Consultant advocates margin enhancement

Revenue assurance can be a limiting term, Carl Geppert told communications executives last week at Telestragies’ Revenue Assurance conference in Washington, DC.

In a telephone interview after his presentation, the KMPG (www.kpmg.com) partner and national industry director for communications said, “When many people think of revenue assurance, they think of things like trying to stop revenue leakage and trying to find the money. They think of billing problems. They think of revenue accounting issues and the like.”

However, KPMG prefers a more comprehensive view of revenue assurance, what Geppert calls “margin enhancement.” At the conference, Geppert discussed how a client, SBC Communications, folded margin enhancement into its operations and how other carriers can do the same.

Margin enhancement includes cost as well as revenue management, Geppart said.

“That wraps together into an area that we look at called profitability enhancement, where the revenue and cost aspects come together and you’re looking at: Am I generating profitable revenue on a customer basis, a product or service basis, a geographic basis, a business unit basis?” Geppert said. “It’s not just about revenue and revenue growth. It’s about profitable revenue growth. It’s about bottom-line results. That’s what Wall Street is looking for, and that’s what top management is looking for.”

Geppert said SBC took about three months to build the initial structure of its revenue-assurance function. But he added that implementing revenue assurance is ongoing.

“One of the critical elements of success was getting executive management involved at the front end,” Geppert said. “The second thing that worked very well was that the team got all of the key business process owners involved. They established a steering committee.”

The team also determined expected outcomes prior to launching the revenue-assurance function.

Although, SBC’s implementation went relatively well, there was one significant problem.

“The project team encountered some resistance from certain parts of the organization,” Geppert recalled. “Given today’s economy and the cost-reduction initiatives that are going on, they found that people didn’t particularly have the time for them.”

Some department managers thought the company didn’t need to enhance its revenue assurance, although process holes existed. However, the team ultimately won those departments over by convincing managers of the project’s benefits, Geppert said.

The downside to implementing a revenue-assurance program is that it costs, and in today’s economy, money is tight.

“If companies are looking at these issues purely from a cost standpoint, i.e., do I want to incur a cost to implement a revenue-assurance function, that could be an impediment to implementation,” Geppert said. “But we’re encouraging companies to look at the business case more closely.”