The Double-Edged Saw

If you hang around revenue assurance departments long enough, you notice a curious thing. Most of the time they report that losses are going down, because they keep finding things wrong and fixing them. But every so often something remarkable happens. And it usually happens at just the point in time when it seems that everything has been fixed and there are no more leakages to plug. The description may vary, but essentially a “new” kind of loss is suddenly discovered, or the scope of RA suddenly grows, and the value of losses reported shoots up. Of course, the revenue assurance team gets back to work and starts to diligently reduce the losses again until they nearly reach zero when… they suddenly shoot up again. So a graph of revenue losses against time ends up looking like the jagged edge of a sawblade. Of course, somebody cynical would say that the losses fall over the year in order to show that targets are being met. And somebody cynical would say that they shoot up at exactly the time it comes to set budgets and targets for next year. That cynical person would say that the numbers reported are more to do with securing ongoing headcount and investment in technology than they are to do with the actual level of benefits delivered. But I would not say those things ;) I would say it is often to do with people changing jobs. If the guy in charge of revenue assurance changes, the old guy wants to leave boasting that everything is fixed, whilst the new guy wants a report that justifies his budget – not one that justifies cutting his budget. By the same logic, if the exec who reads the reports (rare, but it does happen) changes, you can safely assume the business case for revenue assurance will be “bolstered” by finding a few extra causes of loss not reported to the previous exec. Of course, the saw can cut both ways. If nobody changes job for a while, depending on simplistic reports of benefits will in the end undermine the value and purpose of revenue assurance. And, incredible but true, but some execs are smart enough to see through the implications of a sawtooth report of leakage. So if you see a sawtooth trend in leakage reports, you learn more about the rate of personnel turnover than you do about the losses suffered or benefits added. Companies that want to consistently have the best results are better advised to work steadily through all issues, not just handle a few at a time only to be repeatedly surprised by “new” leakages. Because, of course, the leakages are very rarely new, and if new they are usually small, because there blockbuster revenues from totally new products are rare. Which means any very large “new” leakages will be large old leakages that have been ignored for a long time – and costing the business money all that time.

Anyhow, this kind of thing goes on all the time, and it is not for me to criticise if the revenue assurance team finds sawtooth reporting to be the best way to get business buy-in. However, I would be very cautious about letting the figures go public. But my old chums at Cable & Wireless UK do not seem to be as cautious. They have seemingly endorsed a press release that states the value of benefits Cable & Wireless UK have realised thanks to using cVidya technology. In fact, it states two values for the benefits. In the headline the benefits are “over £2.5m” but in the first paragraph the revenue benefits have fallen to “over £1m”, which is not a great advert for the accuracy of reporting by either company (don’t people proofread before they issue press releases any more? they also do not seem to know which year it is). Presumably the distinction between the two numbers is that £1.5m of the total benefit is from releasing network capacity, which is itself an interesting extension of the scope of revenue assurance. Of course, we do not know how these figures are calculated. For example, how do they put a value to the liberated network assets? You could argue that the assets would have never been liberated without work like this – so the value of liberating them is equal to the combined capex and opex costs of replacing the assets from now until the end of time. Of course, that basis for calculation would be silly. But I think everyone must be aware that numbers get manipulated for commercial reasons (Enron, Worldcom, SOX… surely people get the idea by now!) so these numbers are useless as presented. We can safely assume one thing: there will never be a press release stating that the benefits of a tool were less than its cost. But if you ask me, it will only be when that happens, and the sawtooth turns into a flat line, that revenue assurance can be said to have really come of age.

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.