Consolidation, consolidation, consolidation continues to be the dominant theme for revenue assurance vendors. Israeli revenue assurance and fraud business ECtel has just completed the acquisition of the assets of fellow Israeli business Compwise. Read the press release here. The deal valued Compwise at US$1.3m, and will involve ECtel incorporating Compwise’s products into their own, and continuing to support Compwise’s current customer base.
Compwise is a telecoms-oriented supplier of business intelligence; their products are designed to take very large samples of real customer EDRs and calculate billing values using actual and hypothetical tariff plans. The applications are several: use the customer’s own tariff to recalculate their actual bill and check that it is correct, use a planned new tariff to understand what the impact might be on total revenues, use a competitor’s tariff to gauge who provides the better deals and how best to compete. You can also include tariffs for the interconnect and wholesale costs to analyze margins and profitability in addition to revenues. It is a good tool, and a kind of automation that is under-utilized in the industry. Part of the reason for that is that recalculating bills tends to be low on the priorities for RA teams – too low if you ask me. It requires hard work to build and maintain an independent copy of tariff plans, but there is a big benefit in learning how tariffs actually work at a detailed level, not just how people think they work. The two are not always the same. I have been in telcos where a customer has queried their bill and the bill follows a snake-like path around the organization because one person after another has a different opinion on whether the bill was right or not. The marketing-oriented applications of Compwise’s product should be even more compelling than its use for revenue assurance, but marketing and pricing functions often lack the sophistication with data to appreciate the benefits of a tool like this. Anybody who has been around a data warehouse function knows how many reports the marketing arm of the business demands to do its work, but will also appreciate how often there are fundamental flaws in their understanding of the data. Do we all know what a customer is, what a call is, and what a bill is? No. We may think we know based on common sense and that the majority of examples will be clearcut. But without clear definitions that determine where to set the boundaries, it is deceptively easy to ask for a couple of reports analyzing the supposedly same total number of things, but which then do not equal each other.
Why then is ECtel buying Compwise? I see a couple of forces at work here. First, ECtel is going for growth. It has turned around after some lean years, and has the capital and the vision to stay in the consolidation race, at least for now. ECtel is intending to remain competitive with the WeDo’s and Subex’s who have also bulked up. Second, ECtel is diversifying. This is another riff on the topic of revenue assurance vs. revenue maximization. Compwise’s product covers revenue assurance but has greater sales potential when pitched as a maximization tool. ECtel may find a way to pitch the sales both ways, by trying to reach out and sell direct to Marketing functions, but also by encouraging RA teams to broaden their scope and move into revenue maximization using technology and data they should already be comfortable with.