The “Revenue” of Revenue Assurance
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?