This article follows on from my previous article which introduced business assurance.
What is revenue assurance (RA) and business assurance (BA)?
RA is an old discipline, and a system which is available in most companies that are cautious about their revenues. It’s the process of assuring the entire revenue chain within an organisation through implementing controls and measures. However when we talk about BA, we go a level up i.e we not only talk about revenues but also assuring experiences, products, partners and various others involved in the value chain.
Why BA is not just an extension of RA
It is a very big misconception, especially in the RA community that BA is an ‘enhanced’ RA. So you’ll see RA enthusiasts defining what the scope of BA should be and then finding it difficult to justify why the organisation needs an extended RA when the current RA is still struggling with its own sustainability.
Are we saying that bringing BA within RA would help justify the efforts and significance of RA? I personally do not have any real issue with the positioning of BA under RA or for that matter anywhere within the organisation, as long as the end objective is clear and understood. We understand that currently the RA team is very well placed to understand the end-to-end scope of BA since they have had got much more visibility of the organisation at a micro level than anyone else. But, driving BA from an RA perspective would not help in achieving the necessary results.
What is the difference in their approach?
- Both the streams focus on different strategy – RA gets into the operation part and is usually expected to provide solution to an identified issue. BA meanwhile is supposed to focus on the control part and not get directly involved with operational activities.
- RA has to deal with huge data and reconciliation activities and is resource intensive, whereas BA is dependant on the existing departmental structure and resources to address the process gaps. It can be managed through a skeletal BA team
- You need a different skillset of people who can handle BA as it requires business knowledge, not just data analysis. Although, as I mentioned, using RA resource for BA is a good option since they already have much end-to-end business exposure.
- RA doesn’t get involved in the second line of defence within a risk management framework. Whereas BA is supposed to get involved in both the first and second line of defence.
- RA metrics are defined around revenue generating or impacted elements, whereas BA metrics are defined and driven by business objectives and organizational strategy
- RA policy is created and governed mostly at a CXO level, whereas BA policy is mandated by top management and is embedded in the decision-making process
So where does RA fit into BA?
BA has a very wide coverage of dimension and sub dimensions like customer experience, products, margin, partners, services, risk, technology, operations and couple of other areas; RA and fraud are one of its dimensions. So RA definitely is one of the key dimensions within BA but there are plenty of other areas which directly or indirectly affect business as well as revenues. So driving BA from an RA seat might not be good idea if you are really interested in looking beyond what you are already doing. My advice is NOT to make BA an extension of RA otherwise it will end up in a much complicated situation than what RA is currently in.