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III. Levels of Assurance (Objectives)
The first step in the assignment of revenue
assurance responsibilities is the clear
identification of the domain within which the
activity is to be performed. The next step is
then the identification of the “level of
assurance” or the objective for that RA
activity.
The word “assurance” can mean a lot of
different things and management will in most
cases require the revenue assurance team to
apply a different level of “assurance” to a
different domain.
The definition of revenue assurance needs to
include the allocation of different “levels” of
assurance to different areas, based upon
management’s direction.
The five levels of assurance include:
Leakage
identification and containment
This is the highest and least comprehensive
of the levels of assurance. It is also the most
traditional and conservative of revenue
assurance objectives. Assuring against leakage
and containment requires revenue assurance
practitioners to seek out situations or systems
where revenue that has been earned is not being
accurately processed.
The job of revenue assurance in these cases
is to find, diagnose and correct the leakages in
an efficient and rationalized manner.
Revenue Risk
Containment
At a higher level of assurance, revenue
assurance can set out to do more than simply
FIND LEAKAGE THAT HAS ALREADY HAPPENED, but can
actually get proactive and anticipate potential
leakage situations and function to eliminate the
risks before a leakage occurs. The saying “an
ounce of prevention is worth more than a pound
of cure” certainly applies in this case. When
the revenue assurance practitioner actually
prevents a revenue loss condition from
developing, they contribute a significant added
value to the firm at a significantly reduced
cost.
It is for this reason that RA teams are
getting involved in new product development and
are creating change management procedures for
network, billing and other operational groups.
Margin and Rate Plan
Assurance
Another area where revenue loss is sharply
felt by telcos’ is in the area of pricing for
different products and services. The creation of
“bundles”, “loss leader” and “combination
offers” create exceedingly complex revenue
tracking scenarios that can ultimately cost the
company money because of the lack of a
comprehensive revenue protection based analysis
of the assumptions behind its development.
The assurance of revenue recognition and
accounting for revenues properly is a
specialized and critical aspect of some revenue
assurance domains.
Revenue Stream
Assurance
Many telcos are asking their revenue assurance
teams to get even more proactive in their
efforts. These managers define the assurance of
revenues to include the protection and
monitoring of risks not only to the actual
revenues earned, but to the assurance of an
expected revenue stream.
There are several ways that revenue stream
assurance is being included:
Network Asset
Downtime and Revenue Loss
When a carrier invests large sums of money in
the installation of major network components
(like and MSC) and that element suffers a number
of outages, there can be significant and
catastrophic revenue impacts. In the past
management tended to relegate these issues to
the “network issues” category, but most are
discovering that they need to keep track of,
account for and manage these exposures to the
revenue stream in the same manner as the rest of
the exposures we have been discussing.
Churn and Brand
Equity Erosion
Equally interesting is the way that astute
CFO’s are realizing that customer churn and the
cannibalization of brand equity represents a
major erosion to the revenue stream as well.
These groups also include churn as a valid RA
issue.
Fraud Management
It has long been understood that there is a
large amount of overlap between the domain,
tools and scope of the fraud management function
and the revenue assurance function. GRAPA
benchmarks show that the vast majority of telcos
have been to include fraud as a integral
component of the overall revenue assurance
mission. Clearly, the vast majority of fraud
cases represent significant and credible threats
to the companies revenue streams and is
appropriately included as a possible level of
coverage.
The two
dimensional definition of RA Scope
The definition of the scope of any revenue
assurance activity, therefore, includes 2
dimensions. First, the declaration of a domain
that is to be included, and secondly, the
objective set for the assurance of that area.
For example, management may tell the RA team
that they want them to take responsibility for
the:
- Churn (level of assurance) for Prepaid
Voice Customers (horizontal domain).
- Leakage (level of assurance) in the
mediation system (vertical Domain)
Or
- Risk of loss (level of
assurance) regarding the security of network
elements (vertical domain)
This two dimension method
of scope definition provides the RA professional
with a clear, standardized method for the
identification and standardization of tools,
vocabulary and measures.
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