These three words are nothing new in the revenue management domain especially for telecoms. .But the question is — are these sequential activities or are they parallel? Another question that I hear reverberate across the industry — what is ‘in scope’ and ‘out of scope’ for these activities. Add the word “revenue” in front of these and the debate starts. Let me pen down how I see these merge into one broad scope of work.
“Revenue Assurance” is the activity of determining any activity for which there is a direct loss of revenue in the business operations. Note– I did not say “potential”. So, what about fraud? Is that a part of RA? I would say yes– more so because, for fraud the end activity is trying to fix loop-holes which let fraudsters get away by not ‘paying’– and thus is a loss for the business. I have heard people argue– that this is not so because fraud detection activities have to be looked from a completely different angle. Even if that be– it is about reaching the same goal (of plugging monetary leakage) through different routes — a different tactic for RA and a different Tactic for FM. So not only FM, any activity that helps in plugging leakage of money (revenue) should thus be a part of RA– that includes Network assurance and others too.
What’s with “potential”? When you do not know what is to be assured, how would you know what was the potential in the first place? Let me take an example– if You know you are supposed to get $100, and you get $90, you “know” you did not get $10. That is the ‘direct loss’ and that should be in purview of RA activities. When you did not know that the capability was to generate $110 and not $100, how would you account in “RA” ? Thus I believe, revenue management should include all activities of identification of ‘true’ earning potential of the business and then trying to achieve the same. Example, say for a telecom operator, one fine day the international calls dipped than normal. There could be innumerable causes– but if any of it is not identified as anything to do with direct causes of network breakage, of fraudulent tampering or such, but is just attributed to the fact that ‘customers’ called using a free service of another operator– how would you quantify this loss? Well the quantification could be average of $ generated usually minus what was generated on this day. But this is a complete ‘opportunity’ loss. how do you stop it? Identifying what the consumer needs/wants is only one form of such management– today this is being called as CEM (customer experience management), some call another sibling task as “Customer Lifecycle Management”….and the such. Think of quality of service– that is not in RA– but is actually a part of revenue management. I would tend to say– ‘revenue management’ is to ensure the following things:
1. you get what you should get (RA) +
2. you dont lose out what you should have otherwise got (every reason) over and above point 1.
[‘Loyal’ and satisfied customer base + Minimal inventory time + optimum asset usage + near zero bad debts + positive cash flow] — if you have ticked these atleast, you know you have a growing business. (How many other points did I miss? Please help me add more.) All activities geared to achieve these – tend to be in the scope of ‘revenue maximization’….. the point is, assurance and management thus fall within the scope of maximization.
I believe these ‘three’ activities are no where sequential– they are way too parallel– and somehow tend to represent the same states that a company would go through in times of transformation for betterment and growth. Just like transforming a company for growth, where you need to attach smaller problems first to ensure quick wins, but also have a large plan of activities causing a ripple across the organization– these activities actually have no boundaries between themselves. There could be potential situations of achieving quick wins in minimizing inventory time, which has nothing to do with assurance or management. Should you not do that first — if you can before you try and fix core revenue leakage problems which you know would take some amount if time?? I guess yes.
The situation for telecoms is just like that of transforming companies for betterment- all you need is quick wins with long lasting benefits. The challenge is identifying the same– ability to prioritize in an ever changing business model. A company that can help telecoms prioritize is the real game changer in the industry
I feel these terms ‘revenue assurance’; ‘revenue management’; ‘revenue maximization’ and the so called debated boundaries are more to create demands (and thus marketing gimmicks for people who want to stay within their comfort zones of offering capabilities) and less to solve the real life problems. Tell me one CFO who would like to have different reports of revenue assurance and revenue maximization activities. I guess all he/she would like to see is how profitable the business was yesterday vs today vs tomorrow — while keeping a positive cash flow. A business can be bankrupt- yet profitable- no one wants to be in such a situation.
Like always– this is completely ‘in my opinion’. Do let me know what you think of it.
(PS: Please point out grammatical, spelling errors and or typos. I would be happy to correct)