functions and certain leakages before and not actually
detected. You are absolutely right about that.
One of the factors that we have seen is that given there is very, very,
strong user acceptance testing which prevents a leakage from
happening, what they do is they try to quantify based on the business
plan saying that RA actually prevented something from happening
and probably had this product had been launched and based on the
business plan which it was launched, this is probably what you would
have saved. The only perspective there is that it probably helps from
a positioning, like I said, it is ultimately dependent on the philosophy
of the company whether they want to do something like this but we
have seen companies where based on the business plans for product
they are able to quantify saying that we prevented this and the user
acceptance testing or whichever level, before launching the product
and hence being able to save approximately to a big extent.
I think it is a valid point of what you said there where companies have
typically been more than ten years in existence, maybe that probably
could be one of the insights yes.
Sean Collins
Thank you very much.
There is still time for one or two more questions please.
UAE Caller
A quick question related to the query from the lady in Swiss Com,
is it actually right to measure the performance of the department
based on the savings or losses that have been detected because
that is a very valid question I thought. What I would say is, in the
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Revenue Assurance for Telecoms Webcast Transcript
Date: 7th July 2010
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immediate aftermath of actually implementing revenue assurance
solution, you are likely to see quite a lot of payback and that will
eventually taper off therefore measuring the actual revenue losses
that have been, let us say, detected is probably not a very good
way of identifying performance.
What we tend to look at is the number of days, the lead time, it
took to actually find an issue. So did you find an issue, let us say,
three months after it manifested or did you find it within x
number of days. That would be I think, in my opinion, a better
measure of the department’s performance. It would obviously
not give you a financial fact to say that yes we have feedback but
in my opinion you would have already done the feedback in the
first two or three years after you have implemented the tool.
Thereafter the actual amount of revenue leakage detected should
not be high.
Romal Shetty
So Santosh I think you are right in terms of what you have mentioned.
I think here what we are trying to say is more just about funding
which is specifically saying that your cost of operations and the
benefits you are providing is more than the cost of operations. That is
really what we are trying to….so I agree I don’t think that
measurement of all of the RA function should be purely based on
leakages, no I don’t think so. It should be based on various
parameters like you mentioned, issue resolution, issue identification,
whether it is closure of issues, whether it is for example how many
have you detected at the new product development stage. So all of
the things like that I agree. I wouldn’t say self funding from a
performance measurement but I still believe that in the RA function
normally would at least, because RA functions are typically small,
they are not a huge set of people compared to what the business has.
In that scenario and with the tools and you have already used the tools
for two or three years, probably don’t have too much value left then.
But just that the benefits are more than the cost. That is probably
what we are saying but I agree performance of the RA function
should not purely be based on leakage identified and hence also my
earlier remark of saying that RA should also start moving towards
cost savings and similarly towards margin enhancement, that is
providing business intelligence. So that is probably also how RA
becomes more functional and more a value adding organisation.
Sean Collins
Good. Perhaps time for one final question.
Caller
Building on the discussion we had before, I agree with the
previous two people on the line. We are actually moving towards
a revenue assurance control cycle where we demand from the
business to state their appetite for risk regarding revenue loss and
we then manage our effectiveness by measuring to what extent we
are able to ensure that the revenue loss does not exceed the stated
appetite for risk. If the appetite for risk increases for whatever
reason well then the [inaudible].
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Revenue Assurance for Telecoms Webcast Transcript
Date: 7th July 2010
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Romal Shetty
I think like what you mentioned, I think that is important. I think that
is probably the way to go ahead as well but yes you need to work in
tandem with business on some of those aspects and only then
probably because it is important at the end of the day, you need to
figure out overall how do you contribute to the organisation and how
do you assess so yes I agree. It is not just about leakages but it is also
about how proactive RA is rather than being reactive.
Sean Collins
Good thanks Romal.
I think it is probably time now to bring this session to a close so I
would like very much to thank Romal for guiding us through the
survey, guiding us through the report and to remind all participants if
you have any questions, if you want to have any follow-up at all on
this hugely important area of revenue leakage and revenue assurance
you should still have on the screen the reminder to…….
[End of call]
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