Features and Analysis

Revenue assurance is doing well, but beware the streetlight effect

You know the old saying, “Is the glass half empty or half full?” Well an optimist will see it half full and a pessimist will see it half empty. I always ask myself two questions: What is the risk that the glass will fall and break? And what should I do to fill it up completely? I think that this year’s survey shows that the revenue assurance (RA) glass is 75 percent full. It also presents ways to achieve the missing 25 percent, and it highlights some of the risks we could face in the future. See the top findings at a glance here.

So let’s cut to the chase. From this year’s report I am taking away three main points:

  • RA is doing well, but there is the risk of the streetlight effect, i.e. searching by looking mainly where it is easiest is increasing

RA maturity is high – over 40 percent estimated that their maturity is 4 and above, and 75 percent estimated that their maturity has improved since last year. There is a clear correlation between the years of existence of RA in the organization, and its maturity.  This means that RA departments are not stagnant but improve over the years. Interestingly, the two main factors that helped propel this improvement were the increasing experience of RA teams (25 percent) and the use of tools (20 percent). The average ratio between reactive, active, and proactive RA activities is 38 percent, 36 percent, and 26 percent respectively, which is fairly close to the golden ratio, at least in my view, of 33 percent, 33 percent and 33 percent.  And over 65 percent estimate that they have become more proactive over the last year.

The extent of coverage also looks good (but see also the next section for a comment on that). So everything is swell.

However, there is a risk that RA will only seek out issues in its comfort area. Network and usage management is well covered by over 75 percent of the respondents, but partner management is only well covered by 36 percent. (Given that the open digital ecosystem is all about rapid partnering, this is a key area to address.) Many of the new services are still poorly covered, e.g. MVNO hosting is only well covered by 17 percent, mobile money 21 percent, OTT services 26 percent, and API-based digital services only by 12 percent.

The tendency is clear: Traditional areas are well covered, new areas are less well covered.  This is natural, and it is fine as long as RA continually monitors the business and adapts itself to the changing business needs over time. I believe it will happen, but it will not happen by itself. RA practitioners need to stay vigilant and continue to strive to advance.

  • A significant percentage of RA practitioners are over-optimistic – this is very risky

About 8 percent of the participants estimated that their maturity is level “5-optimizing”; 21 percent said that their activities cover over 90 percent of their company revenues. These are troublesome figures. Since the survey was anonymous, there was no reason for the respondents to inflate the numbers. So they truly believe that these numbers are correct.

Assume for a moment that the numbers reflect reality, then I would estimate that their RA activities are not cost-effective. Think of RA as insurance – if you buy insurance to mitigate every possible risk, you’ll pay a lot of money, and it would not be cost-effective. A reasonable insurance policy is to accept some level of risk, reducing the premium to an acceptable level. The same goes for RA – if you are really at maturity level 5 and you really cover over 90 percent of your revenues in a sound way, then you are most likely not being cost-effective. Yes, there are exceptions. Sometimes you may cover 100 percent of your revenues, be at maturity level 5 and be extremely cost-effective, but these exceptions are rare. Based on my experience, 90 percent coverage and maturity level 5 are unlikely figures. This is a real cause for concern, because some RA managers may be deluding themselves that their situation is swell when the reality is different. Very dangerous. It also makes me wonder if only those with maturity 5 were over-optimistic, or if over-optimism runs across a large percent of the respondents.

  • RA practitioners are thirsty for more information and willing to cooperate

Sometimes the metadata is even more important than the data. 122 participants, from, I estimate, well over 100 distinct Communication Service Providers, representing all continents (with the exception of Antarctica), contributed their time to reply to the survey. A community of 30 professionals invested their time in creating the survey and analyzing the results. All these are clear indications of the global aspect of RA, the sense of community that RA practitioners have, and the importance they place on sharing and learning from their peers. It is clear that RA is a thriving, vital discipline. I believe that this attitude is what ensures the effectiveness and continuing improvement of RA practices, and their growing importance and relevance to CSPs.

So if I have to sum up in one sentence: RA is doing well, active, well established and significantly contributing to the organization. This is great, but also a bit dangerous. RA practitioners make their bones by being inquisitive, unsatisfied, impatient, and constantly checking under the hood. We should make sure that today’s RA prosperity will not create RA stagnation. We should continue to investigate, to look out for the next new risks and how we can improve. If we do so, I am sure that next year’s survey will show that RA is continuing to advance, contributing more and more to overall business results.

Did I mention that I always ask myself what is the risk that the glass will fall and break? And what do I need to do to have it completely full?  I think that this year’s survey gave me clear answers.

Download the full Revenue Assurance 2015 report now: FREE


About The Author

Gadiis Revenue Guard CTO at Amdocs, one of the founders and the chair of the Revenue Assurance team of the TM Forum, he is one of the authors of the TM Forum documents TR131, and GB941 that are today the de-facto standard in Revenue Assurance best practices, Gadiis a TM Forum Distinguished Fellow and Ambassador. Current areas of research include Revenue Management, and Big Data Analytics. A selection of Gadi’sblogs can be found hereand here.

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