Sunday, 21 March 2010
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Dominic Smith, marketing director at Cerillion Technologies looks at ways of stopping revenue leaks at source.
In the current economic downturn, the need to plug potential sources of revenue leakage has become an increasing priority for telecoms operators. To develop competitive edge, telcos need to ensure they are tackling the problem of revenue leakage aggressively. The urgency of this requirement is explained by the scale of the problem. Latest estimates suggest that as much as 10% of total provider revenue is being lost due to revenue leakages. According to a recent survey by US-based Connectiva Systems, Indian telecom operators alone are forgoing almost US$900mn in revenue every year, due to revenue leakage. This situation is unacceptable at any time but particularly in today’s environment. Considering the scale of the losses that many operators incur, it is vital that operators identify the causes, quantify their magnitude and then set about addressing these leakages in a holistic manner. Why integration is key One of the root causes of revenue leakage is poor systems integration. This is often a characteristic of the traditional best-of-breed approach to the implementation 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 encounter two key problems which make this difficult to achieve. First, they typically discover incompatibilities between the data models used in best-of-breed systems. Synchronising data across applications is complicated because of the need to align different ways of identifying the subscriber, service and orders. However, if mappings are not carried out properly, the operator will struggle to trace orders across systems. Providing this level of traceability has an inevitable cost in terms of introducing data replication and unnecessary levels of complexity, which can result in holes where revenue leakage can occur. Process concerns Poor integration typically also results in a host of process problems. It may, for instance, lead to data entry in multiple systems or incompatible configuration between solution components. The consequence of this may be, for example, rating/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 often occurs when network switches produce erroneous information and prevent the operator identifying 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. Sometimes manual set-up processes for new services result in several days hold-up before the operator can start invoicing the customer, subsequently leading to revenue loss. In contrast, a fully automated process with flow-through provisioning enables the operator to begin billing for service use immediately. Pinpointing other issues Invoicing system errors are another potential cause of revenue leakage. Historically, the problem has been thought to be one of under-billing:- operators failing to invoice customers for services received. In fact, over-billing can be just as significant. This typically occurs when a service is terminated but the operator continues to bill for the service 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 offending process, and further revenue leakage will occur indirectly as a result of growing customer dissatisfaction and increased rates of customer 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. Tackling root causes Putting additional systems and checks in place is largely a reactive approach to revenue assurance - a ‘sticking plaster’ approach to plugging the gaps in the system. Rather than dealing with problems at source, it focuses on putting processes in place which track where revenues are being lost and then looks to correct errors retrospectively. As a result, problems can stay hidden for some time and their source remain obscure. Operators may initially believe that they have billing issues or 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 in this initial order process may not be discovered by the operator 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. In contrast, the best end-to-end pre-integrated solution suites give operators the confidence that all elements within the product suite will work together in harmony. The holistic approach of these systems is clearly in line with operators’ increasing desire to address and monitor the whole lifecycle from the initial order placement through to billing and cash collection. These solutions also enable operators to be much more proactive. Rather than merely reacting to problems that have already happened, their seamless connectivity offers a means 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. In addition, embedded workflow and order management functionality allows front-end orders to be successfully transitioned to the back office, ensuring all services can be billed for and eliminating revenue leakage at source. The pre-integrated nature of these systems allows key business information to be proactively tracked, detailed reports to be generated for each process, revenue leakages quickly identified and losses minimised. It is hardly surprising, therefore, that ever greater numbers of operators see end-to-end pre-integrated solution suites as a vital weapon in their ongoing battle to achieve genuine revenue assurance. |
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