3. Contents
Rapid maturity assessment and benchmarking 4
Revenue assurance strategy and target model 6
Analytics driven revenue assurance/revenue finder 8
Product margin assurance 10
Migration assurance 12
Customer churn assurance 14
Control framework review, implementation and automation 16
Revenue assurance dashboard and KPI reporting 18
Fraud analytics 20
I 1Sharpening Revenue Assurance capabilities in the digital and converged space
4. 2 I Sharpening Revenue Assurance capabilities in the digital and converged space
Background and context
Product characteristics underpinning
financial leakages:
• L arge custom er base
• M ass transaction
• P roduct catalog com plex ity
• P rocess and I T com plex ity
• I nvolvem ent of m ultiple third parties
T he telecom m unications industry rem ains a f ast- m oving and com plex ecosy stem , w ith operators f acing a rapidly evolving technology
landscape that has m any new challenges and opportunities. Additionally , an underly ing shif t is tak ing place: telecom providers are
investing in m edia and digital services, w hile m edia and digital service providers are investing in com m unications. O ver- the- top ( O T T )
and digital services are becom ing increasingly popular w ith custom ers, w ho are dem anding higher- q uality data services that are
placing increased traffic requirements on providers.
W ith declining m argins and new opportunities/ services on the horiz on, operators’ success cannot rely solely on state- of - the- art
networks: technology alone will not guarantee benefits for telecom companies. By 2020, EY predicts a 50% increase in customers’
time spent online, with 75% of that time on mobile devices. Operators need to monetize the large amounts of data flowing through
their netw ork s by data propositions, pricing and charging m echanism s.
Operators are moving from transaction-based charging to “flat data” packages; these offerings are actually complex, with bundled
services rated and priced dif f erently w ithin the sam e pack age. T o accom m odate digital services, propositions are evolving tow ard
unlim ited data plans, w hich m ay be either f ree or priced based on the user’ s ex perience. O perators m ay even of f er sponsored or z ero-
rated data propositions w here usage is billed to the sponsoring com pany and not to the custom er. F or these reasons, operators need
to f orm sophisticated agreem ents and partnerships f or digital services, enable the creation of applications, and of f er businesses an
accessible platf orm and capacity to reach telecom custom ers.
What does this mean for revenue assurance?
Revenue assurance (RA) was conceived as a risk mitigation solution about 15 years ago in response to the constantly increasing
com plex ity of the telecom value chain and grow ing revenue leak ages.
T he recent industry shif t tow ard convergence w ithin the telecom , m edia and technology ( T M T ) industry and the em ergence of other
entrants such as O T T play ers m ak e it m ore necessary than ever f or providers to ensure their revenue assurance strategies are robust
— indeed, it is also relevant f or the w ider ecosy stem .
T he converging ecosy stem is disruptive and a challenge f or revenue assurance prof essionals, w ho w ill need to m ove bey ond their
traditional scope, perhaps beyond their “comfort zone.” Although telecom providers (and revenue assurance functions) have invested
heavily on voice and SM S services, they are now called upon to assure the data product revenue stream s. Revenue assurance w ill
theref ore need to m itigate risk s and plug leak ages in new products and services and contribute in m argin im provem ents. M oreover,
revenue assurance will need to optimize its operations and “step up” to contribute to the required returns on investment (ROI).
5. I 3Sharpening Revenue Assurance capabilities in the digital and converged space
revenue assurance strategy and
target operating m odel
Custom er churn assurance
Where am I? What do I want to achieve?
Step 2: Operational
objectives
Step 3: Actions
Step 1: Rapid maturity
assessment
Set up a w orld- class revenue
assurance f unction
Rapidly assess the m aturity of the
revenue assurance f unction to
understand the current state and
f orm ulate a grow th road m ap
Ensure that all major revenue
leak ages have been covered
Analy tics- driven revenue
assurance/revenue finder
Ensure complete control coverage
through a thorough f ram ew ork
P roduct m argin assurance
I m prove revenue assurance
capabilities
M igration assurance
Deliver increm ental value to other
com pany f unctions
Ensure BSS/OSS* transformation
Control f ram ew ork review ,
im plem entation and autom ation
RA dashboard and K P I reporting
F raud analy tics
How do I get there?
New strategies are needed to put proactive and profit-enabling revenue assurance capabilities in place — in practice, this will
m ean dif f erent things to dif f erent operators or service providers. So the q uestion rem ains: how can the service providers in
the w ider T M T ecosy stem ensure a proper revenue assurance setup?
T he best w ay f or service providers in the w ider T M T ecosy stem is to start w ith a rapid m aturity assessm ent and to set clear
goals and objectives with respect to capabilities needed to form a robust revenue assurance framework.
Below is a simple three-step “cheat sheet” for setting up potential objectives and respective actions.
Illustration: RA cheat sheet for setting up objectives and actions
Focus areas for revenue assurance
T he f ollow ing pages cover a detailed description of the solutions against each of the action plans show n in Step 3 above,
together w ith suggested approaches and leading practices on how to im plem ent them .
* Business Support Systems/Operating Support Systems
6. 4 I Sharpening Revenue Assurance capabilities in the digital and converged space
Rapid maturity assessment
and benchmarking
Typical challenges faced
• U nclear revenue assurance
objectives
• L ack of benchm ark s to
assess m aturity and drive
actions
Why should it be done?
• T o create a baseline f or
revenue assurance against
leading practices
• T o help develop a robust
road m ap
Value added
• Clear view of the current
state of revenue assurance
and target m aturity
Solution overview
Rapid m aturity assessm ent and benchm ark ing are designed to provide a baseline and benchm ark against selected service providers
of f ering sim ilar services. I t provides the com pany w ith a clear view on w here its revenue assurance is and w here its revenue
assurance could be (always aligned with the company’s business goals, of course). The rapid assessment is the first step in designing
a w inning revenue assurance strategy . O nly by understanding ex actly w here som eone stands and w hat ground has been already
covered can they plan and design the w ay f orw ard.
T he illustration above describes the ty pical lif e cy cle of a revenue assurance f unction, f rom early f orm ation to best- in- class perf orm er.
As the team and capability evolve, so does the RO I , w hich is usually high at the initial phase. T his is w hen the f unction is established,
high risk s are covered in early stages and large leak ages are plugged.
At later stages, revenue assurance widens its scope and eventually becomes a reliable profit and control center for the company. This
can be achieved only through looking for incremental opportunities and further adopting a cost, cash and margin agenda, not just
revenue. Even mature revenue assurance functions can benefit from “restarting RA” when a new product line emerges.
1
Illustration: EY revenue assurance Maturity Model and life cycle
1 2 3 4 5Early
Strategy
• N o f orm aliz ed strategy
Organization
• P ersonal initiatives or
sm all team s
Process and technology
• Reactive and instinct-
based revenue assurance
activities
• Substantial m anual ef f ort
Strategy
• Som e revenue assurance
success
Organization
• Early formalization of
the revenue assurance
f unction
Process and technology
• Basic revenue leakage
related task s perf orm ed
Strategy
• F orm aliz ed strategy and
influence at executive
level
Organization
• Defined and recognizable
team f ocusing on revenue
assurance activities
Process and technology
• Major revenue assurance
processes covered
Strategy
• F orm aliz ed strategy
elem ents of group
integration
• P rovision of cash, cost and
revenue m ax im iz ation
Organization
• Revenue assurance
activities dissem inated
into the organiz ation and
m onitored by the revenue
assurance team
Process and technology
• All revenue leak age and
f raud processes covered
• Major cash and margin
activities covered across
value chain
Strategy
• Strategy is risk - based,
includes cost reduction
param eters and is
integrated w ithin group
• It is considered as a profit
center
Organization
• Revenue assurance
prim arily undertak es a
m onitoring and advisory
role and guides on cash
and m argin issues
Process and technology
• revenue assurance covers
revenue, cash and m argin
leak ages
Recurring Established Adm inistered O ptim iz ed
ROI
Revenue assurance evolution curve
Control
implementation
Control
automation
KPI
implementation
Embed
controls Detective
leakage
Incremental
opportunities
7. I 5Sharpening Revenue Assurance capabilities in the digital and converged space
Approach
• T he rapid assessm ent of each m aturity level spans three pillars: strategy , organiz ation, and processes and technology .
• T he rapid assessm ent includes insights and inputs not only f rom revenue assurance m em bers but also f rom stak eholders accros
the com pany .
Case study
Illustration: EY revenue assurance Maturity Model Assessment tool
• Conduct interview s w ith the revenue assurance team to understand how the current f unction is structured, their
influence across different functions, tools used for detecting leakages, and reporting and operating processes used by
the revenue assurance team
• Conduct cross-functional workshops with key stakeholders and understand how to use an “outside view” the revenue
assurance roles and responsibilities
US$80mover five years
We conducted a rapid assessment for a large technology company offering business-to-consumer (B2C) services
to assess revenue assurance req uirem ents against its peer group and assessed high- level capabilities req uired
f or building the revenue assurance practice. T he w ork led to a proper business case and RO I m odel that resulted
in a revenue assurance function that saved more than US$80m over five years.
1
4
7
2
5
8
3
6
9
• Risk - based strategy
• I ntegration w ith risk f unctions
• Sponsorship and budget
• Cross- departm ent buy - in
• K P I m onitoring
• Scope
• T ools
• P rocesses
• Dashboards
• T eam structure
• V irtualiz ation
• P eople and sk ills
• Culture of ex cellence
• Influence and authority
OrganizationStrategy
Process and technology
8. 6 I Sharpening Revenue Assurance capabilities in the digital and converged space
Solution overview
Revenue assurance f unctions need a clear vision f or the f uture aligned w ith the com pany ’ s strategy to ensure that they add
maximum value. It is imperative that the strategy is tailored to the specific local needs and considers the key idiosyncrasies of the
service provider.
Robust perf orm ance, delivery and corresponding RO I on investm ents in revenue assurance can be harnessed if the f unction is set up
on sound f undam entals. Q uality design of the f unction w ill bring recursive returns as y our business ex pands.
Approach
• Understand the company vision and product features, Operational Support System (OSS) and Business Support System (BSS)
architecture
• Understand the revenues and cost flows and related processes
• U nderstand com pany risk appetite and set target revenue assurance m aturity accordingly
• Evaluate best practices of revenue assurance seen across telecom operators and other B2C technology companies
• Develop a heat m ap view through interview s, w ork shops and process w alk - throughs on potential risk s related to revenue
assurance
• Design revenue assurance strategy that will include objective and vision, budget allocation, KPIs for staff, risk assessment based
approach and scope of coverage
Illustration: RA strategy, target areas and actions
Revenue assurance strategy and
target model2
Typical challenges faced
• RA f unction perceived as
control- driven f unction vs.
value- driven
• Insignificant, or unknown,
RO I f rom RA f unction
• H igh cost f or providing
revenue assurance
Why should it be done?
• T o provide clarity on
developing RA strategy w ith
an ROI and define robust
target operating m odel
• T o enable support and
investment for RA objectives
Value added
• Significant value from RA
f unction and good RO I
• O ptim iz ed target m odel f or
delivery
RA’s strategic imperative Target areas
PrecisionAgilityEvolution
Key tenets to over achieve
• Saf eguard basic revenue streams
• Establish billing accuracy
• Ensure accuracy and timeliness of
service provisioning and its m ovem ent
• Ensure precision of product catalog/
configuration, custom propositions and
new product launches
• M itigate risk s pertaining to credit control
and custom er abusive behavior
• I m plem ent revenue assurance strategy
• Define visioning and scoping
• O rganiz ation design
• Conduct control gap identification and
im plem ent m itigation actions
• Establish cross-functional role, presence
and involvem ent of RA
• Create RA governance m echanism
• I dentif y data points and regulariz e data
f eed f or basic controls
• Conduct third-party cost rationaliz ation
• M onetiz e of opportunity losses
• Ensure adequacy and accuracy of
product profitability
• Ensure accuracy of channel payouts
• Deliver z ero- revenue- loss network/IT
transformations
• Provide sales assurance over lead
closure and enterprise pursuits
• Expand controls universe to ensure
com prehensiveness of coverage
• Build automation environment for
m onitoring of RA controls
• T ie issue escalation and resolution
back to ERM framework
• Develop financial models to monitor
and m aintain product m argins
• P ose strategic interventions on
procurem ent volum es
• Seiz e incremental revenue opportunities
( up/ cross- sell)
• O ptim iz e working capital optim iz ation
• Predict and reduce churn
• O ptim iz e of production costs
N ex t w ave of RA returns w ill be
unlock ed by em pow ering the
f unction and encouraging an
unrestricted agenda
• Network usage and rating
• Billing
• Order management and
provisioning
• Customer acceptance and
risk management
• Collections
• Channel and partner
management
• Product design
• Customer management
and disputes
• Accounting
• Apply cognitive rules to com pute
event- based risk propensity and
f orecast occurrence of leak ages
• Create an advance RA agenda by
link ing f unctional K P I s w ith P & L
benefit identified
+
+
M aturity
N ascent
Accelerated
I m pact
0–12
months
12–24
months
24–36
months
9. I 7Sharpening Revenue Assurance capabilities in the digital and converged space
• P ropose the com pany - w ide role revenue assurance w ould play , the latitude in the activities the f unction shall undertak e
and an overall directional view f or the f unction aligned w ith the overall strategy of y our business
• Make a quantitative business case justifying early revenue assurance investment
• Conduct a cost benefit analysis to decide the optimal deployment, in conjunction with expected business growth; options
could include a centraliz ed f unction, one that is divisionally or f unctionally distributed, or a shared services center
• Derive a best-fit organizational structure, supported by a detailed people and organization plan
• Define operating policies and target performance metrics for the function
• Calculate budget requirements based on various direct and indirect costs; this activity would include man power
estim ation in line w ith the proposed organiz ation structure
• Consider and decide the revenue assurance approach to analy tics data access and business inf orm ation — this is k ey to
the function’s success and depends on the company’s attitude to “build vs. buy” on IT systems; all functions start with a
“what’s available” approach to information, but it is important to get the strategic decision on this correct for success
*Models increasingly becoming popular with operators around the globe
W e have supported leading telecom operators
and O T T play ers across the globe in assessing
and developing revenue assurance strategy
and target m odel. T he scope of w ork included
assessing the revenue assurance coverage,
related strategy , target m odel, organiz ation
setup and related FTEs and budget.
W e are the outsourcing advisor f or a large
integrated telecom service provider f or f our y ears.
W e have a dedicated team of 4 0 + prof essionals
w ork ing across and have helped the client re-
engineer num erous processes, im plem ent revenue
assurance tools, set up new SL As w ith user
departm ents and f ram e m ultiple new processes
journeys, which covered successful automation
and new product launches coupled w ith technology
changes.
Target operating model examples
First-generation service delivery models
Second-generation service delivery
models
In-house — traditional
In-house — center of
excellence (CoE)
On-site co-sourcing* Selective offshoring* Complete outsourcing
Operatingmodel
• T raditional in- house
decentraliz ed m odel
• O perations
com pletely in- house
w ith reporting
elem ents draw n to
CF O at a f unctional
level
• Captive shared
services based
centraliz ed m odel
• RA CoE created
centrally w ith a
m ix of on- roll and
of f - roll em ploy ees
and product- based
ex pertise
• Selective stream -
w ide co- sourcing/
outsourcing
prim arily popular
w ith new solutions,
lack of sk ill set,
deploy m ent of
enhanced controls
and global best
practices, and
geographical
challenge
• Selective stream -
w ide of f shoring of
RA
• P opular w here on-
site co- sourcing is
costly / lack of locally
available sk ill set
• Controls over
service q uality and
SL As
• Com plete f unctional
outsourcing of RA
activities
• M odel still nascent
on account of
regulatory and data
security challenges
Operatingelements
• H igh costs
• L ack of best
practices and
standard processes
• Challenges in
building RA
organiz ation of
f uture
• Cost ef f ective w hen
com pared w ith
traditional in- house
m odel
• O pportunity to
create RA as a profit
center
• Robust reporting
process and
f unctional SL As
critical to success
• Speed to m ark et
f or any challenges
stated above
• Challenge of low
sk ill set retention
• Shared
inf rastructure
• Robust reporting
m echanism a critical
success f actor
• Cost ef f ective
• Ease of resource
replacem ents and
global best practices
• Strong data security
and data integrity
controls a pre-
req uisite
• Regulatory
dependent
• Cost ef f ective
• SL A driven
• Strong data security
and data integrity
controls a pre-
req uisite
• Regulatory
dependent
Case study 1 Case study 2
1
4
7
2
5
8
3
6
9
10. 8 I Sharpening Revenue Assurance capabilities in the digital and converged space
Analytics-driven revenue assurance/
revenue finder
Solution overview
T he im pact of continued evolution of new products and their associated revenue and billing f ram ew ork s m ak es revenue assurance
m ore challenging f or revenue assurance f unctions to im plem ent controls in all areas.
Additionally, many CFOs have started to demand that revenue assurance further contributes to the telcos’ EBITDA and cash flows. A
revenue finder program is an analytical-driven program to quickly identify leakages, cost leakages and cash flow opportunities.
Approach
• Engage with a local revenue assurance function from day one to start know-how and expertise sharing
• L ook at the revenue cy cle holistically , of ten building upon w ork done by ex isting assurance and control team s
• Engage with system and process owners for thorough walk-throughs and review of revenue controls and reporting
• P erf orm advanced data analy tics using developed SQ L q uery ing and program m ing
• P erf orm a range of core activities to identif y opportunities, including:
• Data analy tics
• P rocess and contract w alk - throughs
• I nvoice review s
• Billing re-rating
• Credit note analy sis
By taking an end-to-end view of the revenue cycle, our framework covers opportunities across optimization, assurance and
realiz ation.
3
Illustration: Revenue value chain assessment questionnaire
Typical challenges faced
• Revenue f orecast errors
• Slim m ing m argins
• P ointers of revenue and cost
leak ages
• N ecessity to broaden control
scope
• Search f or increm ental
revenue opportunities
Why should it be done?
• To deliver business financial
im provem ent
• T o provide clarity on the
developing RA strategy to
support RO I
Value added
• Adds opportunities ranging
f rom
1%–3% of EBITDA
• Identifies opportunities
across a w ide range of areas
and also highlights w ork ing
capital opportunities
Ref: 1011184
Revenue cycle heat map – enterprise
Mobile (voice, messaging,
data)
Product and offer
development
Product and offer
change
management
Marketing/
campaign
management
Order intake
Customer risk
assessment
Lead management
Customer change
management
Customer and
service
termination
Customer and
service activation
Inventory
management
Bill timeliness
Allowances and
discounts
Usage
processing
Usage rating
Usage
generation
Non-usage billing
Invoice
management
Payment follow-up
Dunning
Bad debt
management
Dispute
resolution
Dealer
management &
commissions
Interconnection
Roaming
Wholesale/
reseller
management
Content provider
management
Completeness and
existence of
postings
Revenue
recognitions
Cost allocation
Accrued revenue
Contract
compliance
Care credits
Churn
management
Refunds
management
Reference data
management
Bill accuracy
Provisioning lead
times
Fraudulent usage
detection
Credit approval
and limits
Refunds
management
Product design
Customer
acceptance and
risk management
Channel and
partner
management
Order
management
and provisioning
Network usage
and rating
Billing Collections
Customer
management
and disputes
AccountingRevenue cycle heat map – cloud
Mobile (voice, messaging, data)
Product and offer
development
Product and offer
change
management
Marketing/
campaign
management
Order intake
Customer risk
assessment
Lead management
Customer change
management
Customer and
service
termination
Customer and
service activation
Inventory
management
Bill timeliness
Allowances and
discounts
Usage
processing
Usage rating
Usage
generation
Non-usage billing
Invoice
management
Payment follow-up
Dunning
Bad debt
management
Dispute
resolution
Dealer
management &
commissions
Interconnection
Roaming
Wholesale/
reseller
management
Content provider
management
Completeness and
existence of
postings
Revenue
recognitions
Cost allocation
Accrued revenue
Contract
compliance
Care credits
Churn
management
Refunds
management
Reference data
management
Bill accuracy
Provisioning lead
times
Fraudulent usage
detection
Credit approval
and limits
Refunds
management
Product design
Customer
acceptance and
risk management
Channel and
partner
management
Order
management
and provisioning
Network usage
and rating
Billing Collections
Customer
management
and disputes
AccountingRevenue cycle heat map – digital
Mobile (voice, messaging, data)
Product and offer
development
Product and offer
change
management
Marketing/
campaign
management
Order intake
Customer risk
assessment
Lead management
Customer change
management
Customer and
service
termination
Customer and
service activation
Inventory
management
Bill timeliness
Allowances and
discounts
Usage
processing
Usage rating
Usage
generation
Non-usage billing
Invoice
management
Payment follow-up
Dunning
Bad debt
management
Dispute
resolution
Dealer
management &
commissions
Interconnection
Roaming
Wholesale/
reseller
management
Content provider
management
Completeness and
existence of
postings
Revenue
recognitions
Cost allocation
Accrued revenue
Contract
compliance
Care credits
Churn
management
Refunds
management
Reference data
management
Bill accuracy
Provisioning lead
times
Fraudulent usage
detection
Credit approval
and limits
Refunds
management
Product design
Customer
acceptance and
risk management
Channel and
partner
management
Order
management
and provisioning
Network usage
and rating
Billing Collections
Customer
management
and disputes
AccountingConsumers Revenue cycle heat map – consumers, mobile
Mobile (voice, messaging, data)
Ref Billing leakage point Description Rev Cash Cost Value RAG Ease Time
6.01 Data lost between mediation and billing Any data lost or corrupted during file transfer between mediation and billing
6.02 Bill not produced Leakage occurs when a bill for the serviced provided is not produced
6.03 Billing cycles not optimised for cash flow Inappropriate number of billing runs lead to substantial levels of accrued revenue and/or customers not proportioned evenly across billing cycles
6.04 Bills produced do not cover the services provided Fixed charges (including any concurrent charge loss) and/or new/upgraded equipment charges not applied to customer bills
6.05 Customer reference data missing from billing Inability to correctly charge for an event where customer data is required to identify the customer type, and this data is missing or corrupt
6.06 Bundle allowance applied incorrectly Usage events over-allocated to bundle allowance causing revenue leakage
6.07 Discounts not applied correctly Incorrect discounts applied to customers on X tariff leading to lower billed values than appropriate
6.08 Charges not applied to customer bill Fixed charges (including any concurrent charge loss) and/or new/upgraded equipment charges not applied to customer bills
6.09 Manual billing inaccuracies Failure to correctly compile manual bills, resulting in charges being omitted from the bill (including equipment sales)
6.10 Long duration between cut-off and invoice issue date Delays in processing calls and bill runs lead to lengthy timescales between cut-off and invoice issue date
6.11 Terms not calculated from cut-off date Triggering terms from cut-off date rather than invoice produced date will minimise days within which customers should pay their bills
6.12 Terms not applied correctly to bill Failure to correctly apply terms to invoices leads to customers being given extension to contractually agreed terms
6.13 Print vendor does not receive all complete bills Bill not received by print vendor, and thus not sent to customer. Will appear as bad debt as revenue will still be booked in G/L
6.14 Concurrent charging Loss Two simultaneous charges hit prepay customer account; one charge is not deducted
6.15 Re-credit raised in Prepay Billing System for sent SMS Prepay SMS flagged as not sent by SMSC and customer re-credited
6.16 ... ...
Product and offer
development
Product and offer
change
management
Marketing/
campaign
management
Order intake
Customer risk
assessment
Lead management
Customer change
management
Customer and
service
termination
Customer and
service activation
Inventory
management
Bill timeliness
Allowances and
discounts
Usage
processing
Usage rating
Usage
generation
Non-usage billing
Invoice
management
Payment follow-up
Dunning
Bad debt
management
Dispute
resolution
Dealer
management &
commissions
Interconnection
Roaming
Wholesale/
reseller
management
Content provider
management
Completeness and
existence of
postings
Revenue
recognitions
Cost allocation
Accrued revenue
Contract
compliance
Care credits
Churn
management
Refunds
management
Reference data
management
Bill accuracy
Provisioning lead
times
Fraudulent usage
detection
Credit approval
and limits
Refunds
management
Product design
Customer
acceptance &
risk management
Channel and
partner
management
Order
management &
provisioning
Network usage
and rating
Billing Collections
Customer
management
and disputes
Accounting
Additional proposed revenue
streams to be covered during
heat map development:
► Roaming
► Broadband
► MVNO
► Handsets
► Managed services
► Property
6
Illustration: Revenue Value chain assessment questionaire
11. I 9Sharpening Revenue Assurance capabilities in the digital and converged space
• Detailed documentation of findings, together with implementation recommendations/fixes
• EY revenue finder framework is a four-stage approach typically spanning six to eight weeks:
• Opportunity identification
• Opportunity validation and quantification
• Benefits realization
Illustration: Revenue finder reports and outputs
We conducted a rapid revenue finder review to identify material areas of potential revenue leakage across all
revenue streams and business segments. The review identified US$60m–US$260m, developed business cases
f or individual initiatives and created the revenue assurance road m ap.
Case study
US$60m–$260m
in potential savings
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4
7
2
5
8
3
6
9
12. 1 0 I Sharpening Revenue Assurance capabilities in the digital and converged space
Product margin assurance
Solution overview
U nderstanding the product creation and delivery is a f undam ental stage f or increasing the num ber of custom ers, their satisf action
and their retention. EY proposes a thorough post-factum review of products and marketing campaigns using advanced data analytics.
As telcos m ove tow ard a subscription- based m odel vs. event charging m odel, it becom es m ore critical f or revenue assurance
f unctions to establish a proper product m argin assurance f ram ew ork .
Typical challenges faced
• L ack of visibility on product
profitability/value leakage
of products against the
business case
• U nbalanced product
portf olio — too m any
products w ith low m argin
• Conf using of f erings to
custom ers
Why should it be done?
• T o understand the
assum ptions tak en and
validity of products and
cam paigns’ business cases
by look ing at the product
perf orm ance ( based on real
data)
Value added
• M onitor product
perf orm ance in real tim e
• I dentif y opportunities to
rationaliz e products w ith low
GM/EBITDA
• Improve profitability by
stopping the least profitable
products
Illustration: Advanced reporting of the unitary profitability of each single offer, including the network capex-related costs
Building on top of the performed analytics, the reporting is executed using the most
advanced data visualiz ation tools, enabling f ast k now ledge ex traction and deep
insights, such as identification of trends due to customer behavior, abuse and revenue
leak ages.
T hrough proper product m argin assurance, the revenue assurance f unction can support
com m ercial team s w ith the products and of f ers that are eroding value ( such as low -
m argin or negative- m argin products) and help identif y q uick w ins. T his can develop
better w ork ing relations w ith m ark eting and com m ercial team s.
O f f ers/ tarif plans
T arif f plan # 1
Prepaid PAYG
standard
T arif f plan # 2
P repaid voice
and data
unl.
T arif f plan # 3
P ostpaid voice
and data
unl.
T arif f plan # 4
P ostpaid prom o
handset
subs.
Tariff plan #5
P ost- dongle
data unl.
# of subscribers 800k 2 0 0 k 1 0 0 k 1 0 0 k 1 0 0 k
ARP U ( U S$ ) 4 1 0 17.5 17.5 15
M oU ( m in) 175 min 250 min 500 min 500 min n/ a
Data usage ( M b) 1 0 M b 2 0 0 M b 500 Mb 500 Mb 1500 Mb
RP M ( U S$ / m in) 0 . 0 2 0 . 0 1 6 0.015 0.015 n/ a
P rice ( U S$ / M b) 0.05 0.025 0 . 0 2 0 . 0 2 0 . 0 1
Gross margin 1 (%) 90% 90% 85% 85% 100%
Gross margin 2 (%) 70% 70% 60% 45% 50%
Real profitability (%) 55% 45% 40% 25% 10%
T otal
prepaid
T otal
postpaid
1 , 0 0 0 k 1 0 0 k
5.5 17.5
2 0 0 m in 500 min
50 Mb 500 Mb
0 . 0 1 9 0.015
0 . 0 4 0 . 0 2
90% 85%
70% 55%
45% 35%
Gross margin 1 = Revenue – interconnect costs
Gross margin 2 = Gross margin 1 – commercial costs – other variable costs
Real profitability = Gross margin – fixed costs allocation – unitary network costs
Product margin dashboard
4
Identify quick wins / products
for “cutting the tail”
Avg-profitability
13. I 1 1Sharpening Revenue Assurance capabilities in the digital and converged space
Approach
• V erif y product positioning vis- a- vis targeted custom er segm ent
• Check accuracy of product configuration and corresponding benefit rendered to customer
• Study current product structure, req uirem ents and com patibility of product portf olios
• Evaluate whether current products addresses intended or defined strategy
• Collect and prepare data using advanced SQL techniques, creating a product profitability diagnostics dashboard using
data visualiz ation techniq ues
• Conduct analy sis of operational K P I s of products, such as:
• N um ber of subscribers per plan
• Identical plan based on configuration parameters
• Assessm ent of usage per subscriber per plan
• Com plaints analy sis per plan
• G o- to- m ark et/ sales cy cle/ I T developm ent tim e
• P roduct/ plan m erger analy sis
• Identify quick wins/products for “cutting the tail”:
• I dentif y obsolete/ inactive products to be cleaned straight aw ay
• I dentif y m utually sim ilar products to be technically m erged in sy stem s
• Define full list of products for further strategic analysis
• Conduct product profitability analysis to identify loss-making products
As part of a revenue assurance engagem ent, w e helped a large integrated service provider review its product
portf olio and calculate the gross m argin percentage at both the product and custom er level. As part of the
exercise, we identified many quick wins including, cost-saving opportunities worth US$20m and opportunities to
reduce the total number of products by 50% — all while providing improved customer experience.
Case study
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14. 1 2 I Sharpening Revenue Assurance capabilities in the digital and converged space
Migration assurance5
Solution overview
Migration of BSS or OSS involves the transformation of an organization’s existing (legacy or source) stack to a new one (target).
Projects that migrate legacy systems are large, complex, risky and expensive, involving multiple stakeholders. Any migration project
usually af f ects end custom ers and theref ore needs m eticulous planning and ex ecution — this is the design and aim of this solution.
T he illustration above show s a com prehensive and robust m ethodology , w hich is enabled through a stringent q uality assurance
framework, applied throughout different phases of a project.
Typical challenges faced
• Absence of project
governance f ram ew ork
• L ack of com prehensive and
q uality assurance test plan
• M anagem ent of custom er
ex perience
Why should it be done?
• T o understand m igration
w ith a structured and
proven m ethodology
• T o evade costly and
m ishandled transf orm ation
projects
Value added
• Reduce transf orm ation
ef f orts to m inim al levels,
w ith critical risk s m itigated
through the test plan
• G ain a m igration path w ith
m inim iz ed business im pact
Timely risk
mitigation and
readiness
Comprehensive migration plan
considering all customer scenarios
Proactively managed
customer experience
Accurate and
complete migration
• F lash cut vs. phased m igration
• U sage catch- up plan
• Cutover planning
• T oll gates and thresholds
• M igratable vs. nonm igratable
• Data- cleansing ex ercise
• Consideration of f unctionality
m ism atches
• Adeq uate test scenarios
• P lan vs. actual testing delivery
• I ssue capturing and closure
• Adeq uacy of team deploy ed
f or testing
• Sufficiency of validations planned
• Autom ation of validations so that
the data m igration ex ecution
plan is adhered to during critical
w indow
• Subscriber ex perience handling
during cutover in term s of
availability of services
• Custom er com m unication plan
• Project management, delays and
cost im pact
• I ssue reporting escalation,
resolution
• Q uality assurance
Transformation
M igration
plan
M igration
scope
T est
coverage
Cutover
validation
plan
Business
continuity
Project
governance
15. I 1 3Sharpening Revenue Assurance capabilities in the digital and converged space
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Approach
• Begin by conducting appropriate tests to assess the quality and progress of your project. Our comprehensive approach is
f urther supported by the f ollow ing ex ecution enablers f or robust m igration assurance:
• Program risk assessment tool kit to gauge confidence in the integrity of the business case and projected benefits and
to identif y program critical risk s and issues
• Migration and testing checklists for “health checks” performed at specific phases of a transformation to support
tim ely and accurate delivery
• Data analy tical tools to perf orm com prehensive validation of data points that can result in custom er ex perience
deterioration af ter go- live
• Benchmarks and leading practices to support clients from migration planning to cutover
A Southeast Asian operator had to revisit its m igration plan and strategy half w ay into its transf orm ation
exercise, inducing a delay of almost two years in planned project completion. Migration flow failed because the
company lacked a proper approach and project management.
Pre-cutover/cutover Post-cutover
Migration plan
review
Test plan
review
Migration
validations
Health check
KeyactivitiesBenefits
• Review data
conversion,
cleansing and
cutover strategies
• Review m igration
rules
• Review business
case assessm ent
f or various decision
points
• Review business
continuity plan
and custom er
com m unications to
be f ollow ed during
cutover
• Early identification and mitigation of inherent risks
• P lanned toll gates to f acilitate go/ no- go decisions
• Identification and
rectification of any
anom aly during actual
cutover
• Early identification
and rectification of
any post- m igration
anom alies
• Review test strategy
• I dentity toll gates
• Benchmark test
strategy w ith leading
practices
• Review test
scenarios f or
adeq uate coverage
• Review thresholds
and entry / ex it
criteria established
f or test including
acceptance testing,
end- to- end
test, bill- to- bill test,
data m igration
rehearsal
• P erf orm activities
defined in testing
stage
• Report issues along
w ith prospective
im pact to custom er/
revenue and
recom m end
resolution
• Recom m end k ey
perf orm ance
indicators f or
reporting to
m anagem ent and
update on success
• Recom m end
threshold f or go/
no- go
• Conduct post-
cutover analy sis to
ascertain success
of m igration and
highlight any def ects
leading to im pact to
custom er or revenue
• I dentif y critical
business param eters
and perf orm trend
analy sis
• P erf orm check s to
indicate health of
m igration
• Review custom er
com plaints and the
root causes and
rem ediate them
16. 1 4 I Sharpening Revenue Assurance capabilities in the digital and converged space
6 Customer churn assurance
Solution overview
Custom er churn assurance is a solution built to address the m ost im portant underly ing aspect of any business — their custom ers.
Com panies w ith capabilities f or gathering and analy z ing large am ounts of data should be better positioned to anticipate m ark et
changes and m eet consum ers’ needs in innovative w ay s w hile enhancing this vital relationship.
I n the digital space, the f ocus f or m any com panies in the T M T sector is changing f rom direct revenues to connected users ( CU s) ,
w hich leads to indirect advertising revenues f or the service providers — new ventures of ten see CU s as a lead m etric. I t becom es very
critical f or revenue assurance f unctions to develop com prehensive custom er assurance capabilities to proactively m anage CU churn
m etrics and help business to im prove through this deep data analy tic sk ills.
“Knowing your customer” — that is what will ultimately decide who wins in the market. Taking the example of customer churn, churn
rates req uire a deep- dive analy sis on the causalities by review ing custom er acq uisition, paid conversion and retention to im prove the
churn prevention activities. By understanding the root cause of why customers leave, companies are then able to transform their
of f ers f rom a large, standardiz ed approach to a m ore custom iz ed, targeted and individual of f er.
Typical challenges faced
• Declining revenues
• I ncreasing churn and
internal cannibaliz ation
Why should it be done?
• T o understand and
connect the dots betw een
custom er churn, subscriber
m ovem ents, product choice
and sales channels
Value added
• Reduce churn rate by 3%–8%
• O ptim iz e the cost of
retention ef f orts
17. I 15Sharpening Revenue Assurance capabilities in the digital and converged space
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Approach
• Define and validate business objectives associated to churn/cannibalization (e.g., voice services cannibilazed by data
services, on dem and by pack ages)
• Review ex isting custom er segm entation m odels adopted by the com pany
• Co- develop and agree to a list of initial hy potheses f or churn/ cannibaliz ation by segm entation
• P erf orm an analy tic screening of the custom er base ( value, usage, tenure, etc. ) f or cannibaliz ation and churn based on
the selected hy pothesis, such as:
• Analy z e intra- prepaid m igrations ( betw een pack ages)
• Analy z e voice/ SM S cannibaliz ation by data
• Analy z e prepaid/ postpaid m igrations ( buy ing behavior)
• Analyze “rotational” churn on prepaid
• Co- develop m ark et survey q uestionnaire f or assessm ent of churn/ cannibaliz ation
• Provide market research team with detailed profiles that could be interviewed in order to get client insights for churn
and roll out the survey
• Analyze survey results and identify main market/business/technical reasons that justify main variations
• Develop a 10–15 key action plan for implementing a robust process to improve cannibalization and churn management
By redesigning early life customer experience, developing targeted churn treatment plans and creating a loyalty
program , a w orldw ide digital services provider successf ully im proved its custom er churn m anagem ent processes
and gained a financial benefit of US$12m.
Hypotheses Description Levers
Quality of
sales — “fake”
activations by
distributors
• I ndirect distributors activate or pre- activate
SI M s to get their sales rem uneration.
• I ndirect distributors resell prom otional credit of
pre- activated SI M s.
• Review the com m issioning schem e of indirect
resellers by including incentives based on
quality of gross adds (~30% of the rem based
on 3 - m onth ARP U )
• Monitor the “ghost”/“fake” activations in
com m ercial reportings
Quality of sales
— opportunistic
“one time”
users
• Com m ercial prom otions in acq uisition are too
aggressive and incite opportunistic custom ers
to m ak e auto- churn.
• Check consistency of acq uisition prom otions
m echanism s
• Anticipate in the business case the
cannibaliz ation im pact of acq uisitions
prom otions on the ex isting custom ers ( auto-
churn)
Non-controlled
prepaid
migrations
• Som e custom ers m igrate to a prepaid plan and
generate less ARP U .
• Som e opportunistic custom ers constantly
change their tariff plan to benefit from ad hoc
advantages.
• Build a comprehensive prepaid offers portfolio
w ith consistent advantages on each tarif f plan
• Define rules and migration matrix between
prepaid tarif f plans
• Control the m igrations betw een prepaid tarif f
plans
Non-virtuous
stimulation
campaigns on
customer base
• T oo f req uent and/ or non- segm ented custom er
base management (CBM) campaigns are
cannibaliz ing revenues.
• Segm ent the custom er base consistently to run
CBM campaigns
• Build a comprehensive CBM road map per
segm ent
US$12mfinancial benefit
18. 1 6 I Sharpening Revenue Assurance capabilities in the digital and converged space
7
Control framework review, implementation
and automation
Solution overview
T his solution is designed to tak e an in- depth look at the com plete value chain of the com pany through a m eticulous evaluation of
processes and sy stem s containing potential f or leak ages. L ocating the m ain control gaps, understanding their im pact and becom ing
aw are of potentially ignored areas are sure w ay s to deliver revenue assurance value.
Typical challenges faced
• O ver and under invested in
control coverage
• L ack of understanding of
k ey risk s and associated
controls
Why should it be done?
• T o bring clarity on the
current risk coverage and
control im plem entation
• T o address k ey risk s w hile
achieving higher degrees of
autom ation
Value added
• Gain proper control
coverage
• Balance the control
autom ation
• I m plem ent an optim z ed
solution based on RA
m aturity and investm ents
Illustration: EY Control Assessment and Benchmarking Tool
T he illustration above portray s one of our tools to rapidly review the ex isting control f ram ew ork across the com plete value chain.
This process flows from assessment toward importance screening, control design and prioritization. Having a structured flow built
in the grow th process ensures constant hom ogeneity and com prehensiveness in revenue assurance activity ex ecution, w hich w ill be
stitched together w ith a revenue assurance activity governance structure.
19. I 1 7Sharpening Revenue Assurance capabilities in the digital and converged space
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Approach
• Deliver a solution by engaging w ith k ey stak eholders, analy z ing the risk hy pothesis, establishing procedures, designing a
governance structure and finally delivering control automation
• Create a risk and control matrix of the current environment by assessing the “as-is” state and compare it against
industry leading practices that EY has observed
• U se the m atrix to outline all k ey processes and risk f actors associated, tak ing adeq uate consideration of m anagem ent
req uests and f uture potential risk s
• Develop req uired revenue assurance controls f ram ew ork
• I dentif y autom ation opportunities f or the controls based on the assessm ent
• H elp the business select the tools to im plem ent autom ated controls
• Support in designing autom ation of controls
EY supported a large pan-European telecom operator in assessing its revenue assurance control framework and
governance against leading practices. As part of the engagement, EY identified potential revenue risks across
the value chain and developed a revenue assurance control f ram ew ork and road m ap to m itigate potential risk s.
20. 18 I Sharpening Revenue Assurance capabilities in the digital and converged space
8
Revenue assurance dashboard and KPI
reporting
Solution overview
This solution is designed to give senior leadership visibility into revenue assurance performance and benefits to senior leadership and
help create influence in the business by showing where errors are occurring, benchmarking performance and monitoring progress, as
w ell as prioritiz ing areas f or f ocus.
With the availability of new agile visualization tools (such as Tableau and Spotfire), these dashboards and automated reporting could
be created in very short tim e scales w ithout deploy ing large classical revenue assurance tools, theref ore k eeping costs relatively low .
M ain categories of revenue assurance K P I s include:
• Data q uality : m easuring the validity , accuracy and coherency of data w ithin the operational sy stem s and databases, e. g. ,
m isaligned custom er records/ total custom er records
• Measuring the implications of revenue leakage on the bottom line, e.g., recovered and billed records/total billed records; the below
table illustrates the different financial leakages and examples
Typical challenges faced
• N o clear view on RA purpose
and perf orm ance
• L ow visibility on problem atic
areas
Why should it be done?
• T o k now w hat is going
wrong in order to fix it
• To measure the benefits RA
is adding by reducing the
level of leak age
• To create influence for RA
w ithin the business
Value added
• Measure the benefits RA is
delivering
• P rovide visibility to other
stak eholders and help
increase influence
• P rioritiz e areas of f ocus
• Control effectiveness and efficiency: measuring the efficiency and effectiveness (result oriented) of the RA organization and RA
practices, e. g. , solved RA incidents/ total RA incidents
• RA management: measuring the effectiveness and efficiency of individual controls , e.g., value of cases from control X/total RA
cases value
Revenue assurance
term
Opportunity loss Revenue leakage Overcharging Cost leakage Revenue at risk
Risk scenario Services not
available f or
custom ers
Revenue not
collected f or a
service provided
Extra amount
charged over the
agreem ents
Extra variable
cost incurred f or
delivering service
L ose collected
revenue due to
legal obligations
Examples P ay m ents not
available due to
outages
F ree calls m ade to
countries not listed
in of f ers
Duration of Call
Data reports
incorrectly
calculated
H igher com m issions
paid to affiliates
I ncorrect billing
inf orm ation show n
to custom ers
F inancial view L ow er revenue
collected ( w ith avg.
m argin)
L ow er revenue
collected ( w ith
100% margin)
H igher revenue
collected ( w ith
100% margin)
H igher cost
incurred (with 100%
m argin)
N ot visible
21. I 1 9Sharpening Revenue Assurance capabilities in the digital and converged space
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T he diagram below show s an ex am ple of a dashboard developed to m onitor K P I s by senior m anagem ent staf f . T he revenue
assurance dashboard containing high- level m etrics, detailed revenue leak ages by each control and a tool f or ah hoc
analysis, which allows data to be easily manipulated using filters and available dimensions in near real time.
Illustration: Revenue Value KPI Dashboard
Approach
• Subdivide the business into a series of theoretical control points f rom sales order- to- cash collection w here there is risk of
leak age
• T he aim is to put tools, reconciliations and activities in place to q uantif y any leak age occuring at every control point
• Each “gap” in knowledge is a potential source of loss
• Agree with the revenue assurance function and other stakeholders (including CXOs) on KPIs
• Conduct w ork shops and interview s to m ap the K P I s w ith sy stem and data points
• Develop a sim ple architecture using ex isting sy stem inf rastructure f or reporting and dashboard
• Design the visualization layer using tools (e.g., Tableau and Spotfire) and define the process of reporting
W e helped a large m ultinational organiz ation design the revenue assurance K P I s and tools that could be
leveraged to im pact the K P I s. W e also developed an autom ated dashboard f or m onitoring trends, K P I s and
perf orm ance benchm ark s f or reporting to senior m anagem ent. T he engagem ent not only created transparency
across the company, but also helped in creating influence across the senior leadership through impactful
reporting.
22. 2 0 I Sharpening Revenue Assurance capabilities in the digital and converged space
9 Fraud analytics
Solution overview
As m any of our large T M T clients start to of f er digital services, the risk s of online f raud have increased, especially w hen there are
lim ited m ethods to validate the custom er com pared w ith previous m ethods.
The fraud analytics solution is based on the profiling and knowledge discovery in data techniques. It does not replace the existing
f raud detection tools, but provides additional insights, f raud detection and prevention m ethods related to new digital products and
organiz ation activities in cy berspace.
Example of fraud Description
Account surfing U sing accounts w ithout perm ission
Account tak e- over M ay be com bined w ith various techniq ues to becom e the account adm inistrator
Resale/ arbitrage/ abuse U sing accounts f or inappropriate com m ercial activities, e. g. , by pass operators
Impersonalization/spoofing Masking identity for illicit purposes; pretending to be another entity
Credit f raud M any w ay s to obtain card data used f or pay m ent charge- back s
Refunds and adjustments T argeting pay m ents m ethod to tak e over control of pay m ent accounts
Digital fraud examples
The table above summarizes some basic potential fraud activities; however, the fraud threat landscape is much wider than that
m entioned and includes account, pay m ent, supplier, partner, crim e f acilitation, technical and internal categories.
O ne of the techniq ues is to identif y f raudulent behavior patterns by com prehensively analy z ing transactional data so y ou can react
in time to suspicious activities and prevent potential high-value frauds. When new behavior patterns are identified, they are used
to identif y other custom ers ( or f raudsters) that have sim ilar behavior and theref ore are m ost lik ely to com m it f raud. Despite this
classification technique, the following techniques are also effective in detecting frauds: outlier identification, identification of unusual
entries, duplicate testing, gap testing, sk im m ing of num eric values, entry date validation, purchase scoring engine, continuous
transaction m onitoring and others.
Typical challenges faced
• F raud losses due to digital
product of f erings
• Lack of skill sets
Why should it be done?
• T o prevent digital f raud
and develop proactive
capabilities to prevent f raud
Value added
• Reduction in f raud cost by
15–20% (including losses
and charge- back f ees)
23. I 2 1Sharpening Revenue Assurance capabilities in the digital and converged space
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Approach
• Perform a diagnostic fraud risk management review of a company’s environment assessing it against the EY maturity
m odel
• Q uantif y anatically and characteriz e the ex tent and siz e of threats
• Quantify the level of profit leakage and wider costs incurred as part of risk management pipeline
• Develop, configure and deploy solutions to remediate identified issues and lead education efforts about them
• Define and implement a method that monitors and detects fraud suspects based on a behavior comparison using the
behavior attributes of the profiles of fraudsters previously detected by comprehensive data analytics
EY conducted a full fraud risk review of a digital selling channel for a major mobile device manufacturer. The
assessm ent covered governance, strategy , people, processes and technology . T he w ork involved m ultiple on- site
interview s w ith m anagers and technical staf f to assess w hether the stated strategy is aligned w ith technological
capabilities.
24. Contacts
Brice Lecoustey
P artner and G lobal revenue assurance
Solution L eader
+352 42 124 8368
brice. lecoustey @ lu. ey . com
Prashant Singhal
P artner and G lobal T elecom Sector L eader
+ 9 1 1 2 4 6 7 1 4 7 4 6
prashant. singhal@ in. ey . com
Ajay Bali
Director
+352 42 124 8172
ajay.bali@lu.ey.com
Amit Sachdeva
P artner and G lobal T elecom Advisory
L eader
+91 124 6714870
am it. sachdeva@ in. ey . com
Ramanpreet Singh
Director
+91 124 6711579
ram anpreet. singh@ in. ey . com
Dieter Lange
Executive Director
+49 211 9352 20863
dieter. lange@ de. ey . com
2 2 I Sharpening Revenue Assurance capabilities in the Digital and Converged space
