Tech M White Paper Revenue Assurance D0 9 180612 (1)

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Application of Business Analytics to Telecom Revenue Assurance

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Tech M White Paper Revenue Assurance D0 9 180612 (1)

  1. 1. 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
  2. 2. AbstractHistorically Revenue Assurance dealt only in analyzing the billions of daily usage transaction recordsgenerated and processed by a Service Provider’s network in order to retain every billable amount ofrevenue and ensure that no transactions are lost as they traversed each network node and system. Inrecent years, the scope of RA has expanded in leaps and bounds. Today, RA sector not only monitors eachand every billable transaction to retain and cover the revenue, but also performs root cause analysis toidentify the reasons for revenue leakage and provides strategic solution to the problems. In today’schanging economic conditions and an evolving technological environment every Service Provider isfocusing to improve margins. Thus Revenue Assurance function plays not only an important, rather criticalrole in Telecom business.On the other hand, Business Analytics is one such practice which involves analyses of organization widedata elements using various statistical and quantitative techniques, explanatory and predictive models inorder 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 deliverInventory Reconciliation for Revenue Assurance effectively for Telecom data products. It explains that howevery aspect of business analytics techniques like, to integrate, to extract, to transform and analyze hugequantity of data for various business processes can be used with different phases of InventoryReconciliation for Telecom data products. This will help the Telecom business operations to improvegrowth in Revenue by reducing Revenue leakage.More so, this white paper focuses on how smaller players of Telecom with low budgets can divert theirsynergies in carrying out Revenue Assurance activities with Business Analytics team and their capabilities tooperate with lower cost and gain higher Revenue thus improving the profit margin. 1 © Tech Mahindra Limited 2012
  3. 3. 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 © Tech Mahindra Limited 2012
  4. 4. Revenue Assurance - An IntroductionWith eroding margins, looming cost pressure and market becoming extremely competitive, and a commonthread for all Telcos, whether they are faced by the challenges of sustenance, scalability, or both, is thepotential impact on Revenue. In any of these scenarios, Telcos may be vulnerable to Revenue leakage orRevenue stagnation. As a result, for Telcos, Revenue Assurance (RA) has become a necessity rather thanluxury.Revenue Assurance can be defined as a practice that helps in identifying and preventing Revenue leakagesthus 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 size of RA in Telecom domain estimates the US $ Million 400 below: 350  RA market size for Telecom domain was US $ 300 235 million in the year 2009 250 200  This was expected to grow upto US $ 413 150 million by the year 2012 100  Market for Revenue Assurance would gradually 50 235 282 340 413 0 grow by 21.6 percent CAGR every year 2009 2010 2011 2012 Source: StratecastThese days Telcos follow a conceptualized RA model which covers all aspects of business operations rightfrom 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 inthe below figure: 3 © Tech Mahindra Limited 2012
  5. 5. A holistic approach followed for performing these activities can help plug the Revenue leakages in majorimpacted areas of the business. An in-depth explanation of Inventory Reconciliation is explained in thecoming sections.Need for Revenue Assurance in Telecom SectorTelecom is the most dynamic sector. In markets with multiple players, competition is often intense andtelecom operators are required to concurrently manage fast-paced growth as well as innovation. Fromservice 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 issuesAll the above factors make revenue assurance a critical solution in Telecom business. © Tech Mahindra Limited 2012
  6. 6. Benefits of Revenue AssuranceRevenue 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 ExperienceChallenges faced in conducting Revenue AssuranceAs Telcos move deeper into next-generation services and content-driven service environments, RevenueAssurance becomes both, more complex and more critical. The major challenges faced in carrying outRevenue Assurance are mentioned below:Complex processes and practices:As Telcos operate under a stricter regulatory regime, new rules are forcing them to increase their internalcontrol and to ensure generating Revenue at highest levels of efficiency. As a result; expansion of productportfolios, networks and services, operations, processes and revenue chains are becoming highlycomplicated which makes RA difficult for implementation.Technical complexity:Accelerated growth in data, IP and real-time services due to dynamically evolving technologies, continuousdemand for new services, complex processes and business systems infrastructure adds complexity in systemconfiguration thus hindering exposure for RA.Data availabilityRevenue data is difficult to obtain- with too many sources of data and too many reports. Extracting the rightdata with no integrity and quality issues is a big challenge to start with. This leads to difficulty in quantifyingRevenue losses.People factorNeed of competent RA analysts and Subject matter experts with right skills and adequate knowledge to notonly identify suspicious data but also perform quick investigation and suggest quick wins is an important butdifficult task. 5 © Tech Mahindra Limited 2012
  7. 7. Tools and techniquesManaging vast data for performing data analysis is one of the biggest challenges. Revenue Assurance canbecome quite time consuming; thus wasting time on interpreting massive amount of data from unrelatedand cumbersome reports without proper tools and techniques is difficult.Revenue Assurance – Inventory ReconciliationInventory Reconciliation is one of the activities of Revenue Assurance program that aims at carrying out co-relation and reconciliation of inventory details and its data attributes of concern on systems, right fromprovisioning to billing for data products. Inventory Reconciliation helps in maintaining the data qualityacross all the systems from provisioning to billing thus the correctness and availability of all the dataattributes. It helps to ensure that the entire inventory provisioned for the customers are available on thebilling 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 toimprove their inventory management. Also revenue losses caused due to mismanaged inventory isrecovered through the reconciliation activity. Below is a detailed Inventory reconciliation delivery modelwhich can help any Telecom sector to carry out reconciliation activities: © Tech Mahindra Limited 2012
  8. 8. Business AnalyticsBusiness Analytics is a practice which helps Telcos to understand the structure, policies and operations of anorganization and recommend solutions that enable the organization to achieve its goals. It mainly providesan analytics support to the business strategy in shaping business/investment proposals with market andoperational metrics. Traditional Telcos are focused on improving financial parameters however they alsoneed an insight about customers, suppliers, business operations and bottlenecks. Business Analyticsespecially 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 operationsBusiness Analytics methodology can be implemented in a Telecom industry through the below strategicdelivery model: 7 © Tech Mahindra Limited 2012
  9. 9. Applying Business Analytics to Inventory ReconciliationBusiness Analytics can help deliver various activities of Revenue Assurance in any organization in a strategicand planned manner. Every activity of Revenue Assurance program when performed by implementingBusiness Analytics model will accelerate the yield, thus ensuring predictable and measurable businessoutcome. This section of the white paper will focus on the application of Business Analytics in Inventoryreconciliation activity to recover the lost revenue due to mismanaged inventory for telecom dataproducts.Business Analytics can provide useful assistance to achieve the objective of Inventory Reconciliation so as topresent an accurate portrayal of the assets leading to data cleansing. BA techniques can supplementInventory Reconciliation outcome in terms of detecting anomalies, identifying process or system gaps, andbusiness benefits associated with solution. Inventory Reconciliation offering can be mapped vis-à-vis theBusiness Analytics model mentioned above by using the below mapping: © Tech Mahindra Limited 2012
  10. 10. Thus aligning the Inventory Reconciliation for Revenue Assurance to the Business Analytics model helps incarrying 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 ReconciliationBusiness Analytics approach helps support business with process re-engineering, re-organization initiativeand large transformation initiatives by providing predictive analytical metrics and recommendations. UsingBusiness analytics approach to conduct Inventory Reconciliation activity helps in identification and analysisof data attributes, mapping and validation, identification of discrepancies and bottlenecks, conducting rootcause analysis and recommending solutions in order to reduce revenue leakage leading to growth inrevenue.A SIPOC model is shown below to show how the above model impacts the value chain right from thesupplier to the customer:Cost Assurance can also be performed by analyzing the variable cost that should be reconciled with theactual revenues. Hence, the profit margins can be assured by the Telcos; once both Revenue & CostAssurance have been implemented effectively with proper control plans in place.Therefore, Revenue – Cost (Variable + Fixed) = Profit Margin 9 © Tech Mahindra Limited 2012
  11. 11. However, smaller Telecom players with a lesser budget can neither afford to hire the assistance of externalRevenue Assurance consultants nor set up an independent team of Revenue Assurance experts. Hencesetting up an in-house team of Business analyst can be the best savior to combat this situation. Byimplementing the Business Analytics approach this team can easily initiate and drive actions to address theRevenue 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 costlyaffair. Instead, a simple automated tool based on Microsoft Excel or Microsoft Access can be developed sothat query based commands can drive automated data extraction and data analysis. This tool can beupdated and upgraded depending on expansion of service and products in future.In addition to applying business analytics approach to implement Revenue Assurance, there are differentstyles 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 torecover the losses once leakage is detected. Similarly Proactive approach helps in controlling or avoiding theleakages before they occur and effectively taking steps to change processes or systems before leakageoccurs. On the other hand, Active approach is real time approach to address revenue leakage problems asthey occur. So any steps to correct the revenue leakage before it causes any damage is designed andimplemented.According to TMF the three approaches are complementary. A good RA practice must always includeReactive controls, to identify leakages and create the case for the Active and Proactive controls.Tele Management Forum’s RA Solution suite 3.6 suggests Maturity Model that provides any telecomindustry, large or small, a common framework with a strategic approach for Revenue assurance. Five stagesof the Maturity model, as shown below helps to identify areas of improvements in five business aspectsnamely Organization, People, Influence, Tools and Process. © Tech Mahindra Limited 2012
  12. 12. 5 Optimizing - Continuous improvement via feedback. Decentralized ownership, holistic control4 Managed - Leakage quantitatively understood and controlled3 Defined - Standardized approach developed. Designing-in control commences2 Repeatable - Basic project/process management. Repeatable tasks1 Initial – Ad hoc, chaotic. Dependant on individual heroicsAn 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 thushelping identify, remedy and prevent revenue leakages. This provides a perfect opportunity for them toachieve more (Revenue) with less (Cost).AcknowledgementWe would like to thank Dr. Shreekala Jaydeep, Tech Mahindra Ltd for motivating, encouraging and guidingus in writing this white paper. Her invaluable suggestions at each stage have helped us in successfulcompletion of this white paper. 11 © Tech Mahindra Limited 2012
  13. 13. About Tech MahindraTech Mahindra Limited (formerly known as Mahindra-British Telecom Limited) is the global leader inproviding E2E IT services and solutions to the Telecom Industry.Majority owned by Mahindra & Mahindra, India’s fifth largest commercial group, in partnership with BT Plc(BT), Europe’s second largest telecom service provider, Tech Mahindra has grown rapidly to become the 8thlargest software exporter in India (NASSCOM 2006). With over 25000 professionals, Tech Mahindra servicesCustomers 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) andIndia (Pune, Mumbai, Bangalore, Kolkata, Chennai, Hyderabad, and Noida). Having serviced premiumtelecom companies worldwide, for nearly two decades, Tech Mahindra combines deep domain expertise inOSS (Operations Support Systems) and BSS (Business Support Systems) systems, intellectual leadership anda 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 systemintegration, design, application development, implementation, maintenance, and product engineering.Through a rich Telecom heritage, Tech Mahindra has built long-term sustainable relationships with telecomCustomers through delivery of IT services that help them achieve significant ROI and the greatestcompetitive advantage in the telecom marketplace. Committed to Quality, Tech Mahindra adds value toclient businesses through well-established methodologies, tools and techniques backed by its stringentQuality processes. Its centers are ISO 9001:2000 & BS7799 certified and it also holds a SEI-CMMi Level 5certification.Tech Mahindra’s people-care practices are certified at PCMM Level 5. Tech Mahindra is also one amongstonly three companies worldwide to be successfully appraised for SSE-CMM Level 3. © Tech Mahindra Limited 2012
  14. 14. Glossary RA Revenue Assurance CAGR Compound Annual Growth rate KPI Key Performance Indicator E2E End to End SQL Structured Query Language SIPOC Supplier Input Process Output Customer BA Business Analytics BI Business Intelligence TMF Tele Management ForumReferences1. Revenue Assurance Solution Suite 3.6- Tele Management Forum (TMF)2. http://www.telestrategies.com/ra11/index.htm - Different RA operators and their programs3. Tech Mahindra Internal Revenue Assurance practices4. http://www.xintec.com/ra-modules.aspx- RA solution for small telecom industries 13 © Tech Mahindra Limited 2012

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