If you work in revenue assurance, you surely need the instinct to spot numbers which look suspicious. I am often bemused by market ‘research’ reports which sell for several thousand dollars but present funny-looking numbers and questionable facts amongst the few snippets they give away for free. The latest example is from marketsandmarkets.com, who want your company to pay USD7150 to discover their predictions for the RA market from 2014 to 2019. The report covers all industries, which immediately begs a question of how easy it is to research the extent of ‘revenue assurance’ in banking, healthcare, and logistics… or even what counts as revenue assurance in these contexts. Nevertheless, the report tell us that:
The global revenue assurance market is expected to grow from $ 1.7 Billion in 2014 to $ 2.9 Billion in 2019
So the market is already worth USD1.7bn? Really? I have arguably the most popular website dedicated to revenue assurance, and I can assure you it does not feel like I am working in a USD1.7bn market. But I kept an open mind, and continued to read their press release. After all, it is very possible that when marketsandmarkets.com sized the market, they included revenues from lots of businesses that provide software and services which I would not include in the scope of revenue assurance. And then I noticed this…
The Global Revenue Assurance market consists of large players like Cvidya, Subex, Nec, Accenture, and others – which offer services and solutions in this market. The market has seen these players grab high amount of market share.
Let me pick one of these ‘large players’ and do some quick common sense maths to verify the reports’ claims. For my example, I will work with numbers from cVidya for no other reason than they were first in the list. ***ahem***
We can reasonably estimate that cVidya’s annual revenues are about USD40mn. They are smaller than Subex, a publicly traded company whose numbers are audited, and WeDo, whose reported numbers can be sense-checked by reviewing the performance of their division within their parent group’s accounts. Corroboration that cVidya is smaller than Subex and WeDo is available in the form of other reports from other research firms; for example, Stratecast recently reported that WeDo led competitors with a 14% share of the telco assurance market. But comparing cVidya’s revenues to the total pan-sector assurance market would give USD40mn/USD1.7bn = 2.3% market share. If cVidya has a 2.3% share of a USD1.7bn market, how can this be reconciled with the assertion that they are a “large player” with “a high amount of market share?”
If we assume Stratecast’s numbers are accurate, and use the thumbnail rule that WeDo told Stratecast that their annual revenues are around USD70mn, then that means Stratecast sized the telco assurance market at approximately USD500mn. For marketandmarket.com to have accurately sized the pan-sector assurance market, that would mean the non-telco market must be currently worth USD1.2bn. It then seems odd to me that marketsandmarkets.com start their list of “large players” with cVidya and Subex. Neither of these companies is the current market share leader in telco assurance, and neither firm generates significant revenues outside of telecoms. In fact, WeDo has made much more effort to diversify outside of telcos. And whilst WeDo are pleased with their non-telecoms growth, they still admit that the vast majority of their revenues comes from telco customers.
Not long ago, Subex CEO Surjeet Singh spoke to me about his hopes for his company, saying he wanted to grow Subex revenues to USD100mn within the next few years. But even USD100mn of revenues would only translate into a 5.9% share of what marketsandmarkets.com say is the total value of the pan-sector market.
In short, there is something very wrong with the research of marketsandmarkets.com. Either they have massively exaggerated the size of the pan-sector assurance market, or they have badly miscalculated the revenues of cVidya and Subex, or they have deliberately misrepresented cVidya and Subex as “large players” whilst choosing not to mention much larger players, or there are no large players because there is only a long long list of small players – which begs a question about the coherence of this market. Whatever the truth, it is not worth paying USD7150 to discover where they went wrong.