New Holes in New BucketsNew Holes in New Buckets
April 1, 2006
By Tara Seals
WITH THE DISAPPEARANCE of UNE-P and the movement to wireless and VoIP, many smaller carriers and resellers are switching to new product lines and technologies, and entering a growth phase. This presents challenges to those responsible for revenue assurance as the expansion means more customers, more partners and more complexity in the back office.
Smaller operators have the same classic revenue assurance problems such as billing verification or fraud as the big operators, only they usually have fewer resources available to solve them. Oftentimes they are not able to afford entire vice-presidential-lead revenueassurance departments like the biggest operators, says Roger Parks, vice president of global products at Qpass Inc., a digital commerce software company. Qpass offers software for automating business processes and providing transparency and visibility into the complex transaction lifecycle of premium services. The software manages relationships with any number of third parties and also provides visibility tools for partners selling through the operators.
If youre growing fast, youre leaking revenue, and you cant fix it after the fact. You have to audit this in an ongoing manner instead of being reactive.
Lack of revenue-assurance resources is becoming more critical than ever, considering that many smaller operators have new issues stemming from the fact they have been forced to compete by taking on new lines of business such as VoIP, wireless, premium content and other value-added services in order to stay viable in a hyper-competitive, post-UNE-P world. Its sink or swim time out there, so second-tier service providers are hustling to get to market with new lines of business, and they need a customercentric view of whats going on, says Jim Hayden, vice president of business intelligence for Vibrant Solutions, which provides high-volume call detail record invoice processing, auditing, data enrichment, reconciliation, warehousing, pattern recognition and analytics for application to a variety of business processes, including revenue assurance.
Even so, in the post-UNE-P rush to maintain viability, many secondtier service providers simply have focused on getting offers to market without measurement tools in place to see where money is leaking out of the systems.
Tier 2 guys face a big problem in growth, says Sanjay Mewada, vice president of strategy at NetCracker Technology Corp., a service and resource management OSS vendor that provides a cost module for provisioning. To be successful, they have to grow quickly. A good rule of thumb is that if youre growing fast, youre leaking revenue, and you cant fix it after the fact. You have to audit this in an ongoing manner instead of being reactive. So once you reach a certain threshold in your business oppor-tunities, assume you have leakage. But they dont have the time or the resources to put in the right people and platforms.
Top Telecom Revenue
Source: Dittberner and Associates
Its a process that can be overwhelming. To move quickly, remain profitable and competitive all while managing your business with limited resources is almost too much for CLECs, says Brad Soutiere, president and COO of Vertek Corp., a provider of business solutions, process outsourcing and business consulting. For instance, service bundling will be the differentiator for them, and as they do that, it becomes increasingly complex to keep track of. With new services coming out and dynamic IP offers, scaling that will mean that analyzing spreadsheets manually will become unwieldy, to say the least.
The lack of a revenue-assurance plan provides bigger headaches down the line as content comes into play. The span of what needs to be measured is much bigger than traditional network-based services, says Parks. [Beyond] minutes, bytes, voice mail and call waiting, operators are reselling or distributing thousands of diverse products provided across hundreds of providers applications, games, ringtones, icons, video, music, ring-back tones, etc.
That makes the revenue-assurance chain longer, often originating outside systems that are owned and operated by the service provider. The service providers responsibility has expanded as the third-party providers rely heavily on the operator to assure revenue for their business; it isnt just the service provider accounting for their own services anymore, says Parks.
So what is a second-tier operator to do? Solutions that provide transparency and visibility into third-party relationships, content and IP service usage, network data, billing and mediation information and so on in one central place are the key, along with OSS automation and getting the right people in place to oversee the department. Ultimately, revenue-assurance concerns are driven by business concerns. They need to see all the transactions in one place to understand the true margin across all services, says Hayden.
Its also critical to see how new services impact general OSS functionality. Operators bringing in new lines of business do understand that VoIP services and so on have a very different network structure, requiring different interconnect relationships, other suppliers for terminations and it all requires a better understanding of revenue owed versus revenue due, says Mewada. But they need the right tracking mechanisms to avoid excess leakage. When they buy automation software, for billing, mediation and so on, the software package needs a cost-correlation engine that gives them visibility into understanding the cost functions the software is automating. Its an investment they have to think about.
This can all be expensive, so when considering approaches, resellers, CLECs and others with limited budgets first have to look at cost vs. risk ratios to determine the ROI profile for implementing revenue assurance. Risk includes the amount lost from the bottom line from leakage, accounting issues with partners, Sarbanes-Oxley compliance needs and the associated regulatory/legal ramifications. Sarb-Ox is a great driver for revenue assurance, says Travis Russell, vice president of strategic planning at Tekelec, which can collect signaling information for use in revenue assurance. It tends to get pigeonholed as billing verification, but it encompasses engineering, planning and all of the disciplines, including QoS and tracking Web and download activity.
Its not a one-size-fits-all situation. Operators simply have to be pragmatic about the business case associated with managing the revenue assurance problem, says Parks. It is foolish to spend a dollar to hunt down and assure a nickel. There is a balance that each operator must strike, and there is no magic formula for how to arrive at how much to spend on the problem.
There are, however, some well-understood benchmarks to use as a starting point. Fraud, for example, should be kept at less than 1 percent or 2 percent of revenue, Mewada notes. RA (revenue assurance) is never a problem you solve, he says. Its a problem you control. You need to keep it below a certain threshold. You also have to consider that you will continually invest in the process as you deliver new services, because circuits are no longer tied to a network in the next generation.
One way to cost-justify investment in a revenue-assurance plan is to prove its usefulness across the organization. The ability to slice and dice the data used for revenue assurance has applicability to other business units. You have to bust down the silo walls. All the answers lie somewhere in the data, and once you have that in one place, you can analyze it and use it for revenue assurance, then tap into other areas product marketing, cost management and so on, says Hayden. RA then goes from evil cost center to useful business tool.
Many revenue-assurance solutions in the market target Tier 1 operators concerned more with managing margins and profitability than with growth. But one turnkey option for smaller operators was launched in March by Vertek. The Managed Financial Assurance Program (MFAP) is a hosted data management platform offering analytical tools specifically engineered to acquire, validate and reconcile the accuracy of service providers monthly operating costs and billing, for a fixed monthly fee.
Whether you are a CLEC reselling services from multiple partners, or a carrier engaging with a new content provider partner for DSL or IPTV services, chances are you are experiencing some revenue leakage, unnecessary vendor costs and invoice overpayment, says Verteks Soutiere. MFAP resolves these issues while optimizing the operating costs and revenues for new service offerings. Vertek has developed the interoperation, billing reconciliation and settlement standards for this offering that enables service providers to determine the health of their partnerships and to gauge how well their partners are living up to commitments specified in existing contracts and SLAs.
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