Telecom RA Survey

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Telecom mu nicat ions Survey 2008

D escriptor

ContentForeword 3Executive summary 5Introduction Revenue Assurance 7Survey set-up 8

The survey results 11Contact information 25


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Telecom mun icat ion s Survey 2008

Forew ord

Looking back to 2007, different trends in the Telecom m unication m arket em erged. All had their ow n speci c challenges:

Decrease of terminat ion rat es an d roaming t ariffs. Even though the num ber of custom ers is still increasing, m ost of the Telecom m unications

com panies offering voice services suffered from a drop in revenues due to the decrease of m obile term ination rates and roam ing tariffs. W e notice

a sim ilar trend for the prices of SM S, M M S and other data exchanges.

Limited success of multimed ia sources. M obile data, w hich are often products w ith low er m argins, continue to be dom inated by exchange of

sm all packets of data, such as m essaging and ring tones, rather than large m ultim edia les.

Limited market response to triple play product. Fixed operator triple play launches w ere w idespread, but discounting rem ained the m ain

m arketing tool –leaving its value proposition open to questions.

IPTV rema ins a n iche prod uct. M obile television failed to gain signi cant traction, w ith som e services ram ping dow n or shutting dow n entirely

due to w eak dem and. IPTV struggled to differentiate itself from the regular television and the overall dem and for the m edium rem ained niche.

2008-2009 prom ise to be equally challenging years: the im pact of a possible econom ic dow nturn on the telecom m unications sector, concerns

about inadequate capacity of the netw ork, the convergence of GPS and m obile technology, the grow ing im portance of com m unications to new

m edia com panies, the accessibility of com m unications to all consum ers and the outlook for m obile phones as it reached 21 years of age to nam e a

few .

Revenue Assurance has not yet properly responded to these challenges. Progress has been m ade in term s of m inim izing revenue leakages, but only

a lim ited num ber of com panies have m oved beyond this point. At its start-up, Revenue A ssurance has indeed dealt w ith the m ost urgent problem s

in the com pany, evolving from an ad hoc re ghting m ode in the late 90’s to an acknow ledged contributor and creator of custom er value. Since

then, its achievem ents have been less spectacular and in som e cases also less visible as not all of the Revenue A ssurance functions report the

prevented revenue losses. This has had an im pact on the perceived added value of Revenue A ssurance, w ith responsibles having to justify the

existence and scope of their activities.

How ever, Revenue Assurance still has an im portant role to play. In a m arket w ith pro ts under pressure, the im pact of proper Revenue A ssurance

processes on the bottom line, and hence its added value to the com pany, increases signi cantly.

By prom oting w orld-class operations across the entire value chain, by assuring the com pleteness, accuracy and optim ization of the revenue

stream , the Revenue A ssurance function can assist the organization in bringing pro table and sustainable products and services to the m arket. The

broadening of the Revenue A ssurance scope to the end-to-end value chain (including a.o. product developm ent and custom er care), is essential for

a telecom com pany to survive in a highly com petitive environm ent w here tim e-to-m arket and custom er retention m ake the difference.

W e note som e of the m ore advanced Revenue Assurance functions m oving aw ay from their traditional role of custodian of the revenues. In order

to further increase the added value to the business, cost assurance has been added to their activities portfolio.

Evolutions in the scope of the Revenue A ssurance function as described above m ay put it back on top of the corporate agenda, as a m ean to

respond to the challenges, assisting in creating the value that shareholders expect. The Revenue A ssurance responsibles should how ever not loose

track of their core responsibility. A scope extension can only be successful in the long run if it is built on the solid foundations of the basic Revenue

Assurance tasks: providing assurance that the revenue leakages are and rem ain lim ited.

This report guides you through the results of our m arket study on Revenue A ssurance in the Telecom m unications sector and can assist you in

benchm arking your com pany w ith respect to the EM EA Telecom m unications industry average. The study has been designed to provide a diverse

selection of view s and thoughts that challenge, inform and engage executives and Revenue Assurance leaders. I hope the results provide you w ith

plenty of food for thought on the road tow ards the future Revenue A ssurance function.

I w ish you a pleasant and inspirational reading.

Laurent Van dend ooren

Partner Deloitte Enterprise Risk ServicesEM EA Revenue Assurance team

Foreword


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Executive sum m ary

The Revenue Assurance function today

The Revenue A ssurance function is further gaining im portance in the Telecom m unication

industry. This is indicated by the increasing num ber of organisations w ith a dedicated

Revenue A ssurance function: 71% of the participant organisations report to have such a

dedicated function.

In m ost of the Telecom m unications com panies the Revenue A ssurance function has reached

an average m aturity level. The Revenue A ssurance function exists and is w ell em bedded in

the organization.

The Finance function rem ains the m ain sponsor of Revenue A ssurance w ithin the com pany:96% of the Revenue A ssurance M anagers report to the C FO w hereas in com panies w ithout

a dedicated Revenue A ssurance function the Finance departm ent rem ains an im portant

sponsor. A lthough the place of the Revenue A ssurance function in the organisation is not

that im portant, but rather the em pow erm ent by the C XO level, the Finance function seem s

to be a good prom oter given its experience w ith risk m anagem ent, internal control, variance

analysis and reconciliations.

The cost of the Revenue A ssurance function (0,013% of the total revenues) is fairly lim ited

com pared to the revenue leakages detected and prevented by the Revenue A ssurance

function. The average estim ated revenue leakage today is about 1,5% . A lthough this is still

high, it is a trem endous im provem ent com pared to a num ber of years ago.

A n im portant contributor to this realisation is the in-house expertise on Revenue A ssurance

that has been built up over the last years. Som e com panies in our survey started w ith

Revenue A ssurance about 13 years ago, giving them plenty of expertise to rely on. O thers

bene t from the best practices available at other com panies w ithin their group. In 52%

of the cases, the Revenue A ssurance function is shared across m ultiple business locations,

fostering the dissem ination of Revenue A ssurance know ledge and best practices.

D oes this m ean that the glory days of Revenue A ssurance have passed? N o, there is still a

road ahead.

Executive summary


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Executive sum m ary

What’s next?

Revenue Assurance has achieved som e trem endous successes over

the years, but it w ill have to address som e key challenges in order toful l the expectations of m anagem ent and shareholders.

Cover the ent ire value cha in. W hen in the late 1990’s grow th w as

starting to slow dow n and the availability of external nancing w as

decreasing, telecom operators began to verify w hether every single

service delivered to a custom er w as actually billed. This w as the start

of the Revenue Assurance activities as w e know them today.

Today w e observe that data collection and billing is still the m ain

focus of the Revenue A ssurance departm ents. In less than 24% of

the cases, the entire end-to-end revenue value chain is in scope of

the Revenue Assurance departm ent.

C om panies, confronted w ith a saturated m arket are forced to

focus m ore on custom er retention. Telco’s are starting to realize the

im portance of an adequate feedback loop on custom er feedback

and behaviour. Revenue A ssurance functions are gradually turning

their attention to the end-to-end revenue value chain, looking at

the business perform ance and the interaction betw een the different

parts of the chain. C ustom er Care is slow ly getting into the picture

as it deals w ith custom er dissatisfaction, typically caused by incidents

earlier in the value chain. C urrently, C ustom er Care is only in scope

of the Revenue A ssurance function in 57% of the cases. Revenue

A ssurance w ill need to realign its activities to respond to these

challenges.

Finding the right b ala nce. D ue to the success of the Revenue

A ssurance activities, som e Revenue Assurance m anagers have todefend the cost-bene t of their activities and the added value

to the business. W e noted through our survey that a num ber of

Revenue Assurance functions consider expanding the scope of the

Revenue A ssurance activities w ith revenue enhancem ent and/or cost

assurance as a solution to that challenge.

W hile this shift in focus can indeed be of added value to the

com pany, Revenue A ssurance responsibles should be careful not to

loose track of the Revenue A ssurance principles. The continuous

m onitoring of the basic Revenue A ssurance controls m ust rem ain a

top priority, given the rapidly changing environm ent.

A nother risk is the potential transfer of ow nership of controls from

the business tow ards the Revenue A ssurance function. Revenue

A ssurance is by nature a controlling body and should be careful not

to jeopardize that role by taking over activities perform ed by the

business.


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Introduction Revenue A ssurance

What is Revenue Assurance?

Revenue A ssurance is a com bination of organizational structure,

processes, technology and inform ation responsible for m onitoring

the revenue process. Its activities are designed to provide assurance

that business processes and system s are perform ing as developed, in

order to:

•Reduce the risk of revenue leakage, by ensuring that risks have

been identi ed and appropriately addressed.

•Prom ote operational ef ciency, by analyzing processes and

system s, identifying gaps and design aw s w hich drive upoperating costs.

•Effectively com m unicate business risks to m anagem ent, in order

to allow inform ed decisions and elim inate surprises (dashboard/

m onitoring).

The Revenue Assurance processes?

The sub-processes of the revenue cycle have been de ned as

follow ing:

Introduction Revenue Assurance

Products &

pricing

Order intake &

provisioning

Fraud prevention

&detection

Data collection

&billing

Interconnect

&roaming

Customer

careCollections

Accounting

&reporting

•Produ cts &pricing : the process from product/pricing concept to

developm ent, testing and go-life.

•Order intake &provisioning : the process of capturing the order

and custom er data, custom er acceptance and provisioning in the

system s/netw ork.

•Fraud prevent ion &det ection: the set of controls and processes

in order to detect and prevent internal and external fraud.

•Data collection &billing : the process of capturing the events in

the netw ork, processing them in the billing system and issuing a

custom er invoice.

•Interconnect &roa ming: the process of handling interconnect

and roam ing invoices and controlling incom ing interconnect and

roam ing invoices.

•Customer care: the process of handling custom er com plaints,

including root cause investigation and the granting of credits,

com pensations and refunds.

•Collections: the process of handling paym ents and m anaging the

custom er account, including dunning and bad debt m anagem ent.

•Account ing &reporting: the process of nancial accounting

and m anagem ent reporting.

The graph below provides an overview of the end-to-end process

fl ow :


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Survey set-up

The survey evolution

This is the 4th tim e that the D eloitte Revenue A ssurance team is

organizing a benchm ark survey for the Revenue A ssurance function

in the telecom m unications m arket. The survey’s topics refl ect the

evolution of the Revenue Assurance function over tim e:

•The surveys of 1999 and 2002 focused on addressing revenue

leakages and im plem enting a structured approach. The key

challenge in the telecom m arket at that tim e w as the transition

from a reactive to a pro-active Revenue A ssurance process.

•O nce the basic processes w ere under control (m ostly data

collections & billing, interconnect & roam ing and accounting

& reporting), the next step w as to im plem ent an end-to-end

Revenue A ssurance process covering the w hole of the revenue

chain. This w as addressed in our survey of 2005: “Revenue

A ssurance, w here to focus?”.

The current trend of m arket convergence results in a m ore global

Revenue A ssurance approach. A lot of the m ajor international

telecom com panies are consolidating their local efforts and best

practices to a w orldw ide approach. The goal of this year’s survey

is to analyse the m aturity level of the Revenue A ssurance function

on EM EA level and to provide a benchm ark w ith respect to the

organization of the Revenue A ssurance function, its costs and

num ber of FTEs. This should allow the telecom com panies to

benchm ark their ow n perform ance on an international level and

to identify the international best practices and the m ain trends of

Revenue A ssurance w ithin the EM EA telecom m arket.

Survey set-up

0

5

10

15

20

25

30

Wireless

d a t a

(HSPDA,

GPRS,

I-mode,...)

Internet

(Cable,

Broa dba nd)

Wireline

Voice

Leased

Lines

Wireless

Voice

Wireless

Voice

as an

MVNO

28 28

24

2019

14

10 9

4

Internet

(Wimax)Digi ta l

TV

CAT

TV

0%

5%

10%

15%

20%

25%

30%

35%

< 25 M EUR 250 M EUR -

1.000 M EUR

1.000 M EUR -

5.000 M EUR

32% 32%

26%

10%

> 5.000 M EUR

The participants

Product representation

42 Telco com panies across the EM EA region participated to this

year’s survey. The participants cover a vast m ajority of products

(voice, internet and data) and custom er types (residential and

corporate m arkets). The follow ing graph gives an overview of the

set of products offered by the 42 participating com panies:

Overview of the company size per revenue and per #FTEs

The participating com panies are also representative for the EM EA

telecom m unications m arket in term s of revenue and num ber of

FTEs. Their yearly revenue varies betw een K€ 322 and

K€ 11.531.000 w hile the com pany sizes vary betw een sm aller

Telco players and large m ultinational organizations. The table below

provides an overview :

The products offered by the survey participants

Revenue in EUR for participating companies


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Survey set-up

0%

10%

15%

20%

30%

35%

40%

45%

< 1.000 < 5.000 < 20.000

42%

32%

18%

8%

> 20.000

25%

5%

Geographical representation

For analysis purposes w e clustered the participating com panies into

geographical areas:

•W estern Europe (19 com panies): U K, Belgium , Italy, Spain,

The N etherlands and G erm any;

•C entral Europe (9 com panies): A lbania, Poland, C zech republic

and Turkey;

•Eastern Europe (7 com panies): M oldova, Rom ania, Latvia,

Lithuania and A zerbaidjan;

•A frica (7 com panies): Nigeria.

Western Europe: 19

Central Europe: 9

Eastern Europe: 7

Africa (Nige ria): 7

M ost of the survey’s respondents are part of a m ultinational group,

w hich allow s them to bene t from the experience and best practices

available at the various entities.

Company size in #FTEs Geographical representation


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Survey set-up

Survey definitions

The differentiation in m aturity levels is based on the follow ing:

•Ma turity level 1 - Initia l: N o real process is in place. The focus lies w ith a reactive action ( re ghting);

•Maturity level 2 - Repeatable: The process is dependant on individuals, it is inform al and inconsistently applied;

•Maturity level 3 - Defi ned: Revenue A ssurance is de ned and a central part of the organization. Process

m easurem ent, quality assurance and detective controls are in place;

•Mat urity level 4 - Mana ge d: Revenue A ssurance is m easured (KPI dashboard) and issues are detected in an early

stage (ongoing testing, preventive controls). The responsibilities for Revenue A ssurance are m ore decentralized

through the organization;

•Ma turity level 5 - Optimized : A dvanced m ethods are used and feedback into the process is optim al (e.g. cost

assurance, custom er / product pro tability analysis).

Initial

(Ad hoc)

No RA processes

processes

(Ad hoc)

No RA processes

Repeatable

Defined

Managed

Optimized

Overview of Revenue Assurance maturity levels


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The survey results

Sim ilar to the results of our previous surveys, the Revenue A ssurance m anager typically

reports to the Finance director. Finance has traditionally been a sponsor of the Revenue

A ssurance activities given its experience and buy-in w ith respect to risk m anagem ent and

internal control.

W e perform ed a sim ilar analysis for the com panies w here the Revenue A ssurance activities

are perform ed by several departm ents (29% of the participant organizations).

W e noted that the Finance departm ent is alw ays involved. The IT and N etw ork O perations

departm ents provide the necessary support to cover the process chain.

Number of employees in the Revenue Assurance department

For benchm ark purposes, w e com pared the num ber of FTEs w orking in the Revenue

A ssurance departm ent to the yearly revenue generated by the com pany.

O n average, the Revenue A ssurance departm ent em ploys about 0,05 full tim e equivalents

per 10 m illion EU R revenues.

0,00

0,15

0,20

0,25

N i g e

r i a

E a s t e r

n E u

r o p e

a n c

o u n t

r i e s

6,05

0,21

0,07

0,040,03

0,02 0,02

0,5

0,10

0,01

0,05

U K

C e n t

r a l E

u r o p

e a n c o

u n t r i e

s I t a

l y

S p a i

n

B e n e

l u x

G e r m

a n y

G r a n

d T o

t a l

FTEs per EUR 10 mio revenue

0%

50%

60%

70%

80%

90%

100%

Fina nce IT Netw ork

opera t ions

Customer

opera t ions

Ot he r Le g al &

Regula tory

100%

76%

67%

50%

42%

33%

17% 17%

Internal

audi tBilling

department

10%

20%

30%

40%

Revenue Assurance activities within the organisation


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The survey results

13

There is a clear correlation betw een the num ber of FTEs em ployed by a Revenue A ssurance

function and its m aturity level. The graph below illustrates this evolution:

Initially, w hen revenue leakages are identi ed w ithin the com pany, a num ber of em ployees

are designated to deal w ith these individual incidents. A dedicated Revenue A ssurance

function does not exist at this point.

A s the root causes of the incidents are investigated, other issues arise. M anagem ent

becom es aw are of the risk and invest in proper Revenue A ssurance controls. The num ber

of FTEs em ployed by the departm ent grow s rapidly at this stage due to the high level of

m anual controls (no autom ation yet) and due to the high visibility of the results of the

Revenue A ssurance activities, w hich are a good business case for m ore resources.

In m aturity stage 3, the scope of the Revenue A ssurance activities is enlarged: the accuracy

and com pleteness of the invoice is no longer the sole concern. The Revenue A ssurance tools

available at this point do not cover the entire value chain. A dditional resources are required

to acquire an overview of the controls in these processes and to m onitor them .

The integration of the different controls and KPIs throughout the value chain, the

developm ent of a set of preventive controls and the autom ation of controls and reports

com pletes the transition of Revenue A ssurance to a stable and repeatable process. A lthough

new products are still added to the scope of Revenue A ssurance and existing processesand system s still often change given the continuous changes of the Telco environm ent, the

num ber of FTEs required w ill therefore stabilize and even decrease som ew hat.

Average total cost of the Revenue Assurance department

W e analyzed the annual cost of the Revenue A ssurance departm ent, i.e. the outsourcing

costs, operating expenses, contracted services and direct labour costs. The acquisition and

m aintenance costs of the Revenue A ssurance tools w ere not included in this analysis.

Maturi ty 1 Maturi ty 2 Maturi ty 3 Maturi ty 4 Maturi ty 5

Immature RA

processes

Mature RA

processes

# FTEs

Revenu e Assura nce FTEs vs. mat urit y level


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The survey results

The average cost for the survey population am ounted to 0,025% of the total com pany

revenue.

A further breakdow n of the various cost types reveals that the vast m ajority of the costs

can be attributed to direct labour costs (68% ). O ther signi cant costs are contracted

services (18% ) and operating expenses (13% ). O utsourcing costs (1% ) can be considered as

im m aterial for m ost of the participating telecom com panies.

W e noted that com panies w here the Revenue A ssurance activities are scattered across the

various departm ents, lack an overview of the total num ber of FTEs w orking on Revenue

A ssurance activities and of the total cost of these activities.

When were the Revenue Assurance activities formally developed?

The participating Telco com panies indicated w hen they form ally started the Revenue

A ssurance activities. The graph below also includes the results for the com panies w here the

revenue activities are not centralized via a dedicated Revenue A ssurance function.

0,000%

0,200%

0,250%

N i g e

r i a

E a s t e r

n E u

r o p e

a n

c o u n

t r i e

s

C e n t

r a l E

u r o p

e a n

c o u n

t r i e

s

0,195%

0,068%

0,030% 0,027% 0,024% 0,021% 0,004% N/A0,050%

0,150%

0,025%

U K

S p a i

n

B e n e

l u x

G e r m

a n y

I t a l y

A v e r

a g e

0,100%

Cost of the RA department vs. company revenue

0%

20%

40%

60%

80%

100%

100 78

22

64

36

76

23

2

48

14

2

36

36

18

46

68

13

18

76

19

2

2

N i g e

r i a

E a s t e r n

E u r

o p e a

n

c o u n

t r i e

s U K

B e n e

l u x

C e n t r a l E

u r o p

e a n

c o u n

t r i e

s S p

a i n

G e r m

a n y

A v e r

a g e

Outsourcing fees

Operating expenses

Contracte d service

Direct labour

Cost breakdown per country / region


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The survey results

For the entire EM EA region, the Revenue A ssurance activities started on average 3,5 years

ago. 2 com panies even started their Revenue A ssurance activities 13 years ago, w hile forothers this is only a few m onths.

The U K and the C entral European countries in the scope of our survey clearly have a longer

history in Revenue A ssurance. There is a correlation betw een both as a large part of the

survey participants in the C entral European region have U K-based global headquarters. A s

such, they w ere able to bene t from the experience and best practices provided by their U K

headquarters.

B. Scope of the Revenue Assurance department

This section of the survey provides details on the activities of the Revenue A ssurance

function: the processes in scope of the Revenue A ssurance and the type of activities

perform ed.

Processes in scope of the Revenue Assurance department

To assess the scope of the Revenue A ssurance activities for the participating Telco com panies, w e

asked the respondents to indicate the processes in scope of their Revenue A ssurance activities.

The data collection & billing and the interconnect & roam ing processes are the core

processes for m ost of the Revenue A ssurance departm ents. This result is sim ilar to previous

survey ndings w here w e noted that in m ost com panies Revenue Assurance starts w ith the

m onitoring of the com pleteness and accuracy of the invoices to the custom ers.

O nly 24% of the respondents have the entire value chain in the scope of their Revenue

A ssurance activities.

0%

20%

40%

60%

80%

100%

83%

P r o d

u c t &

P r i c i

n g

O r d

e r I n t a k e

&

p r o v

i s i o n

i n g

F r a u

d p r

e v e n

t i o n

&

d e t

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D a t a

c o l l e

c t i o

n &

b i l l i

n g

I n t e

r c o n

n e c t

&

r o a m

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C o l l e

c t i o

n s

A c c o

u n t i n

g &

r e p o

r t i n

g

90%

70%

50%

30%

10%

83%

76%

98%

90%

57%62%

83%

Processes in scope: RA department vs dispersed RA activities

0,00

4,00

5,00

6,00

U K

C e n t

r a l E

u r o p

e a n

c o u n

t r i e

s

5,33

4,87

3,60 3,50 3,39

2,822,50

2,00

1,00

3,00

3,46

B e n e

l u x

S p a i

n

G e r m

a n y

N i g e

r i a I t a l y

E a s t

e r n E u

r o p e

a n

c o u n

t r i e

s

A v e r

a g e

2,00

Avg. number of years Revenue Assurance activities


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The survey results

The Revenue Assurance activities

N ext to the processes in scope, w e analysed the type of Revenue A ssurance activities

perform ed by the participating com panies. These activities can be divided into 5 clusters:•“Basic”Revenue A ssurance tasks, i.e. standard controls and m onitoring,

m anagem ent reporting, project m anagem ent and team m anagem ent;

•O ptim ization initiatives to enhance the Revenue A ssurance function;

•Tasks related to cost assurance;

•Sarbanes O xley com pliance activities;

•O ther, com pany-speci c, activities.

O n average about 70 % of the tim e is spent on “basic”Revenue A ssurance tasks.

A signi cant am ount of effort also goes to the revenue optim ization initiatives (16% ).

The latter is how ever often lim ited to the identi cation of quick w ins rather than the

developm ent of a continuous and structured process w hereby Revenue A ssurance analyses

assist in the de nition or ne-tuning of the business strategy.

A bout 52% of the survey’s respondents have participated in a Sarbanes O xley program .

H ow ever, the tim e spent on SO X by the Revenue A ssurance function is lim ited as the

Revenue A ssurance activities are by nature not operational.

W e also noted 2 respondents w here the Revenue Assurance departm ent w as activelyinvolved in the closing process or in the m onthly nancial reporting. The Revenue Assurance

M anager function should be an assurance function. W e som etim es see com panies w here

this function is operating certain controls. This often results in a lack of ow nership by the

business and in the Revenue A ssurance departm ent being blam ed w hen som ething goes

w rong.

0%

20%

40%

60%

80%

100%

52 81 80 65 85 65 60 78

124

25 15 12 15 11

15

3

2325

10

2

B e n e

l u x

C e n t

r a l E u r

o p e a

n c o

u n t r i e

s

E a s t

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u r o p

e a n

c o u n

t r i e

s

G e r m

a n y

I t a l y

N i g e

r i a

S p a i

n U K

Other

SOX

Cost Assurance tasks

Revenue optimization

Basic RA tasks

A v e r

a g e

70

13

26

95

64

4

56

16

10

Overview of activities per country / region


16/27


17/27

18


The survey results

Impact of SOX programs on the maturity of the processes

A s 52% of the participating Telco com panies have im plem ented a SO X program ,

w e investigated the im pact on the assessed m aturity level of the processes.

The SO X program has an im pact on the m aturity level of the order intake & provisioning and

the C ustom er Care processes. The m aturity level of the collections process also increases

w ith the im plem entation of a SO X program . These are the processes that w ere often not

part of the scope of the Revenue A ssurance activities.

D. Estimated revenue leakage

To perform an assessm ent on the effectiveness of the Revenue A ssurance activities, w e m adesom e analyses on the estim ated revenue leakages. Additionally, w e investigated the revenue

leakages on product level in m ore detail.

Estimated revenue leakage per country / region

The table below gives an overview (in % of revenue) per EM EA region of the estim ated

revenue losses.

The revenue leakage is estim ated to be on average about 1,5% of the total com pany

revenue. For the entire survey population, the estim ated revenue leakage varies betw een

0,05% and 5% .

2

2,4

2,6

P r o d

u c t &

P r i c i n g

O r d

e r I n t a k e

& p r

o v i s i

o n i n

g

F r a u

d p r

e v e n

t i o n

& d e

t e c t i o

n

D a t a

c o l l e

c t i o

n & b i l l i

n g

I n t e

r c o n

n e c t

& r o

a m i n g

C u s t o m

e r c a r e

C o l l e

c t i o n s

A c c o

u n t i n

g &

r e p o r t i

n g

SOX Progra m

3,0

3,4

3,8

3,6

3,2

2,8

2,6

2,2

2,5

3,1

3,0

3,1

3,6

3,4

3,1 3,1

2,6

3,0 3,0

3,4

3,2

3,0

No SOX Progra m

2,8

Impact of SOX on process maturity

0,00

0,50

1,00

1,50

2,00

2,50

3,00

Nig eria Spa in Benelux Cen tra l

European

countries

UK It a ly

2,40

1,75 1,68

1,421,30 1,25

1,10

0,78

1,51

Eastern

European

countries

Germany Grand

Tot al

Estimated revenue leakage per country / region


18/27

19


The survey results

Revenue leakage on product level

The table below gives the estim ated revenue leakages on product level. O nly the core

products of the respondents have been included in this analysis.

Revenue A ssurance has alw ays paid considerable attention to the voice products due to the

usage based billing. These efforts pay-off as the graph clearly indicates.

The data products are still fairly lim ited in use and generally don’t have com plex billing

structures. That explains the good result (1% for w ireless data) for this product set.

The revenue leakages are estim ated the highest for the internet products (respectively 2,4%

for W i-m ax and 2,1% for the regular internet product).

The correlation between Revenue Assurance maturity and estimatedleakage

O ur survey dem onstrated a clear negative correlation betw een the m aturity of the Revenue

A ssurance processes and the estim ated revenue leakage. O n average, a m aturity increase of

1 point on a scale of 5 (e.g. from m aturity level 1 to m aturity level 2) results in a decrease of

estim ated revenue leakage of about 1% .

0,00

0,50

1,00

1,50

2,00

2,50

Internet

(Wimax)

Internet

(Cable,

Broadband)

Leased

Lines

Wireline

Voice

Wireless

Voice

Digita l TV

2,38

2,121,99

1,56 1,52

1,20

1,02

0,74

Wireless

d a t a

(HSPDA,

GPRS,

I-mode,...)

Wireless

Voice

as an

MVNO

Estimated revenue leakage per product


19/27

20


The survey results

E. Revenue Assurance tools

In this section of the survey, w e analysed to w hat extend the Revenue A ssurance activities

are supported by the necessary tools. W e also assessed their cost-bene t, i.e. the averagecost of the tools com pared to their im pact on the revenue leakage.

What are the tools available to the Revenue Assurance function and wheredo they come from?

The graph below gives an overview of the type of Revenue A ssurance tools available to the

participating Telco com panies. W e distinguish 4 kinds of tools used by the different Revenue

A ssurance departm ents:

•Reconciliation tools;

•Fraud m onitoring tools;

•Test call generators;

•Various auditing tools.

The graph also indicates w hether the tool w as developed in-house or if it w as an external

acquisition.

Tools are m ainly used to autom ate reconciliations perform ed betw een system or process

data. A s these reconciliations are generally com pany and process speci c, m ost of them

(40% ) are in-house developed.

This is not the case for the fraud m onitoring tools, the test call generator and the auditing

tools: they are generally less available to the Revenue A ssurance function and m ost of them

are purchased from outside vendors.

The average appreciation of the tools is rated on average at 3,7 on a scale of 5 by theparticipants. W e did not notice a signi cant difference betw een in-house developed and

externally purchased tools.

0%

60%

70%

80%

90%

100%

26%

Reconciliation

toolsFraud monitoring

tools

Test call

genera to r

Auditing tools

(e.g. ACL)

No tool available

Combination of in-house developed

and externally acquisitioned

10%

20%

30%

40%

50%

In-house d eveloped

Externa l acq uisition55%

64% 71%

40%

12% 12%

10%

19%26% 24%

17%

14%

7%

2%

Revenue Assurance tools


20/27

21


The survey results

The average cost of the Revenue Assurance tools

The average total cost of the softw are acquisition for Revenue A ssurance tools is K€ 15.442,

w hile this is K€ 4.252 for the hardw are acquisition. The average yearly m aintenance cost for

the Revenue A ssurance tools am ounts to K€ 6.601.

The impact of tools on the estimated revenue leakage

The graph below illustrated the im pact of the use of tools on the estim ated revenue

leakages: the coloured bar on the left represents the estim ated revenue leakage for Telco

com panies w ith supportive tools, w hile the bar on the right indicates the estim ated revenue

leakage for com panies that lack the necessary tools.

There is a clear correlation betw een the use of Revenue A ssurance tools and the estim ated

revenue leakage: com panies w ith tools estim ate their revenue leakage to be about 1,2%

w hile this is 2,6% for the others. This result is also correlated to the m aturity of the Revenue

A ssurance processes: m ature com panies are m ore likely to have the appropriate tools

available w hile in turn their revenue leakage is also low er on average.

0

0,5

1

1,5

2

2,5

NoYes

3

1,21

2,6

Estimated leakages vs. usage of tools


21/27


The survey results

22

F. Revenue Assurance reportingW e assessed the level of (dashboard) reporting available to the participating telco

com panies. A dditionally, w e also assessed w hether the reporting on the Revenue A ssurance

realizations covers both leakage detection and prevention.

Availibility of dashboard reporting

A bout 69% of the respondents currently have a Revenue A ssurance m onitoring dashboard

available. G enerally, the m aturity of the Revenue A ssurance activities has reached a certain

level before a m onitoring dashboard is im plem ented. The participating telecom m unications

com panies that have im plem ented a dashboard reporting started w ith Revenue A ssurance

on average 4,3 years ago w hile this is 2,2 years for the com panies w ho are lacking a

dashboard m onitoring.

In line w ith the other survey results, the K PIs that are m onitored are m ostly related to the

data collection and interconnect & roam ing processes. KPIs are often not available for thecustom er care and product & pricing processes w ithin the Revenue Assurance dashboard.

M ost dashboards are updated on a daily basis (54% ) or on a m onthly basis (25% ). O nly 4%

of the available dashboard reports are available in real-tim e.

Measurement of the Revenue Assurance realizations

The pie chart indicates the percentage of participating com panies w here the reported

Revenue A ssurance realizations:

•A re not reported;

•Relate to detected revenue leakages;

•Relate to prevented revenue leakages;

•Relate both to detected and prevented revenue leakages.

Leakage detection

Leakag e preventionBoth

None

14%

17%

19%

50%

Revenue Assurance realizations measurement


22/27


The survey results

23

14% of the survey’s participants have no reporting available on

their achievem ents, w hile for 17% this is lim ited to reporting on

the leakage detected via the control set. 69% of the com panies are

capable to report the revenue leakage prevented by the Revenue

A ssurance function to m anagem ent.

Dashboard reporting vs. estimated revenue leakage

W e investigated the correlation betw een the availability of dashboard

reporting and the estim ated revenue leakage. The bar on the right

indicates the estim ated leakage for com panies w ith m onitoring

reporting, w hile this is not the case for the bar on the left.

A substantial drop of the estim ated revenue leakage can be noted

for com panies w ith dashboard m onitoring: from 2,46% to 1% for

com panies w ith dashboard reporting. The root causes are tw ofold:

•First of all, less m ature telecom com panies often have not yet

developed a Revenue A ssurance dashboard reporting, w hile in

turn their revenue leakage is still relatively high com pared to m ore

m ature com panies.

•Secondly, the lack of proper dashboard reporting seem s to lead to

a m ore negative perception of the revenue leakage perform ance.

This is because com panies w ithout dashboard reporting are m ore

reliant on individual incident reporting (e.g. fraud cases, m ajor

billing problem s, etc.). Since this type of reporting is focused on

quantifying the nancial im pact of incidents rather than reporting

the overall perform ance, the general assum ption of the Revenue

Assurance perform ance w ill be m ore negative.

G. Future Challenges

The participating com panies also provided us w ith their current

and future top priorities. These priorities w ere clustered into 4

m ain areas: basic Revenue A ssurance, cost assurance, revenue

enhancem ent and optim ization initiatives and the im plem entation

of a SO X com pliance program .

The spider graph below gives the results for both the 2007 and

2008 priorities, w hereby 0 is a low priority and 5 is a top priority.

A lthough the “basic”Revenue A ssurance tasks rem ain the top

priority in 2008, w e note a tendency for Revenue A ssurance

functions to also start focusing on cost assurance and/or revenue

enhancem ent.

Revenue

enhancement /

Optimization

initiatives

Cost

Assurance

Basic Revenue Assurance

SOX

Priority 2007

Priority 2008

5

4

3

2

1

0

Priorities for 2007 and 2008

0

0,5

1

1,5

2

2,5

Estimated leakage

with monitoring

Estimated leakage

without monitor ing

3

2,46

1

Impact of dashboard monitoring on revenue leakage estimate


23/27


24/27

Contact informationCore team members

Laurent Vandendooren

Partner

D eloitte Enterprise Risk Services

lvandendooren@ deloitte.com

Tel. + 32 2 800 22 81

Tom Van Cauw enberg e

Partner


tvancauw enberge@ deloitte.comTel. + 32 2 800 22 79

Nico Vandamme

M anager


nvandam m e@ deloitte.com

Tel. + 32 2 800 23 25

For m ore inform ation about this study, contact us via e-m ail: nvandam m e@ deloitte.com

25


C ontact inform ation


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Telecom RA Survey