Operators are leaking 5% of their revenues. We can find them.
With a vast selection of networks, carriers, tariffs and content to choose from, revenue is increasingly under attack from a variety of sources.
Revenue leakage has been a major value loser for telecom operators over the years, and despite the numerous approaches and tools employed, conservative estimates range from 1% to 5% of traffic going unaccounted for, even more in emerging or high-growth markets. According to operator estimates, 3% – 15% of revenues still go uncollected, which amounts to around $140bn dollars a year globally.
While fraud is a relevant source of such leakage, so too are internal inconsistencies, process failures and malfunctioning systems, which are fully under the control of the operator and thus in a position to be tackled systematically and eliminated or reduced to negligible volumes.
With the market moving from simply eliminating weaknesses to an end-to-end revenue maximisation strategy, Revenue Assurance is mission critical for both increasing revenue and encouraging a greater focus on accounting and billing transparency.
An effective approach to Revenue Assurance (RA) needs to have a strong foundation of governance (usually in the form of a dedicated team and clear responsibilities assigned), operations (typically a recurrent monitoring of product and process changes) and supporting technology (test call generators, automatic alert systems, and the like).
At mmC GROUP we have extensive experience in the subject of Revenue Assurance: many of our professionals have spent years working with some of the leading operators worldwide performing revenue assurance diagnostics, valuating the size of leaks, devising and implementing strategies to eliminate or control them, and helping our clients establish their own RA functions and systems.
Our experience shows that in some cases, individual leaks can be quite substantial, and frequently are not too hard to tackle individually. If we have to identify some examples in revenue leaks, I would point out those identified in a real case example of a 3rd entrant with 8M clients in Europe:
- Lacking coordination in the P&S development and launch process leading to provisioning and billing inconsistencies: 250k EUR/year
- Incorrect processing of VAT in returns: 4M EUR/year
- Lack of cross-checking customer balances for business segments (fixed, mobile, etc.) leading to non-collection of overdue debt: 4M EUR/year
- Optimization of due date calculation within contracted terms: 500k EUR/year
- Inconsistencies between Billing and Provisioning systems: 18M EUR over several years
An effective approach to Revenue Assurance needs to have a strong foundation of governance (team, roles and responsibilities), operations (recurrent monitoring) and supporting technology. Operators should consider a group-wide approach, which may bring added advantages of control, synergies and efficacy following the following approach and principles shown in the following slide:
In the times we are living, operators have to seize this opportunity and to reverse the corporate mindset of revenue leakage from a “cost of doing business” to an “opportunity for profit growth and profitability.” If the management team stat to think of this as revenue maximization, they will succeed.