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Revenue Assurance - Identifying Leakage & Implementing Solutions

Published by: Juniper Research Limited

Published: Nov. 1, 2005 - 141 Pages


Table of Contents


Executive Summary



1. Introduction

2. Evaluate Current Market Position

3. Identify and Quantify Leakages

4. Identify and Select Solutions

5. Implement Solutions

6. Monitor and Control

7. Critical Success Factors

8. Case Studies

9. Forecasts and RA Profitability

10. Appendices



List of Figures

List of Tables

List of Forecasts

Mobile Subscribers

Revenue Loss Figures

Mobile Data Revenues

Revenue Assurance Market

Glossary

Executive Summary


1. INTRODUCTION

1.1 What is Revenue Assurance?

1.1.1 Defining RA

1.1.2 Where do Revenue Leakages Occur?

Figure 1: Revenue Assurance Value Chain

1.2 Why is RA becoming increasingly Important?

1.3 Aim of the Report

1.3.1 Purpose

1.3.2 Analysis Framework

Figure 2: RA Framework

Figure 3: Elements of a RA Programme

1.3.3 Framework Elements

1.3.3.1 Evaluate Current Market Position

1.3.3.2 Identify and Quantify Leakages

1.3.3.3 Identify and Select Solutions

1.3.3.4 Implement Solutions

1.3.3.5 Monitor and Control

1.3.4 Benefits that Operators can Derive from our Holistic Framework

1.3.5 Report Structure



2. EVALUATE CURRENT MARKET POSITION


2.1 Introduction

Figure 4: The Environment

2.2 Macro Environment

Figure 5: Global Mobile Penetration

2.2.1 Analysing the Region of Operation

2.2.1.1 The US

2.2.1.2 Saturated Markets

2.2.1.3 Emerging Markets

2.3 Economic Cycle & Sector Analysis

2.3.1 Company Economic Cycle

2.3.2 National Economic Cycle

2.3.3 Sector Analysis

2.3.3.1 GSM/3G

2.3.3.2 MVNO

2.3.3.3 Incumbent

2.4 Resources and Capabilities

2.4.1 Infrastructure

2.4.2 Legacy Systems

2.4.3 Knowledge Base

2.4.4 Culture

2.4.5 Company's RA Experience

2.5 RA Positioning Rating Tool

Table 1: Rating Guidelines

Table 2: Typical Rating Benchmarks for Telco's in Different Markets

Figure 6: Typical Spider Chart for a US Telco

Figure 7: Typical Spider Chart for a Telco in a Saturated Market

Figure 8: Typical Spider Chart for a Telco in an Emerging Market



3. IDENTIFY AND QUANTIFY LEAKAGES


3.1 Revenue Leakages

3.1.1 High Level View of Leakages

3.1.1.1 Why do Leaks Occur?

3.1.1.2 Where do Leaks Occur?

3.1.2 Predicting Leakages

Figure 9: Importance of Key Elements of Revenue Loss

3.1.3 Traditional Leakage Areas

3.1.3.1 Fraud

3.1.3.2 Rating

3.1.3.3 Billing

3.1.3.4 Network Management

3.1.3.5 Data Loss

3.1.3.6 Roaming

3.1.3.7 New Product Development and New Service Roll Outs

3.1.4 New Leakage Areas

3.1.4.1 Operator to Operator Fraud

3.1.4.2 Third Party Solutions

3.1.4.3 Settlement

3.1.4.4 Quality of Service

3.1.4.5 Customer Retention

3.1.4.6 Optimised Call Routing

3.1.4.7 Marketing

3.1.4.8 IP Fraud

3.1.4.9 Bulk SMS

3.1.4.10 Premium Rate Calls

3.1.4.11 Mobile Content

3.1.4.12 Migration to New Technologies

Table 3: Leaks in 3G/2.5G Networks

3.1.4.13 Industry-wide Consolidation

3.1.4.14 IPv6

3.1.4.15 Convergence and Next Generation Networks

3.2 How to Track and Identify Key Leakages in the Company?

Figure 10: RA Value Chain and Key Drivers

3.2.1 Scorecard

Table 4: Scoring the Existing Leaks

Functions

Leakage Areas

Key Drivers

Relative Importance to Strategy

Figure 11: Prioritising Leakages



4. IDENTIFY AND SELECT SOLUTIONS


4.1 Introduction

Figure 12: RA Actions

4.2 RA Tools Available on the Market

4.2.1 Reporting Tools

4.2.2 Testing Tools

4.2.3 Analysis Tools

4.3 Identify Solutions

4.3.1 A Simple (Pen and Paper) Approach

4.3.2 Vendors

4.3.2.1 Criterion for Selecting the Right Software/Tool

4.3.2.2 Analysing the Key Services Offered by Vendors

4.3.2.3 Vendor Evaluation Criteria

4.3.2.4 Vendor Pricing Models

4.3.2.5 Vendor Profiles

Table 5: Vendors/Product Details

4.3.2.6 Juniper Research's Advice to Vendors

4.3.3 Consultants

Table 6: Areas of Expertise of Key RA Consultants

4.3.3.1 Accenture

4.3.3.2 Azure

4.3.3.3 IBM

4.3.3.4 WeDo Consulting: Case Study

Figure 13: WeDo Consulting's Approach to RA

Figure 14: Integrity Assurance Module

Figure 15: WeDo's Revenue Control Module

Figure 16: WeDo's Events Control Module

4.3.4 Outsourcing

4.3.4.1 Drivers and Inhibitors of Outsourcing

4.3.5 A Comparison Among Vendor/Consultant/ Outsourcing Options

4.4 New RA Tools Available on the Market

4.4.1 Billing

4.4.1.1 Usage-Based Billing

4.4.1.2 Billing Management

4.4.1.3 Billing System

4.4.2 Collection Mediation

4.4.3 Traffic Rating

4.4.4 Pricing Models

4.4.5 Electronic Bill Payment and Presentation

4.4.6 Billing Software

4.4.7 Rating Engine

4.4.8 Internet Billing Platform

4.5 Selecting Solutions

Figure 17: Impact of Cost vs. Revenue

Table 7: RA Issues, Solutions and Vendors



5. IMPLEMENT SOLUTIONS



5.1 Introduction

5.2 Define Clearly the Programme's Scope and Objectives

5.2.1 Scope

5.2.2 Objectives

5.3 Getting Top level Management Approval

5.3.1 Underline the Easy Wins

5.3.2 Emphasis on Bottom Line

5.3.3 Involve CFO

5.3.4 Demonstrate High Return on Investment (ROI)

5.3.5 Sarbanes-Oxley

5.4 First Cycle: Quick Wins and Low Hanging Fruits

5.5 Second Cycle: Medium to Long-term Leakages

5.6 Long-term RA Strategy

Figure 18: Time Frames for RA Programme



6. MONITOR AND CONTROL



6.1 Introduction

6.1.1 Regular Cleaning Cycle

Figure 19: RA Performance Scorecard

6.1.2 Conduct Internal Analysis

6.1.3 Day-to-Day Processes



7. CRITICAL SUCCESS FACTORS



7.1 Ensuring Success from RA Programme

7.1.1 Identifying the Key Strategies and Developing a Solid Business Case

7.1.1.1 Identifying the Key Strategic Objectives

7.1.1.2 Cost Benefit Analysis and Business Case Development

Figure 20: Cost Benefit Analysis

7.1.2 Senior Level Buy-in/Support

7.1.3 Set-Up Dedicated Internal RA Team

7.1.4 Allocating P&L Responsibility to RA Departments

7.1.5 Ensuring Disparate Functional Areas Work Together

7.1.6 Effective Communication Within and Outside the Organisation

7.1.7 Ensuring QoS

7.1.8 Setting-up Appropriate Time Frames for each Phase of the Programme

Figure 21: Time Frames for RA Programme

7.1.9 Training

7.1.10 Developing a Culture that Values RA



8. CASE STUDIES



8.1 KPN, Netherlands

Figure 22: Components in KPN's Network

8.1.1 Scope of Project

8.1.2 Project Deliverables

8.1.2.1 Technical Level

8.1.2.2 Application Level

8.1.2.3 Detect and Correct Level

8.1.2.4 Organisation and Process Level

8.1.2.5 Operational level

8.1.3 KPN's Approach to RA: A Three Phase Approach

Figure 23: KPN's Approach to RA

8.1.4 Critical Success Factors for KPN's RA Programme

8.2 Optimus, Portugal

8.2.1 Optimus' Revenue Leakages

8.2.2 The End-to-End Solution

Figure 24: Architecture of Optimus RA System

8.2.3 Ongoing Developments

8.2.4 Advice from Optimus' IT Billing & RA Manager

8.3 Western European Operator

8.4 Best Practice Case Studies

8.4.1 SMS Prepaid Top-Up

8.4.2 Subscriber Refunds

8.4.3 Interconnect Partnerships and Settlement Assurance

8.4.4 Business Requirements Acceptance Testing



9. FORECASTS AND RA PROFITABILITY



9.1 Maximising Profits and Revenues

9.1.1 Figures and Facts about Revenue Leakages

Figure 25: % Companies within Revenue Leakage Range

Table 8: Companies within Revenue Leakage Range

9.1.2 How Revenue Leakages Affect Operators?

Figure 26: Mobile Subscriber Growth Worldwide (m) (2005-2010)

Figure 27: Total Global Revenue Loss ($m) Forecast (2005-2010)

9.1.3 Is RA Worth it?

Figure 28: Global Revenue Loss (%) of Total Revenue (2002-2004)

Table 9: Global Revenue Loss (%) of Total Revenue (2002-2004)

9.1.4 Revenue Recovery Opportunity

Figure 29: Revenue Recovery Opportunities as Predicted by Key Players in RA Market

Table 10: Revenue Recovery Opportunities (%) as Predicted by Key Players in RA Market

Figure 30: Percentage of Revenue Recovered by Successive Projects

Figure 31: Revenue Recovery Illustrative by Project

9.1.5 Differences in Revenue Leakage by Region

Figure 32: % Revenue Loss of Total Revenue by Market (2005)

Figure 33: Average and Acceptable Loss

Table 11: Average and Acceptable Loss

9.1.6 Differences in Revenue Leakages by Operator Type

Figure 34: Acceptable Revenue Loss (%) by Operator Type

Table 12: Acceptable Revenue Loss (%) by Operator Type

Figure 35: Mobile and Average Operator Revenue Losses (%) (2002-2010)

Table 13: Global Mobile and Average Operator Revenue Losses (%) (2002-2010)

Figure 36: Global Mobile Data Revenues ($m) (2004-2010)

Table 14: Global Mobile Data Revenues ($m) (2004-2010)

Figure 37: Expected and Realised Global Data Revenues (2004-2010) ($m)

Table 15: Expected and Realised Global Data Revenues (2004-2010) ($m)

9.1.7 Forecasts

9.1.7.1 Global Market for RA

Figure 38: Potential RA Market Value ($m) for Vendors/Consultants (2004/2010)

Table 16: RA Market Opportunity for Vendors ($m) (2004/2010)

Figure 39: Global Market for RA and Mediation ($m) (2003-2010)

Table 17: Global Market for RA and Mediation ($m) (2003-2010)

Figure 40: Operator Approach to RA (2004/2008)

9.1.7.2 RA Market Segmentation by Region

Figure 41: RA Market Segmentation by Region (2005 and 2010)

Figure 42: RA Market Value by Region ($m) 2005-2010

Table 18: RA Market Value by Region ($m) 2005-2010

9.1.7.3 RA Market Segmentation by Operator Type

Figure 43: RA Market Segmentation by Operator Type ( %) (2005/2010)

9.1.7.4 Key Software for RA Initiatives

Figure 44: Global % Leakage caused at Various Points in Revenue Generation Value Chain (2005/2010)

Table 19: Global % Leakage caused at Various Points in Revenue Generation Value Chain (2005/2010)

Figure 45: CAGR for RA Solutions/Software (2005-2010)

9.1.7.5 Forecast of Change in Revenue Loss Elements

Table 20: Elements Affecting the Revenue Loss

Figure 46: Total Revenue Loss

Figure 47: Changes in Value of Elements Contributing to Revenue Loss/Plugging in US Market (2005-2010)

Table 21: Elements of Revenue Loss in the US Market (2005/2010)

Figure 48: Changes in Value of Elements Contributing to Revenue Loss/Plugging in Saturated Markets (2005-2010)

Table 22: Elements of Revenue Loss in Saturated Markets (2005/2010)

Table 23: Elements of Revenue Loss in Emerging Markets (2005/2010)

Figure 49: Changes in Value of Elements Contributing to Revenue Loss/Plugging for Emerging Markets (2005-2010)

Table 24: Average Market Revenue Loss (2005/2010)

9.2 Impact of Financials Over Time

9.2.1 Pay-back Period For RA Programme

Figure 50: Payback Evolution during an RA Programme

9.2.2 Return On Investments (ROI) From RA Programme

Table 25: Example (Effect on Bottom line through RA)

Figure 51: ROI from Traditional Approach to RA

Figure 52: ROI from Using Advanced RA Tools

9.2.3 Case Study: Tier 2 European Operator

Table 26: Programme Deliverables

Figure 53: Revenue Recovery Details



10. APPENDICES

Appendix 1: Companies Interviewed

Appendix 2: Web Addresses



LIST OF FORECASTS

Mobile Subscribers

Mobile Subscriber Growth Worldwide (m) (2005-2010)

Revenue Loss Figures

Total Global Revenue Loss ($m) Forecast (2005-2010)

Global Mobile and Average Operator Revenue Losses (%) (2002-2010)

Global % Leakage caused at Various Points in Revenue Generation Value Chain (2005/2010)

Changes in Value of Elements Contributing to Revenue Loss/Plugging in US Market (2005-2010)

Changes in Value of Elements Contributing to Revenue Loss/Plugging in Saturated Markets (2005-2010)

Changes in Value of Elements Contributing to Revenue Loss/Plugging for Emerging Markets (2005-2010)

Mobile Data Revenues

Global Mobile Data Revenues ($m) (2004-2010)

Expected and Realised Global Data Revenues (2004-2010) ($m)

Revenue Assurance Market

Potential RA Market Value ($m) for Vendors/Consultants (2004/2010)

Global Market for RA and Mediation ($m) (2003-2010)

Operator Approach to RA (2004/2008)

RA Market Segmentation by Region (2004 and 2010)

RA Market Value by Region ($m) 2005-2010

RA Market Segmentation by Operator Type (%) (2005/2010)

CAGR for RA Solutions/Software (2005-2010)



LIST OF TABLES

Table 1: Rating Guidelines

Table 2: Typical Rating Benchmarks for Telco's in Different Markets

Table 3: Leaks in 3G/2.5G Networks

Table 4: Scoring the Existing Leaks

Table 5: Vendors/Product Details

Table 6: Areas of Expertise of Key RA Consultants

Table 7: RA Issues, Solutions and Vendors

Table 8: Companies within Revenue Leakage Range

Table 9: Global Revenue Loss (%) of Total Revenue (2002-2004)

Table 10: Revenue Recovery Opportunities (%) as Predicted by Key Players in RA Market

Table 11: Average and Acceptable Loss

Table 12: Acceptable Revenue Loss (%) by Operator Type

Table 13: Global Mobile and Average Operator Revenue Losses (%) (2002-2010)

Table 14: Global Mobile Data Revenues ($m) (2004-2010)

Table 15: Expected and Realised Global Data Revenues (2004-2010) ($m)

Table 16: RA Market Opportunity for Vendors ($m) (2004/2010)

Table 17: Global Market for RA and Mediation ($m) (2003-2010)

Table 18: RA Market Value by Region ($m) 2005-2010

Table 19: Global % Leakage caused at Various Points in Revenue Generation Value Chain (2005/2010)

Table 20: Elements Affecting the Revenue Loss

Table 21: Elements of Revenue Loss in the US Market (2005/2010)

Table 22: Elements of Revenue Loss in Saturated Markets (2005/2010)

Table 23: Elements of Revenue Loss in Emerging Markets (2005/2010)

Table 24: Average Market Revenue Loss (2005/2010)

Table 25: Example (Effect on Bottom line through RA)

Table 26: Programme Deliverables



LIST OF FIGURES

Figure 1: Revenue Assurance Value Chain

Figure 2: RA Framework

Figure 3: Elements of a RA Programme

Figure 4: The Environment

Figure 5: Global Mobile Penetration

Figure 6: Typical Spider Chart for a US Telco

Figure 7: Typical Spider Chart for a Telco in a Saturated Market

Figure 8: Typical Spider Chart for a Telco in an Emerging Market

Figure 9: Importance of Key Elements of Revenue Loss

Figure 10: RA Value Chain and Key Drivers

Figure 11: Prioritising Leakages

Figure 12: RA Actions

Figure 13: WeDo Consulting's Approach to RA

Figure 14: Integrity Assurance Module

Figure 15: WeDo's Revenue Control Module

Figure 16: WeDo's Events Control Module

Figure 17: Impact of Cost vs. Revenue

Figure 18: Time Frames for RA Programme

Figure 19: RA Performance Scorecard

Figure 20: Cost Benefit Analysis

Figure 21: Time Frames for RA Programme

Figure 22: Components in KPN's Network

Figure 23: KPN's Approach to RA

Figure 24: Architecture of Optimus RA System

Figure 25: % Companies within Revenue Leakage Range

Figure 26: Mobile Subscriber Growth Worldwide (m) (2005-2010)

Figure 27: Total Global Revenue Loss ($m) Forecast (2005-2010)

Figure 28: Global Revenue Loss (%) of Total Revenue (2002-2004)

Figure 29: Revenue Recovery Opportunities as Predicted by Key Players in RA Market

Figure 30: Percentage of Revenue Recovered by Successive Projects

Figure 31: Revenue Recovery Illustrative by Project

Figure 32: % Revenue Loss of Total Revenue by Market (2005)

Figure 33: Average and Acceptable Loss

Figure 34: Acceptable Revenue Loss (%) by Operator Type

Figure 35: Mobile and Average Operator Revenue Losses (%) (2002-2010)

Figure 36: Global Mobile Data Revenues ($m) (2004-2010)

Figure 37: Expected and Realised Global Data Revenues (2004-2010) ($m)

Figure 38: Potential RA Market Value ($m) for Vendors/Consultants (2004/2010)

Figure 39: Global Market for RA and Mediation ($m) (2003-2010)

Figure 40: Operator Approach to RA (2004/2008)

Figure 41: RA Market Segmentation by Region (2005 and 2010)

Figure 42: RA Market Value by Region ($m) 2005-2010

Figure 43: RA Market Segmentation by Operator Type ( %) (2005/2010)

Figure 44: Global % Leakage caused at Various Points in Revenue Generation Value Chain (2005/2010)

Figure 45: CAGR for RA Solutions/Software (2005-2010)

Figure 46: Total Revenue Loss

Figure 47: Changes in Value of Elements Contributing to Revenue Loss/Plugging in US Market (2005-2010)

Figure 48: Changes in Value of Elements Contributing to Revenue Loss/Plugging in Saturated Markets (2005-2010)

Figure 49: Changes in Value of Elements Contributing to Revenue Loss/Plugging for Emerging Markets (2005-2010)

Figure 50: Payback Evolution during an RA Programme

Figure 51: ROI from Traditional Approach to RA

Figure 52: ROI from Using Advanced RA Tools

Figure 53: Revenue Recovery Details

Abstract

The risk from revenue leakage is set to grow as new products are launched, new content and distribution partners enter the value chain, more sophisticated fraud methods are deployed, and business processes become more complex.

While the complete eradication of revenue leakage is the goal, complete plugging of revenue loss is an unrealistic objective and not uneconomically viable in most cases.

The consensus from several operators, consultancies and vendors remains that there are few solutions which cover the entire revenue generating chain.

As a result the aim is to present a comprehensive range of solutions from vendors and consultancies to combat the risk areas identified herein, with the approach and solutions specifically tailored and adopted for each particular market.

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