Michael Badawy published a definition of technology management in an academic journal and referred to it as “A tweet and two characters”. His objective was to work through large volumes of research related to technology management and come up with a simple, yet comprehensive definition for the concept technology management. Thus, it had to fit within a 140 characters. Though he missed this by 2 characters, the result was worth the effort.
What is the tweet for both RA and RM? The TMForum RA definition is “Data quality and process improvement methods that improve profits, revenues and cash flows without influencing demand”. That fits in a tweet. I like David Smith’s definition of RA more “Accurately billing for all transactions, products and services provided in accordance with the tariffs and contracts while managing fraud to acceptable levels and collecting all due revenue”. David’s definition is more practical and measurable but does not fit in a tweet.
A good definition for Revenue Management by Gross is “An art and science of acquiring knowledge of what the market place really wants and the wisdom to address it effectively”. Not measureable at all but quite a snazzy tweet. I am not sure I saw a definition for Revenue Management from the TMForum.
Was Badawy perhaps on to something when he tried to simplify matters by keeping it short? Or is it possible to still confuse the matter even in short verse? I believe so.
ps. Please contact me should you like more info on the authors mentioned in this post.
Guera,
Quite a challenge to get the definition down to the size of a tweet
I guess this is why writing a great haiku is considered by the Japanese as a sign of the greatest poetic artistry. It’s easy to say something in 100 words!
I also like David Smith’s definition, and I wish it had a more “customer experience” element to it. For instance, you could accurately bill for services that the customer is not receiving. Let me take a stab:
Revenue Assurance
“Assuring the accurate delivery and billing of services while keeping a lid on fraud, collections, and customer support costs.”
Revenue Management (or Billing)
“Communicating with customers about services, contracts, charges, and opportunities to buy things that maximize own revenue and reduce our costs.”
Now, depending on the telecom involved, they may be more interested in profitability over revenue, so perhaps a sweeping definition doesn’t always apply.
Dan, I would add the cost of assuring a positive customer experience to the Revenue Management definition. The outcome of my study suggested that RA is about assuring revenue already earned while RM considers the generation of revenue not yet earned given current capability and capabity.
Thus RM includes margin management and costs as these affect margin. So based on the current capability and capacity the CSP can increase its revenue by keeping cost down. I would include churn here but not upselling. RM as borrowed from the Operations Research discipline focuses on the demand and supply against current capability and capacity and does not consider sales, entering new market segments etc.
I would stick to that but one can argue either way. It is much of a muchness really. I like the division as explained here because it becomes easier to implement and define roles and responsibilities. The way you manage a resource with operations KPIs (RA) vs planning KPIs (RM) is quite different and are incentivized differently.
Although the study did not include fraud as a source of RA leakage, and hence it is not included in the RA definition, I am in two minds whether to suggest it is a subset of RA, albeit that it is intentional in nature rather than unintentional as in the strict sense of RA. This inclusion may make the industry a bit “clearer”.
Guera,
I think we agreement about the “gestalt” of what RA/RM is. My sense is the dividing line between traditional RA, RM, and fraud functions will get grayer and grayer.
When I included “upselling” in my RM definition I was thinking of modern charging systems such as the one Telcordia implemented at Oi in Brazil. A platform like that is shattering traditional notions of what a billing/charging system does because it performs upselling autonomously based on rules.
I interviewed Grant Lenahan about this platform here:
http://www.billingworld.com/blogs/baker.aspx
Yet another factor entering the picture is network policy in wireless. If policy controls access to services in real-time, then it can have a huge impact on revenue. So I envision RA one day verifying the accuracy of how network policy is being applied and how well automated upselling is working.
We’re moving to a pricing world similar to what the airlines do with their floating prices depending on when you buy your ticket.
All of which is to say that RA/RM is bound to get very interesting in the years ahead.