An Argument for RA Managed Services

In a recent white paper French test call specialists Araxxe argue the merits for acquiring new revenue assurance tools via a lease-based managed service, instead of purchasing them outright. Their paper is called “Buy or Subscribe?” and readers should be conscious that any vendor has a vested interest in promoting deals that suit them. However, I was pleasantly surprised by how even-handed Araxxe were in evaluating the arguments on either side of this perennial question. Perhaps this is because vendors historically preferred to receive the big one-off boost to revenues that came with a sale compared to the steady drip-drip-drip of revenues that result from a leasing arrangement. The increasing number of vendors who are willing to provide managed services shows that the market has matured.

Here are three takeaways from Araxxe’s paper.

1. Outsourcing Can Give Telcos the Power to Stop Paying for Unwanted Tools

In a refreshingly frank section on the benefits of managed services, Araxxe argues:

If the managed service does not provide the telecom operator with added value any more, it is easy to stop the contract.

Surely that depends on what is written into the contract, but Araxxe makes a good point. Telcos should recognize the benefits of contracts that allow them to terminate a situation which does not deliver value to their business. Araxxe continues by stating:

… [the operator can] feel a bit stuck to what software or hardware they have purchased but stop investing in it because it does not deliver value… With a flexible yearly outsourcing contract, if the vendor does not deliver, the operator can always look elsewhere because the hardware and software are owned by the outsourcer.

2. Outsourcing Introduces Risk

Araxxe does not shy away from the risks, which they list under the following categories:

  • security issues;
  • loss of control;
  • lack of knowledge or expertise;
  • difference in culture; and
  • unclear terms and conditions.

Reading between the lines, Araxxe is giving telcos some guidance as to what they should be looking for in a potential outsourcing partner. For example, do not ask a managed service to be run by a business with no experience of providing services of that type.

3. Telcos Should Demand a Trial Period

Araxxe concludes their analysis of the key success factors for outsourcing RA services with this observation:

Last but not least, a trial period is highly recommended…

They argue that trials should last up to three months, without any obligations for the telco or the outsourcer. The benefit is that it allows both parties to check the workflows whilst making sure that SLAs and KPIs have been correctly calibrated.


Araxxe’s white paper ends with a hypothetical case study that lists the pros and cons of buying a platform versus subscribing to a managed service. They then make their pitch for why Araxxe should be trusted to provide managed services. Whether the telco is interested in test call generators or some other kind of revenue assurance product, and whether they are willing to consider Araxxe or intend to evaluate another supplier, this paper provides a decent overview of the questions that should be considered when contemplating any new deal with an RA vendor. Outsourcing may be the better option, so long as the related risks can be addressed. This white paper could easily be turned into a checklist for telcos to work through systematically.

You can download the “Buy or Subscribe?” white paper by registering for it here.

Eric Priezkalns
Eric Priezkalns
Eric is a recognized expert on communications risk and assurance. He was Director of Risk Management for Qatar Telecom and has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and others.   Eric was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He was a founding member of Qatar's National Committee for Internet Safety and the first leader of the TM Forum's Enterprise Risk Management team. Eric currently sits on the committee of the Risk & Assurance Group, and is an editorial advisor to Black Swan. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.   Commsrisk is edited by Eric. Look here for more about Eric's history as editor.
  • Paul Lia

    Hi Eric.

    It is an interesting question for an operator, “Whether to buy a Managed Service or buy a test call generator
    and run it themselves?”

    I haven’t read the Araxxe report yet and I wonder if the even handed approach considered the question
    from an operators perspective rather than simply an RA perspective?

    Let me say that I believe for some operators a managed RA service is the right approach. Equally there are
    many who purchase their own TCG system. To understand why this is the best solution for them you need to expand the perspective from RA to the whole operator. An RA Team may principally use active test calls to answer the question:
    – Is our billing and metering correct?

    Whereas active testing is also used to answer many other questions by operators, such as:
    – What quality of voice and data are we providing?
    – What quality of voice and data are our competitors providing?
    – Are our new services working as expected?
    – Can our customers use their phones abroad?
    – Can inbound roamers use our network?
    – Can our customers access Facebook, Netflix, Twitter, eBay etc?
    – Does international traffic bypass our gateway?

    Very often these questions are more important to an operator than the RA question. The good news is that
    the Network, Roaming & Marketing Teams can all provide a business case and budget to pay for a TCG system or certainly contribute towards the cost of one.

    This opens up a third option which Araxxe may not have considered. IE Should an operator buy a TCG system AND buy a managed service to provide the RA element while Network, Roaming
    & Marketing use the system to answer their own important questions?

    The key from an operators perspective is to fully understand all 3 options and to have some flexibility
    to change between them as needs dictate over time.

    So my answer to the Araxxe question “Buy or Subscribe?” is “Yes”. Or even a combination of the two!

    • Hi Paul, you make a lot of good points. Let me focus on just one of them. When it comes to TCGs, you are absolutely correct to point out that the business case for using TCGs to test for revenue leakages and billing errors is different from the overriding business case for using TCGs in general. This is something I know from personal experience. I once agreed to present to the exec team a joint business case for investment in TCGs alongside colleagues interested in the quality of the services being provided. The problem was that my colleagues who ran the network backed out at the last minute, leaving me arguing for a system that they wanted to use but where the only positive argument was me talking about RA!

      Whilst it is tempting to look at business cases at the level of a telco department, finding synergies between departments can have a transformative impact on the business case for investment. Sadly, political rivalries may make it impossible to present the business case which is in the best overall interests of the business.

      • Paul Lia

        That still happens today Eric. The relentless drive for efficiency does put pressure on these political rivalries. We see an increasing number of Group lead initiatives leveraging economies of scale leading to multiple departments and operators sharing a single TCG system.

        Even in the case where the decision is at a department level, the commercial distinctions between “Buy or Subscribe” can become blurred with the possibility to rent virtualised TCG systems over short periods of time.

        To add further dimensions to an operators decision making is the choice to subscribe for a fixed fee or subscribe on a revenue share basis where they pay when leakage is detected. So the choices become:
        – Buy or rent
        – Real or virtual
        – Managed or self managed
        – Fixed fee or revenue share

        So operators have a suite of choices to tailor the active RA testing service that suits their needs.