We Need Fewer, Bigger, Better Vendors

There has been a lot of revealing news recently. But when I say ‘revealing’, I mean that in the sense of a man who sees dark clouds on the horizon, pulls out his binoculars, studies the skies carefully, tries to predict what will happen, and only reaches a conclusion when the rain is pouring on his head. The latest news ‘reveals’ that the market for revenue assurance and fraud management is contracting. Does this need saying? Hardly. It is obvious, and has been for years. And yet talkRA does need to say it, because if you receive your business assurance news from elsewhere, there is zero possibility of you reading about the decline of the market.

Let me summarize recent news. To begin with, an absence of anyone issuing press releases about sales is also a kind of news. They say ‘no news is good news’, but not in this instance. Companies that have to report results have been issuing disappointing numbers. Companies that do not report results have been saying as little as possible. The re-born Connectiva has shifted its focus away from RA and FM. Minor player Basset barely mentions assurance any more. Even Morisso Taieb, serial launcher of LinkedIn groups (such as the ‘RA Pros’ group) is sending out invitations to join a new group for ‘online lending professionals’ – which means there is not enough activity on his old groups, or he wants to get a job with a payday lender.

Everything points in the same direction: revenue assurance and fraud management have reached the point where the buzz is over, sales are rare, and former big-shots want to change job. So if any of you were hoping to be appointed the Chief Revenue Assurance Officer of a major telco, you might want to stop daydreaming, and to think more constructively about your career direction. The party is over, but the hangover will not last forever. We still need to get on with the rest of our lives. After the boom and bust comes a steady state of affairs, where the ongoing demand for assurance is satisfied, without excessive optimism about what might come in future.

Those of you who intend to manage revenue assurance and fraud management teams over next few years, need to be thinking very seriously about your current choice of supplier. Suppliers that were good choices during a phase of growth may be lousy choices during the steady state. Will your vendor still be in business, a few years from now? Will it be under new management? Will it have merged with another vendor, meaning you will have to switch to another supplier’s product whether you like it or not? Will the vendor persist, but milk you for fees, whilst having no intention of upgrading their product further, because they can find no market for it? Consider Connectiva. A start-up that raises a lot of capital may never reach the point where it turns a profit, and unprofitable firms cannot persist indefinitely. Consider Basset. Even if the supplier is viable, or is bought out, you may find the supplier has only a few customers for the product you use, and so has no reason to invest heavily in upgrading that product. Choosing the right suppliers ranks amongst the most important decisions that managers can make. Even if your supplier is currently satisfying requirements, there is still a need to plan for the future, and that future may involve a change of supplier.

My advice is straightforward. There is little future for business assurance if it relies upon too many undercapitalized, underperforming, small and loss-making vendors. Too much will be spent on marketing, too few resources will be directed into significant research and development. That means customers will have a lot of nominal choice, but only of similarly unimpressive, underdeveloped products. It is better that we all drive an identical Model T, and for every car to be black, than bickering about which horse we ride to work. Fewer vendors would be in everyone’s interests – except for those working for the vendors that miss the cut, and the telco staff who are too close to those particular vendors. We need vendors to be profitable, so they can be stable, and reinvest profits into development. That means bigger vendors, and fewer vendors, each taking a larger slice of a smaller cake. That is in the long-term interests of customers too, because investment in tools will only occur if a profit can be made from selling them.

Consolidation is good for the strong, who will survive, and bad for the weak, who will perish. Assurance has been the subject of a lot of hype, but hype tends to distract us from real weakness. I want to see a stronger, healthier assurance sector. To get that, we need to weed out the weaklings.

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 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. 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.