Revenue Assurance Scorecard For The Telecommunication Industry

Step 1: Implementing The Financial Perspective

Dr. Jacques Carrier Process Matters Inc February 2003 February , 2003

Executive summary 1. Description of a business challenge and the benefits of solving it

A recent study amongst the telecommunication service providers indicates that while there is a belief that revenue losses are less than 3%, the actual revenue losses are more likely to be around 10%. The main challenge for the revenue assurance (RA) team within the telecommunication industry is to obtain accurate and timely information to quantify and to reduce revenue leakage. We developed a methodology that supports all aspect of a comprehensive Revenue Assurance plan. This paper addresses only one aspect of implementing the RA plan: the Financial Perspective. Subsequent white papers will cover other aspects of the methodology. After implementing this solution, Telecommunication Service providers will have a near-real time monitoring tool that answers the fundamental revenue assurance questions: How much money are we losing? What is being done to prevent losses?

2.

Conceptual solution

Telecommunication service providers are facing a number of complex challenges when implementing revenue assurance programs: While the revenue assurance business function typically resides in the finance department, most people within the organization are responsible for, and contribute to assuring revenue integrity Revenue losses are difficult to quantify Most groups involved in Revenue Assurance have a different interpretation of revenue assurance Revenue data is difficult to obtain too many sources of data, too many confusing reports Insufficient process documentation Difficult to assess relevance and impact of revenue assurance actions

Revenue assurance practitioners recognize the need to develop a strategic, long term revenue assurance plan across the organization. The strategic intent of the revenue assurance plan (see figure 1) must be defined in terms of four perspectives: Financial: to quantify the amount of revenue losses Process: to identify where the losses occur Customers: to understand the impact on the customers Learning and Innovation: to measure the success of the revenue assurance culture within the organization Implementing such plan requires commitment at all level of the organization. It is a long term strategic effort that is difficult to implement and almost impossible to manage without the methodology and proper tools.

How Much Revenue Are We losing?

Where are the process deficiencies?

How Satisfied is my customer?

Revenue Assurance Culture?

Figure 1 Balanced View of a Revenue Assurance Plan

Implement the Financial Perspective: Show Value

Once the overall Revenue Assurance strategy is defined, it is important to quickly show its value. To do this, the organization must start by developing the financial perspective. The implementation of the financial perspective will help quantify process inefficiencies and trigger performance enhancements initiatives to capitalize on the savings. These savings will be used to fuel the overall process assurance program. With this approach, the revenue assurance program can even be treated as a revenue generating activity.

Developing the Financial Perspective

There are a numbers of steps required to develop the financial perspective: Step 1: Identify Revenue Stream The objectives of this exercise are to: define the scope for the revenue assurance plan identify the top drivers of revenue recovery Once revenue streams have been identified, we conduct a high level risk analysis for each stream and assess the revenue leakage potential for each stream. Based on the above information, the team selects areas to work on and formulates project(s) to address them. Depending on resource availability the team can select one or more areas for improvement.

Step 2: Document revenue processes Using QPR ProcessGuide, the team documents each process supporting the revenue streams. During this phase process gaps will likely be uncovered triggering process improvement initiatives.

Step 3: Identify Revenue Measures After completing the process documentation, the team must review the information and identify a set of relevant Key Performance Indicators and process measures that will be used to monitor the heath of the processes. Step 4: Define Targets The process measures, Key Performance Indicators and Revenue Stream information are then incorporated in the QPR Scorecard. Part of the scorecard definition includes setting targets and alarms for each element. Step 5: Manage Day to Day processes There are a number of stakeholders involved in managing the various revenue streams. Consequently we need a flexible process monitoring tool able to adapt to the needs of each stakeholder. The QPR Portal allows us to integrate process documentation, metrics, actions plans, alarms and dialog that are essential to manage the RA processes. Furthermore, the views and information supplied to the Portal are customized to meet to need of each stakeholder. The Portal provides a near-real time view of all data sources. The potential revenue losses are immediately presented in the scorecard and action can be taken to recover the revenue. The Revenue Assurance personnel can now spend more time managing processes rather than wasting time interpreting massive amount of data from unrelated or cumbersome reports. Step 6: Continual Improvement Having demonstrated the value and effectiveness of the revenue assurance approach and tools, the team can continue enhancing the revenue assurance scorecard by: adding other perspectives (Revenue stream) raising targets to already defined revenue streams

3.

Implementation with QPR products

Process Documentation with QPR ProcessGuide Revenue Assurance Monitoring Tool with QPR Scorecard Process Monitoring using QPR Portal

Immediate ROI
Most Telecommunication service providers understand and accept revenue losses of at least 3%. However, losses are typically higher than 3% and often as high as 10%. The QPR tools combined with a comprehensive approach to revenue assurance, enable organizations to understand how much revenue is lost and where the losses occur. Organizations can not only recover the cost of implementing such solution in the first deployment, the savings can fuel the entire revenue assurance plan.

4.

Case example

The overall objective of this solution is to present the different aspects (perspectives) of the Revenue Assurance process in a near real-time manner. We combined measures from all possible revenue streams and derive the overall Revenue Assurance ratio. At each level there is a visual indicator (Red, Green, Yellow) showing the actual performance of the element against predefined targets.

Top Element

Revenue Streams

KPIs

Measures

Figure 2: Revenue Assurance Dashboard Overview

For the purpose of this presentation several perspectives haven been considered: PCS-West usage-based revenue (own network) PCS-East usage-based revenue (own network) PCS-MIKE usage-based revenue (own network) Usage-based revenue (incollect) Usage-based revenue (outcollect) Settlements Service-based revenue We recognized that these are not the only revenue streams. The framework is scalable and other perspectives can easily be added.

Documenting the Revenue Processes The methodology for identifying relevant measures for the Revenue Assurance dashboard involves the identification and documentation of the revenue assurance processes. Once the processes are defined the relevant process measures are identified and validated. The process models are created using QPR Process Guide. For illustration purposes let us look at the process behind the PCS-West perspective:

Figure 3 PCS-West Process Model

Since these are the steps that make up the PCS-West aspect of the process, each one of these items will be defined as Key Performance Indicators. Within Process Guide we can obtain as much information as desired relevant to a process. For example, we could go down to one of the sub processes included above and we will get more details about it. Also, each one of the items in Process Guide can be linked to different types of documents (Manuals, Standards, etc.) Going down to one of the Key Performance Indicator processes we will get a different level of detail:

Figure 4 Detailed Process View

After proper analysis the proper process measures are defined. We also define and document how to derive the Key Performance Indicator measures. For example, the Guiding process as been defined as follows: Top Element: Revenue Assurance Perspective: PCS-West usage-based revenue (own network) Key Performance Indicator: Guiding Efficiency Measures: Pre-processed calls into Guiding % calls guided correctly Once we have defined the measures we can proceed to define the whole model from the bottom up. Implementing Measures The Scorecard framework offers very flexible and powerful ways to document and implement measures. Each measure can be of different types, use different unit of measure, have different owners and be collected at different interval (see Figure 4)

Figure 5 Defining Measures

We can also define how to obtain the value of a measure. It could be typed in, or obtained from a formula, or obtained directly from the data source, that is normally it would be the applications Database. QPR Balanced Scorecard supports SQL imports from any ODBC compatible source) see figure 5. Data can also be imported from OLAP sources and even spreadsheets.

These updates are normally scheduled so that no

Figure 6 Defining Data Source

intervention is necessary. Also, the timing of the measurement is completely definable by the user or the nature of the process. It is even possible to have measures within the same KPI that occur at different intervals. The system will consolidate them for calculating and displaying purposes. See Figure 6. This measure would however be meaningless if we dont have preset standards to compare it against. It is the reason why we define alarms and targets. These values will define the relative performance of that individual measure. For example, if we expect the process to pass through 95 % of the calls but would consider it acceptable with 90% we would define 90% as an alarm and 95% as a target. In Figure 7 the alarm will show up as red, the ones between alarm and target as yellow and the ones above the target as
Figure 7 Schedule Import of Measure

green (this is only a suggestion, as actual colours are user-defined). It is also worth mentioning that this is completely customizable and that we could define not only 3 levels of performance but less or also more. In the revenue assurance model we have defined most measures as percentages of efficiency, that is, we are visualizing an update of these measures considering the calls that have not been processed through. Therefore if, for example, Guiding is expected to process 1000 calls and only 920 are processed through, then, this process is deemed as having a 92% efficiency. If we define 90 as alarm and 95 as target, this particular measure when displayed will be shown as yellow.

It is important to keep in mind that we have so far only dealt with measures, that is, direct input from the process into our Process Monitoring Tool. Once all the measures have been collected we need to use them to obtain information Figure 7 Setting Target and Alarm with respect to its Key Performance Indicators. The Key Performance Indicators will make use of the measures underneath to calculate the performance of that particular item. Again, how good or how bad that performance was is relevant insofar as it is compared to pre-established values. The methodology normally involves considering the measures in a certain Key Performance Indicator and applying a formula combining these results to finally obtain either a percentage or in general an index which will represent the combination of all the measures within a Key Performance Indicator. The formulas available for use in the definition of values comprise a wide variety of statistical as well as mathematical functions. Similarly, at this step we must also define the values that would make a Key Performance Indicator poor, sufficient, or good that is, we must set alarm and targets.

Figure 8 Measure Derived from Formula

Defining the value of a perspective is a similar task, since we can use the values of its Key Performance Indicators to determine the value of a perspective in a similar manner. For example in the case of the first perspective: PCS-West usage-based revenue (own network), we have the following:

Figure 9 Deriving KPI measures

In this case, each of the Key Performance Indicators, which represent a step in the end-to-end process has a measurement. We have defined them as percentages, so their range is 0 to 100. Because of the importance of all the sub processes, we define the value of the Perspective as the average of all its components. After this, we still have to set alarms and targets so that their result is meaningful. For example, if we have the 5 Key Performance Indicators with the following values, Billing efficiency: 93 Guiding efficiency: 92 Record Polling efficiency: 100 Pre-process efficiency: 99.5 Rating efficiency: 96, the efficiency of the whole perspective is 96.10 %, which is below the alarm value of 97 and the target value of 99 (and therefore it shows as red). This approach will enable users to prioritize areas of action where they could implement strategies to improve results, so that the overall process can operate as efficiently as possible.

Monitor Performance Upon implementation of the proposed solution, users will be able to access a secured web-based portal. The portal can be integrated within the Organizations Intranet. Since we are working with a webbased client-server application, users simply access the URL where the Portal will be residing. There is no need to install applications on the users end. This greatly reduces the effort required by the IT department, since it will only be necessary to administer this application the same way any other web-based applications are administered (providing backups, etc.). It is also important to point out that the security can be managed at the user level, providing different types of access to the objects contained in models.

Figure 10 Revenue Assurance Login Screen

Also, this security can be combined with existing Windows NT/LDAP security for an even more seamless implementation. This is the main view from the portal. The look and feel will be customized so that it is integrated with the current one in the companys intranet and in line with corporate image. Upon entering the Revenue Assurance Portal the user is presented with a main page that is customizable. Figure 11 shows a main page where all recent alarms are presented.

Figure 11 Revenue Assurance Main Page

From the main page, users can access the content of the solution. For example, by clicking on the tab called Processes, users will access the Process Models that have been defined.

Figure 12 The Process View

Similarly, the Operational Dashboard will be under Scorecards.

A comprehensive Revenue Assurance Dashboard will typically combine a lot of elements and it is difficult to represent them all using one single view. See Figure 13.

Figure 13 Overview of Revenue Assurance Dashboard

Consequently there are different ways to views of the scorecard.

Figure 14 The Perspective View

We can also view a summary of all measures using the Analysis view.

Perspectives Value Status Trend Analysis View

KPI

Measures

Figure 15 The Analysis View

We can also access the section of the process model that the dashboard is referring to by simply clicking on the appropriate symbol. Therefore, a connection between the Balanced Scorecard and Process Guide is established. See Figure 16.
Figure 16 Linking Measure and Process

Conclusions The solution presented offers a powerful, flexible and scalable framework for implementing a comprehensive revenue assurance plan. The main benefit of this approach is the near real-time monitoring of your entire revenue streams and the quantification of the revenue losses. Organizations using this approach are able to act quickly and take actions to recover potential losses. The focus of the Revenue Assurance team shifts from extracting and interpreting the data to managing process. Other benefits of this approach include: Centralized repository for process information. Near real-time access to data Less time wasted on generating reports Spending less time on operational activities and more on analytical ones Minimizing the learning curve for new members of the team, as all the information is accessible and organized in a logical manner. Day-to-day overview of operations at a glance. Flexible framework to define, implement, track and analyse results of RA strategies Easily accessing historic data, practically giving you access to snapshots of how the systems were working at a certain point in time.