Surviving the Recession: Keeping the Dollars You've Already Earned

One of the service providers furthest down the path toward this vision is Subex customer Verizon, which at the recent Management World show detailed its efforts to build a so-called “revenue operations center.” In addition to optimizing the billing experience – and thus ensuring payment and minimizing costly customer calls regarding bills – the ROC aims to consider the costs of delivery to start to get a handle of service profitability, explained Kathy Romano, executive director of revenue assurance and billing for Verizon.

What’s important to note is that, in a converged, IP-based network environment, revenue assurance is as much about network and service assurance as about billing issues. “The underlying network has a direct impact on top-level service assurance, which has a direct impact on revenue recovery,” said Rahul Sachdev, vice president of marketing for OSS vendor Intelliden, who noted that in some instances, providers delivering enterprise data services have been found to provision them such that anywhere from 10% all the way to 50% of network ports are “lost or stranded,” a massive cost leakage.

“You have a defect that happens in the front-end of the process created by the provisioning infrastructure, and ultimately you have to give revenue back to the customer – it’s not the circuit they ordered or you billed them incorrectly,” Sachdev said. The answer, particularly in a downturn, is to tighten up those end-to-end processes, he said. “Service providers have to ask themselves in the next 12 to 18 months, ‘Can we use this time to maximize what we already have in people and network assets so that, when this recession ends, we can be leaner and more competitive in the marketplace?’ It’s all about discipline.”

While many back-office “transformation” projects – large or small – focus on supporting next-generation services, much of the revenue and cost leakage comes from older systems and processes. “Most of the operational costs today are still in those legacy systems,” said Subex’s Nicholson. “And the reality is, to get any real cost savings and maximization, you need to focus on that legacy as well.”

“If we look at overall service provider infrastructure spending, the access area is a disproportionate share of the capital costs and the operational costs for [service providers]. That's where leakage is the most painful,” said IDC analyst Rainge. “Whether it’s the cost of the truck roll, the diesel for the generators at the remote site or the sheer volume of elements and sites, size and reach can be challenging. The age of the outside plant is another issue. There's just more opportunities for leakage. It's also a place where the technology is likely to be out of date or incorrectly logged into the system.”

More closely tying revenue assurance to network and service assurance is one major trend. Another is the emergence of “partner assurance,” or the need to make sure revenue-producing partnerships are working properly and efficiently. In the past, this was mainly about interconnection partnerships, a traditionally major source of revenue leakage.