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Industry View
Minimizing telcos' revenue leakage
Addressing business and technology sides of revenue assurance will help stop the bleeding
by Roberto Pulice, Accenture
Accenture research has found that network communication providers and telecom operators worldwide, on average, lose at least one to two percent of their revenue because of operational shortcomings, and could recover at least two to three percent of their revenue if they have effective controls and actions in place. Although these percentages may sound small, they can translate into millions of dollars per year.
Whether because of network inefficiencies, increasingly complex delivery models, or flawed accounting metrics, these issues are consistently draining companies of valuable revenue – a problem that is made even more alarming during this period of global economic instability. Most telcos are fully aware of these shortcomings, but their attempts at corrections may not always be completely effective.
To stem revenue loss, telcos typically might implement a tactical revenue assurance project, such as the implementation of a singular, “quick fix” application. These approaches have limited impact because revenue leakage is rarely concentrated in one specific area, occurring instead across the entire organization and involving multiple functions. In some cases, telcos fail to define their revenue assurance goals appropriately, making them either too broad or too narrow to deliver substantive results. In other cases, companies focus on billing as a source of revenue leakage while ignoring alternative areas where significant revenue can be lost, such as accounting, interconnection, roaming, and network quality.
High-performance businesses proactively use economic downturns to improve their competitive position — prudently cutting costs while making the kinds of investments required to prevent short-term urgency from putting the company at risk in terms of medium-term competitiveness and long-term profitability. More than ever, to excel in the present economy, telcos must be able to effectively identify and eliminate sources of revenue leakage that can have a serious impact on the bottom line. Doing so requires tight integration between a company’s billing and financial settlement systems as well as the ability to accurately and reliably recognize revenue. It also requires active measurement and management of credit and cash flow and automatic monitoring of adherence to contracts.
Four phase approach
To generate results, an effective program must address both the business and technology sides of revenue assurance issues. There are four critical phases to this approach:
Startup: In the startup phase, a company must conduct a detailed assessment of its revenue-assurance function and capabilities as well as all areas in which revenue leakage can occur. As part of these activities, the company must benchmark its existing revenue-assurance maturity level against leading industry practices, as well as identify and prioritize the main sources of revenue leakage. Telcos must also formally develop a new revenue-assurance organization department to define new business processes, roles and responsibilities. It is also essential that this department be integrated with all key areas of the company, including fraud and credit management.
Definition:Telcos must develop a set of target business results they would like to achieve and subsequently define new key performance indicators that will help them to measure their progress. They must design new revenue-assurance business processes that will make it more effective to identify and address sources of revenue leakage. Also during this phase, telcos should identify a set of short-term initiatives or “quick wins” to resolve high-priority issues rapidly so they can begin generating cost savings immediately in order to gain management commitment to further revenue-assurance improvement.
Deployment:In the deployment phase, the new revenue-assurance capabilities “go live”. During this time, the newly designed processes and solutions are rolled out.
Tuning:The Tuning Phase, which involves refining all processes and solutions for optimal performance, enabling the company to support the ongoing review, detection and repair of future issues that could lead to revenue leakage and bottom-line degradation.
By investing in a sound approach to revenue assurance that can generate benefits and clear return on investment in a matter of months, telcos can develop a distinctive capability that can help them address the pressure to control costs and conserve cash in today’s uncertain economic climate, as well as position themselves for high performance over the long-term.
Roberto Pulice is a senior manager and revenue assurance solution lead, billing practice, Communications and High Tech Group for Accenture.
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