The TM Forum has issued a new report on revenue assurance, entitled ‘Revenue Assurance: The Hidden Opportunity’. The report is the sixth in their ‘insights business intelligence’ series and builds upon the data they obtained from their industry-wide revenue assurance benchmarking exercises. The report is available from here and is free to members of the TMF. I have been digesting the report’s findings over January; read on for my review.
The TMF report is solid, and is unusual in how much it is based on actual data. Most reports make sweeping generalizations about ‘expert opinion’ and ‘experience’ whilst being very vague about where this comes from. In contrast, the TMF report derives its conclusions from the very successful RA maturity and RA KPI benchmarking exercises that the TMF has been running with telcos around the world. Their benchmarking program has been so successful that it threatens to overshadow anything else the TMF is doing in the field of RA, but I will save that topic for another day. However, whilst the report is solid, I do not think there are many surprising conclusions for anyone working in RA. Perhaps this is how it should be; benchmarking reinforces the norm, not the exception.
One major and reassuring conclusion is that increased maturity correlates to better performance. Put simply, if a telco does better against the maturity scores for the five maturity aspects – organization, influence, people, tools and process – then it will suffer less leakage and generate better returns for your business. For example, the TMF found a strong inverse correlation between unbillable revenues and increasing maturity. This is an important result – it shows a genuine link between maturity and real telco KPIs. This proves that maturity is not just an abstract theory or a piece of marketing hype, but is a genuine roadmap for RA within a telco. Most importantly, it demonstrates that success at revenue assurance is determined by all the factors that drive success, not to just one or two. In particular, it is not enough to simply buy some software and assume that the benefits will follow without any other effort. That said, I was perplexed by some of the TMF’s recommendations. For example, the report said that less mature providers should invest in RA tools early. Why pick on investing tools above, say, the need to invest in RA people early? I suspect the bias is because anyone responding to the TMF’s benchmarking exercise must be at least half-decent at their job. That means the benchmarking exercise is more likely to hear from a telco with good people and weak tools, than from a telco with good tools but weak people.
Another surprising conclusion, which baffles me, is that
“… while strength in both Tools and Process is preferred, strong performance may be achieved with a high level of maturity in one or the other. Strong tools can compensate for weak process and strong processes can compensate for lack of tools.”
Let me say now that empirical data is vital to understanding business, but care is needed when drawing any conclusion. Put simply, I think this particular conclusion must be wrong. Some kinds of work done by tools and processes are interchangeable. For example, I can have a process where people make test calls using their handsets, or I can use a machine to do the same job. However, there are plenty of tasks where there is no choice. You need a tool, not a process, to identify where a customer has made two mobile calls whilst seemingly in different places at the same time. You need a process, not a tool, to review the design of a new product and identify potential weaknesses. Most importantly, most tools are used to detect issues, not to resolve them. Telcos need processes to resolve leakage issues. The economic value of a detection tool is zero if there is no process to follow-up on the leakages found. This shows the dangers in going to far with conclusions not justifiable from limited data. Although the TMF’s benchmarking is a far more comprehensive source of empirical data than we are used to in the commercial world of RA, it would still fall far short of the expectations of a genuine academic study. In an academic study, the next task will be to examine conclusions like this more closely, asking for more detailed data to understand the findings, but it is not fair to expect this from a commercial body like the TMF.
A key finding of the report, and one that I fully agree with, is that as RA reaches a high level of maturity there is a problem of seemingly diminishing returns. Or rather, the demonstrable returns diminsh because issues are prevented, rather than resolved after the occur. The TMF hence conclude that, to get the most from the revenue assurance team, the telco should task it to
“…take on added scope and report on measures related to that new scope as well as traditional measures.”
This does seem to be increasingly common, but it underlines a fragmentation in the RA industry, which is hinted at as the report continues:
“This provides for continuity of contribution. Each CSP is different, so the specific additional responsibilities that are most appropriate may vary. Some CSPs are positioning their revenue assurance teams in a business optimization role, while others are having them focus on assuring customer experience or addressing fraud
I am surprised at the last suggestion of diversifying from RA to fraud management; vendors who sell both RA and FMS pretty consistently report that the trend is they sell the FMS first, and the RA system later. There have been plenty who noted that immature telcos tend to address fraud earlier than the much more politically sensitive challenge of addressing revenue leakage caused by errors and poor design. However, the overall trend identified by the TMF can be seen in many telcos. The upshot is that whilst the RA team’s focus expands, not every telco is expanding the focus in similar directions, meaning that the common ‘core’ of revenue assurance between telcos is a diminishing portion of the overall workload of RA staff. This begs a question about what the future is for developing RA people, or even how to maintain a common RA maturity model in the context of diverging responsibilities. Unfortunately, this question is not raised or discussed in the TMF report.
Here endeth the review of the empirical data in the TMF’s report. But the report goes on. The second half of the report is devoted to ‘expert viewpoints’ of ten revenue assurance industry leaders. In reading through this, I get the impression of an engaging and interesting pair of conversations (one between vendors, another between telcos) that has been cleverly edited to pull out the most interesting aspects. So far so good. If I was to find fault, my question to the TMF would be to ask: how many of these people actually contributed to the collaborative program necessary to develop the benchmarks in the first half of the report? You can tell from my question that the answer is the minority. Herein lies the eternal fault and dilemma of the TMF. It talks a good talk about industry cooperation, but then showcases some people who may have knowledge and experience, but who are not engaged with the TMF’s own collaborative programs. This sends mixed messages about the TMF’s collaborative programs – is the TMF saying that the collaborative programs are driven by thought leaders, or driven by nobodies not worth interviewing in the TMF’s own reports?
Of the two separate panels in the second half of the TMF report, the vendor debate suffered greatly from the fact that vendors are compelled to sell, sell, sell. That means vendors are bound to be relentlessly upbeat about the future and their own prospects. The prize for most mentions of a USP went to Alon Aginsky of cVidya, who talked about the importance of dealer commissions so often that cVidya deserves to be permanently banned from all telcos that do not use dealers. Mark Nicholson of Subex deserves an honourable mention for his, ahem, mentioning of inventory, fulfillment and the ROC. Mark’s USPs were better, but Alon deserved the top salesman prize for the relentlessness of the marketing bludgeoning he meeted out. Rahul Nandi of Connectiva deserves some credit for his fair analysis of market segmentation. The wisest words came from Tony Poulos, who did was he always does – talked straight without ever straying into a no man’s zone that might have upset another panelist. How does Tony walk that tightrope so expertly? Given the quality of Tony’s insights, the report would have been improved if the vendor discussion had been replaced with Tony giving his own personal review of the state of the RA.
Seconds out, round two: the vendors got of the ring and the debate was taken over by people who worked in telcos. Why not let the people who work in telcos talk to the people who work for vendors? Presumably the TMF does not want to mess with the time-honoured tradition that vendors and customers are not allowed to actually talk to each other about what they want. If round one was dominated by vendors landing repeated marketing blows, then round two started with… more marketing! Alexander Nelles of Vodafone Germany, customer of cVidya’s dealer commissions product, told us of how he was dealing with dealer commissions. After Alon had hammered that topic repeatedly, this came as the knock-out blow and I wondered if I had the strength to read on. Lying flat on the canvas, I reimagined the ‘talkRA’ logo as ‘talkDC’, standing for ‘talk dealer commissions’. I got up, took an eight count and held my guard high in case of more surprise marketing blows. The manager conversation continued with some tame parrying. This could have been easily summarized by just saying the future of RA is like the present of RA except better. Then, as if to redeem himself, Alexander said this:
Our current environment gets continuously more complex. The whole train of convergence is moving quickly and leads us to a situation where different product types need to be charged for in addition to the legacy ones. This complexity, which you can see both at the OSS and BSS area, makes it rather impossible to control it by only one central revenue assurance team. We need to think further and act as an enabler to bring the idea of revenue assurance into the head of every employee working along the revenue chain. I believe that this area will evolve over the next years, resulting in a matrix organization that prevents leakages. Finding the errors with revenue assurance controls is not sufficient any more. It will be increasingly important to find ways to prevent revenue assurance losses. The basic skill set of a typical revenue assurance employee will change to have a strong focus on soft skills rather than only technical skills.
Wow. Did he really say that off the top of his head, or was it scripted? Either way, it is impressive stuff. Darned impressive stuff. And it linked back to the one really important thing that Rui from WeDo said in vendor panel:
Having proven the benefits of assuring the revenue management processes, we see the Members of the Board willing to embrace a wider approach to the entire organization internal control and risk management, namely in terms of business processes. We believe this will be the trend for the next five years.
This is all tremendously positive. Problem is, in every market – every market, without exception – you have to consider the threat of new entrants to the market. RA is no different. There is the software market (vendors selling RA software) and the job market (individuals chasing RA jobs in telcos). In the beginnings of RA, both RA staff and vendors started with virgin territory. Nobody was fighting for the same turf and the challenge from new entrants was low. The competition between vendors is now cut-throat, but they are still the same businesses, engaged in a knock-out brawl where the goal is to be the last man standing. It has been a long time since there was a significant new entrant to the RA market who could pose a real threat to the bigger vendors. By the same token, RA people are now more likely to go from RA job to RA job, with limited risk that somebody new to the discipline can usurp somebody with real hands-on experience. Compare that to what Alexander and Rui talked about. They are talking about expanding RA into risk. Alexander does not mention risk, but his vision of RA in ‘the head of every employee’ is not specific to revenue assurance. It is the goal for managing any risk, whether it is the risk of a revenue leakage or the risk that somebody is hurt by an accident whilst at work. As Alexander suggests, that vision would require a shift from technical skills to soft skills… and therein lies the problem for both the current RA vendor and current RA employee. The broader terrain of risk management is not virgin territory like RA was. It is tempting to think of a rosy future where RA people just march into bordering spaces, without encountering resistance. The truth is that they will face competition from others working in risk management – and the new competitors will very likely be ahead of the RA community when it comes to things like soft skills.
The visions of Rui and Alexander diverge when it comes to how RA expands into risk. Rui talks about risk with the hope of installing yet more MIS to support the people who deal with risk, whilst Alexander is talking about the skills those people need to have.
That RA has got as far it has is partly thanks to an unspoken deal between vendors and operator staff. One sold some specialist software and the other got job security because they wanted to buy and use the specialist software. A by-product is the dumbing down of RA, where RA staff are relegated to mere users of software. As Mark Yelland highlighted during our recent podcast, the newer generation of RA staff are more likely to press pre-defined buttons on a screen, and less likely to know how to build an RA reconciliation or control from the raw data. An exchange involving improved job security and reduced ambition will suit some people. Not everybody is a high-rising genius. However, it does not suit the Alexanders of the world – meaning the implicit deal between RA vendors and RA managers will be put under increased strain in future. Without this deal, it is far from obvious that there will be champions working in telcos who will want to help the RA vendors to expand from RA to business assurance. It is just as possible that the people already dealing with risk will try to box in RA staff, and will already have their own preferred ways of doing things. For these people, it is the RA staff and the RA vendors that are the new entrants, and hence a threat. On top of that, shifting job expectations to soft skills means even if people move on from RA to business assurance, as their skills change they may not feel the need to take the RA vendors with them.
The emerging disconnect between vendors and staff was neatly demonstrated by the contrast between the report’s summary and the WeDo-sponsored ‘feature’ that immediately followed it. After hearing about soft skills and the need to work on all aspects that drive maturity, we got a rather flat sales pitch from WeDo straight after. Reduced to its bare bones, the vendor conception of business assurance is very unlike that of Alexander Nelles. To the vendor, the difference between revenue assurance and business assurance is that business assurance takes more data from more places to look for a wider variety of operational exceptions. In short, they sell more of the same. This is quite different to Alexander’s statement that RA is ‘in’ everybody, and hence everything the telco does.
My colleague and friend David Leshem says that what is really missing from RA is solutions. We have software, and we have users, but we lack the comfortable coming-together of brains and machines that would deliver solutions with minimal fuss. In the TMF report, nobody talked about improving solution delivery as a goal for the future of RA, and perhaps that is symptomatic of the real challenges for RA. You cannot fix a leak if you cannot find it, and you cannot address an issue if you do not know it is there. Sometimes it is difficult to step back from how things are currently done, and really think about how they might have been done differently. For example, why should the defining characteristic of RA be the split between RA done by machines and RA done in people’s heads? How might this divide have been avoided?
Sometimes when you break a task down into its constituent elements, you lose some perspective on the whole. The TMF’s reports had a lot of the right ingredients, but it failed to identify the recipe for RA’s continued success. The report started strongly, emphasizing how it is the combined strength of people, tools, process, organization and influence that generates real and quantifiable financial benefits for communications providers. By the end of the report, the world of RA was divided into two – some people selling software and other people selling themselves. The right recipe would combine both. But that is no small challenge. After all, too many cooks spoil the broth…
Great review and food for thought.
Unfortunately Rui and Alexander were not on the same panel.
I think something positive would come out of that discussion.
Discovering the “weak link” in each company could be a good exercise.
Organization, Influence, People, Tools or Processes? Which is in worst-relative shape in each case? The TMForum has some good tools to support that exercise.
As software vendors you know we will be biased towards a certain kind of weakness. But are we really that wrong?
Final note: I agree with this vision “My colleague and friend David Leshem says that what is really missing from RA is solutions. We have software, and we have users, but we lack the comfortable coming-together of brains and machines that would deliver solutions with minimal fuss.”