Stratecast ‘Predicts’ Margin Assurance Will Become ‘Engrained’

When I saw Stratecast’s 22 predictions for the comms industry in 2015, my first thought was: it is easy to make fun of them. On the one hand, they predict that broadband regulation will be a big deal in the USA. Err… I think anybody – and I mean literally anybody, not just telco employees – who follows US news would have noticed US President Obama making a YouTube video asking for lots more broadband regulation. So this Stratecast prediction falls into the ‘sun will rise tomorrow’ category. On the other hand, another big story that closed the year was the so-called cyberwarfare between North Korea and the USA. Obama was involved in this story too, talking big about Sony’s handling of the malicious hacking of their systems, which was quite likely conducted by operatives working for the North Korean government. This culminated with lots of fuss about freedom of speech, as the entertainment company withdrew their comedy film about North Korea’s leadership from cinemas, and premiered it via the internet. But amongst their ‘secure networking’ predictions, Stratecast made no mention of increased government interaction with the private sector in order to prevent malicious hacking sponsored by enemy nations. So the report includes at least one blindingly obvious prediction, whilst failing to include another blindingly obvious prediction!

But then I had to think again. I was drawn to read the report because of this prediction:

Margin Assurance becomes a management discipline as purpose-built analytics help address core business needs.

I was going to lampoon this prediction for lots of reasons:

  • Does this mean margin assurance was not a ‘management discipline’ in 2014, or the year before, or the year before that? When I joined Cable & Wireless in 2007, colleague Guy Howie was building superb tools to assure margins. And in 2010, when the TMF RA team started talking about extending the definition of RA to include margin assurance, I chided them because the original definition had been consciously written to include activities like margin assurance within the scope of RA. In short, margin assurance has long been a management discipline. Different telcos progress at different rates, but there is no need to insult everyone who has been doing margin assurance for many years by suggesting that people will only start doing it properly in 2015.
  • What does the phrase ‘purpose-built analytics’ mean, and how does it reflect actual trends? Has there long been proprietary analytic software that could be used for margin assurance if the right data was supplied? Yes. Have RA vendors long supplied analytics suites incorporating functionality to perform ‘margin assurance’? Yes. Have real telcos been actively using such third-party software to assure their margins? Yes. Is it the trend in software to build analytic solutions designed to satisfy specific narrow purposes? No. On the contrary, the trend is towards general-purpose analytical capability being made more widely and easily available for flexible use all around the telco.
  • The need for margin assurance is apparently prompted by tightening margins. But what is new about that? Margins did not suddenly narrow in 2014. Margins have been eroding for many years, depending on the maturity of the market in which the telco operates. The rationale for this 2015 ‘prediction’ has been valid for a decade, so why make the prediction now, and not before?

But then, I had a change of heart, and decided not to make fun of Stratecast. I read the full text of their prediction closely, and realized Stratecast are not guilty of making bad predictions. They are guilty of much worse: of making vapid predictions that rely on weasel words. You might think they are predicting something, but they are predicting nothing at all, because it is so hard to imagine an outcome that would clearly contradict it. Here is everything they had to say about margin assurance in 2015:

Rising from the roots of revenue assurance and fraud management, Margin Assurance is a business discipline focused on maximizing profits.

So far, they have predicted nothing, and said nothing interesting. But they did demonstrate inconsistency in how they capitalize words.

CSPs globally continue to see rising costs as data volumes increase from the roll-out of new network technologies, and through engagement in changing business models, including a sharp increase in partnerships.

Still no prediction. And nothing interesting.

CSPs are also seeing flat revenues or at least revenues that are not rising as quickly as their costs.

***Yawn*** Please tell us something we do not know already.

The result is tightening margins.

***Really big yawn***

Using the right analytical tools associated with the right types of data,

As opposed to the wrong tools, with the wrong data? How stupid do they think we are?

the Margin Assurance discipline in 2015 will

At long last, a prediction is coming!!!

become engrained in all major Operations and Monetization processes.

And that was it. That was all they said on the matter. But what does ‘become engrained’ mean? It means nothing. If you have been doing margin assurance for the last 10 years, Stratecast could argue it was not sufficiently ‘engrained’. And whatever margin assurance you conduct by the end of 2015, that could argue it is now ‘engrained’. In ‘major’ stuff. Though not necessarily in the ‘minor’ stuff. You will do it for major stuff like your processes, as opposed to all those non-processes telcos have for operating things and making money. The more you look at the words spouted by Stratecast, the less there is to see, until you realize you have analysed pages of documentation that told you nothing at all.

I closed the talkRA review of 2014 by saying the increasing complexity and interplay of several key trends in assurance made it impossible for me to predict what will happen in 2015. An honest analyst admits the limits of their knowledge, and when they can no longer make reasonable extrapolations from the data they possess. Sadly, Stratecast lack that integrity, and feel obliged to make predictions even when they have no idea what will happen, and no data to support their hunches. What happens in 2015 will be determined by what you do, not by what they say. So go ahead and do something of substance, without wasting time on empty predictions.

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.