Smart Margin Analytics: Adding Margin Assurance Capability to Revenue Assurance


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Smart Margin Analytics: Why Bolting on a Margin Assurance Capability to an Existing Revenue Assurance System can Deliver Big Savings - Efrat Nissimov, Director of Revenue Assurance Product Management, cVidya, in the Telecom Analytics 2013 Conference in Atlanta, January 30-31, 2013

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Smart Margin Analytics: Adding Margin Assurance Capability to Revenue Assurance

  2. 2. 2 Agenda  Market Trends  Why Margin Analysis  Margin Analysis on top of Revenue Assurance
  3. 3. 3 Market Trends
  4. 4. 4 Trends in the Market – New Challenges?  New technologies  New pricing models  New services  Additional players in the revenue chain  Data traffic explosion Market Trends - New Challenges
  5. 5. 5 Global Mobile Data Traffic Drivers More Mobile Connections Faster Mobile Speeds More Mobile Users More Mobile Video
  6. 6. 6 Data Traffic Explosion
  7. 7. 7 The Hunger Games 7  New technologies (LTE)  New business models  Policy-based charging  Data sharing family plans Results of the ever-hungry bandwidth consumer:
  8. 8. 8 Variety of Pricing Models UNLIMITED DATA DATA THROTTLING • 3GB of usage per month for 3G unlimited customers • 5GB for 4G LTE customers and then throttling • 2GB of data per month and then throttling only on congested cells DEVICE PACKAGES
  9. 9. 9 Why Margin Analysis?
  10. 10. 10 The Need … Money…  Operators are under increasing market and competitive pressure  While OPEX and CAPEX costs must be lowered, shareholder demands for increased values must be met Understand the Revenues Identify the Costs Optimize the Margins
  11. 11. 11 Why is Margin Analysis So Important Now?  Multiple operators have been licensed to compete, so tweaking services to achieve maximum profitability has never been more important  Over-the-top players are not only eating scarce bandwidth, they are offering profit-killing alternatives to voice and SMS  Revenue per subscriber is decreasing, and operators needs to remain profitable, protect their business and exploit opportunities  Service-bundling has exploded, and triplequad-play operators need to gain a consolidated view of margins  Interconnect and content partners have expanded, underscoring the need to monitor these partners from a service profitability aspect
  12. 12. 12 Traditional Approaches for Margin Analysis  For years people have been performing margin analysis using Excel spreadsheets  In the early 90s, margin analysis was also a key benefit of owning a data warehouse  Why are these approaches less than optimal?  Time consuming  Results are not granular enough  Excel is suited to producing periodic reports (monthlyquarterly). Once product categories are mixed and segmentation is required, the Excel model becomes clumsy
  13. 13. 13 A long term goal of many RA organizations is to understand profitability for different segmentations Determine revenue generated and cost , effectively analyzing the margin per segmentation The Goal
  14. 14. 14 Margin Assurance  Conceptually: Margin = Revenue - Costs  Verify that each segmentation, or group of segmentations, has a positive margin  Costs include: – Direct costs, for example, payment to a partner per minute for calls – Indirect costs, for example, network costs, customer acquisition costs (indirect costs are more difficult to define) By using direct costs only, it is still possible to set upper limits on the margins
  15. 15. 15 Margin Challenges  Revenue challenges  Multiple rate plans and bundle complexity  Consumption- or service-based charging  Quality of service-based ratings  Cost challenges  Partnership arrangements and commissions  Interconnect partnerships, where wholesale rates are higher than retail rates  Content supplier relationship where content received and paid for is not delivered or billed
  16. 16. 16 Margin Analysis on-top of a Revenue Assurance Solution
  17. 17. 17 Easy to Implement — Based on RA Data  Margin analysis and Revenue Assurance are complimentary activities that share similar techniques and information  RA paves the way for margin analysis since most of the source data has already been collected, normalized, and augmented with additional data (e.g., customers’ demographic, regional, and network information)  Since platform is based on xDR-level (not just aggregate numbers), operators can view various dimensions in highly granular segmentations
  18. 18. 18 What Should Be Analyzed?  Content providers  International carriers  Inter-carrier traffic  MVNOs Content Provider A Soccer Video Basketball Results Golf Updates Sports Package Settlement Settlement Content Provider B Content Provider C National Geographic The Wild Life Discovery Nature Package The Runner Poker Packman Games CSP Austria 0.25$ Belgium 0.20$ Hungary 0.30$ Zone A (0.25$) Settlement Settlement CSP Germany 0.55$ Italy 0.45$ France 0.50$ Zone B (0.50$) UK 0.75$ Spain 0.70$ Romania 0.80$ Zone C (0.75$) International A International B National Carrier A Transit Traffic Terminating Traffic Orginating Traffic Carrier A Settlement Settlement National Carrier B National Carrier C CSP Transit Traffic Terminating Traffic Orginating Traffic Carrier B Transit Traffic Terminating Traffic Orginating Traffic Carrier C CSP MVNO A MVNO B MVNO C Transit Traffic Orginating Traffic SMS Data Terminating A Settlement Settlement Transit Traffic Orginating Traffic SMS Data Terminating B Transit Traffic Orginating Traffic SMS Data Terminating C
  19. 19. 19 Most Important Uses for Margin Analysis  Service hierarchies  Margins on hierarchies of services and sub- services  Pricing plan analysis  Analyze whether a pricing plan has a high or a low margin  Customer usage patterns for a particular plan  Market segmentation  Customer profitability in great detail - margins for subscribers per region, business customers in a particular industry, etc.
  20. 20. 20 Most Important Uses for Margin Analysis  LTE service monitoring – QoS-based pricing, bandwidth consumption, services enhanced during an actual session, etc.  Analyzing service margins and profitability presents a challenge  Complex plans (e.g. Friends and Family mobile data plans)  Requires constant vigilance to ensure profitability, since there are many variables that could make costs spike  Experimentation, testing and “what if” scenarios  Uptake of a particular service is getting tougher to forecast - being able to assess the margins of a service in advance or soon after launch is critical for making adjustments to the product
  21. 21. 21 Financial Dashboards  Centralized financial dashboard, configurable to organizational business topology  Financial impact reporting, tracking and decision support for C-level, CFO, Risk Management, RA experts, Management, and others  Drill down for impact on relevant business entities (revenue streams, services, platforms, customer types)  Hierarchical finance trend analysis and deviation detection  Forecasting and “what if” scenarios for selected entities based on common forecasting models
  22. 22. 22 Margin Analysis Dashboard Example
  23. 23. 23 Margin Analysis – The Full Picture Margins Customer Segment Service Subscriber Invoices Partner Settlements Exact revenue & costs Revenue Assurance Adjusting parameters – Impact margins? Destination Rates Plan Bundle Best approach to maximize margin Automatic Recommendations Service Type Customer Segment You Need to Know Service Type Region Margin Analysis Where are you underperforming? Service in Bundle Pricing Plan “What if” Analysis Why you are underperforming?
  24. 24. THANK YOU!