With operators needing to enhance profitability, but constrained in terms of capes and opex, how can they leverage their OSS/BSS systems for some quick results in 2009? Dominic Smith, marketing director, Cerillion Technologies, suggest some answers
A survey carried out by Cerillion in 2008 highlighted revenue assurance as one of the three most critical business issues facing operators today, with 15% of respondents identifying it as their most urgent concern. And this trend is likely to have been further strengthened by the current recession.
The emphasis on plugging potential sources of revenue loss is not surprising when one considers the scale of the problem. Latest estimates suggest that as much as 10 per cent of service provider revenue is lost due to leakages. The problems are particularly acute in the mobile communications sector. A 2006 report, commissioned by Subex Azure and conducted by Analysys Research, argued that global mobile operators were losing an estimated $77 billion* through avoidable revenue leakage. (*Operator Attitudes to Revenue Assurance 2006′ – Subex Azure/Analysys Research 2006, and IT Fact Mobile Usage 2006).
In the current economic downturn, the need to plug potential sources of revenue leakage has become an increasingly critical priority for telecoms operators. To develop competitive edge, telcos need to ensure they are tackling the problem of revenue leakage aggressively. Considering the scale of the losses that many incur, it is vital that they identify the causes, quantify their magnitude and then set about addressing the problems in a holistic manner.
Tackling the Issue of Integration
One of the most important causes of revenue leakage is poor systems integration. Unfortunately, this is often a characteristic of the traditional best-of-breed approach to the development of business support systems. With this model, systems integrators are often tasked with implementing and integrating multiple heterogeneous systems to build a complete solution. Invariably, they encounter problems which make effective integration difficult.
First, they typically discover incompatibilities between the data models used in the different best-of-breed systems. Synchronising data across different applications is complex because of the need to align different ways of identifying the subscriber, service and orders. However, if these mappings are not carried out properly, the operator will struggle to trace orders across the systems.
Providing this traceability inevitably has a cost in terms of introducing data replication and unnecessary levels of complexity, which can result in holes where revenue leakage can occur
Examining Process Issues
Poor integration can also result in process problems. It may, for example, lead to the same data being entered in multiple systems, or result in incompatible configuration between solution components. Rating or prepaid charging errors may result as operators may either apply an incorrect price to a customer record, or not being able to price the record at all. Such errors will inevitably lead to usage that cannot be billed and ultimately revenue leakage.
Incomplete or incorrect usage data is another primary cause of leakage. This problem typically occurs when network switches produce erroneous information and prevent the operator identifying the type of service used by a customer or prevent the customer using that service. In either case, the result is an inability to bill for usage incurred.
Poorly-integrated systems with no common workflow can also lead to delays in billing. Sometimes manual set-up processes for new services cause a delay of several days before the operator can start invoicing the customer, potentially resulting in revenue loss. In contrast, a fully-automated process with flow through provisioning enables the operator to begin billing for service use immediately.
Invoicing system errors are another potential cause of leakage. Traditionally, the problem is thought to be primarily one of under-billing with operators failing to invoice customers for services received. In fact, over-billing can be just as significant. This typically occurs when a service is terminated but the operator continues to bill for the service in error.
This can often result in costly customer disputes and the need to provide refunds or credit as a goodwill gesture. Valuable time and resource may be required to fix the process and additional revenue leakage is likely to occur indirectly as a result of growing customer dissatisfaction and increased rates of churn.
Launching new products and decommissioning old ones are two other areas where a badly-coordinated system can cause further revenue assurance problems. Businesses often leak money, both by providing incorrect tariffs for new services and by not taking older, more costly products out of service quickly enough.
Proactive or Reactive?
Putting additional systems and checks in place is largely a reactive approach to revenue assurance in a best-of-breed solution. In essence, it is a ‘sticking plaster' approach to plugging gaps in the system. Rather than dealing with problems at source, it focuses on putting processes in place which track where revenues are being lost and then trying to correct these errors retrospectively.
As a result, problems can stay hidden for some time and their source is likely to remain unclear. Operators may at first believe that they are suffering either billing or credit management problems. In fact, when they carry out thorough ‘root cause analysis', they often discover that the problem is order management-related.
If the system is not proactively managed, a mistake made in the initial order process may not be discovered by the operator for a month or six weeks, when the customer receives their first bill and finds they have been placed on the wrong tariff or are being billed for a service they never received. In contrast, the best end-to-end pre-integrated solution suites reassure operators that all elements within the product suite will work together in harmony. The holistic approach of these systems is in line with operators' increasing desire to address and monitor the whole lifecycle, from initial order placement through to billing and cash collection.
These solutions also enable operators to be much more proactive. Rather than merely reacting to problems as they occur, seamless connectivity helps to prevent ‘gaps' in the system appearing in the first place. In other words, they treat the root cause of the problem rather than the symptoms.The tight integration of these solutions helps eliminate data replication and synchronisation problems. In addition, embedded workflow and order management functionality allows front-end orders to be successfully transitioned to the back office, ensuring all services can be billed for and eliminating revenue leakage at source.
The pre-integrated nature of these systems allows key business information to be proactively tracked, detailed reports to be generated for each process, revenue leakages rapidly identified and losses minimised. It is hardly surprising, therefore, that ever greater numbers of operators see end-to-end pre-integrated solution suites as a vital weapon in their ongoing battle to achieve genuine revenue assurance.
Consolidate to reduce operational expenditure
By Gabriel Matsliach, Ph.D., General Manager, Comverse Billing and Active Customer Management
Now more than ever operators need to cut costs and get higher rates of return on capital investments. Where better to start than by looking at your own billing infrastructure? Many operators suffer from having numerous legacy systems which prevent efficient operations and hinder their ability to bring in new revenues.
One way to avoid this is for operators to consolidate billing systems. Besides eliminating cost redundencies, the reduction in systems' complexity ensures operations become more streamlined. Additionally, a single truly converged business support system enables operators to generate more revenues by improving their time-to-market and allowing more tailored offers to their customers. A truly converged billing system handles multiple service, network and payment types, of course, and also includes customer management capabilities. A system that offers customer management, ordering and billing all based around one data model brings huge deployment and operational efficiences to operators, as well as enabling the operator to provide a consistent customer experience, regardless of customer touchpoint.
There are two immediate measurable benefits of consolidated billing which our clients such as Bharti, MTS, Telecom Italia, GCI and Play have experienced:
1) Eliminating the complexity and redundancy of duplicate systems – not only does it cost a lot more to run multiple systems but it's also highly ineffective. Telecom Italia realised a 30% operational saving by cutting their 60 BSS systems down to two, and reduced the average time taken to roll out a new service by 90%.
2) Consolidated billing systems enable operators to bundle services more easily and effectively, leading to a meaningful reduction in customer churn. Quad-play operator GCI saw a 70% ROI by consolidating its billing and customer management tools for example. Providing better customer care enhances customer loyalty to the operator, improves the customer experience and, in turn, reduces the turnover and churn rate.
The right types of bundles can replace lost revenues from price erosion – another way that operators can benefit from consolidating their billing systems into one.
Payment-type convergence is just one aspect of consolidation, but it can significantly increase the benefits of systems consolidation and lead to a better ROI. Comverse customer, Play in Poland, chose to launch with a converged pre- and postpaid billing system to keep costs low while laser-targeting the attractive consumer with tailored, real-time offers. With a converged billing system complementing their innovative market strategy, Play passed the one million subscribers threshhold in its first year of operation with ARPU 40% higher than market average.
Studies by Comverse have estimated that consolidating separate prepaid and postpaid systems into one truly converged system could deliver an ROI as high as 60% in operational cost savings alone.
React to the business need of the customer
Gadi Maoz, Vice President, Sales & Marketing, FTS
The dramatic change in economic outlook has forced all businesses, operators among them, to get back to basics.
Many operators are being forced to choose just two or three key projects to focus on for the year and each of those projects has to have an indisputable RoI.
The new economic reality has forced a rationalisation of investment in long-term projects in favour of addressing tangible, immediate business needs – ‘quick wins', as well as anything that can fix revenue leakage. And for the longer-term ‘big bang' projects that do go ahead, there is a greater push to get better control over the risks associated with it.
In this new environment, opportunities to win a contract to rip and replace a billing system in an established operator are clearly not as common as they were. Likewise, although upgrades are still taking place, the reasons behind the planned upgrade are being questioned more thoroughly, and the project ideally needs to represent a quick win or risk being forced down or off the agenda.
OSS/BSS vendors need to reassess not only the type of solutions they prioritise, but also the cultural attitudes and assumptions that they may have carried over from the 'years of plenty'. he OSS/BSS vendor would, of course, love to offer a major upgrade of the operator's system to address that business need, in the knowledge that it may take many months to implement and bring in major professional services costs for the foreseeable future. But that is unlikely to happen.
An operator's specific business need has to be addressed individually and quickly, without changing what already works just fine in the back-office. The solution does not necessarily need to be within the confines of the existing billing system, nor does it need to be a complete replacement of it. Service providers would be wise to look at solutions that can live alongside the main billing system, and that are agile enough to serve as a ‘staging ground', allowing you to react quickly to new business needs as they arise.
An example of this approach is through better policy management. Smart policy management and business control technologies can ‘see' relevant information and events on the network and create actions or reactions to a set of circumstances. These technologies can pinpoint the business need and just focus on events on the network which relate to that business need, leaving everything else unrelated to continue as before. It is this ability to just focus on relevant events on the network which means that the business need can be ‘ringfenced' and dealt with individually. In this new environment, service providers are starting to see the potential for policy management and business control as a way to focus on solving the business need without time consuming and expensive upgrades.
The opportunity now for the Service Provider community and the OSS/BSS community which serves it, is for us to come through it together stronger and wiser than ever before, with a renewed focus on the fundamentals of business and the drive towards greater profitability.