RA: Standing At A Crossroads?

To a great extent, Revenue Assurance in telecoms was born of the last recession.

Embattled CEOs were finally forced to come clean about the parlous state of internal systems that had expensively been put in place over the previous 10 years. Typically, even those that were fully functional were no longer fit for purpose, and many intra- and inter-departmental processes were broken. Consequently, RA started its life with a boom – ‘low hanging fruit’ were everywhere, and demonstrating the business case for any RA related activity, given even the smallest sign of executive championship, was relative child’s play.

As we enter a new economic cycle – and the exact impact of the Credit Crunch on the increasingly convergent telecoms marketplace has yet to be revealed – RA has consistently demonstrated its worth, but in many operating environments (although certainly not all) the opportunities for easy revenue wins have been much harder to come by. Consequently, whilst RA has by and large retained its primary focus, the temptations for expansion and scope creep have been great.

In the interim, there have been a number of external factors that have had a significant impact on the RA operating environment.

The first has been the drive towards ensuring shareholder value (sometimes even at the expense of business value) through increasing financial governance, ethical business and compliance requirements. Whilst on the one hand this has thrown into sharp relief the need for the business to focus on processes and risk which has in turn undoubtedly bolstered RA awareness, on the other it has not necessarily done RA any favours as it has in some cases subverted RA activity away from its prime directive and into less strategically significant areas such as process management and compliance enablement.

The second has been the trend – both within the CSP community and the supply chain – for aggregation through M&A. This, too, has had an upside and a downside for RA: group-wide systems environments have again become more complex and the opportunities for RA rationalisation with centralised co-ordination, resources and power have increased, but at the same time the opportunity for Group to leverage economies of scale, impose ‘preferred supplier lists’, and demand headcount reductions across its OpCo dominions is increasingly being aided and abetted by ‘RA justification’. Whilst efficiencies can undoubtedly be achieved and in many cases are both necessary and long overdue, the potential impact on RA as it becomes ensnared in Group/OpCo politics is that by having its interdepartmental communications skills and connectivity exploited RA will be returned to an environment where it is treated by the OpCo business units with suspicion, and RA will have become the harbinger of bad news rather than the provider of mission critical assistance in delivering operational effectiveness.

Ultimately, if this approach continues without adequate safeguarding, not only RA’s ‘client’ relationships with target business units, but also its bi-lateral relationships with closely coupled functions such as fraud management, internal audit and risk, will suffer.

The third trend, largely in response to the first two, has been the increasing effort to standardise and quantify all aspects of business and operational processes. Again, the monitoring and risk assessment of business effectiveness has to be a good thing, and for many operators who started with relatively immature business reporting capabilities the ability to ‘actually know what is going on in their business’ has been a revelation. However, these advances also bring with them the potential for business ossification and a tendency for ‘death by KPIs’ in all of its various forms. Not only are operating environments in some CSPs becoming overburdened with quantitative metrics that are inhibiting the potential for very necessary business transformation in the light of changing new generation requirements, but important projects required to deliver new functionality are being inhibited even from consideration in case they conflict with reference architecture models that have become erroneously set in stone.

Moreover, given the huge variability in market penetration and maturity, customer expectations and regulatory responsiveness, together with the status of internal legacy systems and processes experienced by CSPs around the globe, the concept of ‘best practice’ as a determination of implementation suitability and success factors is becoming increasingly harder to justify. Without a doubt ‘best fit’ has become a much better guiding principle, but this is and will always remain a subjective judgement call. One size definitely does not fit all.

A further problem in this respect has been the levels of understanding at senior management level (and elsewhere within the business) about the nature of standards themselves, and the adoption of an attitude that has assumed that technical process standards developed at the network layer and business process standards developed at the IT and business layers are methodologically the same, and that they can be treated, managed and developed in the same way. This is clearly not the case, and as a consequence – the stirling efforts of the TMF RA Working Group notwithstanding – the overall status of standards evolution within the BSS domain in particular remains something of a mess.

The fourth trend has been a response to the perceived success of RA itself, and indeed to RA’s own attempts to expand its scope. Having successfully secured a degree of proactive control over leakage across a wide range of operational areas, many RA professionals – particularly those in more mature markets – have looked beyond RA towards a more strategic role with a broader level of influence on business operations. Areas such as input to and even sign-off on new product development, increasing engagement in marketing and sales activities, and the development of consistent approaches to 3rd party management and revenue share settlement, are all coming within the remit of this expanded RA sphere of relevance. Moreover, given the huge variability in market penetration and maturity, customer expectations and regulatory responsiveness, together with the status of internal legacy systems and processes experienced by CSPs around the globe, the concept of ‘best practice’ as a determination of implementation suitability and success factors is becoming increasingly harder to justify. Whilst on the one hand best practice is a useful benchmark for both ISVs and CSPs to aim at as a reflection of how a specific function can be best optimised, on the other, the fact that Analysts point at a particular solution as ‘the way to go’ does not necessarily mean it will be optimum in every operating (and legacy) environment, and most certainly it does not necessarily offer a guarantee of optimised ROI, either in the short or long term. Without a doubt ‘best fit’ has become a much better guiding principle, but this is and will always remain a subjective judgement call. One size definitely does not fit all.

A further problem in this respect has been the levels of understanding at senior management level (and elsewhere within the business) about the nature of standards themselves, and the adoption of an attitude that has assumed that technical process standards developed at the network layer and business process standards developed at the IT and business layers are methodologically the same, and that they can be treated, managed and developed in the same way. This is clearly not the case, and as a consequence – the stirling efforts of the TMF RA Working Group notwithstanding – the overall status of standards evolution within the BSS domain in particular remains something of a mess.

Billing is a good example. As a technical function there are technical standards for device interfaces that can be adopted; there are also process standards that optimise the implementation of these interfaces. However, billing processes also encompass a wide range of business activities that are dependent on intangible non-technical factors – particularly those that affect customer interaction and marketing. In these areas billing policy is as closely related to corporate positioning and brand management as it is to the underlying platforms on which these processes are enacted. Technical disciplines can be highly effectively managed by technical process standards, but to assume that profitability can be guaranteed by the application of technology-based billing processes to the wider domain of revenue management as a business operation is likely to end in tears.

Unfortunately, at the same time, almost every software vendor across the OSS and BSS domains has laid claim to offering complete or near-complete RA capabilities within their product offerings, often under the banner of Revenue Management. Whilst some of these offerings are genuine (and the need to embed core RA functionality into all operational systems is becoming a necessity for new generation product management and risk amortisation), many are not, and most are primarily designed to reposition the functional set of their product suites on offer across more ‘strategically significant’ dimensions. In addition, of course, all of the usual ‘Guardian of the Gatekeeper?’ questions still arise. From a pure RA perspective, this muddying of the waters is not helping.

• • • •

The big three areas of RA activity with highest visibility still remain:

  • Switch-to-bill / Order-to-cash (CDR reconciliation/rating verification & etc) – [highest historic visibility in Europe]
  • Inventory management – [highest historic visibility in the US]
  • Interconnection – [highest historic visibility in high growth markets]

To these have been added a fourth key element:

  • Analytics & Business Intelligence support

…And these areas remain those within which the ‘quickest wins’ will continue to rise to the surface most easily. However, as a result of the increasing diversification of RA activity, the championship and sponsorship of RA is becoming yet more heterogeneous, with the heads of Finance, Audit, Risk, IT, Operations and now Marketing all having a vested interest in potentially maintaining strong controlling links over the RA domain, both because of its access to a broad range of business information and its increasing power as a justificatory business mechanism. (For example, new product sign off.) Inevitably, both methodological conflicts and turf wars will increasingly embroil RA as a result (even in cases where RA might have no direct play.)

This is the crossroads at which RA finds itself. Great opportunities for the advancement of both RA and the positive impact that RA professionals can make on the business abound, but at the same time the potential to become embroiled to RA’s detriment in the changing political landscape that market and economic factors are driving is also growing.

Of course, politics isn’t the only SWOT factor on the horizon. Within the backdrop of ongoing business transformation, the re-purposing of existing functionalities, new technologies, and new skills requirements are all continuously evolving. Here are just some of the new challenges:

  • The growing importance of wholesale, and all that this will bring with it. This isn’t just an extension of existing interconnect assurance; new factors include: wholesale marketing considerations, 3rd party settlement complications, revenue share complications, distributed rights management, UGC (user generated content) management, attention data, integration with transit and peering management, end-to-end contract (document) assurance, real time inter-business data management complications and the impact of multiple hostile audits that will inevitably follow in the wake of a more competitive wholesale environment.
  • An enhanced service support environment, with real time policy & data management complications, active mediation, exception charging, metadata and algorithmic service enactment, increasingly complex customer segmentation and analytics, customer experience/interaction management with augmented personalisation and self care complications (all required on a ‘time-to-market yesterday!’ basis)
  • IP. Whilst RA lessons learned from the unconverged mobile and PSTN environments will still be applicable, IP is both qualitatively and quantitatively different. Even leaving aside the assurance of multiple new platforms, applications and interfaces (and, later, IPv6), managing AAA in a ‘best effort’ environment with status rather than event information and a refocusing on stochastically modelled non-granular data is going to be a wrench. The complexities of managing multi-session control and multi-platform/channel integration securely in an open network environment with unique customer identifiers (A “single view of the customer” and “One instance of me” existing for all customers, whose behaviours will be enacted within multiple personal and affinity groups.)
  • Providing RA support for multi-dimensional convergence and continuous business transformation. There is as yet no consolidated RA methodology for business transformation, nor have CSPs paid much attention to evolving skills requirements, either during the interim/transitional phases or in the new generation environment itself. RA has a clear co-ordinating role as a business enabler, managing cross-functional semantics & methodology integration as well as ensuring that opportunities for knowledge transfer, skills and asset reuse are exploited. (One further note: business transformation needs to be managed on a ‘programme’ rather than a ‘project’ basis, and its successful resolution will unavoidably be asynchronous with the concomitant underlying individual platform and systems evolution projects which will have their own specific technical and business targets to meet. RA will need to safeguard this cultural and mindset evolution as the Credit Crunch will inevitably encourage business leadership to control the scope of projects as tightly as possible and to cut corners wherever business-wide policy and process changes are required for successful deployment.)

…and all of this monetised, and thus of great concern to all steadfast RA personnel. Finally, industry restructuring – with a move from vertical stovepipes to horizontal layers and all that this will entail – is lurking to a greater or lesser extent within the peripheral vision of many CSPs. Although the detail is outside the scope of this review, restructuring will lead to changing systems ownerships, departmental relationships and inter-business processes, all of which will have the opportunity to create new revenue discontinuities that RA will have to fix.

• • • •

In theory, the credit crunch is reducing the flow of new implementation projects to a trickle. Given the return to an ‘accountancy-led’ (as opposed to entrepreneurial) business leadership style, CapEx has retreated into limbo, and OpEx focus is firmly on cost reduction. In reality, the hunger for re-systemisation and rationalisation projects has not stopped and continues to grow, and the contribution that RA could and should make to the success of these initiatives is without question.

If CSPs are to compete, not just with each other but with the wide range of new organisations that convergence is bringing into the communications value chain, then the watchword of the next 18 months needs to be ‘simplification’, applied not just to a reduction in and rationalisation of the number of operational systems, but to pricing and tariffing, product catalogues and customer interaction. Our internal operating environments and the relationships we have with both our customers and suppliers are just too complex to manage in any meaningful and profitable way in the longer term. If this does happen as it should, it will be great news, not just for RA but for the telecoms industry as a whole.

In summary, RA is and should always remain RA, but this should not limit the activities and influence of RA professionals within the business and operational domains. Under the guise of Revenue Management, and through the evolution of new generation ecosystems, RA is getting into new areas of activity and influence. The Credit Crunch represents a huge opportunity for both departmental and personal RA growth and development, but significant new skills and knowledge will be required, and there is a significant political dimension to be monitored, managed and overcome.

Hugh Roberts
Hugh Roberts
Hugh Roberts has worked with network operators, service providers, VAS suppliers and vendors to develop their service and product strategies, market and brand positioning, revenue fulfilment, and business modelling. Formerly he was Development Director of the TM Forum, where he was responsible for the introduction of TM Forum’s BSS Teams for Revenue Assurance, Content & Data Charging and Pre/Post Convergence.   Hugh is a frequent media commentator and analyst, speaker & chair of industry conferences around the globe, as well as the author of numerous articles for the trade, national and international press.