Application of Business Analytics to Telecom Revenue Assurance

Authors: Shital Ghuge Lean Six Sigma Green Belt Jyoti Govekar Lean Six Sigma Green Belt Prasoon Agarwal Lean Six Sigma Black Belt

Tech Mahindra Limited 2012 Tech Mahindra Limited 2010

Abstract
Historically Revenue Assurance dealt only in analyzing the billions of daily usage transaction records generated and processed by a Service Providers network in order to retain every billable amount of revenue and ensure that no transactions are lost as they traversed each network node and system. In recent years, the scope of RA has expanded in leaps and bounds. Today, RA sector not only monitors each and every billable transaction to retain and cover the revenue, but also performs root cause analysis to identify the reasons for revenue leakage and provides strategic solution to the problems. In todays changing economic conditions and an evolving technological environment every Service Provider is focusing to improve margins. Thus Revenue Assurance function plays not only an important, rather critical role in Telecom business.

On the other hand, Business Analytics is one such practice which involves analyses of organization wide data elements using various statistical and quantitative techniques, explanatory and predictive models in order to draw inferences that help to solve business problems.

This white paper attempts to highlight that how Business Analytics can be used to execute and deliver Inventory Reconciliation for Revenue Assurance effectively for Telecom data products. It explains that how every aspect of business analytics techniques like, to integrate, to extract, to transform and analyze huge quantity of data for various business processes can be used with different phases of Inventory Reconciliation for Telecom data products. This will help the Telecom business operations to improve growth in Revenue by reducing Revenue leakage.

More so, this white paper focuses on how smaller players of Telecom with low budgets can divert their synergies in carrying out Revenue Assurance activities with Business Analytics team and their capabilities to operate with lower cost and gain higher Revenue thus improving the profit margin.

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Table of Contents
REVENUE ASSURANCE - AN INTRODUCTION ................................................................... 3
Need for Revenue Assurance in Telecom Sector ........................................................4 Benefits of Revenue Assurance ...................................................................................5 Challenges faced in conducting Revenue Assurance ...................................................5

REVENUE ASSURANCE INVENTORY RECONCILIATION ..................................................... 6 BUSINESS ANALYTICS ............................................................................................... 7 APPLYING BUSINESS ANALYTICS TO INVENTORY RECONCILIATION........................................ 8
Advantages of using Business Analytics to conduct Inventory Reconciliation ............9

ACKNOWLEDGEMENT ............................................................................................. 11 ABOUT TECH MAHINDRA ........................................................................................ 12 GLOSSARY ........................................................................................................... 13 REFERENCES ........................................................................................................ 13

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Revenue Assurance - An Introduction

With eroding margins, looming cost pressure and market becoming extremely competitive, and a common thread for all Telcos, whether they are faced by the challenges of sustenance, scalability, or both, is the potential impact on Revenue. In any of these scenarios, Telcos may be vulnerable to Revenue leakage or Revenue stagnation. As a result, for Telcos, Revenue Assurance (RA) has become a necessity rather than luxury.

Revenue Assurance can be defined as a practice that helps in identifying and preventing Revenue leakages thus enhancing cash flow by billing accurately and improving the effectiveness of cash collection process. According to various Revenue assurance researches conducted globally Revenue leakage in the Telco industry is 1% to 11% of gross Revenues annually (Source: Tele Management
Forum Solution Suite 3.6)

Assuming the global telecommunications market Revenue is US $ 1.3 Trillion we can estimate the
annual Revenue leakage of up to US $ 143 billion (Source: Connex Technologies)
Global Revenue Assurance survey for market
Market Size of RA in Telecom Domain
450 400

size of RA in Telecom domain estimates the below: RA market size for Telecom domain was US $ 235 million in the year 2009 This was expected to grow upto US $ 413 million by the year 2012 Market for Revenue Assurance would gradually

US $ Million

350
300 250 200 150

100
50 0 2009 2010 2011 2012 235 282 340 413

grow by 21.6 percent CAGR every year

Source: Stratecast

These days Telcos follow a conceptualized RA model which covers all aspects of business operations right from sales to the collection of payments.

A mature RA methodology that can be used in any Telco can be explained in six different phases as shown in the below figure:

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A holistic approach followed for performing these activities can help plug the Revenue leakages in major impacted areas of the business. An in-depth explanation of Inventory Reconciliation is explained in the coming sections.

Need for Revenue Assurance in Telecom Sector

Telecom is the most dynamic sector. In markets with multiple players, competition is often intense and telecom operators are required to concurrently manage fast-paced growth as well as innovation. From service provision to cash collection, there are limitless opportunities for revenue to seep through the cracks especially in a world of convergent services. Some of the issues driven by this are stated below: Complex business operations with different products on different IT stack Cumbersome and inefficient value chains leading to ill-defined processes Interconnect issues between different service providers Complex billing practices and adjustments Financial limitations leading to system issues

All the above factors make revenue assurance a critical solution in Telecom business.

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Benefits of Revenue Assurance

Revenue Assurance solution can benefit any Telecom industry in the following ways: Identify opportunities for cash, revenue generation, margins and profitability Identify, measure and prevent the risk points for Revenue leakage Identify process Improvement and revenue recovery opportunities Prevent billing inconsistencies before they reach the customer bill and increase billing accuracy Reducing operational costs Focus on customer acquisitions and retention propositions Divert the Revenue for more profitable endeavors Improve Customer Experience

Challenges faced in conducting Revenue Assurance

As Telcos move deeper into next-generation services and content-driven service environments, Revenue Assurance becomes both, more complex and more critical. The major challenges faced in carrying out Revenue Assurance are mentioned below:

Complex processes and practices:

As Telcos operate under a stricter regulatory regime, new rules are forcing them to increase their internal control and to ensure generating Revenue at highest levels of efficiency. As a result; expansion of product portfolios, networks and services, operations, processes and revenue chains are becoming highly complicated which makes RA difficult for implementation.

Technical complexity:
Accelerated growth in data, IP and real-time services due to dynamically evolving technologies, continuous demand for new services, complex processes and business systems infrastructure adds complexity in system configuration thus hindering exposure for RA.

Data availability
Revenue data is difficult to obtain- with too many sources of data and too many reports. Extracting the right data with no integrity and quality issues is a big challenge to start with. This leads to difficulty in quantifying Revenue losses.

People factor
Need of competent RA analysts and Subject matter experts with right skills and adequate knowledge to not only identify suspicious data but also perform quick investigation and suggest quick wins is an important but difficult task.

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Tools and techniques

Managing vast data for performing data analysis is one of the biggest challenges. Revenue Assurance can become quite time consuming; thus wasting time on interpreting massive amount of data from unrelated and cumbersome reports without proper tools and techniques is difficult.

Revenue Assurance Inventory Reconciliation

Inventory Reconciliation is one of the activities of Revenue Assurance program that aims at carrying out corelation and reconciliation of inventory details and its data attributes of concern on systems, right from provisioning to billing for data products. Inventory Reconciliation helps in maintaining the data quality across all the systems from provisioning to billing thus the correctness and availability of all the data attributes. It helps to ensure that the entire inventory provisioned for the customers are available on the billing systems and also customer bills hence avoiding revenue leakage.

This RA activity can be useful for any telecom operator for short or long term opportunity, targeting to improve their inventory management. Also revenue losses caused due to mismanaged inventory is

recovered through the reconciliation activity. Below is a detailed Inventory reconciliation delivery model which can help any Telecom sector to carry out reconciliation activities:

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Business Analytics
Business Analytics is a practice which helps Telcos to understand the structure, policies and operations of an organization and recommend solutions that enable the organization to achieve its goals. It mainly provides an analytics support to the business strategy in shaping business/investment proposals with market and operational metrics. Traditional Telcos are focused on improving financial parameters however they also need an insight about customers, suppliers, business operations and bottlenecks. Business Analytics especially helps Telcos in following ways: Helps to move ahead of ad-hoc reporting analysis and adopt a culture of analytics Assists in strategic initiatives through impact analysis, feasibility studies Provides granular view of the current performances and bottlenecks Helps in driving continual improvement programs Conducting Root cause analysis for complex problems Enhancing customer experience and profitability Reducing Revenue leakage and fraud leading to growth in Revenue Reducing costs and increasing efficiencies across Telco operations

Business Analytics methodology can be implemented in a Telecom industry through the below strategic delivery model:

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Applying Business Analytics to Inventory Reconciliation

Business Analytics can help deliver various activities of Revenue Assurance in any organization in a strategic and planned manner. Every activity of Revenue Assurance program when performed by implementing Business Analytics model will accelerate the yield, thus ensuring predictable and measurable business outcome. This section of the white paper will focus on the application of Business Analytics in Inventory reconciliation activity to recover the lost revenue due to mismanaged inventory for telecom data products. Business Analytics can provide useful assistance to achieve the objective of Inventory Reconciliation so as to present an accurate portrayal of the assets leading to data cleansing. BA techniques can supplement Inventory Reconciliation outcome in terms of detecting anomalies, identifying process or system gaps, and business benefits associated with solution. Inventory Reconciliation offering can be mapped vis--vis the Business Analytics model mentioned above by using the below mapping:

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Thus aligning the Inventory Reconciliation for Revenue Assurance to the Business Analytics model helps in carrying out the various activities in a strategic way, enabling fact based decision making at various levels. The outcome is conducting Revenue Assurance efficiently and delivering benefits to the organization.

Advantages of using Business Analytics to conduct Inventory Reconciliation

Business Analytics approach helps support business with process re-engineering, re-organization initiative and large transformation initiatives by providing predictive analytical metrics and recommendations. Using Business analytics approach to conduct Inventory Reconciliation activity helps in identification and analysis of data attributes, mapping and validation, identification of discrepancies and bottlenecks, conducting root cause analysis and recommending solutions in order to reduce revenue leakage leading to growth in revenue. A SIPOC model is shown below to show how the above model impacts the value chain right from the supplier to the customer:

Cost Assurance can also be performed by analyzing the variable cost that should be reconciled with the actual revenues. Hence, the profit margins can be assured by the Telcos; once both Revenue & Cost Assurance have been implemented effectively with proper control plans in place.

Therefore, Revenue Cost (Variable + Fixed) = Profit Margin

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However, smaller Telecom players with a lesser budget can neither afford to hire the assistance of external Revenue Assurance consultants nor set up an independent team of Revenue Assurance experts. Hence setting up an in-house team of Business analyst can be the best savior to combat this situation. By implementing the Business Analytics approach this team can easily initiate and drive actions to address the Revenue leakage issues identified and start generating returns.

Investing to acquire different Business Intelligence tools for generating RA dashboard, Scorecard, Monitoring, Database audits, Performance reporting from external RA consultants can be useful but a costly affair. Instead, a simple automated tool based on Microsoft Excel or Microsoft Access can be developed so that query based commands can drive automated data extraction and data analysis. This tool can be updated and upgraded depending on expansion of service and products in future.

In addition to applying business analytics approach to implement Revenue Assurance, there are different styles of RA approaches that TMF RA solution suite 3.6 describes i.e. Reactive, Active and Proactive. Reactive approach helps in detecting revenue leakages after their occurrence and then steps are taken to recover the losses once leakage is detected. Similarly Proactive approach helps in controlling or avoiding the leakages before they occur and effectively taking steps to change processes or systems before leakage occurs. On the other hand, Active approach is real time approach to address revenue leakage problems as they occur. So any steps to correct the revenue leakage before it causes any damage is designed and implemented.

According to TMF the three approaches are complementary. A good RA practice must always include Reactive controls, to identify leakages and create the case for the Active and Proactive controls.

Tele Management Forums RA Solution suite 3.6 suggests Maturity Model that provides any telecom industry, large or small, a common framework with a strategic approach for Revenue assurance. Five stages of the Maturity model, as shown below helps to identify areas of improvements in five business aspects namely Organization, People, Influence, Tools and Process.

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Optimizing - Continuous improvement via feedback. Decentralized ownership, holistic control Managed - Leakage quantitatively understood and controlled Defined - Standardized approach developed. Designing-in control commences Repeatable - Basic project/process management. Repeatable tasks Initial Ad hoc, chaotic. Dependant on individual heroics

An in-house Business Analytics team and an internal BI tool will ensure that operational costs remain lower. Putting it together with the above strategic approach is a cost effective solution for a small player thus helping identify, remedy and prevent revenue leakages. This provides a perfect opportunity for them to achieve more (Revenue) with less (Cost).

Acknowledgement
We would like to thank Dr. Shreekala Jaydeep, Tech Mahindra Ltd for motivating, encouraging and guiding us in writing this white paper. Her invaluable suggestions at each stage have helped us in successful completion of this white paper.

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About Tech Mahindra

Tech Mahindra Limited (formerly known as Mahindra-British Telecom Limited) is the global leader in providing E2E IT services and solutions to the Telecom Industry. Majority owned by Mahindra & Mahindra, Indias fifth largest commercial group, in partnership with BT Plc (BT), Europes second largest telecom service provider, Tech Mahindra has grown rapidly to become the 8th largest software exporter in India (NASSCOM 2006). With over 25000 professionals, Tech Mahindra services Customers across geographies from 16 sales offices across USA, Europe and Asia-Pacific. Tech Mahindra owns 10 state-of-the-art offshore development centers - UK (Milton Keynes, Belfast) and India (Pune, Mumbai, Bangalore, Kolkata, Chennai, Hyderabad, and Noida). Having serviced premium telecom companies worldwide, for nearly two decades, Tech Mahindra combines deep domain expertise in OSS (Operations Support Systems) and BSS (Business Support Systems) systems, intellectual leadership and a global workforce advantage to provide services to leading players in the telecom ecosystem. Tech Mahindra provides a wide variety of services ranging from IT strategy and consulting to system integration, design, application development, implementation, maintenance, and product engineering. Through a rich Telecom heritage, Tech Mahindra has built long-term sustainable relationships with telecom Customers through delivery of IT services that help them achieve significant ROI and the greatest competitive advantage in the telecom marketplace. Committed to Quality, Tech Mahindra adds value to client businesses through well-established methodologies, tools and techniques backed by its stringent Quality processes. Its centers are ISO 9001:2000 & BS7799 certified and it also holds a SEI-CMMi Level 5 certification. Tech Mahindras people-care practices are certified at PCMM Level 5. Tech Mahindra is also one amongst only three companies worldwide to be successfully appraised for SSE-CMM Level 3.

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Glossary
RA CAGR KPI E2E SQL SIPOC BA BI TMF Revenue Assurance Compound Annual Growth rate Key Performance Indicator End to End Structured Query Language Supplier Input Process Output Customer Business Analytics Business Intelligence Tele Management Forum

References
1. Revenue Assurance Solution Suite 3.6- Tele Management Forum (TMF) 2. http://www.telestrategies.com/ra11/index.htm - Different RA operators and their programs 3. Tech Mahindra Internal Revenue Assurance practices 4. http://www.xintec.com/ra-modules.aspx- RA solution for small telecom industries

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