Where Should Revenue Assurance Report?

Where Should Revenue Assurance Report? by Rob Mattison

Where in the Organization Should Revenue Assurance Report? Where should revenue assurance report? This question is asked more and more these days. In the past week alone, I have had twelve different organizations call me, send me emails, and ask me at a conference, Where should our revenue assurance group be reporting? It is a very good question and it really shows how important revenue assurance (RA) is becoming for most telco organizations. Until recently, it seems, no one cared and it didn t matter where revenue assurance was reporting. Now, suddenly, everyone has an opinion. Some say revenue assurance should be part of IT. After all, much of the revenue assurance job is concerned with getting IT systems to work correctly. Others say that it is rightfully part of quality assurance. If everything and everybody was functioning with quality there would be no need for a revenue assurance function. Right? Those with a more traditional view seem to think that RA is most appropriately an internal audit function. In other words, it is just an extension of the job of making sure that everything is running right. I have even heard the opinion that RA should report directly to the CEO! So where in the organization is the right place for revenue assurance? The Many Faces of Revenue Assurance It is interesting how many different groups claim revenue assurance as part of their mission? This tells us much about the nature of the revenue assurance job. Revenue assurance is a Finance problem. It certainly is also a Quality Assurance problem. At the same time, it is also an Audit problem and an IT problem. Even more than that, it is a Billing problem, a Mediation problem, a Network Operations problem, and the problem of everyone in the firm. Everyone involved in the creation, generation, activation, capture, transformation, or collection of revenue generating events in the telco have a stake in revenue assurance. questions that must be addressed first. They are the difficult ones. 1. What is the current health of your revenue management systems? (Risk Assessment: identify current leakage and risk of leakage) 2. What is the definition and allocation of responsibility for revenue assurance between various operational groups and the revenue assurance group? (Shared Responsibility Allocation) 3. What are your goals for the revenue assurance function? (Mission Development and KPI Establishment) 4. What is the cultural, organizational and operational fit of your revenue assurance group? Let s consider each of these in more detail. What are the Specific Areas Where RA is Needed? One of the difficulties of placing revenue assurance is the fact that every telco has different revenue assurance vulnerabilities. For some telcos, the billing and mediation areas are run with an incredible degree of efficiency and accuracy. For those groups, adding revenue assurance to all of the other already effective assurance mechanisms would simple be a waste. In other telcos, the network operations people believe that anything about the integrity of the network should fall completely within their set of responsibilities, leaving no room for outside meddling and interference. A Methodology for RA Group Placement Decision-Making Actually, responding to the question, Where should revenue assurance report? comes easy once you know the answers to the other 2

So how do you decide where revenue assurance is needed to begin with, and where does the revenue assurance group fit into that picture? At XiT, we have developed an organizational and operational template for mapping revenue assurance risk and responsibility. The principle tool is a concept we refer to as the Revenue Management Chain. The Revenue Management Chain diagram shows all of the areas that are involved in the assurance of revenues within the organization. It includes: 1. Network Operations 2. Mediation 3. Postpaid Billing 4. Prepaid 5. Interconnect (Inter-carrier or Carrier Access Billing) 6. Roaming 7. Collections 8. Settlement 9. Activation and Provisioning 10. Quality Assurance, Quality of Service, and Service Order Management 11. Network Reference Data Management 12. Point of Sale Management The first step in the process, then, it to assess exactly how well revenue assurance is already being handled in each of these areas. There are a number of ways to address this, but it all depends on the answer to the question, How confident is management that each area is running with no risk of revenue loss, now and in the future? If management believes that one area is already covered well enough, then that can be considered outside of the scope of the revenue assurance group. Once analysis of the organization is complete, you create a Revenue Assurance Risk and Coverage Map. In some cases, management may feel that most areas are well run without any extra help. Then there will only be one or two hot spots to consider. In other cases, management may have little confidence in the full integrity of any of the areas, in which case the role of revenue assurance will be much wider in scope. How To Determine if There is Appropriate RA Coverage in each Area? There are several methods to determine whether there is enough revenue assurance coverage for each area. One way is to use a technique known as a Functional Coverage Map. Creating a Functional Coverage Map When you are evaluating your organization, if you are not sure whether the revenue assurance function is being done 3

Where in the Organization Should Revenue Assurance Report? correctly, XiT s comprehensive revenue assurance coverage guide, called MBASIC, can help. The acronym stands for: 1. Monitoring 2. Baselining 3. Auditing 4. Synchronization 5. Investigation 6. Compliance / Correction These six represent the primary functions associated with the performance of revenue assurance duties. To determine whether each area is being covered, create a spreadsheet, listing all of the areas on one dimension and the functions on the other. Then, simply fill in the grid with the name of the person or group that is responsible for providing that service in each area. Where there is no one responsible or where there is confusion about who is accountable, mark those areas as a revenue assurance weakness. You should be able to map out how well each of the functions is covered across all of the revenue assurance areas. Performing Leakage Risk Analysis Another way to check how well your systems are covered is to analyze the risk of loss of each area. Leakage mapping provides management with a realistic assessment of the risk associated with each link in the revenue management chain. This method, developed by XiT over the past several years, not only provides management with a realistic appraisal of how much risk each area presents, but also of the economic value the risk represents. Leakage risk mapping is accomplished in three steps. Step 1: Create a Revenue Flow Map A revenue flow map is a view of the economic value that each component of the revenue management system is responsible for. Obviously, the network itself represents nearly 100% of the revenue generating potential (except for fixed charges, sales fees, etc.). Mediation also manages near 100%. But then we can track how this revenue flow spreads out through the different billing and collections systems. Step 2: Assess the Risk of Loss in each Area The second step in the process is to determine the actual risk of loss that each of the operational areas represents. A number of approaches can be used for this assessment. The best and most accurate method utilizes existing operational reports and audits to assign the actual risk of loss. When these quantitative methods are not available, it is a sign that the risk is high since the lack of reports means that no one can possibly check. Qualitative methods and expert review can be utilized as a substitute. No matter which method of risk assessment is utilized, when completed the risk map will provide management with an understanding of how much risk of revenue loss each area houses. Step 3: Calculate Revenue at Risk The last step in the process is to perform the revenue at risk calculations. By combining a risk leakage map with a revenue flow map (shows how much revenue each system is responsible for processing), the manager can quickly determine exactly where the areas of greatest risk lie and what the economic value of that risk represents. Allocation of Responsibilities Across the Organization It is generally easy to find one or more departments that are responsible for the operations. There is a group responsible for billing. There are several assigned to network operations management. The mediation system, the interconnect system and the prepaid Intelligent Network systems all have operational groups who make sure that the systems are running. 4

On top of this, most telcos have internal audit functions, quality assurance initiatives (ISO9000 or Six Sigma) and other groups who are supposed to watchdog and fill in the gaps. Therefore, logically, you should be able to simply make sure that each of those groups is aware of what its revenue assurance responsibilities are and then let them do their jobs. Why Can t You Just Trust People to Do Revenue Assurance? Is revenue assurance, then, nothing more than a corporate social responsibility program? Is it just a matter of teaching everyone how to do their jobs the right way? In some situations, that may be the case. Unfortunately, in the majority of cases, getting truly effective revenue assurance put into place requires more than simply making existing organizations more aware of revenue assurance issues. There are several reasons for this: 1. First, most operational managers have jobs to do that have a higher priority than revenue assurance. The Billing Operations Manager s first priority, for example, is getting bills out on time. These managers have no time, no money, or no personnel available to do the assurance job. 2. Second, there are many revenue assurance problems that fail to fall neatly within someone s clear responsibility areas. Many of the biggest and most difficult RA problems are those that fall between operational areas. 3. Third, there is a need for someone to have complete endto-end responsibility. For many organizations, the biggest risk associated with the lack of revenue assurance is the clear inability of anyone to assure management that the entire process is put together and is running well. The Shared Responsibility Model It is usually not practical to assign all revenue assurance responsibilities to operational groups and it is also not usually prudent to try to assign all of the responsibilities to a separate group. There are several reasons for this: 1.If you make the revenue assurance problems completely the responsibility of a group that is not operationally responsible, you create a situation where the operational group does even less assurance than they are doing now. 2. If you make all of the revenue assurance responsibilities an new, external function, you will end up paying to duplicate a lot of highly economical and useful RA capability that the operational systems can delivery at a very low cost. A large percentage of RA is clearly most appropriately managed by operational managers. Because of this, we need to establish a shared responsibility model where operational groups are responsible for some areas, and the RA will be responsible for others. This is the reality of revenue assurance for carriers today. After you have evaluated exactly how well the RA job is being delivered by existing operational groups, you define what other tasks need to be done. These functions will either have to be added to the operational areas or added to the RA group s list of responsibilities. Allocating Shared Responsibilities Once you have determined where your revenue assurance risks and coverage gaps are, your next job is to figure out what to assign to the various operational areas as responsibilities, and what to assign to the revenue assurance group itself. The first part of this process is easy. Review each operational area and define those aspects of the MBASIC (Monitoring, Baselining, Auditing, Synchronization, Investigation and Compliance/Correction) that they are already handling or should be adding to their mission. The next part is more difficult. Figuring out how to allocate what is not being covered by the core operational groups. Clearly, some responsibilities, such as audits, can be given to an Internal Audit group to manage. Other functions, like investigations, can be assigned to an IT / Business Intelligence 5

Where in the Organization Should Revenue Assurance Report? group. Quality process operations groups like Six Sigma or ISO9000 can take responsibility for corrections. When all is done, if your organization is like most telcos and if you are being honest with yourself about how well these groups are actually going to fulfill their responsibilities, you will still have a significant collection of responsibilities that have yet to be assigned to anyone. This is where the revenue assurance group comes in. At a minimum, an RA group should make sure that all of the operational groups are performing their revenue assurance responsibilities. This is the overall, end-to-end compliance responsibility. In addition, most telcos have other areas that are not reasonably covered by operational groups. For example, at one carrier, the revenue assurance group conducts all audits of operations along the revenue management chain in order to assure that rating, billing, mediation, and network are performing to spec. In many telcos, the revenue assurance group is in charge of call testing and call simulator usage. In others, the RA group takes on a more comprehensive role. I now of several carriers where the revenue assurance group is responsible for prepaid assurance from end to end. Defining the scope of revenue assurance will always be based upon this kind of blending and in depth understanding of what is needed and where. What Do You Want RA to Accomplish? After identifying the risk areas and allocating responsibilities for risk management coverage, the next job is to define what exactly the RA group is supposed to accomplish. Part of this definition will be intrinsic in how the cooperation between business units was defined. Some of it will be based on specific management objectives. Typically, the mission of RA will focus on several Key Performance Indicators. 1. Compliance Making sure that the different groups are conducting their checks on a regular basis. 2. Capabilities Enhancement Driving the organizations awareness of revenue risk areas and making sure that the new systems, policies and procedures that will improve the company s risk profile are being implemented. This role includes becoming the champion for new systems and procedures that fill in the operational gaps in the organization. 3. Leakage Measurement and Risk Assessment Keeping management aware of the overall risk of loss that each area of the business represents. 4. Leakage Detection and Elimination Identifying leakage wherever it is occurring. Key Performance Indicators for the Revenue Assurance Partners Assigning KPIs to the revenue assurance group alone will be less than optimal if we do not assign complementary KPIs to the other RA participants. Billing, Network, Mediation, Collections and all of the other groups should be assigned similar types of KPIs to make sure that the entire organization is motivated to accomplish the same objectives. Assuring the Cultural and Operational Fit of the RA Group One of the biggest mistakes made in positioning revenue assurance is to fail to understand the cultural and operational fit of the group within the larger corporate environment. It is a sad fact that, no matter how well meaning your intentions are, if your group has developed a bad reputation or has created a non-cooperative image with other groups, chances are that you will not be successful in being the new home of revenue assurance. The critical factors for successful cultural and operational fit of the revenue assurance group are: 1. Perception as an operationally neutral organization. The first rule for revenue assurance is that it be considered to be operationally neutral. The group cannot be viewed as being part of another organization. It must be perceived as being truly unbiased (i.e. It is part of Finance or IT), or it must be perceived as having a mission that is crossorganizationally focused (Internal Audit, Process Quality, Quality of Service). 2. Perception as a group with the authority to enforce (or at least to escalate) revenue assurance issues. A group that reports too low in the organization chain and cannot get the ear of the CEO or CFO will not be very effective when complex organizational issues arise that create serious risk to the firm s revenues. 3. Perception as a group that is qualified and knowledgeable enough to participate in revenue assurance. The group must not only have neutrality and organizational authority, it must also have operational authority. The participants must understand and be able to cover the entire depth and breadth of revenue assurance with knowledge, experience and know how. So Where Should Revenue Assurance Report? After taking all that into account, we are now ready to answer the question, Where should the revenue assurance group report? 6

The answer is, It depends. It depends on where your organization is currently strong or weak in terms of revenue risk coverage. It depends on how much responsibility you place on operational areas for revenue assurance and how much on a central group. It depends on how much you are going to invest in monitoring, tracking and enforcement of revenue assurance practices and policies across the organization. It depends on the KPIs you set for the RA group and for the operational groups in terms of revenue assurance deliverables. It depends on your existing corporate culture and on the perceptions of fit, attitude, authority, and competence for the different groups in that organization. Where are Revenue Assurance Groups Placed Today? Finance The number one place for positioning revenue assurance groups is typically in the finance area. The authority, neutrality and credibility are there, and the group will have access to the right top level people when issues arise. Billing The second place where revenue assurance groups appear is as an adjunct to billing operations. This makes perfect sense since the billing systems are in the ideal position to be aware of any problems that occur upstream or downstream in the revenue management chain. Many billing organizations are already performing a large number of the revenue assurance functions without getting recognition for that fact. They simply do it because they have to get the bills out accurately and on time. IT The IT groups also appear as revenue assurance candidates. They are organizationally neutral, have access to most of the systems required, and have a shared responsibility for the integrity of any of the operations. Internal Audit The internal audit group also often steps up to take revenue assurance responsibility. You could argue that any revenue assurance issue should be identified by internal audit first and foremost. Process Management (ISO 9000) Some telcos have actually been successful at launching revenue assurance groups as part of their ongoing quality management (Six Sigma or ISO9000) initiatives. This too makes sense, when you consider that this falls well within the operational mission of such groups. Where Should You Place RA? Wherever it Will Do the Most Good Ultimately, the job of revenue assurance is to promote cooperation, awareness of revenue risk, encouragement of quality and integrity, and shared responsibility for all aspects of the revenue management chain. Because of the complexity of most telco organizations and revenue management operations, there is clearly no one right answer to the question. When I am asked where to put the revenue assurance function and I am expected to answer immediately, I tell them that the right place is wherever its placement will do the most good for the organization. As the business continues to grow and as the revenue assurance discipline evolves, I am sure that we will begin to develop more standard answers to questions like this. For now, however, we will just have to focus on understanding the situation as best as possible and doing whatever works best for our individual situations. * Updated 08/07/09 7

WP120 ROB MATTISON, president of GRAPA, is an internationally recognized expert and thought leader in telecommunications computer systems development in the areas of marketing, sales, billing, revenue assurance, and telco business intelligence. Mattison is a consultant with more than 20 years experience with customers across Asia, South America, the US and Europe, author of many books on telecommunications operations and analysis, and a popular and much sought after speaker at conferences and seminars. You can reach Rob at info@grapatel.com Download a copy of GRAPA s internationally ratified standards document at www.grapatel.com The Global Revenue Assurance Professional Association (GRAPA) is a not-for-profit organization created to serve the interests of revenue assurance professionals throughout the world. As the leading standards, certification and professionalizing body in revenue assurance, GRAPA is committed to core principals of consensus, rationalization and integrity in all its endeavors. GRAPA s goal is to further the professional stature of those working in revenue assurance, and to have their essential functions recognized at the core of efficient and effective telecommunications industry practice. GRAPA believes that this can only be achieved through the rigorous application of ratified global standards, the certification of trained and qualified professionals, and the continuous education of those who work in such an essential, demanding and constantly evolving discipline. info@grapatel.com www.grapatel.com