How revenue leakage can be prevented in the developing telecommunications industry
The telecommunications industry is undergoing a major transformation, especially in the fast-growing EMEA markets. For example, according to the International Telecommunications Union's Information Society Statistical Profiles released at the end of last year, the African telecommunications industry has seen compounded annual growth of 47 per cent between 2003 and 2008, far surpassing the global rate of 23 per cent. As with many other business services, technological advances are rendering existing usage tracking, billing and fraud prevention measures redundant, or worse, ineffective. We recommend a fresh approach to revenue assurance, which has emerged as a critical component in managing telecommunications operations.
Revenue assurance: tactical to strategic
As the industry changes, so do a company’s objectives and modus operandi. They need to constantly find new ways to deliver innovation to customers, optimize internal business processes and increase profitability. Revenue assurance is a classic case in point.
Telecom revenue leakage is caused primarily by inefficient systems and processes, and is exacerbated by fraudulent activities. Uncharged traffic, inconsistent rating and erroneous billing all contribute to leakage. Data collection and record errors are the leading causes of revenue leakage. Different network elements generate records and data in various formats, types and mediation systems which may not interact well. However, errors in order management and provisioning systems allow subscribers to use services for which they aren’t charged; they also produce inconsistent customer records.
An efficient revenue assurance programme is required to monitor the entire revenue stream (network through billing as well as collections). Revenue assurance must continually audit the network elements to ensure that records are generated and captured; collected and processed by mediation; rated accurately; and free from invoicing errors.
In the past, revenue assurance has been largely used to detect revenue leakage and deployed as a tactical response. Telecom executives and shareholders today, however, are beginning to see revenue assurance as a more holistic and strategic tool that can improve overall operations.
In order to monitor the integrity of the entire revenue chain, telecom operators need to work closely with customers and partners from the initial order to the final settlement. Connectiva’s customers in the Middle East have used revenue assurance solutions to identify and recover more than $500m in leaked revenues. In a specific case, we uncovered $1.5mn in leaked revenue within less than 60 days. These data points just go to show that revenue assurance solutions, when implemented effectively, can deliver dramatic results.
Listening: the key to maximizing revenue
The key is – and has always been – to listen carefully to every client. The research and development activities at our Global Innovation Center in Kolkata, India, are driven by what our clients are telling us – the pain points, the opportunities and the specific use cases. Unlike most software companies, we are not encumbered by long development cycles. We are nimble and develop tailored solutions using an agile development methodology.
Our solutions are based on:
· A Flexible Framework – The ability to compose and execute revenue assurance and fraud management leveraging a large repository of industry leading best practices.
· Robust Technology - The ability to process data from multiple network sources (legacy or next generation) through highly scalable ETL (extract, transform and load) technology which is agnostic to data sources & formats.
· Next Generation Design– Easy and convenient tools for analysis and resolution through an interactive and highly visual user interface.
Connectiva’s solutions have been chosen by some of the biggest telecom operators including the Zain Group, Cable & Wireless, Bharti Airtel, T-Mobile, Idea Cellular, Etisalat, Qtel Group and BSNL. Several of these deployments are live and have already realized tens of millions of dollars in savings for these customers.
Revenue assurance has also been advancing into enterprise analytics. With such solutions, telecoms operators can create ‘what-if’ scenario analyses, which then generate automatic recommendations for subscriber consumption data. The result is greater visibility into business performance in real time, which enables better informed, more timely business decisions.
There is also growing demand for the multi-application platform approach -Platforms that can integrate revenue assurance, fraud management, credit risk management, test-call generation, re-billing, and re-rating into one comprehensive suite can save time and money. For example, Connectiva’s Revenue Maximization Solution Suite provides all the building blocks needed for enterprise revenue and risk management systems. The solution exemplifies Connectiva’s “configure, not code” architecture philosophy, which allows service providers to customize to their specific requirements.
Customer Experience Management: the next big thing
Every customer “touch-point” contributes to customer satisfaction, loyalty, and ultimately profitability. Retaining and customers by delivering a superior customer experience is a strategic imperative for telecom service providers.
Telecom companies successful in this endeavour will reap great rewards. According to a recent study by Bain & Co., a five per cent improvement in customer retention can yield a 75 per cent increase in profit for companies across industries.
Untapped opportunities exist in:
Mobile trends and the future of growth
Mobile banking has immense potential, especially in emerging markets. Mobile banking and related services are predicted to grow worldwide at a compound annual growth rate of 89 per cent, with the number of users increasing from 20mn in 2008 to 913mn by 2014. Growth in mobile usage will lead to a greater demand for security and fraud protection solutions. An estimated 49 per cent of the emerging market population, mostly in Africa, does not have access to banking solutions; however, 31 per cent of the unbanked have a pre-paid phone while 17 per cent have access to a phone, suggesting an enormous untapped market. Researchers at Informa Telecoms and Media forecast that revenue from data services in the Middle East will rise from $6.88bn in 2009 to $13.82bn in 2014.
While several such growth opportunities beckon, they all also carry risks and challenges related to new forms and types of revenue leakage. More than ever, it is critical for providers to embrace revenue assurance best practices and ensure that their revenue operations are streamlined and optimized. After all, to paraphrase Ben Franklin, a penny saved from revenue leakage and fraud is a penny earned and directly adds to the bottom-line.
Anandan Jayaraman (AJ), Chief Product and Marketing Officer, Connectiva Systems