One difficulty with revenue assurance is the preponderance of metaphors that people use when talking about it. These metaphors may help with explaining the purpose of revenue assurance, especially in the absence of good public data to prove the point. However, all metaphors have their limits, and they can also lead to misunderstanding. Take the metaphor of a ‘leak’ for example. Water goes in one end of a pipe, and comes out the other end. Not as much comes out the other end, because some is lost through leaks. Okay, but does this explain leaks caused by errors in rating? If water pipes could have rating errors, you might end up with more water coming out than went in…
Despite this, I am as guilty as anyone of using metaphors. In case you do not believe me, let me introduce you to one of my favourites. J.F. Kennedy said:
The time to repair the roof is when the sun is shining.
If that is true, than an economic downturn should be worst for any telcos that have not already invested in revenue assurance, and less of a trouble to those that have. But I expect most vendors will be thinking the other way around… ‘look the roof is leaking! and it’s pouring with rain! better pay someone to get up there and fix it now!’ I think the problem with JFK’s metaphor is pretty apparent. Any time is a good time to fix the roof. When the rain comes pouring in through your roof, fixing it will be harder, but that does not mean you can afford to sit and wait until the sun is shining again.
That is one way to interpret the metaphor. On that reading, vendors would be roof-menders, and if a telco has not mended their roof already, they had better get a vendor and do it now. But there is another way to apply this metaphor to revenue assurance. Now, I do not know about you, but if I paid someone to fix a roof, I would not expect that the roof still needed fixing on a daily basis forever more. If it did, I would probably argue that the roof had not been fixed properly to begin with. If the roof was fixed, there would be no leaks. I could sit snug and warm and dry, and not worry about it. I would not be walking around my house, looking up at the ceiling, and saying “where is the next leak going to come from?” I would not look up, find a leak, put a pan underneath to collect the drops, and start commenting to my family: “look at all this water we have collected – what a victory for our anti-leakage program!” In short, if you fix the roof properly, the job is at an end, and you can stop worrying. There is no ongoing benefit, because there are no more leaks. You would not employ a team of people to keep looking up at the roof, ready to raise the alarm and run with a pan to recover the rainwater.
If we stick to this second way of interpreting the phrase, what would fixing the roof mean? It would mean building (or re-building) the roof so nothing went wrong. It does not mean waiting to see if something goes wrong, but spending a lot of time and money trying to deal with the consequences. A leak is, purely and simply, a mistake. Fixing the roof thus means having a business which does not make mistakes. Its decision-making processes are lined up correctly, just like the tiles on a roof should be lined up correctly. Each decision fits the needs of the business. Whether a big decision (how should we price this new product?), or a small decision (where does the decimal point go in this new rate to be implemented?), the right decision is made. People take care to avoid mistakes, just like the roofer is careful to ensure the roof will not leak. Because individual people may not be reliable, you ensure the way they work is designed to avoid mistakes. That is what fixing the roof means to me – but it has nothing to do with what the vendors sell.
This week I read a news story about how obese people wasted a lot of money on products that misleadingly promise to help them lose weight, but which do no such thing. That got me thinking. There is a simple reason why the pharmaceutical industry is always looking for drugs to solve every problem that a person can have. Drugs can obviously be monetized. Whether the patient pays, or their insurance pays, or a taxpayer pays, then somebody pays for every single pill. In contrast, prevention is not easily monetized. It is harder to make money from telling people to take some exercise, eat well, and take care of their body. It is easier to make money by waiting until people get sick and then stuffing them full of drugs. On the flip side, insurance firms and healthcare services recognize that they will spend a lot less money if people try to be healthy, and spend a lot more money if they do nothing about it. It is worth remembering that big tobacco in the US was eventually forced to admit the consequences of smoking because individual states had pursued them with huge bills for healthcare costs.
Here comes another one of my favourite metaphors, and this one is especially for the revenue assurance industry. Health is wealth, and plugs are drugs. A healthy business is a wealthy business, because the fundamentals of operations are sound. Mistakes are not made, so money is not lost. The job of revenue assurance in these companies is to promote health, by promoting prevention as superior to cure. On the other hand, plugs are drugs. Leaks are a symptom, so plugging them gives instant relief. A business that spends all its effort plugging leaks is a business addicted to the drug of fixing a problem, but may do so at the expense of not addressing the underlying causes. The business is sick, but deals with the symptoms of illness, instead of becoming well. The drug is addictive because there is an obvious and measurable benefit. However, life with those benefits is wrongly compared to life without those benefits. That is like persuading a sick man to keep popping pills because he will suffer more without them. Instead, the benefits of popping pills should be compared to the benefits of being healthy. The sick man should also look at the cost of his drugs and change his lifestyle so he does not need them in future. Prevention is better than cure. The question for the revenue assurance industry is which do they prefer to sell – health or cure? Are we trying to make the difficult but virtuous sell of promoting the equivalent of healthy living for telcos? Or are we happy just to push the drugs and make money by exploiting the sick? ;)
Eric,
One issue though with the “roof” analogy is that telcos change the “house” underneath the roof all the time. New roofs need to be built to cover new sections of the house (e.g. new products or pricing), a room that is well protected by a good roof becomes less important to the overall house (e.g. product substitution sees older products diminish in total revenue contribution) and whole new frameworks for building are introduced and require different styles of roof (e.g. new infrastructure/platforms etc). OK, I stretched the analogy a bit but the key take out is that if telcos were not in a constant state of flux then building a strong roof that would last would be a lot more attainable.
Should we blame the roof vendors for this? Probably a bit unfair to do so. They are responding to a need to close the holes that telcos create. To your point, then prevention is a way to go and I agree absolutely but this requires quite a different skill set to detection. One much more orientated around process improvement, and organisational influence, than data analysis. Perhaps the road to RA maturity then is data driven leakage analysis, followed by “real” root cause analysis (by “real”, I mean not that the rate table is wrong but that process ABC failed), which then drives a business case to change the process. Of course, process is always open to failure so people that can find holes in roofs will be needed for a while.
Mike
Fair point – I concede that I was exaggerating in order to be provocative… In particular, you are right that the building is always changing, at least in some telcos. But is that true of all telcos, and all processes? Sometimes this story of change is exaggerated – and is used as an excuse not to deal with the problems. In the end, if things are not going to change, then we should be able to justify the time and effort to fix them. And if they are going to change, then what better time to build new systems and processes that are designed to be error-free?
You are also right about not blaming the vendor. You might as well blame a leopard for not changing its spots… it is in the nature of the beast, and how they succeed. My concern is not so much with vendors, as with the absence or marginalization of RA skills and techniques that cannot be so easily turned into marketable products. Too narrow a focus on quick returns from RA products can ultimately be unhealthy for everyone who wants to be in RA in the long-run, vendors included.