The more things change, the more they remain the same. That is an old saying that keeps proving itself to be true, and nowhere do we see more change than in the telecoms and revenue assurance area. Since GRAPA’s founding in 2007 there have been several major revolutions in the practice of revenue assurance. We have seen revenue assurance move up in status and importance in many organizations around the world. We have seen revenue assurance teams grow quite rapidly in most telcos. We have seen the role of revenue assurance expand to include dozens of new domains and areas as CFO’s and CEO’s have come to appreciate the real value that revenue assurance can deliver to the bottom and top line of the company’s financial statements.

We have even seen the revenue assurance professional move up to an almost C-level type standing in some of the more progressive and innovative telecoms. So, as the president of GRAPA, I have to ask myself a very serious question. Where do we go from here? How can we, at GRAPA continue to support the growth and increase in status of the revenue assurance professional, and how can we get even more creative in figuring out ways to help expand the reach of revenue assurance, as well as the effect?

I cannot tell you the complete answer to this question, because I just do not know. But I do know that we are redoubling our efforts in several areas. There seems to be a pattern emerging that we are going to try to develop, and that is in the area of specializations.

Clearly revenue assurance has greatly increased in scope over the past few years. Revenue assurance professionals are working less on “leakage” and more on “top line revenue delivery” as we get better at the fundamentals of our craft. Unmistakably, the skills and knowledge developed while securing revenue streams is not the end of the value delivered, but only the beginning. By leveraging, good core understanding of telco technologies, operations and revenue management activities, revenue assurance professionals are expanding and applying their knowledge in a myriad of other arenas.

What is beginning to emerge, I suspect, is a number of different specialized revenue assurance clusters which fall under the general heading of Revenue Assurance. Some of the specializations include the following:

Margin Assurance: (Revenue Optimization)

Of interest most often to CFO’s, controllers and heads of operational units or lines of business. Margin assurance focuses on ways to take an existing line of business, product line or revenue producing assets like Switches and BTS’s and increase their profitability by changing the way they are managed or offered to customers. We have seen a large surge of interest in these areas in recent months, and an entire “sub category” of specialized terminology, tools and approaches are being developed to make it easier, faster and more dependable as an approach.

Market Assurance (Revenue Driven Marketing)

While everyone will tell you that marketing is all about increasing revenues, the reality is, that in the end, the revenues they focus on tend to be only those measured in the short term, and under the most strained of interpretation. The dream of almost every CFO/CEO team is to come up with a way to impose clear financial controls on the marketing process without stifling their creativity and effectiveness. The Market Assurance methodology that is emerging offers a lot of promise to financial managers in this regard. By combining the revenue assurance principles of rationalization and integrity to the marketing process, and by supporting it with an innovative new “revenue based control and alarm” structure, many CFO’s and marketing teams, are exploring these new wrinkles in the practice of revenue assurance.

Revenue Management (Integrated Revenue Stream Management)

While managers around the world have appreciated the results that revenue assurance professionals have been able to deliver to their organizations, many realize that what is really needed is to clean up and fix the revenue streams themselves, eliminating the need for a revenue assurance function in many areas. While the wholesale application of revenue management disciplines often meets with unanticipated problems and flaws, the strategic implementation of a revenue management approach can greatly decrease the cost of managing revenues, while containing risks at the same time. What we see is an emerging group of revenue management specialists who work with the results of revenue assurance analysis and turn those results into effective and well run revenue streams.

Traditional Revenue Assurance (The Identification, Quantification, Reporting and Addressing of Risk to Revenue)

While the new and exciting “spin offs” of the core revenue assurance function will undoubtedly continue to expand, the same tried and true core revenue assurance functions will continue to play a key role in telecoms. The ability to deploy teams of experts with the ability to analyze, diagnose, recommend and operationalize corrections and controls across the full range of telco revenue operations is a core skill that will not be leaving us for some time to come.

Revenue Engineering (Using RA to Develop and Integrate New Products, New Services and New Technologies)

the most advanced, and most powerful of the new emerging revenue assurance disciplines is revenue engineering. Revenue engineering is the science of applying the principles of revenue assurance (margin optimization, market assurance, revenue management, and revenue assurance) and losing their focus on the challenges of new product development, new service line development and the assurance of new technologies brought into the telco. What innovative companies are learning is that the application of core revenue assurance principles can do a lot more than simply “protect revenue streams”. What revenue engineering shows is that the proactive application of these principles can actually help to drive the entire value creation process, the real heart of the telco innovation engine.

Revenue Governance – (Unified Framework for the Management of all Revenue Related Functions)

What is also badly needed, and quickly emerging, is a framework for the governance of all of these different functions within the tactical, operational environment of the telco. Revenue governance prescribes techniques and guidelines for the allocation of responsibility for the different risk and issues facing telecoms revenue management, including the coordination of efforts, and setting of operational boundaries between internal audit, revenue assurance, fraud management , security, revenue engineering, revenue optimization and revenue management. The upcoming revenue governance framework promises to simplify and organize the telcos management of this entire operational space.

Over the next few months, I hope to see the GRAPA organization further develop and enrich these areas, and provide members with options for training and certification in one, or all of them.

As always, the only way that GRAPA will be successful, is if you, the membership , participate in this process. In the near future you will be seeing many blogs, webinars, surveys and other ways get feedback from our members about these approaches. Please feel free to participate, and to tell us what you really think.

Well, that’s about enough for today. Until next week, this is Rob Mattison saying … “be safe”.…

As many of you know, I am American. And as many of you know, in America, we in general do not really appreciate what the rest of the world knows as football, or what North Americans call soccer. As most who know me personally know, I am not a typical American. For years,I have been an avid follower of “real football “ through my loyalty to a couple of German teams (Dortmund BVB and Bayern Munchen), both cities where I have lived and have family connections.

But I have to tell you, that in this FIFA World Cup series in South Africa, I was more than a little obsessed, and yes, my favorite team was the US team. At the writing of this blog, my team was cheated out of a winning goal by a questionable call made by a referee. Would the US win the World Cup? No, not this time. But, if there is anything this year’s world cup showed us, is that it is a big world out there, and the way things were in the past (like the dominance of Germany , France and the UK), is quickly being dispelled as major, and seriously good teams from Africa, the Middle East, Asia and even the United States, change the vary complexion and nature of the sport.

Say what you will about the “fairness” of individual referees, or the many different “political quirks” that make up world football championships, in the end, the process is a basically fair and entertaining process. It is interesting to compare the overtly civilized and politically correct way that the FIFA championship is run to less professionally managed championship events like the World Wrestling Entertainment matches and Wrestle Mania.

To my chagrin, I have found that WWE wrestling matches are quite popular on cable channels around the world. In Asia, Africa and the Middle East, millions of people watch Wrestle Mania matches and view that as an example of life and sport in the US. For those of you who don’t know it yet, the WWF, unlike FIFA, is a scam. Yes, it is true. The wrestling matches that you view are a fake. They are undoubtedly entertaining, and certainly violent. However, in the final analysis, the role of the referee is not to make it fair, but to serve as another “clown” in the circus in this so-called sporting event.

But what has all of this to do with Revenue Assurance?

Here’s the thing. In my last blog, I discussed a concept I call “Revenue Mania”. And I encourage you to listen to it, or read it before proceeding with this blog. In that article, I proposed that what we are experiencing in our industry today, is a re-definition of the role of revenue assurance and revenue management in the telecom landscape.

What I also proposed was that there were many “schools” or “groups” advocating different “flavors” or approaches to how we, as a group of professionals can best advance our careers, and help our companies through our professional practices. In that article I mentioned several groups. There are people clinging to old definitions of revenue assurance; that revenue assurance is about software, that revenue assurance is about I/T and about zero tolerance advocates. I also mentioned more forward thinking schools of thought, including the “revenue assurance is about increasing profits” and the “revenue assurance is about customers” schools.

In a very real sense, we, as telecoms professionals, dedicated to the practice of at least what used to be known as revenue assurance, are in fact, participating in the equivalent of a Revenue Assurance world cup. The world over, telecom executives (CFO’s and CEO’s) are appraising the value that their revenue assurance software and hardware purchases, consulting budgets and staffing decisions and asking, “was it worth the investment?” While the majority of them have seen the value in many of these investments so far, mostof them are asking, “can we do better”? Can I get more value out of my revenue assurance Team? Should I add more staff to the team? Should I raise salary levels? Should I reorganize revenue assurance and give them different KPI’s? How can I best spread the revenue assurance goodness across my organization for the maximum benefit?

In general, I believe that this year’s exercise of Revenue Mania, is an absolutely awesome, powerful and a good thing, especially for revenue assurance professionals. But I also believe that we need to be very careful that we run our “Revenue Assurance Mania” process much more like the FIFA world cup and not like the American style “Wrestlemania”.

What does that mean? Well, first of all, it means that we should proceed with some method. We need to be sure that we are building on the things that already work, and not throw out the good with the bad. I believe that it means several things:

First – It means that we maintain a focus on the individual revenue assurance professional; their skills, strengths and weaknesses. To fall in love with an approach that existing staff cannot manage is a formula for disaster. That is not to say that we mustn’t try new things, only that we have to build on the core strengths we have, and not make professionals feel ‘left out’ and worthless.

Second – it means that we have to focus on our relationships: consensus. Building trust between professionals; this is how any professional excels. The revenue assurance professional should consider approaches that enhance and strengthen relationships with CEOs, CFOs, CIOs and operational managers, not antagonize them.

Third – the new migration paths must be rationalized. Part of the reason people abandoned the old approaches was because they couldn’t prove the value. New approaches must prove value before undertaken.

Fourth – the revenue assurance professional needs to expand the scope and re-define themselves with Integrity. They must understand the new domain and preform with precision, excellence, transparency and reliability.

Over the next few weeks, I will be initiating GRAPA’s own version of the Revenue Mania World Cup. Week by week, we will attempt to address a different aspect of the emerging trends in the practice of revenue assurance. We will explore the concepts of Revenue Management , Revenue Engineering, Revenue Optimization, Margin Assurance, Market Assurance, Revenue Governance and others. We will consider the merit of each and the underlying principles and values. We will also explore the dangers and pitfalls that each might hold for the revenue assurance professional. And finally, we will attempt to build a new operational model for how these different flavors of telco revenue management, assurance, optimization and governance can be weaved into a comprehensive framework for growth into 2011 and beyond.

The rules of the Revenue Mania World Cup will be simple. I will create a blog, or series of blogs to initiate the first round. We will then post the topic on our Linkedin, Facebook, newsletter, podcasts, GRAPA Website and other locations. We will solicit rebuttal , discussion and contribution from as many members as possible (in order to help stimulate the process, our membership managers and faculty will join in the contest).

As with the FIFA World Cup, we will do our best to keep the contest fair minded, open ended and with a clear dedication to revealing the best approaches.

We will not tolerate cheap shots, personal attacks, emotional diatribes or name calling. Our intention is to run a nice, clean competition. Other than that, I hope we get a lot of people participating in these discussions. The important thing, from my perspective, is that we hear from YOU, the membership, about these issues.

Stay tuned for some of our upcoming Revenue Mania Topics, and until next time, this is Rob Mattison saying …be safe….

Have you looked at any of the recent agendas for “Revenue Assurance” conferences around the world? Have you seen any of the vendor’s websites, or the latest marketing programs and promotions for consulting firms, software vendors and systems integrators? If you have, then you may be like me, just a bit confused.

It seems my friends, that telecommunications revenue assurances out of fashion. It has lost its appeal. It is old fashioned and out of style. While most conferences and software/hardware vendors and consultants continue to give a respectful “nod” to the term revenue assurance, many seem to believe revenue assurance is not important anymore.

But don’t panic folks. These vendors and speakers have not decided to go bankrupt and get out of the business. Instead, what they are doing, is what they have always done. They are redirecting their efforts, re-branding their approaches and trying to breathe some new life into their marketing and sales efforts. Do not get me wrong. Rebirth and reinventing yourself is an absolutely good thing. It is the lifeblood of our industry, above any other, and as such, it is a painful, but necessary process. On the other hand, this need to “reinvent oneself” does not mean that we should just abandon everything we have learned, and do and run, helter-skelter into new and random directions.

What we are witnessing in the revenue assurance marketplace today, is a process I like to refer to as Revenue Mania. This process occurs in our industry every three or four years. Vendors, carriers, professionals and companies all take a look at themselves and realize, “something’s not right here”.

“The stuff we have been buying, the things that consultants and vendors have been selling us are not working. We need a fresh approach to the problems we are facing.” In addition to this ‘wake up call’, we also have the fact that in the telecoms industry three years is like several generations of operational change. We are not the industry we were three years ago, and the old ways of looking at things are not going to cut it anymore. And so, is born, Revenue Mania.

So what is Revenue Mania. I always like to begin with looking up words in the dictionary, in order to get my thinking clear. What is mania? The dictionary describes mania as:

1 An. excessively intense enthusiasm, interest, or desire; a craze: a mania for neatness.

2 A. manifestation of a mental disorder, characterized by profuse and rapidly changing ideas.

3. Violent abnormal behavior, also known as insanity.

(reference: http://www.thefreedictionary.com/mania)

That certainly helps us to put this whole thing into context. Yes, I absolutely believe that Revenue Mania is upon us. Vendors, consultants and conferences are “reinventing” revenue assurance (or what we used to call revenue assurance) in literally dozens of different ways.

• However, what “flavor” of mania are each of these sources promoting?
• Are the changes in direction a healthy ‘enthusiasm’ for improvement?
• Do they reflect an attempt to improve and build upon what worked in the past?

Alternatively, do they represent the more malignant form of mania. Just pure insanity. A mad rush to redefine yourself in whatever way will help you get ahead with no thought for consequences.

Are there are vendors and consultants out there that are making an attempt to put shiny new faces on many of the same old stories and approaches? Is someone trying to convince people that the same old, tired, illogical and unfounded approaches will work, if only we call them by different names? Are there vendors and speakers whose efforts amount to nothing more than the magician’s acts of “misdirection”?

Is there an attempt to “get out of the revenue assurance business”, by disguising it and saying that it has nothing to do with revenue or assurance, while it is exactly what revenue assurance is all about, simply because that is what they are trying to sell this week?

Are there speakers, vendors and thought leaders, who make a concerted effort to help “keep up” with the incredible rate of change in telecoms and are sincerely trying to “steer” the telecoms revenue management profession to its next ‘level of excellence?’

If you look at the many different “faces” that the media and vendors, speakers and thought leaders are putting onto the telecoms revenue landscape, you can see examples of all of them.

Allow me to share my observations on some of the patterns that I see.

Software Mania

There are the “good old boys” of revenue assurance. These guys are not just “out of touch” with change, they are actually moving backwards in time. These alleged “thought leaders” are still arguing about CDRs, KPI’s and debating about how to justify “software”. Their vision of the role of the revenue assurance professional is to justify poor software decisions made by others. Come on guys. The game is over. Revenue assurance is not about, has never been about , and will never be about software. Software is a tool that can help the revenue assurance professional and that is all.

Obsessive Neat Freaks

These wearers of the “old school tie” still believe that the absolute and annihilationof leakage and risk is the only acceptable role of revenue assurance. These guys have not yet clued into what GRAPA has been realizing for years. The telecoms industry tthrives on risk, and risk containment in a cost effective (Rationalization principle), Team Oriented (Consensus Principle) and Accurate and reliable (Integrity Principle) environment is the way that revenue assurance can actually add serious value to the process. If you want to attain zero tolerance get into the banking business.

Money Mania

These are new school groups trying to say that revenue assurance is not about revenue, it’s about anything financial. These groups will tell you that the real role of revenue assurance is to assure accounting systems, balance general ledgers, manage inventories and assure all sorts of financial transactions.

Now here we have a case where the Mania moguls may be onto something. Increasingly, revenue assurance professionals are being called upon to expand their horizons into more and more areas related to “margins” and “profits”, and I cannot argue that the directional drift this represents is probably a “for real” expansion of revenue assurance roles.

However, if this “growth horizon” is going to be managed in a way that enhances careers and adds value to the telco, it must be based upon the skills, staff, direction and efforts of the telco’s own revenue assurance staff, not a group of “cowboys” who claim “it’s easy, anyone can do it”.

(The GRAPA standards focus on Margin assurance – the assurance of different Lines of Business (interconnect, roaming, content), different asset categories (Switches, MSCs, BTSs) and promotions are good examples of an approach to issues that builds upon established foundations).

RA is CRM

By far, the most ludicrous of the pretenders to the “future vision” for revenue assurance are the ‘Revenue Assurance is really about customer satisfaction school. Customer Relationship Management, customer satisfaction and the role of customer in the entire _ telecom mix has been a hotbed of controversy for over 100 years. Unfortunately, for the Revenue Assurance “thought leaders” who are trying to steer the bus in this direction, the CRM Mania fever has cycled through telecoms every 5 years like the re-appearance of the 7 year locust.

I predict that the CRM invasion will proceed, like all locust invasions have in the past. It will come, attack, leave a path of devastation in its way, (wasted millions of dollars on CRM software, and thousands of hours of consultants and employees time) and then go back underground for another half-a-decade leaving no discernible improvement in its wake.

(This is not to say that there is No Value in some parts of the story that these advocates tell. See the GRAPA standards, or upcoming blogs and training and certification programs regarding Market Assurance, New Product Assurance and Revenue Engineering for more information about a proactive, progressive and consistent approach to these problems.)

Revenue Management

By far the most serious contenders among those with a clear, legitimate claim at moving revenue assurance forward, are the “revenue management” school. These people have begun to coin the term “revenue management” to represent approaches to revenue assurance that build upon past successes, while attempting to enhance the effectiveness to the business by changing fundamental parts.

In future blogs, we will continue in our exploration of these different issues, and we will continue to question and analyze the emerging worlds of “revenue mania” in all of its different forms. The real key, I believe, for the revenue assurance professional, is to begin to take a much more analytical and critical approach to their acceptance and advocacy of this insane mix of “flavors” or revenue assurance that is being offered by the current market. Indeed, the insanity that is represented by the many different approaches being advocated today in our industry while different than the insanity being promoted 2 years ago, it is incredibly consistent in its diversity.

The bottom line is, that if you are a revenue assurance professional, you cannot afford to simply “sign up” to any oneapproach or vendor solution. You need to analyze each product, approach and solution against the backdrop of your own experience, the needs of your organization and your own career goals, and make a decision based upon your own best judgment (not anyone else’s).

And that, ladies and gentlemen is the core of what GRAPA is all about. We do not exist to push, promote or advocate any approach or belief. Our job is to collect information about how professionals are actually doing their jobs, turn those practices into standards which can be reviewed, modified, ratified and published and then teach those ratified approaches to all who wish to learn.

If today’s “state of the industry” is any indication, we here at GRAPA will be busy for some time to come, analyzing, reporting and communicating back to our members as the “standard practices” of revenue assurance professionals continues to morph.

Well, that’s enough for today, until next time, this is Rob Mattison saying… be safe….

I again (happily) found myself providing training for another corporate, multi-national revenue assurance group. The room was full of revenue assurance managers and team members all working for the same corporate group, but traveling from a dozen different countries around the world. It fills me with a sense of respect and admiration where I see the incredible level of sophistication, dedication and enthusiasm that these professionals exhibit.

Sitting in this room, it is clear that Revenue Assurance continues to be an exciting, challenging and ever expanding career path for those of us who have “The Right Stuff”. Just in case you think I am exaggerating about how exciting and critical revenue assurance has become to telco organizations, I have got to tell you that the organizers of this event provided me with a little “bonus” this week. They told me that I would not have to teach for the first hour, because the CEO for the entire corporate group was going to fly in and provide the kick-off for our one week training and certification event.

Some of you may be surprised that the CEO of a large corporate multinational telecommunication group would travel all that way to spend an hour addressing a room full of revenue assurance geeks. But that would mean you have not been paying attention. In the past year, we have had more than than six onsite training events where the CEO, the CFO or both have opted to kick off the event , and impress upon the revenue assurance team how much they were being counted on to help the company make its objectives in the coming year. I’ve actually had it happen where the CFO to stops by for a visit, listens in on what we are discussing, and then decides to stay around for the rest of the event.

But how do you explain this? Why have a bunch of “CDR Jockeys” suddenly come to find themselves at the leading edge of so many telco operations? It’s simple. They need us. These C Level executives are coming to understand that what we have to offer, is what they need. C Level executives are beginning to see that revenue assurance represents one of the single biggest strategic tools in their arsenal.

At one event in Latin America, the CEO of the group spent over two hours, detailing for everyone in the class what the future direction of the company was going to be. He took the participants through painstaking detail, reviewing plans for major technology upgrades (NGN, WIMAX AND LTE), new product and service delivery plans (launching dozens of new products in three short months). Most importantly, he highlighted and impressed upon everyone the critical role that revenue assurance was expected to play in each of these cases.

Talk about “stealing my thunder”. But ,that’s okay. It greatly enhances my credibility when I can tell them, “This is what is important to the CEO”, when the CEO just got through saying the same thing to them a few hours earlier.

In yet a third case, the CEO of the company addressed our class with a surprisingly clear and simple message for the students. He explained that the revenue assurance  team was a critical part of corporate strategy for the next year, and that the biggest things he needed to see, and he expected from his revenue assurance  team were:

Integrity – He spent more than five minutes drilling down on examples of how important the integrity of the people and of operations was going to be in the year ahead, and how critical the revenue assurance  team was to that strategic vision.

Proactivity – He thanked the revenue assurance  managers, and implored them to be more proactive in their zeal for seeking out risks and revenue opportunities.

If I didn’t know any better I would say that he read the GRAPA standards book on his way to the conference. That is the good news. The bad news is that with this high profile attention comes a lot of responsibility. These guys are putting confidence in us, and the want to see results. Of course, we have the knowledge, the tools and the relationships to get the job done.

In the weeks ahead, our GRAPA social networking group is going to be putting together a series of blogs, articles and interviews about GRAPA success stories, to share with everyone the amazing, compelling and interesting successes that GRAPA members are experiencing.

I hope these stories will help to inspire, enlighten and provide direction to many of you.

So, that’s enough for this week, until next time, this is Rob Mattison saying, be safe.

What do Ernst and Young, Protiviti, Infosys, PWC, Deloitte and IBM all have in common? Is it that:

a)      They are some of the largest, most successful consulting organizations in the world today?

b)      Each has a large, viable commitment to providing professional consulting services to telcos in the Internal Audit, Fraud and Revenue Assurance domains?

c)      Each has sent several of their consultants to GRAPA Certification and Training Events?

The answer is, all of the above.

I was a bit surprised last week when I had the faculty team assemble a study to review the GRAPA memberships and training attendance demographics. Several patterns emerged, but one of the most striking was the high number of consulting organizations filling the seats in GRAPA training events.

I was not surprised that consultants are involved in GRAPA. Many of the consulting firms that I mentioned have been staunch supporters of GRAPA from the beginning. Consultants fill many of the key roles on GRAPA committees, and also provide strong support for the GRAPA standards in the real world. However, what surprised me were the numbers of consultants getting certified is growing, exponentially.

Yes, consultants are coming to learn that GRAPA makes sense for them as well. Being a curious and questioning kind of guy, the first thing that I wanted to understand is why? Why have consultants started to flock to the GRAPA training and certification events?

I think there are several reasons for this. First, we have started to hear of more and more carriers placing a requirement, or at least a preference for GRAPA certification as a criterion for the assessment of job candidates. This makes sense when you think about it. With over 3500 copies of the GRAPA standards downloaded around the world, it is natural that carriers would take the next step, and ask that consultants conform to the same standards that they are practice.

Obviously, once a revenue assurance manager, CFO or auditor recognizes the value of the approach, it is simply the next step to prefer vendors who see things the same way. But, while this tendency certainly helps to explain the phenomena, I think there is even more to it than that.

There really is only one reason for any consulting company to do anything–to gain a competitive advantage. Business in general, and consulting more specifically, is an intensely competitive, highly leveraged activity. Consultants are in a constant state of  re-inventing themselves to get an edge on the competition, re-educating themselves, trying to get the advantage through advanced knowledge and skills, re-evaluating themselves and constantly working to improve their team’s and their own approaches any way they can.

Sounds exhausting, right? I worked for many companies as a Revenue Assurance and Business Intelligence practice leader for many years, and I assure you, it is all that and more. Why then, should consultants develop a preference for GRAPA and the GRAPA standards? Well actually, there are quite a few reasons.

Consultants, just like carriers, need to be concerned about whether their teams have the skills and knowledge needed to do the job and the GRAPA Body of Knowledge (an industry wide, consensus based definition of scopes) makes it easy for consulting companies to benchmark and assess their own people. The GRAPA Body of Knowledge provides a key guideline that everyone can use.

Once the Body of Knowledge was established, it was possible to put together a comprehensive Testing and Certification program. The GRAPA Training, Testing and Certification program is the largest, most pervasive and most respected revenue assurance, telecom fraud and telecom internal audit specific program in the world, as evidenced by the hundreds of people that have certified, or are in the process of certification.

But the benefit GRAPA offers consultants does not end there. In addition to the help GRAPA provides in the assessment and credentialization of their staffs, GRAPA’s industry  Practices (Principles, Methodologies and Standard Controls Based Assurance) make it easy for consulting companies to quickly step into complex situations, and conduct insightful and effective analysis and solution design, with a minimum of fuss and “start up time”. The GRAPA standards provide a common frame of reference, vocabulary and approach making it easy for consultants to step deliver value quickly and effectively.

But I think the real reason that consulting companies are finding lots of reasons to love GRAPA, is the GRAPA core philosophy. GRAPA believes and promotes that the most valuable asset  a company can have, and the best way to solve any problem is through the professionalism of the revenue assurance professionals themselves.

It is the revenue assurance professionals themselves that make the difference in any revenue assurance engagement (a philosophy that aligns perfectly with what consulting companies are selling…the professionalism of their consultants). The only real surprise is that so many consulting companies have not taken advantage of GRAPA. But that’s okay. I’m not worried. The momentum that GRAPA has established is clear. They may not be in our classrooms and taken testing yet, but they will be, or they may have to get out of the telecom business altogether.

Well, I think that’s enough for this week. Until next time, this is Rob Mattison saying. … be safe….

Having goals is wonderful. That is how set up measures for ourselves and assess our progress. However, goal setting can create problems, especially when it comes to choosing role models. What happened to those who regarded Toyota as the example of how to run a car company? What about those who chose Tiger Woods as a role model for the professional and ethical behaviors of “winners”?  Yes, the business of setting goals and selecting a role model to follow can have some serious backlash.

It can be especially dangerous and difficult to choose a role model within telecommunications and revenue assurance.  For the majority of the people I talk to in telecoms and the people clogging the speaker conferences and producing marketing material, the message is simple and clear: To be the best, emulate the big boys.

Do you want to exercise best practice in billing? Find out how ATT does it. Do you want an example of the best at long distance? Let British Telecom be your guide. Conference after conference, vendor after vendor and speaker after speaker the same song is repeated. Since the big telcos do it this way, you should do it this way too. Since the biggest and richest telcos in the world do things a certain way, then copy them, and you’ll become bigger and richer.

Wait a minute! Let me really think about this. The claim is that since the big, successful people do things a certain way, I should too. Their way is the way to success. I have a real, big problem with that logic. Here is the reason.

Let’s look at the ‘big telco’ style of revenue assurance.

‘They’ say:

1. Revenue Assurance is about IT Systems – It is about putting in lots of systems and automating controls. The more computer-run controls, the better your revenue assurance.
2. Revenue Assurance is about doing things the right way, even if it is expensive. In this mode of operation, revenue assurance is like an avenging angel. An agent of change who a) cleans up dirty data b) corrects policy errors c) smoothes out operational problems without regard for the cost. The accomplishment of order is the only goal.
3. Revenue Assurance is about leakage – it is about finding, monitoring, and being absolutely focused and obsessed with little tiny errors in great big systems. Perfection is the order of the day.

But how are those telcos are doing?

1. ARPU’s – Dropping like a stone
2. Market Share – Shrinking
3. Reputation – Eroding rapidly

It seems to me that those are the last models I want to emulate. I am amazed that anyone still gives these people the time of day.

We need to look at the history of telecoms in the past ten years. Who are the carriers we should be emulating? Should we take direction from the dinosaurs behind this thinking and pay to build these systems and engage in never-ending, mind-numbing and meaningless debates? Should we perpetuate the thinking generated by carriers that are so cumbersome and bureaucracy bound that they cannot do anything without a six month study? Do you, in your telco, have time for that???

Maybe we should look at the new market powerhouses around the world: The Zains, MTNs, Vodafones, TIGOs, Orascoms, Qtels, Movistars and the Digicels. Even China Mobile and Airtel Bharti have huge lessons to teach us about how this business can be run profitably.

I propose that these are the companies to be emulated.  These are the people who don’t have time to be obsessed with IT systems. These people know they cannot afford to stand still long enough to have the silly, bureaucratic, political battles about leakage and triple redundancy and the obsessive pursuit of three cents worth of leakage. In other words, in my opinion, these are the carriers who practice telecommunications in the style that has always driven the winners in telecoms:

• Innovation.
• Break neck speed to market
• Change, change , change

It is the commitment to innovation, change and risk that makes a telecom something to be admired, not the size of their IT budget and certainly not hours logged in theoretical discussions about “drip models”. I would not claim that the big cumbersome carriers out there who are bogged down with massive legacy systems, 25 layers of I/T, and enough political process to govern a country do not need to practice revenue assurance the way they the do. On the contrary, I emphatically agree. They really do need to function that way. It is the only way that they can keep up.

What I am also saying, is that the last thing any smaller, leaner, meaner and more effective telco, or revenue assurance team should be doing, is trying to figure out how to do the same thing. Basically, you would be trying to learn how to do the wrong thing.

There is an amusing television commercial put out by Accenture. The commercial shows an elephant crossing a huge chasm by nimbly dancing on a log that goes across the gap. Their message is, you too can be a giant elephant, but we can teach you how to be nimble despite your size. Maybe teaching elephants how to walk across logs sounds like a good idea to you, but I think the chances are good that an elephant is going to be falling to the bottom of the chasm pretty often.

Even more critical, why do you want to be an elephant? Yes, the real key for the revenue assurance professional is not to seek out the worst examples of revenue assurance, and then try to copy them, but to look at your own company, your own situation and your own capabilities, and create your own image of best.

Well, that is about enough time for this week, so I’ll just leave you with this thought. If you want to fly, don’t take lessons from an elephant.  If you want to fly, start learning how the birds do things instead.

Until next week, this is Rob Mattison saying…. Be Safe.

I survived the great volcanic ash cloud of 2010. Like many travelers around the world, I too was stranded in a place I did not want to be when Iceland’s Eyjafjallajokull Volcano decided to do its thing.  We had an event scheduled in Rotterdam, and we had to cancel it while people scrambled to get transportation from once place to another.

Luckily for me however, I had a nice hotel room and no place to go for a week. For most people, a whole week stuck in a nice location would mean a chance for some sightseeing, touring or may just some heavy sleeping. But that is not for me. What I like to do when I get some time on my hands, is arrange some ad hoc meetings with revenue assurance professionals in the area where I happen to be staying.

I was fortunate and managed to meet with quite a few people, and in addition to the usual revenue assurance  team meetings, I was able to swing a few interviews with some CEOs and CFOs to get feedback on how their view of revenue assurance is changing. For many of you, the thought of a CEO or a CFO caring about revenue assurance at all might seem like a stretch.

In the places where revenue assurance teams are taking the GRAPA message to the streets, an amazing transformation occurs. Don’t get me wrong, the transformation does not happen overnight, but in those places where the revenue assurance team works hard, works smart and focuses on their core mission, amazing things happens.

Revenue assurance professionals begin to see a significant and often quite rapid change in their status. As revenue assurance professionals begin to focus more on their understanding of where the true risks to the telco’s revenues are, and get proactive in their mission to “seek out and destroy” risks to revenues in any form it happens to be in, the more revenue assurance professionals come to be perceived as a key strategic asset to top management.

In meeting after meeting, C level executives shared the various ways their revenue assurance teams are surprising them with innovative, creative and downright brilliant solutions to many of the biggest revenue protection challenges facing telcos today. If I were to summarize these stories, I would say that CEOs love GRAPA, or at minimum truly appreciate what GRAPA is doing, because of the way in which it has been helping to transform revenue assurance teams.

Among the most often cited cases that C Level executives are mentioning are:

1. The clear commitment to rationalization and the insistence of the revenue assurance team that all remedies developed are cost justified. That, keeps showing up as number one wherever we go. For many people unfamiliar with the GRAPA standards, there is a prevailing assumption that revenue assurance is some kind of “data cleansing” or “operational best practices” discipline (which is something that no C Level executive has time for). But when the revenue assurance team adopts a hard core, rationalization stance, things really begin to change.

1. CEOs and CFOs were emphatic about how much they appreciate having a team of professionals on staff that proactively looks for risks to revenues without being told to. It seems that C Level executives, like everyone else, have too many things to keep track of, and anyone who is vigilant and proactive in “keeping their eye on the revenue line” is going to attain a “favored” status very quickly.

Most surprising to me were the number of executives who told me that their number one reason for escalating the status of the revenue assurance team in their estimation, was because they were realizing that revenue assurance was their number one best line of defense against revenue loss in new product development areas. An amazing number of telcos now include revenue assurance as a critical member of the new product development team, where they are perceived as the ultimate arbiters of the speed vs. risk tradeoff that all new product development teams must deal with.

For some people getting stuck someplace for a week because of a volcano might seem like a real bother. But for me it was an amazing opportunity to get some necessary and incredibly powerful feedback regarding the job that the revenue assurance teams are doing out there.

The net result of these interviews for me, among other things, is a renewed commitment, and even more focus on the “non-traditional” revenue assurance disciplines (Margin, Market, New Product and New Technology Assurance) that the CEOs seem most focused upon.

Well, that is enough for this week. Who knows, maybe next week, I’ll get stuck someplace else, and have another chance to get more of the “C-Level” view of what is happening in telecoms, and revenue assurance today.

But until then, this is Rob Mattison, saying…be safe.

When Lightening Strikes – Botswana and Revenue Assurance

R Mattison’s Podcast

I recently spent an amazing week with a class of revenue assurance, internal auditor, fraud and telco operations professionals in Botswana. During the training two issues kept coming up: “How exactly do I set up a governance model for revenue assurance,” and “What model should be used for measuring how effective the revenue assurance team really is?”  These are interesting questions and certainly frequently asked at trainings.

If you are a follower of our blogs and of our new Corey’s Corner webinars, we are beginning to uncover some of the really critical areas where revenue assurance is asked to help when disasters strike. When the people in the class in Botswana started asking about the different controls and revenue assurance scenarios, it brought to mind a story reported to GRAPA recently.

It seems that a Latin American wire line carrier had one of its switches struck by lightening. Of course, the network engineers had to make some quick decisions about what to do. It happened that this carrier had been in the middle of a migration from the Class 4 and Class 5 switch environment, to an NGN (Next Generation Network) architecture, where the switching was managed via VOIP instead.

Since the old switch was already destroyed, the network engineers decided to cut over to the new NGN environment. Unfortunately, for the engineers, the carrier and their customers, the revenue assurance group had not been called in order to assist with “New Technology Assurance”. When the cut over happened no one checked to see if the new architecture was set up properly for accounting revenues. The result was that for over one month, customers were double billed for every call they made.

Since this group had not instituted their standard revenue assurance based “Ratio Controls” in billing, and did not institute “Change Management Controls” in the network, the customers of this telco got a little surprise in the mail: a bill twice as big as it should have been. The carrier was of course embarrassed, and they made refunds and corrected the problems, but what an incredible waste of time and money, in addition to the irrevocable damage to reputation.

The questions that the managers in that Latin American telco may have asked themselves after this happened was, “Should I have put the revenue assurance controls in place when I had the chance?” and “Would those controls have prevented this revenue disaster?”

The clear answer, in this case, was yes. The investment in those few critical controls would have more than compensated for the damage to regulatory standing, public relations and actual revenues that the “lightening strike” created.

It is easy to look back and to say “We should have done it this way.” It is another thing to develop the skill, judgment and capability to make such decisions ahead of time. This is where the beauty and efficiency of the GRAPA approach to risk and controls management comes in. Under the GRAPA approach, we do not try to tell managers or revenue assurance professionals how much risk they should be willing to take. That, according to the GRAPA standards, falls under the “Appetite for Risk” principle.

The GRAPA standards are not prescriptive. We do not provide members with a mindless checklist that allows them to say: “Well, I did what the standards told me to do, so if anything bad happens it is not my fault”. What the GRAPA standards provide is a principle based approach.
Specifically, what we identify for each area of a telco operation is:

1. A method for the diagnosis and assessment for risk in that area (forensics).
2. A set of standard controls, which is a list and explanations of the key points where the majority of telcos have been implementing controls in order to contain risks in the identified areas.
3. A method for the calibration of those controls (a range of control levels from the extremely low cost to the extremely exhaustive).

What we then count on, is the revenue assurance professional, in partnership with the management team, to work together to build the best risk management profile for their situation. In the “lightening strike” scenario, there are clearly over a dozen GRAPA standard controls that would have identified and ameliorated the risk long before the disaster that our Latin American carrier faced. What we provide is a set of “standard control points”, control points that need to be understood and applied in the most cost effective way possible by professionals. .

These standard control points define for the executive and the revenue assurance professional a comprehensive roadmap of both the minimum points of coverage required to consider an area assured. It is up to the revenue assurance team to “scale up” those controls to the level of risk containment. The net result, for our friends who trained in Botswana, and for telco management teams around the world, is a new insight and a much better understanding of the ways they can work to combat the ever increasing risks to revenue loss being faced, in the most cost effective way possible.

That is enough for this week. Remember, the next time you see a flash of lightening, or find yourself facing a revenue crisis, maybe you need to ask yourself a simple question, “Could this crisis have been averted, or minimized if I had simply implemented some basic controls in this area”. You may find, like most telcos that the cost and trouble of implementing a controls strategy will pay for itself many times over.
Until next time, this is Rob Mattison, once again saying…. be safe.

(Keep on the look out for our upcoming articles about Revenue Assurance In Haiti, and the role of revenue assurance in the earthquake zone, as well as some really interesting articles about revenue assurance in the battle zone, and learn about the unique revenue assurance challenges in Afghanistan where one of your biggest revenue assurance issues is dealing with the fact that people keep blowing up your towers and switches. )

In a previous article, I discussed the issue of revenue assurance and our involvement in the assurance of sales channels. As we considered in that article, it was clear that even though sales channels might be considered off the beaten path for the typical revenue assurance team, more and more telcos are realizing that:

a)     Breakdowns in sales channels can have an enormous negative effect on revenues.

b)    Revenue assurance teams are exceptionally good at addressing those risks.

As we said in that article, the decision to include Sales Channels within the charter of a revenue assurance group is not a spurious one, but when it is made, it is critical the revenue assurance team be prepared to do a good job.

The Role of Sales Commissions in Revenue Recognition

A naïve observer might propose that sales commissions and the payment of sales reps and channels for their activities are far removed from what we know as revenue assurance. Indeed, in the classical sense, the payment of commissions is simply a “cost of doing business” with no direct correlation with the delivery of the service.

That may have been true in the “old days”, but in today’s tight margin, highly competitive environment, sales commissions and channel incentives have become a major component in the overall strategy of how telecoms are run. If paying a channel an additional 5% for their efforts will yield an additional 30% in sales it makes good sense to do it. Unfortunately, as seductive as that simplistic logic is, it does not take into account the many perversions of logic that can creep into the organization.

As organizations get more creative in their compensations schemes, and as sales channels learn how to best “manipulate” the system, major revenue leakages can be generated. For example: assume we decide to offer a program that allows for sales channels to be paid $10 for every new sim card they sell. The marketing people do some quick math and say that since an average customer generates $100 (at $.10 per minute) in a year, then paying $10 bonus will be a good business activity. (We simply lower our margin by 10%).

• 1 customer = 1,000 minutes in a year. At $0.10 per minute that should result in a revenue of $100

• I give a commission of $10 for the sale.

• I now get 1,000 minutes in a year, but receive only $90 – meaning that I have reduced my revenue by $0.01 per minute.

Revenue went down a bit, but it is still good business and not a revenue assurance issue. What happens when I make this deal, but the customers that are attracted do not generate 1000 minutes? What happens when I offer this deal and the sales reps bring in customers who end up using only 100 minutes? (How can this happen? Easily–customers churn all the time based on aggressive sales promotions). I now have a customer who generates 100 minutes of traffic – which brings $10 of revenue. But, I paid the sales rep $10 for the commission. So now, is there even any revenue? No.

And taken to the extreme, you have cases where sales reps learn how to “fake” the activations to get the commissions resulting in a negative margin. In other words, you lose money on every sale. In this situation, the solution is a correction. Change the policy so that reps are not paid for the sale of a Sim, but for actual minutes delivered and paid for. While perhaps a bit extreme, our example demonstrates the problem a revenue assurance manager must face when asked to assure the sales commission area.

There are actually two things that revenue assurance needs to be concerned about:

1. The commission programs themselves.
2. The commission program accounting and crediting procedures.

Commission Program Assurance

Accounting for and assuring the composition of commission programs fits squarely under the domain of Marketing and Margin Assurance. (Readers are referred to the GRAPA standards, body of knowledge and certification training modules for details about these domains.) The foundational groundwork in the performance of market and margin assurance is for the revenue assurance professional to perform a complete “risk assessment” of every single program based upon the 6 major risk dimensions. These include:

• Subsidy Risk
• Network Risk
• Market Risk
• Sales Risk
• Billing and Assurance Risk
• Partner Risks

Once each of these risks is considered, a Revenue Model for the marketing initiative is prepared. This Revenue Model explains each of the assumptions that make up the marketing proposal, requires the marketer to provide forecasts along each of these dimensions, and defines the “controls” that need to be in place so the marketing manager can be warned when their forecasted levels are not being met.

It is the development of these models, and the initiation of these controls that define the revenue assurance professional’s job. Tracking the programs and responding to errors is the job of the marketing manager responsible for the program.

So how does this relate to Sales Commissions?

Simply stated, one of the principle “sales risks” to be considered is, “What happens if the sales that occur do not meet the conditions specified by the model”. In other words, if my marketing plan expects that each sale is going to be worth $100 in revenue, and that is how I justify the commission, then I need to be sure that I create some controls that make sure that this assumption ($100 in revenue) is the result.

The definition of the control involves:

a)      Measuring and tracking to make sure the assumption is actually happening.

b)      The definition of an alarm and thresholds that will notify the program manager when the assumptions have gone seriously wrong (when the failure of the assumption threatens the revenue in a significant way).

c)      Defining “remedies” and “adjustments” to be made when an alarm is triggered.

Sales Commission Plan Assurance: Summary

The first sub-domain under Sales and Commission Assurance is the Assurance of the Plan itself.
The purpose of the assurance activity is to provide management with clear information about:

1. The risk to revenue that the commission plan represents.
2. The establishment of objective measures that track the assumptions.
3. The creation of alarms and triggers to make everyone is aware when revenues are seriously jeopardized.

Commission Accounting Assurance

The other major area of assurance for commissions is concerned with the accuracy of the commission (and sales tracking) and the accounting process itself. The best sales and commission program will be worthless if it does not accurately track the sales and services delivered, and provide for the accurate and timely assignment of compensation.

While the vast majority of issues concerning Sales and Commission accounting are a straightforward accounting function, revenue assurance will become involved when management has decided to use the sales and accounting system as the method for managing the sales and commission tracking controls. If sales and commissions accounting is not going to house and manage revenue assurance market and margin controls and alarms, then there is no reason for revenue assurance to be involved.

If, however, this system is going to be the way management automates these controls, then revenue assurance participation becomes critical. The ability of the sales and commission system or process to track the items and variables defined in the commission plan (the things being tracked in the forecast, triggers and alarms) is clearly going to define how well the revenue assurance controls will work in this environment. It will therefore, be up to the revenue assurance professional to get involved to the point where he is sure that they are in place.

Providing this assurance will be completely dependent on how the overall market/margin assurance process is managed. What the revenue assurance professional will need to do is:

1. Assure that those things identified within the Sales Risk component of the marketing model are being accurately fed into the commission/compensation system.
2. Assure that the method of computation for the compensation defined in the model is the method being utilized within the compensation / commission system.

If the revenue assurance practitioner has done these things, they will have met their responsibilities.

Summary:

Sales commissions are becoming a critical ingredient in the diverse “innovative new marketing schemes” being created by marketers and product developers. Assuring that these “crazy schemes” are viable, that they contribute positively to revenues, and that they are being accurately executed can make the difference between success and failure, profit and loss and negative vs. positive revenue margins.

As the industry increasingly puts its faith in these innovative strategic approaches, the ability of the revenue assurance team to get involved, and apply a strenuous revenue focus on these programs will be key.

That’s about enough for this installment, so until next time; this is Rob Mattison saying take it easy and…. Be SAFE.

One of the most exciting and challenging things about the revenue assurance world as we evolve as professionals, is how the scope of our responsibilities continues to expand. Few revenue assurance professionals do not understand the process of tracking and assuring the integrity of a CDR. But many of us are finding that following CDRs is a small part of the job.

Case in point is assuring sales channels. Not long ago people would tell you revenue assurance had no business poking around in the sales channel area. Indeed, Sales Managers did not want anyone else looking “under the covers” of their operations, and for many organizations accounting and internal audit was assumed to be “in control” of those areas.

Unfortunately, what happened to a lot of telcos was…well, what always happens. New sales channels sprang up overnight. Instead of managing one internal sales force, the telco now must manage dozens of teams along with partners, brokers, agents, pseudo-employees and mega channel partnerships. Creative, cost effective and incredibly complicated sales tracking and compensation plans were suddenly created.

In the wake of all of this change came leakage and fraud. In no time, telcos inadvertently invented dozens of ways to lose revenue, use sales tracking to give false information, give sales credit where it wasn’t earned and most critically, to fail to accurately and honestly report revenues.

When this happened, it wasn’t long before the CFOs came to realize the skills and capabilities of the revenue assurance team were the best available to address these issues. And so the “morphing” of the definition of revenue assurance began.

Early RA Efforts in Sales Channel Assurance

The first documented cases of allocating the responsibility for “leakage” in sales channels can be found in the South East Asian carriers. In these markets, the rapid expansion of the role of sales channels to fuel prepaid became the impetus for change. Over the past decade, the trend has grown to where the majority of telcos now include “sales channel assurance” as at least a part of the scope of the revenue assurance team.

Given that sales channel assurance has worked its way into the charter of many revenue assurance groups, what are the details behind it? Luckily, the GRAPA standards spell out the principles and approaches key to sales channel assurance and the GRAPA certification training classes review the standard controls and assurance points in detail. For those who have not had the chance to review those standards, or take the training, we will provide an overview here.

Assurance of Sales Channels – Domain Fit

The first issue for the revenue assurance professional faced with the job of sales channel assurance is to identify which domain it falls under. This is critical, because only by mapping a situation to our standards and body of knowledge can the revenue assurance professional gain any leverage or support for the areas they cover.

When you determine which domains a problem touches, you gain access to the standard controls, approaches, benchmarks and knowledge other revenue assurance professionals have gathered over time. Under the GRAPA standards, sales channel assurance can be positioned in several ways.

First – Channel Assurance is one of the four major domains required to assure the prepaid line of business. It is impossible to assure prepaid billing systems and the entire Prepaid LOB without assuring the company that the sales channels are tight, leak proof and feeding the voucher management system with integrity.

Second – Sales channel assurance fits under the subject of CRM assurance and assuring the different CRM value chains:

a) Sales

b) Customer Service

c) Marketing

Either way, sales channel assurance is critical, and definitely “in scope” according to the standards. When is the assurance of channels part of the charter of the revenue assurance group?  As for all revenue assurance domains, the domain comes “in scope” when:

a)      Management identifies it as a domain of concern.

b)      The operational team invites the revenue assurance team to help.

c)      The losses or risk of loss become pronounced.

When the domain is added to the revenue assurance group’s charter the revenue assurance manager must:

a)      Perform an initial forensic analysis of the domain to rationalize and quantify the extent and nature of the revenue risk and loss.

b)      Prepare a set of recommendations and relate them to specific quantified risk areas.

c)      Review the recommendations with top management and the operational teams concerned.

d)      Implement actions based on management decisions.

Channel Assurance – Objectives

What are we supposed to accomplish when we assure this area? After all, there are no CDRs in a sales channel. What leakage are we trying to address? Experience has shown that when a CFO wants the revenue assurance team to “assure” a sales area, they have some specific problems in mind.

The nature of revenue leakage and revenue loss protection when sales channels are involved has taken a couple of major forms:

1. Inventory and “virtual inventory” related losses – When top-ups and sim cards are not adequately accounted for (revenue producing assets are mismanaged, resulting in the false accounting of revenues, or the “giving away” of services) There are three operational sub-domains to consider in these cases:
   1. Outbound Asset Management Failure – Faults in the process of accounting for the creation and delivery of revenue generating assets (virtual and physical) to the point of sale.
   2. Boundary/Exchange Failure – Fraud or error in execution of exchanges of value with sales persons – when sales channels (internal and external) accept responsibility for revenue producing assets, and they are not accounted for properly.
   3. Inbound – Accounting Failure – Failure to get funds collected properly allocated to the Account Management System and the bank account.
2. Post sales accounting – Inaccurate sales reporting/commission pay out – When the payment of commissions or the allocation of sales credit becomes part of the overall profitability of a service area, then the accuracy of the sales tracking and commission payment domains fall under the charter of revenue assurance as well.

How is this Revenue Assurance?

So now we get to the heart of the controversy for some carriers and CFO’s. How can we justify the inclusion of the assurance of these areas as part of the mission of revenue assurance? After all, these are not direct revenue issues are they? At this point, we are forced to go back to some basic definition of revenue. Under the “Old School” Revenue Assurance definitions the term revenue is used to refer to the monies received for the delivery of a service. Revenue is the money we receive from the customer.

In the good old days of telecoms, when all revenues were postpaid, we provided a service to the customer, we collected CDRs that we used to make a bill, and the customer paid us. In this revenue management chain scenario, revenue assurance was ensuring the CDRs are collected, processed, billed and monies collected from the customer.

The Prepaid “Spin” On The Definition Of Revenue

In the modern telecommunications world, revenue is not that simple to understand. In a large number of carriers, the primary form of business is not postpaid but prepaid. In the prepaid world, monies are collected far in advance of service delivery.

I get client money and they receive a “token in exchange” (i.e.: a top-up card), that is used to top up their online account. When they use the service, an amount is deducted from the account management system. In the prepaid world, in the “purist” sense, revenue assurance is a very trivial process, making sure the account management system decrements the balance correctly. There is no long revenue stream or CDRs, just a brief, instantaneous online transaction. That should mean the revenue assurance job is small and specific. However, it is not that simple.

In the postpaid world, losing money because you didn’t collect from the customer reduces your company’s revenues. Errors in collections come “out” of the revenues counted. Because of that, most people consider the job of revenue assurance to be the assurance of the real revenues, not the legalistic definition of revenue under accounting principles. Whether I am worrying about the “watering down” of my full revenue realized from a failure to collect from a postpaid customer, or a breakdown in the collection of prepaid monies, it amounts to the same thing.

The question is not whether this is a problem, nor is the question whether this has a negative impact on revenues. The question is whether the CFO should include that within the scope of revenue assurance, and is a decision they need to make based upon need, skills and the depth and breadth of the problem.

Once that decision is made, it means revenue assurance must concern itself with the integrity of the process of getting the money from the customer and getting it into the Account Management Systems intact as well as making sure  the “moment of truth” that occurs at the point of revenue recognition is accurate.

And so the “channel assurance” domain of Prepaid Assurance is born.

Objectives of Channel Assurance

The mission of revenue assurance when it comes to channels is fundamentally no different than it is anywhere else. The GRAPA standards specify the particulars. Our job is to:

a)      Identify any and all “risks to the loss of revenues” that the domain represents to the company.

b)      Quantify that risk, both in terms of the amount of money at risk and the probability of that loss occurring

c)      Recommend remedies to management (recommend changes to procedures, or the implementation of controls)

d)      Implement the recommendations that management chooses based upon their appetite for risk.

That’s enough I think for this installment. We will continue to explore these issues by taking a closer look at a couple of the sub-domains under channel assurance, namely, Prepaid Time Assurance and Sales and Commissions Assurance.

Until then, this is Rob Mattison saying… be safe.