What is Revenue Assurance?

datePosted on 13:02, March 10th, 2012 by grapa

What is revenue assurance? What kind of question is that to ask? Especially, what kind of question is that to have as a topic for a blog? In recent months, GRAPA and Revenue Assurance as a whole, has been getting some pretty exciting press coverage. It seems that Revenue Assurance (as promoted by GRAPA at least) is becoming more and more a “top of mind” issue for a lot of C Level executives and even telecoms board members.

One of the unfortunate side effects of this renewed attention, is that the first thing we have to do is undo a lot of the confusion, chaos and misinformation that so many people have been spouting the last couple of years. Since the creation of GRAPA, the Revenue Assurance profession has started to become exactly that, a profession. However, even though the definition of what we are doing is emerging over time, there are still a lot of people with some pretty lame, contradictory and even malicious ideas about what revenue assurance is really all about.

It is for this reason, that I have decided to try to do a “RESET”, and see if we can’t get everyone on the same page to start with. So, what is revenue assurance? Here is a “beginners’ guide”.

This presentation (blog) is actually the first in a series that we will be presenting. This series, the “beginners guide” to revenue assurance, will provide people with the answers to the “newsman’s” top six questions: Image: morguefile.com-dmwcreative

  • Who
  • What
  • Where
  • When
  • How
  • Why

We will start with what. What is revenue assurance? Almost everyone involved in the telecommunications industry has heard of “revenue assurance”. Most people even have some vague ideas about what revenue assurance is really all about. In today’s high velocity telecoms environment, many people are curious about how Revenue Assurance can help them.

The problem is that there are so many different stories and explanations of what revenue assurance is out there. Software vendors, consultants, gurus all claim to have the ‘inside story’ on what revenue assurance is, but too often they contradict each other. If you are like most people involved in telecoms, your experience of revenue assurance people has been a bit one sided and confusing. In general, revenue assurance people seem to be very excitable, and they often preach a lot of doom and gloom. In some organizations, they act like junior auditors, and others seem to be some kind of I/T person.

In far too many cases, everything they talk about is complicated, often irrelevant and almost always boring and hard to follow. My favorite method for understanding something is to take the name and break it down into its smaller parts. When we do that, here is what we find.

First – Assurance

When you look up the word assurance in the business dictionary, you find that assurance is actually a pretty important part of what is known as corporate governance. Assurance is the collection and reporting of information, that is accurate and current in order to help management (and the board of directors) understand how efficiently the business is running, and how effectively it is being managed. In other words, is the company being managed well (costs contained and profits good).

Second – Revenue

Research on the word Revenue reveals a lot more, and often conflicting information. In general, the term revenue shows up under the discipline of financial accounting. Revenue is the term used to describe a company’s sales, profits, margins or other forms of money coming in, depending upon which accounting discipline (and industry) you refer to. Gross revenue, net revenue, and the calculation of margins are all revenue accounting issues.

So when you put them all together, what you get is Revenue Assurance, the corporate governance function associated with the accurate, timely and efficient capture and processing of revenue information in a way that makes this information accessible, meaningful and useful to top management. (Wow, that’s a lot of words.)

In telecoms, the term “revenue assurance” has a special meaning. In the telecommunications industry, we have developed a specialized set of functions and disciplines associated with the unique revenue accounting challenges faced by our companies. Over the years, these informally developed and defined approaches have crystallized into what is now known a “Revenue Assurance”.

Scope of Revenue Assurance

In most telecoms, the revenue assurance discipline is applied to a lot of different areas and problems. These include:

  1. Leakage containment – the art of finding places where you have earned revenue and then failed to collect it due to operational laxness. F
  2. Fraud management – the detection and containment of intentional fraud (internal and external)

Also included might be:

  • Revenue accounting management
  • Billing systems assurance
  • Provisioning
  • Credit Management
  • Sales Channel Protection
  • Supply chain integrity
  • Margin Assurance
  • Market Assurance

Wow, Revenue Assurance can certainly include a lot of areas!

The rapid growth of the Revenue Assurance discipline and the critical role that it plays in the modern telecoms led to the creation of GRAPA–The Global Revenue Assurance Professionals Association.

About GRAPA

Founded in 2007, GRAPA has worked to help standardize, professionalize and promote the practice of revenue assurance in telecoms and other communications companies around the world. Under GRAPA the practice of revenue assurance is changing from a randomly applied, personality based art form, into a systematic, practical application of a number of well defined, industry standard approaches that can be managed, measured and applied cost effectively.

In 2011, GRAPA marked several milestones including exceeding over 5000 members, the certification of over 1000 professionals, and the publication of several industry standards and guidelines that have become standard practice around the world.

Who is practicing the GRAPA version of standards based Revenue Assurance? Telecoms from every region of the world, using each of the major technologies sets, including (GSM, Wireline, CDMA, Cable, Satellite, Fiber, DSL, Voice, Data, Broadcast), of all sizes, and of all ages. With that credential in mind, let’s then turn to what the GRAPA standards say about the definition of revenue assurance.

The Revenue Assurance Life-cycle

According to the GRAPA standards, revenue assurance is the systematic, independent application of a set of standard methodologies employ to identify, quantify, report, remedy and contain risks to telecom revenues in its many forms.

It is the job of every revenue assurance professional to focus all of their attention on the identification, quantification, reporting, repairing and containing risks to the telecoms revenues in whatever form that happens to take. The execution of this mission is accomplished by implementing what is known as the Revenue Assurance Life-cycle. This life-cycle defines the way that the revenue assurance function is organized, measured and controlled by management. Key to this life-cycle is the three major revenue assurance functions:

  1. Forensics
  2. Corrections
  3. Compliance

In surveys around the world, and through our ratification process it was made clear that all people doing revenue assurance, in no matter what form are doing one, two or all of these things.

So let’s take a minute to consider each of these jobs in more detail.

Forensics

The first job of the revenue assurance professional is forensics. The term forensics in this case, refers to the process of investigation and analysis.

Forensics investigators handle a large number of cases (or actual or suspected revenue loss). In investigating these cases they determine exactly why the problem occurred, and most critically, they figure out how big the risk is (and report it in financial impact terms), as well as recommended ways to remedy it.

Forensics is reported to be the biggest part of most revenue assurance department activities. Professionals report that percentage of time then spend on forensics can range from 40% (the lowest reported levels) to 100%. Through the revenue assurance standards and certification efforts, GRAPA has identified and teaches several standardized methods for the investigation and calculation of risk and different ways that risks can be quickly and efficiently located and quantified. The formal disciplines include risk analysis, exchange, systems, process and quantitative analysis.

Corrections

Most C-Level executives find having a team that can find problems, but cannot help fix them is less than optimal. For this reason, many (but not all) revenue assurance departments take on the next task, which is corrections. Corrections, in the revenue assurance world, is the process of eliminating or containing risks to revenue through the implementation of controls. A control is a change to a policy, system or operation, or the creation of reports or specialized systems which monitor the risk of revenue loss and make it easy for operational managers to know when a risk has grown, and to eliminate the risk quickly.

A correction could be a minor (adjustment) to a billing system (like tuning a car) , or it could be the implementation of a major re-engineering project, or anything in between. Whatever it takes to contain the risk in the most cost effective manner, that is the key.

The corrections job is almost completely about building controls, but the revenue assurance professional is hardly ever the person who actually implements the controls. That is a job assigned to the most appropriate party, whether that be I/T, the operational manager or a business process re-engineering team. The job of the Revenue Assurance person is to:

  1. Identify the need for the control
  2. Help design a cost effective control
  3. Build a consensus between all parties involved for how best to implement the control
  4. Make sure that the correction occurs (on time and on budget)

What is a Control?

The controls implemented by an organization are typically unique to their organization, but GRAPA’s industry agreed upon standard logical controls provide the organization with a clear, objective, proven default set of controls that can be applied to any system, technology or situation (provided the revenue assurance professional understand what they are and how to implement them.) Standard controls include two types:

  • Vertical controls – which are applied to systems and checkpoints.
  • Horizontal controls – which synchronize and cross check across domains.

Anyone who has worked with people and organizations for any length of time knows that if you don’t create some method of checking things, then you will find all the controls and corrections that you have implemented are for nothing.

Compliance

A control that isn’t regularly monitored and reported is a worthless control. The revenue assurance compliance function is the process of ensuring that the controls that people are supposed to be implementing are, in fact, being checked. There are many ways that revenue assurance professionals provide management with the assurance that controls are actually being run, from a simple ‘random audit” of controls, to the more comprehensive execution of “coverage contracts” where operational managers explicitly commit to a set schedule of controls monitoring.

While it is common, and established via the GRAPA standards that operational controls are to be run by operational teams, it is not uncommon for revenue assurance teams to “temporarily” run a new set of controls until it can be turned over to the true “owner” of the revenue stream.

The Realistic Practice of Revenue Assurance

The practice of revenue assurance is as varied and unique as the telecoms where it is practised.

The practices and assignments of responsibilities may vary from the use of revenue assurance as a small, SWAT team, used by the CEO only to address immediate and major revenue crises, to large departments that include dozens of personnel. Revenue assurance departments may range from 1 to 200.

So, in summary, revenue assurance, and the revenue assurance discipline is made up of people that do three jobs:

  1. Forensics – the well trained “revenue detectives”
  2. Corrections – the practical and hands on – “revenue corrections team”
  3. Compliance – the “revenue police” — making sure that all controls are run as they are supposed to be.

I hope that helps clear up at least a bit of the confusion surrounding the practice of revenue assurance today. If you would like to read about the revenue assurance life-cycle, and the disciplines and standards in detail, you can pick up a free copy of the GRAPA – Revenue Assurance standards from the GRAPA website at www.grapatel.com

If you are interested in learning more, then look for our next blog and podcast – where we will be answering the next question in our series. WHY? Why do telecoms need revenue assurance and why will they use revenue assurance when there are so many other ways to get the job done.

Until next time, this is Rob Mattison, signing off and saying….be safe.

What is Revenue Assurance? Watch the video or listen to the podcast.

One Response to “What is Revenue Assurance?”

  1. What is Revenue Assurance? | The GRAPA Blog on March 10th, 2011 at 4:27 pm

    […] CEO, CFO and Board members in the telecommunications governance and finance disciplines. Read the blog on Mattison Avenue. We’d like to know what you think. Please leave your comments below. Tags: revenue assurance, […]

Leave a Reply

Name: (required)
Email: (required) (will not be published)
Website:
Comment: