More Dodgy Numbers In Another RA Market Report

If you work in revenue assurance, you surely need the instinct to spot numbers which look suspicious. I am often bemused by market ‘research’ reports which sell for several thousand dollars but present funny-looking numbers and questionable facts amongst the few snippets they give away for free. The latest example is from marketsandmarkets.com, who want your company to pay USD7150 to discover their predictions for the RA market from 2014 to 2019. The report covers all industries, which immediately begs a question of how easy it is to research the extent of ‘revenue assurance’ in banking, healthcare, and logistics… or even what counts as revenue assurance in these contexts. Nevertheless, the report tell us that:

The global revenue assurance market is expected to grow from $ 1.7 Billion in 2014 to $ 2.9 Billion in 2019

So the market is already worth USD1.7bn? Really? I have arguably the most popular website dedicated to revenue assurance, and I can assure you it does not feel like I am working in a USD1.7bn market. But I kept an open mind, and continued to read their press release. After all, it is very possible that when marketsandmarkets.com sized the market, they included revenues from lots of businesses that provide software and services which I would not include in the scope of revenue assurance. And then I noticed this…

The Global Revenue Assurance market consists of large players like Cvidya, Subex, Nec, Accenture, and others – which offer services and solutions in this market. The market has seen these players grab high amount of market share.

Let me pick one of these ‘large players’ and do some quick common sense maths to verify the reports’ claims. For my example, I will work with numbers from cVidya for no other reason than they were first in the list. ***ahem***

We can reasonably estimate that cVidya’s annual revenues are about USD40mn. They are smaller than Subex, a publicly traded company whose numbers are audited, and WeDo, whose reported numbers can be sense-checked by reviewing the performance of their division within their parent group’s accounts. Corroboration that cVidya is smaller than Subex and WeDo is available in the form of other reports from other research firms; for example, Stratecast recently reported that WeDo led competitors with a 14% share of the telco assurance market. But comparing cVidya’s revenues to the total pan-sector assurance market would give USD40mn/USD1.7bn = 2.3% market share. If cVidya has a 2.3% share of a USD1.7bn market, how can this be reconciled with the assertion that they are a “large player” with “a high amount of market share?”

If we assume Stratecast’s numbers are accurate, and use the thumbnail rule that WeDo told Stratecast that their annual revenues are around USD70mn, then that means Stratecast sized the telco assurance market at approximately USD500mn. For marketandmarket.com to have accurately sized the pan-sector assurance market, that would mean the non-telco market must be currently worth USD1.2bn. It then seems odd to me that marketsandmarkets.com start their list of “large players” with cVidya and Subex. Neither of these companies is the current market share leader in telco assurance, and neither firm generates significant revenues outside of telecoms. In fact, WeDo has made much more effort to diversify outside of telcos. And whilst WeDo are pleased with their non-telecoms growth, they still admit that the vast majority of their revenues comes from telco customers.

Not long ago, Subex CEO Surjeet Singh spoke to me about his hopes for his company, saying he wanted to grow Subex revenues to USD100mn within the next few years. But even USD100mn of revenues would only translate into a 5.9% share of what marketsandmarkets.com say is the total value of the pan-sector market.

In short, there is something very wrong with the research of marketsandmarkets.com. Either they have massively exaggerated the size of the pan-sector assurance market, or they have badly miscalculated the revenues of cVidya and Subex, or they have deliberately misrepresented cVidya and Subex as “large players” whilst choosing not to mention much larger players, or there are no large players because there is only a long long list of small players – which begs a question about the coherence of this market. Whatever the truth, it is not worth paying USD7150 to discover where they went wrong.

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.

  • Eric,

    I wish more analysts would critically examine these market research studies as you have done. We need some quality control, so it’s much appreciated to call out such imposters.

    Judging by the promotion, the study probably isn’t worth 10% of the electronic ink it’s printed on. So, if I may adopt the classic Eric the High Priezt style of critique, I’d like to have a little fun poking holes in their brochure and showing why anyone who buys this report will probably experience a revenue leak or cry Fraud!

    1. The first give-away is that the table of contents is brimming with forecast tables for each industry. When you see such overloading of forecasts and tables, be suspicious. Excel has made the multiplication of tables laughably simple. What’s not so simple is providing justification for subtle differences in industry forecasts. In fact, you can hardly do that unless you’re an expert analyst in retail operations, banking operations, and all the other industries looked at. And since people who have such cross-industry knowledge don’t have the time to write research reports, we can rest assured that the forecasts are as authoritative as throwing darts at the wall blindfolded.

    2. What industry analyst is behind the report? We have no clue. We must trust the publisher MarketsAndMarkets. By the way, MarketsandMarket is such a prestigious and confidence-building name, don’t you think? And look at the logo — five squares in the shape of the letter “M”. How clever.

    3. What kind of insights will we glean from this report? Well, let’s have a look at the report summary, shall we? Here’s the glorious first sentence:

    “Trade and commerce has been one of the oldest occupations in the world and has flourished and evolved to a great extent over time. Profit making is the main aim of business and companies have been trying tirelessly for the same.”

    Such insights! Trade and commerce is the oldest occupation. Gee, I would have guessed hunting or fishing, but MarketsandMarkets has set me straight. We also learn that businesses are tirelessly trying to make profits. It’s true, though I’m not sure how tirelessly MarketsandMarkets has looked to find a decent copywriter :- )

    Here’s another gem in the first paragraph:

    “Revenue losses are influenced by various influences such as unstructured billing, frauds, and other.”

    Hmm. I would have thought that revenue losses are caused by billing and fraud issues. But the report says that billing and fraud only “influence” revenue loss. An interesting observation… And what exactly is meant by the term “unstructured billing”? It’s a mystery, but I sort of get the idea. And isn’t it odd that MarketsandMarkets couldn’t supply us with a third “influence” apart from billing and fraud?

    4. What about MarketsandMarkets? Is there a CEO or Head of Research we can contact to learn how MarketsandMarkets became such global experts in RA across many markets and markets? No, as far as I can tell, there are no names at all on the site. Ah, but you can on-line chat with MarketsandMarkets. Splendid!

    5. Finally, if you going to spend $5,000 for a report like this, where’s the guarantee of quality?

    In short, it’s companies like MarketsandMarkets who give market research a bad name. My guess is that one of the big companies is paying MarketsandMarkets a commission for sales leads generated.

    MarketsandMarkets probably expects no one to buy this report. And if some sucker does, you can be sure that the report sponsor will send out its sales team to fleece the client for more “revenue assurance” goodies.

    True story. A U.S. telecom operator once paid me twice for the same Revenue Assurance report. I didn’t cash the second check. And I didn’t hear from them till end of the year when they needed to create a tax form and they finally caught the discrepancy. They proved they truly needed revenue assurance help :- )