Revenue Assurance

Revenue Assurance is a niche business function targeting key areas of a Telecom operator’s business. The goal is to independently monitor and maximize revenues, minimize revenue leakages, control costs and eventually manage margins. The activity involves assurance of data quality, optimum utilization of data and improvement of systems and processes to maximise the revenues, profits and cash flows without affecting the sales accounts. This includes real-time monitoring of service delivery and revenue generation lifecycle, ensuring network data integrity, enabling accurate usage billing and helping to achieve compliance.

In short “Revenue Assurance is “Data quality and process improvement methods that improve profits, revenues and cash flows without influencing demand.”

Few years back, RA was considered a low cost mechanism to generate significant financial returns without seeking to generate additional sales. However, due to the unpredictability of returns and hardships of gain measurement; makes many professionals take a skeptical view of its worth.

Considering the importance being given to Revenue assurance practices, one might mistakenly surmise that Revenue Assurance has never been part of telecom processes before and it’s a renaissance concept. In fact; Telecom companies had started considering the importance of Revenue Assurance long before but the kind of attention it is getting nowadays wasn’t there previously. The ever changing technology is underlining the importance of Revenue Assurance and of course market forces too are playing a crucial role. However, there are some disagreement about the ultimate aims and legitimate scopes of revenue assurance teams:

The cross-functional nature of the activity and the need for a variety of skills e.g. Technical, IT, financial, and marketing etc.
The difficulty of generalizing revenue assurance activities across different business models.
Political infighting within each Telco about responsibility for revenue leakages and assurance.
The difficulty in quantifying the benefits contributed by revenue assurance activities.

Severity of the problem

Every business has a share of revenue leakage but for Telecom companies the amount of leakage is significant. A survey, conducted by Subex Azure; an OSS solutions company, that covered almost 100 operators around the world, has come up with some interesting results revealing that the average revenue leakage among global telecom operators increased to 13.6% of revenue, from the 12.1% in 2006. The acuteness of the problem is quite evident from the size of revenue leakage which goes beyond 20% of total revenues for the Indian market, research shows.

Typical Causes of Revenue Leakage

These are some common examples of revenue leakages widely accepted by telecom companies:
1. Corrupted records of actual phone calls
2. Lost call records
3. Incorrect rating
4. Missing components or surcharges on a customers' bill
5. Incomplete customer data preventing billing and
6. Inconsistency between services assigned to a customer on network and billing.

There is some debate about whether the losses caused by fraud fall within the realm of revenue assurance or do they need to be managed by a different section. However, irrespective of their category, such losses too are a matter of concern and have significant impact on financial instruments. As a common practice among all telecom operators, it is being handled by Revenue Assurance department.

RA function in Organizational Structure

High complexity of systems and diverse revenue leakage sources requires a robust monitoring of revenues and corresponding losses. Traditionally the Revenue Assurance function is undertaken by finance Department, but the RA activity needs involvement of other departments too in order to curb revenue leakages at different levels e.g. Internal Audit and Program Management.

Revenue Leakage Detection and Recovery

The starting point for any revenue assurance function is to identify the source of revenue leakages. Fast and accurate detection is crucial for the Revenue Assurance activity. The value of revenue assurance is determined by the size of the leaks "plugged".

Cost and Margin Assurance

Fierce competition in voice market has led telecom companies to try out innovative Value Added Services in order to keep their revenues intact. Operators have to track direct or indirect costs involved with VAS content providers in addition to traditional interconnect and roaming partners to monitor the associated margins.

Operational Efficiency and Quality

The efficiency of processes and procedures, from order entry/provisioning to billing, dictates that how accurately subscription details are captured by the billing and subsequently billed. This has a significant impact on subscriber experience, customer satisfaction index and also on operational costs.

Revenue and Margin Optimisation

Revenue optimization ensures that revenue streams are providing the optimum return on investment with regard to network infrastructure, marketing costs and operational expenditure. It is not possible to maximise revenues and margins without a thorough understanding of a revenue stream lifecycle and the costs associated to it.

Importance of Data Quality Monitoring in RA

DQMs are basically developed to look at all of the key data fields needed to bill the customer across the appropriate systems and report discrepancies between the system’s data which will then be acted upon by a Revenue Assurance team. Once implemented, the Data Quality Monitor will ensure end-to-end checks across the stack and as a result the accuracy and integrity of billing data. The discrepancies, delivered by the tool, will enable Root Cause Analysis and the associated process improvements.

1. Ensuring the quality of data to ensure accuracy of revenue.
2. Involves data extraction and validation to check the consistency of the data.
3. Ensuring that the revenue related processes are done in the most efficient way.
4. Involves process mapping, placing controls to monitor the performance of the process and analyzing the outcomes of the controls.