Review of KMPG Global RA Survey: Part 1

This is part one of a two-part review. See here for part two.

KPMG recently published their 2009 survey of telco revenue assurance departments. You can download the report from here. The report is reasonably balanced and contains messages both good and bad. Even the report’s title, “Progressing or Preserving”, hints that the onward march of RA is far from inevitable. I find this encouraging, as it suggests that a healthy dose of realism has come back into fashion. But with this report, there is more going on underneath the surface that the report writers care to admit. Read on to understand why…

The problem with surveys of this type is that people tell you what they think about themselves. Guess what? People tend to be biased when it comes to themselves. So straight away, you know the answers in the survey are skewed. When asked “what are the major challenges you face?” few will respond “my limited intelligence” or “my laziness”. Probably it is not a smart thing to imply RA people might be stupid or lazy on a website aimed at RA people, and that is not my goal. After all, if you are reading this, you must be someone of above-average intelligence who likes to stay well-informed ;) I just want to highlight that when you ask people what is wrong with the world, they invariably highlight what they do not control, and rarely what they do. If, on the converse, you ask what is right with the world, they are more likely to mention what they have done and how that makes the world a better place. If you do not counter this inherent bias in the way the survey is constructed, you have to filter it out whilst reading through the results. Reading through KPMG’s report, I find myself needing to filter the content as often as I find myself learning from it. On top of filtering for the bias of the respondents, I found myself needing to perform a second filtering exercise – for the bias of the writers of the report. This was not so challenging, as the authors were not so much biased as just conservative. Time and again they reached a safe conclusion, even if this did not seem to fit the answers given in the survey responses.

In a change from their previous methods, KPMG conducted the survey on-line. Answers were provided by 74 operators from 46 countries, giving an unusually broad spread. The respondents found the top 3 sources of leakage to be: (i) incorrect configuration of network elements, (ii) new product development and tariff changes, and (iii) poor system integration (e.g. switch-to-bill). Straight away, I find myself trying to filter the good from the bad. I would not argue that leakage is often caused by a mistake in how a network element was set up. New product development and tariff changes are two separate things, so it seems to me that they should not be grouped together. Sure, when you have a new product you have a new tariff, but there is plenty more that can go wrong with new products than calculating charges. More importantly, the leakage caused by new products is often exaggerated. If a new product generates 1% of revenues (and it usually takes a while before they represent this much revenue) then it would have to be ten times as leaky as a product which generates 10% of revenues if it is to merit the same level of attention based on absolute returns. In short, most of the numbers about average leakages and most of the stories about new products driving leakage do not add up when you factor in that new products usually only generate only a very small amount of revenue compared to long-established products – and that these older products are often still leaking even in the telcos with mature revenue assurance. So new products cannot be the second biggest source of leakages, unless the new product is also a big source of revenue and/or the leakage of old products has been reduced to near zero and other survey answers bolster this view. Read on to find that the survey results are actually contradictory about the risk of leakage from new products; they were not considered to be the most ‘vulnerable’ to leakage. The third leakage item on the list is good old-fashioned switch-to-bill. The inclusion of this item suggests that far from RA having transformed telcos to the point where leakages are reduced to nil, RA is still dealing with the same old challenges it always has, for both old products and new.

Following on from the top 3 leakages, the top 3 challenges faced by RA were rather more obviously biased. Lack of information, absence of automated tools and lack of authority are all problems – but are they the top 3? How about lack of experienced staff, low pay, or unrealistic management expectations? Consider applying a management technique like the 7 Why’s to the challenges identified…

We lack information. Why?
Because the system does not provide it. Why?
Because nobody wants to change the system to provide it. Why?
Because it costs too much to change the system. Why?
Because we cannot say if the benefits are greater than the costs. Why?
Because we lack information. Why?
Because we’re not looking for alternative ways to get information. Why?
Because we tacitly assumed RA must be done a certain way.

Apply the 7 Why’s to the challenges identified and you end up with one of two kinds of explanation for why they are challenging. Firstly, RA does not have sufficient approval, buy-in, budget, support… whatever. Secondly, RA lacks sufficient approval, buy-in, budget etc because it is not finding ways to prove its worth. There are two ways to break out of this cycle. One way is to wait and hope for a leap of faith from people at the top. The other way is to do something different so the people at the top do not need to make a leap of faith. Forget what RA should ideally be, and consider how RA is done by people like Mark Yelland – roll your sleeves up, use some imagination, use some free software, and find different ways of tackling the problem. Even if imperfect, it is better to get some forward momentum using an imperfect technique than to sit and just wait for good fortune.

I took it to be a good sign that operators responding to KPMG’s survey said they were willing to consider outsourcing RA in order to access required skills. In many ways, outsourcing is a ‘threat’ to people employed by telcos. It might lead them to lose their job, and makes it harder to recruit subordinates and hence increase their status by one key measure of such things. Finally, the outsourcer might know more about the topic, leading employees to feel insecure about their influence. But the truth is that outsourcing with the rather partner should lead to better staff at lower cost. RA is plagued by the difficulties of attaining critical mass and cost efficiencies in the investment in RA people. Outsourcers who support several telcos have a straightforward advantage in developing and retaining skilled and experienced RA people and this can be exploited far more than it currently is. However, despite the good news, only 15% of respondents actually outsourced any RA – suggesting either practical or cultural barriers, or an absence of good outsourcers to turn to.

The theme of inadequate skills rose again in the survey observation that RA teams were most likely to be lacking ‘network and technical’ skills. It is my observation that RA teams rarely lack network and technical skills as much as they lack soft skills – like those needed for knowledge gathering and learning. In this respect, I agreed with Alexander Nelles’ comments in the recent TMF survey of revenue assurance. He said that the future challenge of RA was with increasing soft skills, not technical skills. However, there is a link between the two. If I managed a team that was deficient in network and technical skills, my first priority would be to challenge the team about why they cannot improve their skills. For example, they should seek to find out what they need to know from their colleagues in the business. Perhaps their colleagues are unhelpful. It may even be the case that the colleagues are themselves lacking in the skills needed to do their job competently. But more times than not, at least part of the problem is that the RA team has not encouraged the kinds of cooperation and cross-boundary team-working that would enable the upskilling of RA people. Of course, the onus is usually on the beneficiary to encourage sharing and development, and RA personnel face an unusually high demand to develop a disparate range of competencies. I have said it before –and I believe that each year it becomes more true – that nobody could master every skill needed to do revenue assurance.

The delusion of the complete RA practitioner is what people search for in the paper certificates of Papa Rob Mattison and the family GRAPA. The hope of mastering every skill diminishes as things become more complicated. That is why the GRAPA syllabus is written based on decades-old practical experience that has less and less relevance as telcos adapt and change. Just as telcos change, so must the people in telcos. Instead of expecting to know how to do a single job, the increasing burden on telco people is to know how to change and adapt so they can do multiple jobs. As economies develop, workers need to be more adaptable and this is true in telcos and RA just like everywhere else. This makes the skill of gathering information and learning more vital than any specific skill than can be learned. This is especially true of RA, where there is even more emphasis on change and adaptability with a view to delivering optimal results for the business.

If you know how to get the information you need, you can fill the gaps in the knowledge when you need to. Otherwise, you are always fighting a losing battle to learn the relevant knowledge amongst all the things that keep changing all the time. The analogy I often use is that if you give a man a fish, he will eat today, but if you teach a man to fish, he will feed himself every day. What RA people most severely lack is not specific technical skills, how ever much they feel the lack of them. What they most need is the skills to use the resources around them to become more skilled.

This is part one of a two-part review. Part two is available here.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.