Beyond Bill Reconciliation

By Tara Seals

No longer simply a billing backwater, the concept of revenue assurance - that you’re billing for everything you’re provisioning on your network - now is firmly on the map as a major destination for carrier back offices. In fact, revenue assurance is in the midst of a significant transition to becoming a major financial strategy for carriers, with ramifications in sales and marketing, customer service and churn reduction.

This year, revenue assurance, or RA, has begun to move from being a series of point solutions driven by professional services audits of departments to becoming an enterprisewide undertaking with potential for “C-level” oversight.

It’s evolving from simply validating that switch data matches customer billing data.

Now, the core approach is using technology platforms to mine SS7 data for data integrity across the entire suite of operations.

“Revenue assurance is now an end-to-end business monitoring process rather than simply a billing issue,” says John Konczal, vice president of product marketing at Telution Inc. Telution offers a set of  “quote-to-order” OSS components designed to supply the back-office data and the hooks to get at the data so external RA solutions can proactively monitor the performance of our sales, ordering and provisioning processes. “For years, many carriers have placed revenue assurance into the billing department and focused the function on verifying what was billed to end customers against internal data” what the carrier believes should be billed. As such, this was a fairly silo-based process with a myopic view of RA as a billing-only issue.

“In a number of our clients, we have seen revenue assurance almost elevated to a senior management position where the revenue assurance team is responsible for monitoring all processes from initial customer touch-points to service payment, all to ensure processes generate, collect and book the correct revenue,” Konczal adds. “And with today’s falling service margins, every penny counts.”

FROM PEOPLE TO PLATFORMS

In the past, RA was a process conducted by professional services firms such as PricewaterhouseCoopers. After performing a one-time audit and revenue hunt, typically by matching switch data to billing data, the consultants identify systems errors and recommend fixes within the billing system.

“However, every day systems and customers change, and people interact with them, and data flows between the systems,” says Steve Allor, vice president of business development at RA vendor Lavastorm Inc. “With all the moving parts, the revenue-assurance picture doesn’t stay stagnant.”

“There’s a greater push towards automation and outsourcing,” says Mark Easton, business development head for telecom systems at Agilent Technologies Inc. “In an economy where interest rates are low, carriers are willing to invest in hardware and software.

Consultants still will do the studies to justify the deployment, and they’ll perform system design, but technology solutions will replace audits.”

While technology platforms that address specific aspects of the revenue stream have been around for years, the past 18 months has seen the rise of revenue-assurance technology platforms that automate a wide range of functions and constantly monitor internal processes to prevent leakage and to provide a more granular view of the information. Agilent’s product uses SS7 data from carrier networks to ensure the switch is provisioned correctly and to gather customer-specific data. “SS7 is the gold standard for data, and with data mining tool kits to analyze that in a meaningful way gives carriers business-critical information directly from the network,” says Easton.

This allows RA to extend beyond the billing system. “ARPU is stabilizing, margins are coming down, so they’re looking at ways to take more profit in a stable balance sheet,” says Easton.

“There’s a consciousness in the industry that RA needs to become enterprisewide. So we want to take the data off the network and do network-tobill reconciliation. We acknowledge the switch-tobill process is important, but we go beyond that.”

Lavastorm’s software product is a pure-play revenue-assurance and cost-management solution that goes beyond billing into other aspects of the back office.

“We provide a financial view of people, processes and products, and the platform takes a carrier view of problems that create revenue fallout: over- and under-billing and cost overruns,” says Allor. “We can take a view of the network data going into the provisioning, billing, inventory management, ordering and other systems, and look for disparities that could have a financial impact. We have a usage analysis module that provides usage validation for outgoing bills. We can compare SS7 with [call detail] data records too.”

Like its competitors, Vibrant Solutions’ Hyper Analytics Platform performs usage analysis with SS7 data. “Leakage happens either because you fail to provision and configure the switch correctly or the switch is busy and prioritizes call completion over generating and storing AMA records,” says Yves Robinson, director of revenue assurance at Vibrant. “Now, you can reach back into the order-entry system to identify the problem.

Were not selling a new data warehouse. It’s a data-appliance platform. We extract information from the warehouse, remediate it and come up with answers.”

The automated capabilities also far outstrip what consultants are able to achieve within a reasonable timeframe and cost level, industry players say. “We call it ‘analytics at the speed of thought,'” says Robinson. “It used to take weeks or days to get an answer from combing a data warehouse. With this, it’s four minutes to 10 seconds. It allows the person to maintain their train of thought and to do rootcause analysis. The net result is quicker revenue assurance.”

Such technology makes it possible for carriers to perform more novel functions.

Lavastorm, for instance, also bridges the gap between payables and receivables with an invoice-to-bill module for customers that lease facilities. “We can correlate the cost of the network with end-user billing, to make sure they aren’t incurring costs where there is no revenue generation,” says Allor.

Mantas Inc., which has roots in the fraud space, uses SS7 data and applies business rules to compare against the switch, mediation platform, rating engine, billing system and more. So we perform reconciliation across all control points. “It’s not merely a component of the billing system,” says Mario Margolis, head of telco products at Mantas. “We bring an external view that validates the revenue stream is correct and that all the elements are accounted for.”

Such an interdepartmental approach allows easier management for carriers, as well. “Large OSS vendors can now build a practice around a platform,” says Ruth Cox, vice president of marketing at Connexn Technologies. “There are lots of different point solutions out there, and it’s difficult because you have to train everyone on everything. Point applications are scattered, and there’s no critical mass. So they have to manage each one separately.”

Connexn’s Certo platform was launched in May with a series of three packaged applications for interconnect, wireless postpaid usage and wireline postpaid subscription. It integrates a host of existing products into one integrated, modular solution for revenue assurance, automating the process from project configuration and initial systems audit to detection, management and correction of data discrepancies between the billing system and the switches. It also can view multiple applications and connectivity types on the same platform.

ENTERPRISEWIDE RAMIFICATIONS

As RA platforms grow in the amount and type of data they monitor, the process can impact other areas of a carrier’s business, such as customer service and marketing, because the same data set can be used for other purposes.

“We see it as profitability management,” says Daniel Kenyon, global industry director of communications at PeopleSoft.

“For instance, when a customer logs on, walks in, calls in, there must be a capability to immediately answer their question. Traditionally in smaller carriers, this tends to be silo-ed. The more you can bring to a central view, the better off you are. Revenue assurance allows that by collecting data across the various systems.”

The SS7 data can be used to reduce churn since it provides detailed information on a call-by-call basis. “You can look at 30 or 40 different factors to predict churn: Is there a decrease in usage? Are they approaching the one-year boundary on their contract?” explains Agilent’s Easton. “The churn prediction model becomes much more accurate when you can see if calls are dropped, say for a wireless carrier. The classic definition of revenue assurance is switch-to-bill, but something like churn reduction is recovering revenue as well.”

Speaking of revenue recovery, once leakage has been identified, collection becomes a concern that ranges into the area of customer-relationship management. “Just finding [leakage] doesn’t really manage the process going forward,” says Kenyon. “Carriers are often unable to recoup the findings from customers, because they have no way to touch the customer except through billing or accounts receivable. If customers suddenly get a bill for three-quarters more than what they’re used to, they’ll be shocked. You need a proactive way to develop business rules for a call center and apply them via a CRM application that targets customers that are being underbilled. Bill reconciliation is No. 1, but once you’ve identified the problem, you’ve created a customer segment. You have to alert them, then tell them what steps will be taken that customer service representatives can enact. You could maybe give them a credit towards voice mail in the future, etc.”

Customer satisfaction is linked to knowing your customers, a function enterprisewide, SS7- based revenue assurance dovetails with.

“Revenue assurance cleans up and creates a much more seamless architecture,” says Mark Farmer, director of marketing for services at Amdocs.

“We give a single view of the customer. Financial data is spread between 15 to 20 databases, so if you’re trying to understand if you have a Fortune 100 customer with thousands of employees, do you have a holistic view of the revenue and do you treat them appropriately? It’s an extension of an integrated customer-management philosophy.

Historically it was deployed and managed by different departments; to bring it together requires pre-integrated products where every customer touch point - IVR, the call center, e-care - is armed to provide intelligent recommendations to customers based on having as much information as possible.”

“Suddenly RA provides you an opportunity to proactively reach out to the customer,” he adds. “When you tie together all of the platforms seamlessly and break down barriers, you can really drive customer satisfaction.”

Usage information from the network can be used for marketing purposes too. “Our solution integrates Business Objects and provides online analysis,” says Robinson. “For example, Nextel can identify the take rate of a new service and generate a subscriber profile long before the billing cycle is complete. So they can modify a promotion within a billing cycle instead of having to bill and wait 30 days to find out what the take rate is.”

Revenue assurance also is tied intimately to Sarbanes-Oxley compliance. Sarbanes-Oxley requires strict accounting practices from corporations, passed in the wake of the Enron and Worldcom scandals. Carrier CFOs are required to sign off on the balance sheet.

“For a carrier, the currency is the calls,” says Margolis. “Revenue assurance makes sure I bill for everything in my network. So RA audits the revenue stream.”

Kenyon adds, “Carriers will spend $5 [million] or $8 million depending on the company, figuring out how to effect compliance.

Revenue assurance is directly related, and how that tracks back to the general ledger.”

EXECUTIVE VIEW

All of this activity in the revenue-assurance space has set the stage for executives to gain control of RA. In the past, department heads were responsible.

“The evolution is occurring towards revenue assurance becoming part of a title of a senior vice president,” says Robinson. “I know two carriers, a CLEC and a wireless operator, where that is true. It’s turning into a risk- and asset-management function. Or it becomes part of a whole staff that encompasses fraud, security and CALEA compliance, etc. It’s starting to become a line organization.”

Tools for executives are cropping up in platforms. Lavastorms core technology, dubbed BRAIN (Business Rule Automated INfrastructure), gives a visual data flow modeler for graphical representations of data. And Mantas’ Margolis sees RA is becoming more of a dashboard function. “The next step will be a margin- analysis piece,” he says. “If all the information is at the same source, you can compare cost and revenue. The CFO or vice president of finance can just look at the screen for cost trends, leakage in margins, and they can do product and market segmentation. So they can see, in real time, if they’re making money in a certain market. Eventually the dashboards will have all the bells and whistles for financial, auditing and fiduciary requirements for investors.”

Essentially, the future of RA is the ability to monitor the entire network and back-end operations system and relate it to good business practices. “RA is becoming part of the strategic thinking within these organizations, so it’s trickling up to the C-level,” says Jason Briggs, program manager for telecom software at the Yankee Group. “It’s the same concept as a network operations center - you could function without it, but why?”

“If you’re looking to launch a full-scale RA department, it’s a major undertaking,” he adds. “Having a CxO champion is a No.1 requirement. You have to gain cooperation and respect with other departments.”