Finding the Right Place for Revenue Assurance

There is a saying: “having one’s heart in the right place.” It means you have positive intentions to accomplish good things. I was recently involved in plenty of discussions and debates about the ultimate “right place” of Revenue Assurance (RA). RA by definition is about doing good things: contributing to profit, revenue and cash flow improvements with the use of data quality and process improvement methods. Isn’t this a self-evident must for every telecom operators’ management to foster and expand RA?

RA always has its heart in the right spot

Historically, RA has focused on network to bill processes, finding leakages and billing errors and recovering them whereas many organization have been “self-sponsored”. During the last decade RA organizations have evolved towards applying RA best practice principles to the entire process chain. According to the TM Forum’s RA survey 2016 most have at least an order-to-cash scope with notable revenue coverage levels. The majority of RA functions systematically measure leakage and recovery. Teams are equipped with powerful tools, analytical skills, end-to-end process knowledge as well as assurance techniques. They strive to have a permanent impact on process transparency, establishment of ownership and systematic and active risk management.

Connecting the dots with customer experience

Last year I wrote an article entitled “dreaming up the revenue assurance function of the future” reflecting on a possible evolution path for revenue assurance. Complex multi-business partner eco systems are evolving fast where the operator has to guarantee the ultimate customer promise. A robust and well controlled need-to-order process and solid fulfillment capabilities in a multi-vendor environment are becoming important building blocks for assuring customer experience. In other words what is stated in the customer service agreement of an operator and their business partners needs to be secured at all times. RA should also try to align their objectives towards customer experience related topics such as “getting the bill right”. In order to support the ultimate customer promise, RA needs to balance their traditional financial KPI set with IT governance, process improvement and customer experience related targets.

Finding the ultimate place for revenue assurance

Possible future locations of RA will depend much on the company’s objectives and how future RA team capabilities could help the company achieve their short and middle term objectives.

In a perfectly simplified business model with a lean organization and no legacy, RA functions could sit in product management. In a complex organization with a quality management regimen, RA could reside in process development or quality management. In organizations where risk management is engrained in the performance culture a preferable location for RA would be risk management.

Based on the recent RA survey, two-thirds of all RA organizations are currently located in Finance. This is an advantage for the alignment of RA activities with financial objectives and receiving the necessary prioritization from the management board. Many RA organizations directly contribute to cash flow and profitability improvements. Leading organizations apply comprehensive KPI sets whereas revenue loss prevention and non-financial measures have been integrated. For sure, many RA organizations in Finance have still plenty of development potential because Finance also strives for improved business partnering.

There will be discussions about the future place and evolution paths for RA, fraud management and other assurance functions at the RAG Summer Conference in London on July 7th and 8th. Several scheduled sessions will explore current and future priorities and paths to get there, and I look forward to contributing to those conversations.

How an Enterprise Risk Management approach could help

In the context of Enterprise Risk Management (ERM) at telecom operators the “revenue risk” is likely to be among the top 10 risks. RA is appreciated as a mature and visible active risk management activity that reduces revenue risk. RA’s understanding and discipline to measure risk impact provides the C-Level and corporate management a cookbook how to apply such practices to other ERM areas to limit the scale of uncertainty.

The recent RA survey showed that RA functions are increasingly combined with other functions which all try to contribute to managing the revenue risk end-to-end. Fraud management, credit control, risk management, partner management and customer analytics activities are also increasingly performed by RA staff. If a management board states that 10 percent of revenue is at risk then a big part of this risk is likely to relate to a combination of revenue leakages, fraud losses and credit losses. So, it makes perfect sense to have multiple adjacent activities managed in the same organization with the same objective to actively manage revenue risks.

If your heart is in the right place your feet will arrive at the right place

After an anxious situation I sometimes joke with my kids: “oh, my heart has almost dropped to my pants.” Surely unexpected negative surprises will repeat also in a revenue risk context. Revenue leakages may remain unidentified for a long time, and serious frauds will likely happen again. But with proactive revenue assurance principles, some of these events can be avoided and detection and recovery can be improved and accelerated.

RA organizations and their sponsors have a great opportunity to deploy best practice RA principles across their organizations. If they do, they will be able to manage uncertainties actively. This is especially true where cross-functional problems exist. To achieve this demands risk ownership and mitigation accountability from senior management, in order to ensure the appropriate prioritization of protection and optimization projects.

My personal aspiration is that revenue assurance principles will be embedded in people’s thinking and acted on daily. To realize this goal, RA needs to repeatedly demonstrate that complex problems outside the traditional RA domain can also be solved sustainably.

Rene Felber
Rene Felber
Rene is Head of Risks & FRA at Telia Company, Finland. He is responsible for managing: governance, risk and compliance; fraud management; revenue assurance; and credit control.

He has also been the leader of the TM Forum’s global RA survey since 2014, and is responsible for transforming it into an insight based collaborative experience.

Rene has over 14 years of industry expertise and has spent 10 years in international consulting and auditing with a background in GRC, RA, outsourcing and partner management.
  • Gjurgjica Pesheva

    Very interesting article Rene. There are several points I’d like to comment, but I’ll keep the focus now on the opportunities which might come with unification of the risk functions: Risk management, RA, Fraud and Credit management under same umbrella (process, organization, IT technology,…). Some years ago there was more or less clear split of the focus, responsibilities and activities, but all of them having the same objective: protecting the revenues. Nowadays, the business model is changing, the network technology is changing, the partner networks are increasing, and the focus of all functions is changing. I see more and more overlapping between them, but also some “gray” areas with no clear split defined. The demand of the certain skills and IT technology to actively manage all “business assurance” functions is getting much closer. Today the “data” is becoming a commodity supported by industry developments (e.g.Big data), so using the same “data lake” as data layer can be a clear trigger for certain level of unification. Another example is so called “margin assurance” in RA and “arbitrage” in Fraud. Where is the border? The trigger and the result is the same: negative margin. Can this be treated in one process, one tool, with the same skills and the same stakeholders? Can the cognitive learning and artificial intelligence techniques support all of them? I’m very curious to hear the opinions from the industry experts on the opportunities/benefits/risks that might come with the unification?

  • Albert Jan Hartman

    René, there are also arguments to put Revenue Assurance under Commercial. More than other departments, commercial people are managed, measured and rewarded on recognized revenue. If you want to bill as completely as possible this is the place to be. I experienced this personally. Putting RA under Finance is also an option. RA and Billing Ops should never be in the same organisation.