Revenue assurance has emerged in recent years to become an increasingly critical component in the transformation of telecommunications operations.
In our competitive era, it is of paramount importance to capture all revenues that are generated by customer usage of a company's products and services. Anything less is not viable and undermines optimal financial performance.
In fact, scoping and defining revenue assurance processes proactively are an increasingly important planning consideration as service providers seek to develop and bring to market new, innovative products and tap new revenue streams. The discipline itself is evolving, expanding from focusing solely on revenue-stream integrity into the monitoring and management of costs and cost drivers, effectively providing assurance of both halves of the profit equation.
Proactive Revenue Assurance
Industry analyst firm Analysys has conducted global surveys on revenue assurance for the last several years, and the findings in the most recent reports point to a shift in how service providers view revenue assurance. The study, which is underwritten by Subex, surveys approximately 100 service providers of all types and sizes worldwide. The investigation focuses on revenue management, including revenue assurance, fraud management and other domains that seek to address revenue leakage and cost overruns.
The 2006and 2007 surveys found that service providers are much more likely to consider planning revenue management processes during the planning stages of new service products. In previous years, fewer service providers considered revenue leakage issues so proactively, implying that revenue assurance and fraud management were taken into consideration after services had already been launched. In other words, revenue assurance was a reactive process.
This finding was underscored by another section in the 2007 report, which indicated that revenue assurance managers in the surveyed service providers were increasingly concerned about pending major changes in their environments. Specifically, more than double the number of RA managers indicated that they are watching closely the impact of:
- New products and services
- Convergence of fixed and mobile operations
- Introduction of technologies supporting broadband and/or 3G
- Complex relationships with and payments for content-providers and application-providers
This finding further underscores the increasingly proactive and mission-critical nature of revenue management processes as an enabler of operational change and business transformation in today's service providers.
Evolving to ‘Revenue Operations'
As the focus of revenue management shifts, the very nature of the discipline is changing as well. The evolution of revenue assurance at Verizon illustrates the point.
As Verizon set out to break new ground in consumer retail service offerings, the company sought to establish an equally new approach to revenue assurance. Unlike the classic revenue assurance approach that focuses solely on detecting and correcting revenue leakage, Verizon headed down the path of a "revenue operations" program that incorporates cost considerations as well.
The result is a program centered on ensuring that an accurate, customer-friendly billing experience is managed across all product lines. In effect, revenue assurance in this program becomes customer-centric, part of the overarching goal of managing the quality of the customer experience.
Verizon is achieving this by the identification of key control points in the process flows that are associated with establishing and managing a service for a subscriber. Data collected at these control points is monitored to detect process anomalies and data integrity errors that may indicate revenue leakage or a potential cost overrun or some other financial or service impact associated with that subscriber.
Following this philosophy, Verizon is focused on billing a customer accurately based on the customer's expectations, which results in a greater chance the customer will pay the bill and a reduced probability that the customer will call customer service. In that way, the program takes into account a key cost driver -- calls to customer service -- that can eat into margin.
Furthermore, customers who call with billing errors often have a higher propensity to churn, which further increases costs and creates additional pressure on margin. As operators begin to turn-up content-based services, the careful management of revenue chains and control over cost drivers along with a better focus on the customer experience will become increasingly critical to the success of new offerings and the enterprise's overall profitability.
Verizon's example further illustrates how a service provider can think about revenue assurance in a proactive manner. In this case, the revenue assurance strategy considered how to prevent one of the key drivers of customer service calls and customer churn – the inaccurate bill – and so is being used as a proactive tool to reduce the impact of those issues on the business.
The Revenue Operations Center
The revenue operations projects at Verizon take advantage of a key technical aspect of revenue assurance that promises to drive its evolution even further. Revenue assurance systems accomplish their functions by integrating with myriad systems and processes at key control points and extracting relevant data for analysis. In some cases, a revenue assurance system may be integrated with literally dozens of control points to support the analysis of the revenue stream associated with a single service offering.
From that basis, it is only a very short step to using the same basic functionality to extract, analyze and monitor the data associated with any operational process or group of processes. In fact, the innovations introduced through the maturation of revenue assurance can be brought into service for a more generalized “operational assurance” enterprise function. This concept calls for the measuring and monitoring of any operational process that could potentially impact revenue or a cost driver. In effect, operational assurance is about enabling the service provider to understand in real-time how operations affect profit. The result is significantly enhanced visibility and clarity into how the enterprise is performing and much better intelligence for decision making. Operational assurance could be described as the convergence of operations and revenue management and business intelligence.
This extension of revenue management techniques becomes most evident in the Revenue Operations Center (ROC), a concept now being pursued in various forms by service providers around the industry.
A ROC is a collection of systems and processes that are oriented around collecting, analyzing and monitoring the Key Performance Indicators (KPIs) that are deemed essential for the enterprise to meet its goals.
In some examples, the KPIs or metrics monitored with a ROC may be solely revenue assurance focused, such as measuring the amount of revenue leakage being experienced for a given set of services. A ROC in such a deployment can be a mechanism for achieving unified case management in identified instances of revenue leakage. If a case of detected revenue leakage exhibits signs of being caused by fraud, the case can be passed to the fraud analysts for investigation via the ROC, preventing duplication of effort between the revenue assurance and fraud management teams. This example illustrates how a ROC may cross traditionally siloed boundaries between separate systems and processes that share an impact on a given KPI or operational metric.
In other deployments, a ROC may be used to understand process throughput in the fulfillment chain, providing an indication of automation efficiency and time-to-revenue for new orders. A ROC may also be used to track customer churn and correlate changes in the rate of churn to service assurance metrics, such as mean-time-to-repair for service outages.
The Transformation to Lean Operations
These examples illustrate how revenue assurance as a discipline is contributing to the broader transformation of a service provider. When process efficiency can be measured with precision, a service provider can establish benchmarks for performance and understand on a real-time-basis how the enterprise is performing against these benchmarks. Similar operations management innovations revolutionized the manufacturing, retailing and logistics industries in recent years.
Further, these “lean operating” principles make possible metrics-driven and performance-enhancing innovations like TL9000 Quality Management and others.
A service provider who develops these capabilities to their fullest extent can expect to reap rewards as they take on a more competitive stance and generate higher profit, producing even more resources to fuel even more innovation.
Service providers are already taking the important first steps down this path. As they begin to treat revenue assurance proactively, they are factoring the principles of process integrity and metric-oriented management into their product planning. As these projects extend and adapt the principles developed in the maturing revenue management functions, these service providers are laying the foundation for a transformation to lean operations and sustainable profit.