The Sunset of a Dawn, The Future of RA

I guess in a way I repeat myself. I admit I cannot help it. Returning just a couple of days ago from the US, and experiencing the impact of the financial crisis, is beyond any impression I can get from media reports and commentaries.

The US; a small town in Florida. A meeting on a Monday morning. An agenda, open issues, action items and all those mundane topics which you find in every meeting. However this time it was somewhat different. This time you see the faces of people that, instead going into through the listed issues, simply don’t care about the agenda. Instead, they discuss, in length, the breaking news of the morning: layoffs of 53,000 Citibank employees. Later that day, nobody was sure how to comment when CNN reported that, for the first time in its history, GM had stopped paying its dealers due to cash shortages. The gravity of the situation now leaves little room for imagination.

My personal view is that this crisis is far from reaching its bottom. Americans have maybe started to understand the scale of it, but there is still a long way to go before they fully comprehend. They still drive huge cars (by the standards of the rest of the world), care little about energy and do almost nothing about switching to sustainable energy sources. Nobody seems to be installing solar panels on the roofs of the houses in sunny Florida. The American car industry, which is one of the prime pillars of the American economy, is doing badly. American cars are sold mainly in the US and fail in international markets, because of their size, mediocre reliability and rather unappealing design. In California, the prevailing cars are no longer American-made. Korean, Japanese, and German manufacturers have taken their place. The American car manufacturers must understand what has gone wrong, or else they will suffer the same fate as the British automobile industry, which received generous government aid and ended by being sold for less then the value of its debts.

Meanwhile, the average white collar, middle class American is still overly concerned with the cost of a cup of cappuccino at Starbucks. On average, they spend $1200 a year on Starbucks’ hot water and coffee beans. Until they change their priorities, the effects of any economic stimulus will not radiate across the whole economy. At least this is my view. So far, no financial magazine expressed any interest in these views of mine…

However, along the same lines, all telcos and vendors are lowering their revenue forecasts. Sprint announced a new package – everything for $99.99/month. No small print. Unlimited everything – calls, SMS, MMS and data. I guess Sprint will soon be joined by others in the race to offer the best “eat as much as you can” offers.

The papers, any papers, even in a small town in Florida are filled with advice – on how to promote your value within your corporation. They are all full of recommendations on how to be a ‘big picture’ person, on how to justify your job, on how to… yada yada…

Where does revenue assurance fit into this new world order? In my previous blog I discussed the role of RA and where it stops. I’m afraid it was indeed a bedtime story. I would like to challenge the RA managers and ask them how they wish to justify their job when telcos start to adopt an ISP mentality and offer unlimited bundles of everything. What is the cost of the marketers offer? I hope someone did the “fear-greed” analysis prior to launch. Needless to say, I hope it was the RA manager that took up the challenge and questioned the level of profitability in front of the Board of Directors. Otherwise, unless I am missing something, why would anyone see a need for RA in this new régime? I sincerely hope that RA managers can reinvent themselves, and remain relevant.

David Leshem
David Leshem
David is an expert in enterprise solutions: billing, profitability, business intelligence, customer retention, churn and revenue assurance.   Away from the office, David is a keen photographer. Visit davidleshem.com to sample his photographic work.
  • Mike Willett

    Hi David,

    I was intrigued by the Sprint offer and did a little research because as many RA managers know, the devil (and leakage) is in the detail.

    I asked about some common exclusions and this offer doesn’t include international calls (IDD), international roaming charges and content downloads (e.g. ringtones). There is also a reduced price for subsequent subscriptions from the $99.99 if you take up more than one service.

    What does this mean? The offer appears simple but it doesn’t mean Sprint can relax about revenue assurance just yet (even if all their customers take up the offer). Why?

    1 – Call and event records still need to be polled, mediated and tagged to determine if they are included or not in the offer. A classic loss area for revenue assurance.
    2 – Rating will need to be applied to the excluded call types. Another classic area for RA where pricing is wrong and without knowing more detail on Sprint’s IDD or content charges, you can bet there are a number of combinations.
    3 – Lack of enforcement of the multiple services discount could lead to leakage. Can the systems automate the increase in price if a customer wants to disconnect one of their services in this “bundle” or is this process dependent (and hence vulnerable to loss).

    I imagine some form of forecasting has been done and with tight margins all over the industry, if any of the above are not right then they could affect the profitability of the offer….and I haven’t even mentioned monitoring for potential customer exploitation.

    So for all RA practitioners (and particularly for those at Sprint with my free consultancy provided), those apparently simple pricing structures do not guarantee no leakage. Margins are tighter and your role to get offers 100% accurate is even more important.