life,
the universe
and revenue assurance
Billion dollar outsourcing of telecoms services to India. BT's deal with Tech Mahindra is the first of many as the global shift in the telco power moves eastwards from the US and Europe to India and China. What does this mean for revenue assurance? Expect it to move in the same direction....
It looks like Christmas has not interrupted the wave of consolidation taking place in the revenue assurance industry. Rumours about niche UK vendor Cartesian being targeted have been shown to be true. The hot news is that management consultancy TMNG have bought out the outstanding shares in a deal currently worth US$7.3m but which may net Cartesian's current owners another US$7.8m if they meet revenue and earnings targets over the next 4 years. However, you have to assume the growth targets will be pretty challenging given that Cartesian's revenue for the year ending November was US$12.5m.
Doubtless TMNG, headquartered in Kansas, will spend 2007 trying to broaden sales to Cartesian's existing European client list, as well as aiming to sell Cartesian's software to customers of TMNG's consulting services. And it may not be too miserable a Christmas for Cartesian's London-based staff, who are said not to be facing job cuts, despite the international trend towards relocating software development and similar jobs to lower-cost countries. See here for the official press release on TMNG's site, containing the usual quotes from the top men in TMNG and Cartesian. Interestingly, there is no news yet of the purchase on Cartesian's recently revamped website, but they can be forgiven for not having anyone in over Christmas.
One question to ponder is where this leaves Cartesian's revenue assurance "thought leadership" program. Presumably they will have to be wary of being inconsistent with the advice that TMNG already gives customers. It also raises the prospect of a geographical expansion of the predominantly UK-based service providers in Cartesian's Revenue Assurance Group. Its current face-to-face meeting format makes it easy to get involvement from people wanting to enjoy a free lunch and several drinks at Cartesian's expense, but puts a severe limit on its aspirations. One outcome may be that the format is altered to include TMNG's US and overseas clients. (Possibly not - but these are supposed to be people working in the electronic communications industry so shame on them if they do not try). I have a topic of discussion that would get everyone involved. Their first debate can be about the assumption stated in this article that the Europeans are ahead of the US in their adoption of revenue assurance ;)
Regulators are very good at ensuring that money is wasted and that bad people profit from complicated and ill-conceived rules that supposedly benefit society. In the US, the FCC has been responsible for an incredibly complicated regulatory environment, which has enabled rather than prevented the problem of "phantom traffic". Networks that carry phantom traffic find themselves unable to bill it because of gaps in the labelling of traffic. A lot of phantom traffic would be billable if the network carrying it just had simple additional data like the calling and called party. There is also much more than a suspicion that unscrupulous telcos are deliberately manipulating data to avoid being billed for traffic. So it is interesting to see that the telco industry can sometimes get its act together and work collectively to push for changes. Take a look at this article in Billing World about an alliance for consistent exchange and management of CDRs in the US. Is this a sign that, even in the US, the telco industry is starting to realise that you can only get the right regulatory framework if you agree the solution first, and involve the regulator second?
Tis the season when retailers hope to make some big bucks. Also, a lot less money is being given to charity. But it makes you feel good inside when it does. I was touched by this story partly because it mentions Sprint/Nextel's Revenue Assurance department was one of the benefactors. Now that is a bit odd, when you think about it. Why just the RA department, and not other departments in Sprint/Nextel? And given the kinds of loss suffered by most telcos, was the money given by Sprint/Nextel from its recovered revenues or were the employees giving out of their own pay packets?
Anyhow, this all got me thinking. RA people often moan they lack executive sponsorship, and that it is hard to motivate other parts of the business to take RA seriously. But on the other hand, most big corporations want to be seen to be charitable to raise their profile in the community, get good press etc etc. So is there not an obvious synergy here? Instead of RA trying to persuade the CFO to do a risk-reward deal with some sleazy software vendor, why not link revenue recovered and cost efficiencies to charitable giving? Then everybody in the business has added motivation to support the cause, and the business gets to buy publicity with money it would never have had otherwise. Even if just 5% of the benefits delivered by RA went to charity, imagine the added returns that would generate. So, all you revenue assurance people, don your red hats and fake beards because now is the time for you to play Santa Claus...
I often get asked about the "rules" for how long a business can take to raise a bill after the date when the service was provided. Laws and regulations vary from country to country and also depend on the kind of service being billed for. But what surprises me about the question is that people would actually want and ask for a rule for something like this. It is as if common sense and a basic understanding of how customers behave is not enough. Rules may be rules, but there is no rule that tells a business how to work out what people can afford to pay and when the risk of bad publicity is simply not worth the value of the bill. Statute is the last thing a sensible business should look at when working out how late it can raise a bill. The laws that I have come across all tend towards the same conclusion:
> laws are usually written to help businesses succeed rather than fail,
> governments agree it is fair and vital that businesses get paid for what they provide,
> governments can tax companies if they make money, so want them to make money,
> hence rules usually get written that allow bills to be raised very late indeed.
Most rules allow billing so late, in fact, that any normal customer would be very upset at finding how stupid their supplier can be for taking so long to raise a bill, or upset that they eventually got caught and made to pay for something they hoped to get for free, depending on how you look at it. Of course, such customers are right to be upset at their stupid suppliers, though you also have to wonder why simple business logic does not cause businesses to be more thorough in getting everything billed on a timely basis. Obviously there are still many firms that need to improve their revenue assurance.
Anyhow, if you want a great example of just how bad it can get, take a look at this story about an American couple who now owe US$1,600 for a utility back-bill after their supplier forgot to bill them for the last 18 years.
Many know about the debt problems of African countries, thanks to Bono, Bob Geldof and the like. Clean drinking water can also be in short supply. But how about this story saying western utilities may find themselves chasing African bad debts incurred much closer to home. It seems that keeping up with water payments is a problem for various West African diplomatic missions situated in East Manhattan. I pity the poor collections manager who has to chase these outstanding utility bills. Threatening to cut off their supply could lead to a diplomatic incident! If they owe this much for their water bills, I wonder how much they owe other suppliers?
Bono is in the habit of giving sermons about debt to the UN in New York. Next time Bono is in town, perhaps the diplomats can get him to answer the collection manager's calls....
Incredibly, I have personally seen more than one telco get its currency units confused when setting up a rate. Pounds and pence, dollars and cents, there is difference of 100 times, and a mistake like that is bound to either cost a lot of money or upset customers an awful lot. An error as simple as that should not need to be caught by revenue assurance, so it says a lot about the nature of error and the lack of controls in telcos that it sometimes needs to be.
Any customer might struggle to keep their patience with a telco that cannot understand the difference between dollars and cents. You can never tell if an audio clip posted to the web is real, but if it this audio clip is real you have to feel very sorry for this Verizon customer. It sounds too real to be staged if you ask me. Listen to this poor guy try to explain some basic maths and the difference between a rate quoted in dollars and a rate quoted in cents. This customer service call tells you everything you need to know about a business too lazy to get its rates correct. What makes it worse is that they are then staffed by customer service staff who lack the ability or the sympathy to understand that their customer is right and their "computer" is wrong.
This is the top 5 hits for "revenue assurance" if you search Google's US site (the results are different on other Google sites). Do people think these are the top players in revenue assurance?
1. Intec: www.revenueassurance.net
2. TUV: www.tuvps.co.uk/revenue-assurance.asp
3. TM Forum: www.tmforum.org/browse.aspx?catID=2140
4. Dittberner: www.technology-research.com/ra.htm
5. CCMI: www.ccmi.com/conferences/profitability/
Fascinating. I can understand how Intec and TUV get the top two slots, though I would have thought that TUV is a not a well-known brand in international telco circles. The TeleManagement Forum does well to come in at 3, its out of date RA home page besting a recent commercial report at 4. Rankings do not mean that much, of course, but a conference held in March comes in at number 5 out of 3.6 million hits. Not sure what that tells us, but fascinating all the same.
Do you ever wonder who writes revenue assurance training courses? I do. A lot of them seem to be written by people who have never even met anyone who does revenue assurance. Take a look at the learning objectives of the revenue assurance course provided by the naughty people at Ossidian, and via their chums at Xpert Learning. This is copied from their brochure.
* define the role of ‘revenue assurance’ for a telecommunications service provider * identify the activities involved in ensuring billing integrity * identify strategies for managing account and usage fraud, and bad debt * identify strategies for managing customer credit * identify collection management strategies * define ‘customer churn’ and identify strategies for managing it * identify how customer service and revenue assurance demands may be balanced * identify the role of the billing system in revenue assurance
Excuse me, but where is the revenue assurance? This is a course about managing customer payments and debts. Of course, somebody should manage customer payments and debt. Good idea. But not a new idea. I suspect even the most idiotic telco makes an attempt to do that. And they have been doing that for a lot longer than people have been doing revenue assurance. Probably you find out in the ubiquitous "definition" introduction that revenue assurance is defined to be pretty much the same as managing customer payments and debt. Ummm. Defining revenue assurance whatever you want it to be does make it easy to sell a revenue assurance course - you simply define revenue assurance to mean the same as something you do know something about, dust off an old course (for example, a course on managing customer payments) and slap the words "revenue assurance" on top. Easy money rolls in as people trying to learn about revenue assurance get a course about something they had no interest in. Presumably the training company hopes to get away with this because the customer will be so ignorant they will not even know they have been scammed out of their money.
Well, revenue assurance has been defined, once and for all. Who needs a training company to define revenue assurance? The industry definition - agreed by people who actually work in revenue assurance - is in the TeleManagement Forum's Revenue Assurance overview. Thankfully, there are some training companies that have the good sense to write courses based on what industry is doing, instead of just sticking a new name on their rubbish old material. Here comes a plug for the good people at the Billing College, who also give a definition in their revenue assurance course - the industry definition.
Of course, if you really want to learn how people do revenue assurance, I suggest you keep coming back here ;)
Now it is official - nasty people are finally finding ways to put spyware on your mobile phone. Why? To get a complete record of the phone calls you make and the texts you send. Why? Don't ask me, but it cannot be good.
Now, if only the telcos had the savvy to do something like this. They could take all the downloaded info, add up the charges they should have applied to the customer's account and compare it to what they actually charged. How about that for a quick, easy and very effective alternative to traditional revenue assurance....
When the TeleManagement Forum defined revenue assurance in its TR131 technical document, they made it clear it was about things that telcos control - their systems, processes, data and the like. It was not about things they do not control, including the behaviour of their customers. There is good reason for that distinction. It is hard enough to distinguish good from bad in the field of revenue assurance without making it a speculative enterprise too. Unfortunately, not everyone agrees.
I worked at one telco which used to regularly report how much value they added. Every month usage records would leak somewhere or other, and by the magic of revenue assurance they would get recycled or saved or recovered or whatever. By virtue of this magic, the revenue assurance department would claim they had added value to the business, which was reasonable. And they calculated that the value added = the rated value of the records they saved. But that was wrong. Because postpay customers of that telco all benefited from allowances, the actual total value of postpay usage billed was significantly less than the total value of postpay rated records. So the true economic value of saving those records, however you calculated it, was strictly less than their rated values. So in this telco, the revenue assurance department were not even very good at predicting the incremental revenues they were responsible for generating. They were instead guilty of systematically exaggerating them, which was ironic given that was the common criticism that they levelled at Marketing.
There is a fortune to be made out of predicting customer behaviour. But let us be clear - predicting customer behaviour is a gamble, and gambling is not a science, no matter how much science or mathematics you use. Studying the behaviour of people, like studying the form of a racehorse, is prone to error. Even in the most heavily-scrutinised and simplest cases, political elections, human behaviour often confounds expectations. Election pollsters have got it wrong surprisingly often. This is despite their prediction being binary in most cases: either candidate A wins OR candidate B wins. There is a famous picture of President Harry Truman on the night of his victory holding aloft a newspaper that ran the headline "Dewey defeats Truman". But polling has not got that much better since 1948. The pollsters were wrong about the outcome in the 1992 UK general election and much has been written about how the US television networks "called" the outcome of the key Florida state in the 2000 US presidential election first for Gore and later for Bush - see this CNN report for a relatively unbiased take on what went wrong that night.
So opinion pollsters, who try very hard to get it right and build upon a long legacy, sometimes get it wrong. Now consider the average revenue assurance department: a small department in a telco, with very limited statistical skills, unreliable and partial data, no training in customer behaviour and every reason to exaggerate their successes and hide their failures. Would you trust them to correctly predict how customers will act? If they sometimes lack the skills or honesty to measure revenue assurance accurately, they should not be trusted to reliably gauge customer behaviour. So telecoms companies should beware when trusting revenue assurance departments to second-guess how to make more money from customers. RA managers may be tempted to play the role of fortune tellers, but my prediction is that they are better encouraged to be honest and objective reporters of business performance. Because if they report on the success of their own guesses, you can be sure the predictions will be more impressive than the reality.
Writing a blog about revenue assurance, you tend to find yourself searching the web and being amazed at the sheer number of revenue assurance conferences there are, and the very small number of people who speak at them. Of course, this means that those speakers must really struggle to find something new each year to talk about. I warn you, it is only a matter of time before someone submits the following synopsis:
The Next Level of Proactive Maturity: Turning Lead Into Gold
by Darius De Wilde, Project Director of Revenue Assurance and Management, Bigcom
> The limitations of old-fashioned reactive revenue assurance
> Recap of how I told you I had done everything end-to-end last year and so ran out of things to do this year
> How I made my job more exciting by proactively maturing and maturing proactively
> How you can do the same and I wish you would so I can talk about being a thought leader next year
> Moving beyond the limitations of addressing revenue leakage
> Revenue creation: the new revenue assurance that involves closing leakages before you can even think of them
> Bigcom's new Alchemy project
> Impressive returns generated - estimates that 5-12% of lead can be turned into gold
> Step 1: downloading all the lead atoms into a big database
> Step 2: reconfiguring the "lead" data into "gold" data through neural networks and entirely artificial intelligence
> Step 3: accurately measuring and quality assuring the outputs and confirming its real validity as gold
> Conclusions: how Project Alchemy also supports good corporate governance and SOX 404 compliance
Now, I like to think I know a thing or two about telephone bills. So obviously I get upset if I struggle to understand my own bill. Let me tell you a story about my own BT bill over the last few months.
When I moved into my new house a couple of years ago, I did the simple thing and opted for BT fixed line and broadband on one bill, all paid by direct debit. A few months back, after getting poor service from BT's broadband, I switched ISP. The transfer took place on the expected date of 1st September: when I tried to log on with BT that morning it was unavailable but I was able to connect to my new ISP. However, when my September bill arrived, on September 6th, broadband had been charged for the whole month of September at a cost of £21.27 before tax. Obviously, I rang up and told BT to credit this. After much discussion where BT insisted that the transfer, per their records, had only taken place that day - September 6th (?) - they eventually concluded it was not worth arguing about and agreed to credit me the charge for the whole month of September. I even got a nice letter dated September 7th saying they had credited my account the £21.27.
You can imagine how pleased I was when I got my October bill - which for some reason included a credit of only £11.18. This credit covered the period from September 15th to the end of the September. So, of course, I phoned BT and complained again. This time the CS rep said the remaining credit owed to me had been put to my account - but I would only see it on my November bill. Perplexed, I waited for the November bill.
You can probably see where this is going. When I got the November bill, guess what? No additional credit. So I phoned again, the CS rep agreed to credit the remaining £10.09 before tax, and I got a letter saying that the amount had been credited in the post the next day.
So in December, as anybody might, I looked at my bill to see the credit. No credit. At this point I was angry, but instead of cursing at some poor person in a call centre, I took a look at what had happened to my bill. After some detailed analysis, I could work out what had happened, without needing to have another call to the contact centre - but I doubt the average customer would have done the same. Checking the December bill carefully, there was a mysterious figure of £1.65 carried forward from November - but how could that be when I paid by direct debit? Well, what had happened is that BT, in their wisdom, had not taken any payment in November for the amount that was due. The amount due in November was £1.65 after taking off the credit of £10.09 (and grossing up for tax). So, because BT carried forward the £1.65 instead of taking payment, I actually got a higher bill than normal in December (I hardly ever make landline calls) but everything was even in the end. Just a very confusing way of doing things.
Of course, it was relatively easy to work out what was going on by looking at my paper bill. Screw the earth, I will never trust on-line billing which is why I always insist on old-fashioned paper bills. Looking on-line to see what that said about my bills, the situation was even more confused. On-line there was no mention of a credit, just a list of the unamended total bill values matching the bills that had been sent to me. Flicking to the payment history, November showed "part-payment received" which I guess makes a kind of sense - they netted the credit but did not take the remainder owed by direct debit. But looking at the amount that was due in November, on this screen it was more than the actual bill total (?) even though the actual bill total included the carried forward amount. The actual bill had been £13.50, but the screen said that £15.49 had been due. Ummmm. Mysterious. The carried forward amount, £1.65, was correct, so this implied a credit of £13.84 from £15.49 instead of a credit of £10.09 from £13.50. I looked around for numbers that could explain this strange anomaly of £15.49-£13.50=£1.99. And there was one number. No payment had been taken for my October bill either, because I was in credit at the end of the month. The half month's credit I had originally received was greater than the amounts charged for that month. My account was in credit by £1.99, although to add further confusion the payment history on-screen stated that £1.99 was owed. Of course, if you add the £1.99 credit balance in October to the further £13.50 credit put on my account in November, you get £15.49. So BT's on-line history, in short, only correctly states the amount due, and has to fudge all other numbers to make them balance.
Confusing, huh? It seems hard to believe that a large telco can make such hard work of something as simple as crediting a bill and presenting the information to a customer. Well, it seems hard to believe unless you work for telcos and see what a mess they usually make of things.
Of course, there are plenty more stories I can tell about inept billing. And I do not mean from my experience of working in revenue assurance - just from being a customer. I could tell you the story about the operator that gave me a goodwill credit, but got confused about the difference between debits and credits and so added it to my bill as an additional charge instead. Or I could tell you about the mobile CSP which decided, without asking me, to give me on-line access to my own bill, except that when I go on-line I see someone else's bill. Of course, if it was a normal customer's bill I see on-line, I would do something about it. But as I see the internal bill of the revenue assurance department in that telco, I do not mind spying on how much they spend on calls. They have a very big roaming bill, actually, which is probably because of all those conferences they attend. You know, those conferences where they tell everyone that they have no errors any more and have run out of ways to improve the integrity of their billing data...
If anyone doubts me, I have the screenshots to prove it ;)
How about this for a challenge. Suppose you pay car insurance according to where you drive, as tracked every second by GPS - see here. On the other hand, Transport For London (TFL) conclude that satellite tracking is not accurate enough to charge users according to where they drive - see the report. The best results that TFL could get involve an error rate of 0.86%. So if your insurer mischarges you, how do you argue your case? Or put another way, if a customer disputes the data, how will the insurer be able to demonstrate its billing is completely reliable?
I used to quip that the only way to ensure there were no revenue losses in a telco was to provide the service for free. If you believe Google's CEO Eric Schmidt, we will all be getting free mobile phones in future - see here. The only assumption is that we will be so happy to get services for free, that we will not mind being bombarded with adverts. Hmmm... let me think about that.... nope, does not work for me. I think I will be paying any amount to the clever people who write software to block the adverts.
And if that was not enough, you can get a free cellphone in your Second Life too....
But of course, there would still be a need for assurance. The problem with all advertising is assuring that the adverts are value for money. The only way to do that would be to track who buys something after watching an advert. Which means adding to that big bucket of data they are compiling on all of us. Trust me, it is only a matter of time before businesses offer to sponsor our gravestones in return for our regular custom. "Here lies John Smith, who was a loving husband and father of two, and a loyal customer of Wal-Mart. During his life he consumed 4,271 packets of Cheetos, 19,365 cans of Budweiser...."
I have been doing a lot of driving recently, so I get to spend a lot of time listening to radio adverts that get played over and over. One of the worst has been telling me it is "national carwash week", and encouraging me to take my car to the carwash. The only conclusion I can draw is that there are no laws preventing anybody from claiming any day, week or month for whatever purpose they like. So this is me proclaiming December 2nd as International Revenue Assurance Day (imagine the sounds of trumpets, people cheering, and hats being thrown into the air in celebration).
Apologies for not giving anyone any notice. I promise to do a better job of giving everyone some advanced warning next year. Starting now. You have exactly one year to get ready for RA Day, Dec 2nd, 2007. Now, unlike the carwash people who did the obvious and got some z-list celebrities from the tv to promote cheap car washes, you may be wondering how to celebrate RA Day. My suggestion is that we hold an on-line party (perhaps in Second Life or somewhere like that) and nominate each other and hand out prizes for the following awards:
- most extraordinary extension of RA into an area that clearly is not RA
- most exaggerated claim of leakage in a telco
- most exaggerated claim of benefits added by a revenue assurance project
- least developed revenue assurance vapourware successfully sold
- best 12-word explanation of RA in language a CEO would understand
- most secretive "expert" in revenue assurance
- most revenue assurance conference presentations in the last 12 months
- most self-promoting person in revenue assurance
Of course, I am hoping to win the final award ;)
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