Answer: No No NO!

I think the easiest way to explain why setting a fixed rate KPI against revenue reclamation doesn’t work is to first look at a couple of  revenue loss scenarios per revenue stream

One Off System Faults 

  • A pre-pay billing system collapses for a period of time, during that period all calls are free.  Recovery 0%
  • A post-pay billing system collapses for a period of time, during that period no calls are rated. The CDR’s can be re-processed and recovery is 100%

Erroneous Reference Data

  • A pre-pay billing system is rating calls at 1p instead of 10p. You can’t back bill. Recovery 0%
  • A post-pay rating engine is rating calls at 1p instead of 10p, dependant on local regulations, duration of issue, company politics etc Recovery 0 to 100%

Now just from the above couple of examples, it’s plain to see that there is a drastic difference between recovery in pre-paid revenue loss to that of post paid revenue loss. This is mainly due to the fact that pre-paid recovery is rare(not impossible), so therefore when defining recovery KPI’s the first thing you need to do is seperate your revenue streams.

What is Recovery?

This seems like an easy/obvious answer – however when you bring in the subject of opportunity loss, is it so clear?  Well, can you recover an opportunity loss? – some people will say that because there is no billing error with an opportunity loss just a service prevention, there is no revenue to recover. However others will say, that by enabling the service to be used, the revenues that are achieved going forward are the recovery. The debate then grows into: if forward billing is classified as recovery, do we therefore have to track all customer accounts forever and if so how can we have KPI’s?  This debate can escalate exponentially and until there is a standard definition, any work on KPI’s and other standard measures is pointless.

I personally believe that to make life simple, recovery can only relate to revenues already lost(the stuff in the past) for resolution of opportunity losses and the ongoing revenues from fixing a recovery I would term these as Benefits. (Please note I’m really watering things down here, there are many more Benefits that need to be defined like OPEX and CAPEX savings resulting from any resolution)

Does Maturity Impact Recovery?

Of course it does!

I’m not going to write too much here(I’ve already written more than I’d wanted to), but quite simply the level of maturity of a function dictates the types of Revenue Loss that’s identified and as we’ve already seen “type” dictates recovery.

Summing Up

If we define recoverable leakages as being the moneys that should have been billed, but for some reason haven’t. Then what we are looking at is something we really have no control over. Pre-paid revenues generally can’t be recovered and post paid revenues are so wrapped up in regulations and customer choice that again we have little or no control over reclaiming this money. What we do have control over are the Benefits, every attempted recovery should have an associated benefit no matter what the type of loss

I’m sure that the headline of “Operators Recover Only a Third of Indentified Revenue Leakages” is statistically about right if you exclude all of the un-recoverable loss types stated above. Ultimately though, in the case of the majority of African Operators (99% prepaid), what you are talking about less than 1%(financially) of issues they will identify, therefore the KPI is pretyy much pointless.

If we want to look at Revenue Assurance as a whole, then a better study would be to look at All of the assoicated Benefits of each revenue leakage prevented/recovered 

Dave Stuart
Dave Stuart
David is an experienced manager, having worked for a variety of international telcos. He has hands-on knowledge of fraud management, revenue assurance, risk management and software development. David is currently the Group Director of Revenue Assurance & Fraud Management at Vimpelcom.