Yankee urges network-centric revenue assurance

Yankee Group said in an audio conference today that the time has come for service providers to take an end-to-end enterprise-wide approach to revenue assurance and that vendors will face stiff competition for the $900 million market such an approach will create for them by 2008.

Yankee vice president Sanjay Mewada said that since the market downturn in 2001, much of the emphasis of service providers has been on cost reduction, efficiency metrics and operational excellence. "That’s not going to go away," Mewada said, "But early this year as the market stabilized, we are seeing limited introductions of new services and the bundling of capabilities."

Because the market is beginning to grow again, service providers should apply the same enterprise-wide approach to ensuring those new services are profitable by moving from a points solution approach regarding revenue assurance to a ‘revenue operation center’ approach," said Mewada, who jointly presented with Yankee Group program manager Jason Briggs.

Mewada said revenue assurance is processes and products designed to ensure that all billable activities occurring on the network are accurately captured, rated and billed in accordance with the customer agreement—including the detection and correction of problems. As service providers move to next-generation networks, revenue assurance will go beyond its traditional role of verifying billing records and include customer assurance, quality assurance, revenue assurance and business assurance.

"Service providers often carry out these four activities in isolation from one another," Mewada said. "But the fundamental underlying concepts around them are similar."

Briggs added that most carriers would never deploy their networks without some kind of assurance or monitoring system around it. "It’s the same philosophy with business and revenue assurance. You have to stress test the revenue stream," he said.

Where once revenue leakage was seen as a cost of doing business, particularly during the recent period of fast growth, carriers have looked introspectively at improving their processes, which is resulting in tremendous growth opportunities for revenue assurance. "Revenue assurance is there to be a safety net for all the change happening in the network," Briggs said.

The analysts describe revenue assurance as a fault management system for operations’ support system software and processes--except that through the combination of software and services it must go beyond detecting faults to fixing them and ensuring they don’t occur again.

Currently a number of network management, billing and mediation, and other software providers target the revenue assurance market from their particular perspective. These companies generally focus on either provisioning and activation; fraud management, billing and mediation; interconnection and cost management or database and analytics. Several consulting and integration companies also provide services for the functions software can’t yet address. However, few companies are offering enterprise-wide solutions such as those that Yankee Group says will be required.

The firm singles out Westminster, Colo.-based Connexn Technologies as the one vendor closest to achieving a software solution that provides all the elements of an enterprise-wide revenue assurance solution and PricewaterhouseCoopers as the consultancy most active on the space along with BearingPoint, Deloitte and Ernst & Young.

Yankee Group also mentioned LavaStorm, WeDo, Cape and ECtel and up and coming players as well as Telcordia Technologies and Amdocs which are expanding their capabilities.

"It’s quite a fragmented space. But we expect to see a lot of growth in product revenue. It’s just as important as the service side," Mewada said.

The service side of service assurance will generate 473.7 million this year versus $106.5 million in products, according to Yankee Group. Next year, services will grow to $509 million and products to $146.4 million. By 2008, Yankee Group expects the market to generate $587.8 million in services and $354.9 million in products.

"We’re generally conservative with our forecasts, but it will be a descent size market with a fairly large upside in potential growth," Mewada said.