Revenue assurance is now rightly seen by communications services providers (CSPs) as a key part of their strategic armoury – by reducing revenue loss, revenue assurance enhances profitability and enables better use of existing network and system resources, improving Return on Investment (RoI) and often reducing capital expenditure.
We carried out a survey earlier this year which identified revenue assurance as one of the three most critical business issues facing CSPs today, with 15 percent of respondents identifying it as their most urgent concern. This is not surprising when you consider the scale of the problem. Latest estimates suggest that as much as 10 percent of provider revenue is lost due to leakages.
In today’s competitive telecoms environment, this situation is unacceptable. And to develop competitive edge, CSPs need to ensure they are tackling the problem aggressively. Considering the scale of the losses that many incur, it is vital that they identify the causes, quantify their magnitude and then set about addressing these leakages in a holistic manner.
Tackling the Integration Issue
One of the most significant causes of revenue leakage is poor systems integration. Unfortunately, this is often a characteristic of the popular best-of-breed approach to the development of business support systems. With this model, systems integrators are often tasked with implementing and integrating multiple heterogeneous systems to build a complete solution. Invariably, they run into two key problems which make effective integration difficult.
First, they typically discover incompatibilities between data models used in best-of-breed solutions. Synchronising data across different applications is a complicated business because of the need to align different ways of identifying the subscriber, service and orders. However, if these mappings are not carried out properly, the CSP will struggle to trace orders across the systems.
Second, the systems integrator may not have an in-depth understanding of all the best-of-breed components. Consequently, it may integrate the systems inefficiently and introduce data replication or unnecessary layers of complexity, all of which can result in holes where revenue leakage may occur.
Poor integration typically also results in a host of process problems. It may, for example, lead to the same data being entered in multiple systems, or result in incompatible configuration between solution components. The consequence of this may be, for example, rating or prepaid charging errors - essentially applying an incorrect price to a customer record, or not being able to price the record at all. These errors will result in usage that cannot be billed for, and ultimately revenue leakage.
Incomplete or incorrect usage data is another primary cause of leakage. This problem typically occurs when network switches produce erroneous information that prevents identification of the type of service used by a customer or the customer using that service. In either case, the result is an inability to bill for usage incurred.
Poorly integrated systems with no common workflow can also lead to delays in billing. Manual set-up processes for new services may cause a delay of several days before the CSP can start invoicing the customer, inevitably resulting in revenue loss.
In contrast, a fully automated process with flow-through provisioning enables the CSP to begin billing for service use immediately.
Invoicing system errors are another potential issue. Traditionally, this problem is thought to be primarily one of under-billing, however over-billing can be just as significant. This typically occurs when a service is terminated but the CSP continues to bill for it, in error.
It will often result in costly customer disputes and the requirement to generate refunds or provide credit as a goodwill gesture. Valuable time and resource may be required to fix the process and additional revenue leakage can occur indirectly as a result of growing customer dissatisfaction and increased rates of churn.
Launching new products and decommissioning old ones are two other areas where a badly coordinated system can cause further revenue assurance problems. Businesses often leak money both by providing incorrect tariffs for new services and by not taking older, more costly products out of service quickly enough.
Reactive Versus Proactive
In a best-of-breed solution, CSPs often react to revenue leaks by putting additional systems and checks in place. In essence, this is a ‘sticking plaster’ approach to plugging system gaps. Rather than dealing with problems at source, it focuses on putting processes in place which track where revenues are being lost and then try to correct these errors retrospectively.
As a result, problems can stay hidden for some time and their source can remain obscure. CSPs may initially believe that they have billing issues or that they are suffering from credit management problems. In fact, when they carry out thorough ‘root cause analysis’, they often discover that their problem is order management related.
If the system is not proactively managed, a mistake made in this initial order process will not be discovered for a month or six weeks, when the customer receives their first bill and finds they have been placed on the wrong tariff or are being billed for a service they never received, for example.
Ironically, by implementing additional systems for revenue assurance, there is also a danger of creating more leaks in the revenue chain. Rolling out new products and services means updating and configuring more systems, slowing down time-to-market and introducing more potential points of failure.
In contrast, the best end-to-end pre-integrated solution suites reassure CSPs that all elements within the product suite will work together in harmony. The holistic approach of these systems is clearly in line with CSPs’ increasing desire to address and monitor the whole lifecycle from initial order placement through to billing and cash collection.
These solutions also enable CSPs to be much more proactive. Rather than merely reacting to problems as they occur, their seamless connectivity helps to prevent ‘gaps’ in the system appearing in the first place. In other words, they treat the root cause of the problem rather than the symptoms.
The tight integration of these solutions helps eliminate data replication and synchronisation problems, and allows key business information to be proactively tracked, detailed reports to be generated for each process, revenue leakages quickly identified and revenue losses minimised.
It is hardly surprising, therefore, that ever greater numbers of CSPs see end-to-end pre-integrated solution suites as a vital weapon in their ongoing battle to achieve genuine revenue assurance.