Lin Fook Sing of Accenture takes a closer look at the critical success factors of revenue assurance function, the significance of garnering senior executive support, as well as looks ahead to future challengs.
Revenue leakage can happen anywhere along a telecom operator’s end-to-end revenue generation value-chain.
It is not just limited to loopholes in the systems and processes but also occurs when the operational policy is weak and employees abuse the company’s trust. Because of this, its root causes are wide ranging and span across the whole organisation.
Very often, it is the lack of a holistic approach across functions coupled with rapid developments in the industry itself that give rise to new leakage areas. As such, revenue leakage is not “yesterday’s” or “today’s” problem – it is an ongoing issue that can only be solved through continuous improvement initiatives.
What does it take?
A comprehensive revenue assurance program can be very challenging because the scope covers the entire company. Consequently, it demands a wide range of knowledge and skill sets to cover diverse areas such as product development, sales and customer service, credit screening, network, billing and collection, as well as fraud management.
Typically, the revenue assurance team takes on complex analysis involving huge volumes of usage records, billing configuration and reference data from multiple sources and systems.
On top of this, they have to deal with the silo-mindset that usually exists between different departments. While most of the potential sources of revenue leakages are internally-induced, i.e. caused by weaknesses in policies, processes or systems of key areas, the biggest threat to telecom operators is fraud by external syndicates, working in cahoots with employees.
Given this scenario, we believe there are several critical success factors that must be in place to ensure the team’s effectiveness. Firstly, for obvious reasons, the team has to be dedicated and multi-disciplined with relevant cross-functional skills set. The job calls for detailed technical expertise on key operational support systems and network elements, and sound operational knowledge. These skills are well beyond what traditional auditors have to offer.
Secondly, in view of the wide scope, it is essential to prioritise and start with key high-risk areas first. By setting realistic and achievable targets, the team’s early successes will work to garner stronger support as they move on to expand the revenue assurance initiatives.
It is also important that revenue assurance assessment is analysed with actual usage records, revenue-impacting data and business rules, and not just the traditional high-level process audit review. We have found that the traditional auditor approach is ineffective in detecting key sources of revenue leakages such as internal fraud, incorrect business rules, system configuration errors and missing usage records.
Moreover, revenue leakage will not be readily apparent using trend analysis, as what is not captured will not appear in monthly report fluctuations.
Another point is to instil a strong revenue assurance culture throughout the company, starting with the top-level executives. This serves to inspire the appropriate mindset and inculcate a balanced view of protecting company profit versus achieving customer service excellence and sales target.
Lastly, it is vital to have senior management sponsorship and support. This is important as it will ensure the strong collaboration of cross-functional departments and give the revenue assurance team the authority to access data for independent assessments.
Who should carry the bucket?
The simple answer is everyone in the company. However in reality, no single department is in total control of the entire revenue stream, which cuts across the organisation. We believe the solution lies in forming a dedicated team to champion a co- herent strategy and approach, facilitate its implementation and raise awareness across the organisation.
This does not mean that revenue assurance function will take over the existing roles. Operational departments should retain their responsibility while the revenue assurance team drives the ongoing cross-functional improvement initiatives and ensure end-to-end checks and balances are in place.
The other question is who heads up the team. Given that an effective revenue assurance function impacts a company's revenues, cashflow and profitability; it should logically fall under the Chief Financial Officer.
But from our experience, where the revenue assurance team is placed in the organisation is less important than making sure that the team has the necessary authority and support from C-level executives.
The industry landscape is becoming tougher with consolidation, evolving technologies and sophisticated customer demands. Hence, the inherent cost of developing comprehensive revenue assurance capabilities will increase dramatically.
The immediate challenge is that of market consolidation. Besides daily operations, the telecom operators’ resources are stretched to cover additional tasks of integrating multiple legacy systems, merging inconsistent data sets across systems as well as standardising policies and procedures.
Moreover, next-generation services are mushrooming, with operators clambering to offer new services such as infotainment and mobile commerce. This evolution extends the value-chain to multiple trading partners, diversified access channels and complex business relationships, processes and systems interfaces – all of which pose bigger challenges and risks to the operator.
The above factors will continually cause new sources of revenue leakage. Without a dedicated revenue assurance team, the quantum of revenue leakages can only grow and affect profitability as telecom operators respond to the changing marketplace.
While recognising that the recovery of revenue leakage is not an easy job, it is one that is worth the effort and proven to be achievable. The risks are lower than many other major business initiatives to improve profit margin. This is because the organisation has total control over the success of revenue assurance initiatives and is not dependent on external factors such as economic condition, competitors’ strategy and consumer sentiment.
It is a challenging road ahead for the revenue assurance function. Telecom operators have to start establishing their dedicated team now so that it is ready to tackle the industry challenges head on.
o Lin Fook Sing leads Accenture’s Revenue Assurance offering in the local Communications, Electronic and High Tech industry group. His email is fook. email@example.com