In my last post, I tried to highlight the “revenue” aspect for RA and the way KRA’s should be worked on. In continuation to that post, here are 5 questions that should be considered before starting of the RA activities:
- Who is responsible for RA? It has to be a collective responsibility across the organization where every team/department has their role to play. Being in the Revenue Assurance department, is almost as good as being a Product Manager- where the individuals do not have a lot of control on the rest of the organization, yet they are suppose to own and be “solely responsible” for the role/product in the company. Hence, aiding in RA activities is as much a responsibility of Marketing and Network departments as it is for the core RA team.
- What should be viewed as the tactical task for the RA department? All actions/activities that has the ability to allow the operator to generate revenue needs to be monitored to make sure there are no leakages.
- What is the ideal number of controls that should be worked on by the RA teams? This depends on the maturity of the organization in terms of organization, influence, people, process and tools. Hence it is always preferable to perform a quick maturity analysis, based on which primary focus areas would be identified and controls created. Not all controls would necessarily impact revenue. Understanding the maturity enables the creation of a roadmap for improvement across the organization. Typically there is NO need to have hundreds of KPIs to monitor each segment or process. This is because of the 80-20 rule. 80% leakages can be found by 20% of appropriate controls. Hence it is essential to work on controls/KPis that have maximum impact, rather than trying to monitor hundreds of them.
- 4. Is Cost Management a part of RA activities? Only when the RA team is capable enough to secure the top-line for the organization, should they focus their activities on more strategic objectives like cost and margin assurance and management. Revenue maximization should ideally not be a part of RA department activities. Most RA teams should venture into this area solely to ensure they provide ample Business Intelligence for marketing and sales departments to take the information to the market to generate more revenues.
- 5. What are the most important parameters to report on? RA departments should look to quantify the findings from data analysis to provide view of
- a. leakage detected
- b. leakage corrected and recovered
- c. leakage corrected and recovered as percentage of detected
- d. leakage detected as percentage of revenue
- e. leakage detected as percentage of EBIDTA
- f. time to recover from detection of leakage.
In a nutshell, RA is not rocket science, but it is an extremely important and challenging aspect of business- not only telecoms but across other industry verticals as well. The effect in telecoms is much more because of the complexity of operations.
In following articles, we would talk more on RA, scope, new horizons and verticals for RA. Stay tuned.
What is the scope of Revenue Assurance? Honestly, this is a vendor / RA team/ consultant capability dependant age old myth, leading to the term being a misfit for the purpose. There are always things that one can debate on such as what is in scope and what is out of scope? However, if one takes the terms “revenue” and “assurance” at the face value what would be defined as the scope of work? It would simply mean any activity/event that has the ability to generate revenue should be monitored to ensure that the associated ‘revenue’ is generated; and if it is not, ensure steps are taken to fix it. Sounds fair? But then, this brings in another primary question: “What is “revenue”?
Ask personnel from finance and they would give you the most appropriate and correct answer. Now if you ask the same question to an RA professional, the response would not be encouraging. It is not to say that such individuals don’t know anything- but it is a matter of knowledge w.r.t the financial context. Typically, the individuals working in the RA department have sound knowledge of KPIs, data analysis and such items that are monitored as part of RA activities. However, often the large part of data analysis related to finding leakage is not translated in the correct/appropriate terms for business benefit. The net effect of this at times, results in inappropriate KRAs for the RA department. I remember hearing somewhere, the KRA for the RA department for an operator was to detect x% more leakage from the previous year! I don’t think that is a valid KRA.
The solution therefore is to establish the following two things:
- KRA’s for the RA department need to be worked backwards: The KRA’s of the department need to be defined keeping in mind the core business objective of the operator. In this aspect, one would have to determine, how to map the organization KRA’s to that of the RA department? This would definitely vary across operators. Example, if the organization’s focus is to improve profitability of services, one would have to determine the impact of the same in cases of leakage. Hence, the KRA for RA department would have to be worked backwards to ensure that the efforts put in by the RA department are aimed at fixing leakages around activities that would improve profitability.
- Accounting of detected leakages in a manner that makes sense: The “revenue” calculations should be used only for quantification and gauging the leakage potential and recovery. This may or may not be the most accurate revenue calculation because RA is not accountable for revenue generation. However, there are a few methods which use the following of revenue calculation
- “best fit rating” of usage xDRs
- Effective rate of XDRs
- Effective rate of files
NOTE: A revenue assurance department should ideally NOT even attempt to calculate Revenue per Stream/Service/Business Unit, ARPU, AMPU and other revenue figures. These should be obtained from the financial systems for quantification of the leakage detected and to understand the potential impact of leakage on the top line of the company.
Besides “revenue” there are multiple other aspects of RA that should be addressed and answered much before the start of RA activities. In the next post I would try to address the following 5 questions that should be looked at, as the business aspect around RA:
- Who is responsible for RA?
- What should be viewed as the tactical task for the RA department?
- What is the ideal number of controls that should be worked on by the RA teams?
- What are the most important parameters to report on?
- Is Cost Management a part of RA activities?