In the early days of revenue assurance (RA) for telecom companies, a popular phrase used by software salespeople was: “You don’t know what you don’t know.” They were talking about the fact that telcos were not aware of all the losses they were incurring due to poor billing practices, irregular audits and legacy systems.
Those early RA systems simply added the ability for businesses to monitor and assess leakages using basic analytical processes, and the early results were nothing short of astounding. Internal auditors and fledgling RA teams were finding up to 10% of lost revenues that were immediately allotted to the bottom line.
Yet despite these early bewildering results, many service providers were not convinced of the worth of basic revenue assurance and fraud management systems, opting to continue with periodic sampling and comparison of data from different systems in the “switch to bill” process using complex spreadsheets that were also prone to error.
Fifteen years on, we are well into the era of large-scale analytics using big data, and some of those businesses that were tardy in their revenue assurance practices are making discoveries that have the potential of shaking up senior management long skeptical of their worth.
Some horror stories are emerging (albeit secretively) from Asian carriers that are discovering what can only be described as endemic fraud, sometimes perpetrated and concealed by senior managers.
One simple case that I was recently made aware of came about when an analytical process uncovered anomalies in a particular region where up to 65% of prepaid SIM cards that had been sold and activated had never actually being used. What would normally have been discovered by standard RA and fraud management systems had gone unnoticed for many years because no one had bothered to do the analytics.
In this particular case, dealers in the region with strong family links to a senior manager were provided with – and were happily “selling” – prepaid SIMs, activating them and collecting the commissions without them ever being used, resulting in a double whammy in revenue loss for the carrier.
This simple example raises questions that every business owner or stakeholder must be concerned with. The potential for revenue leakage, particularly through fraudulent activities, will continue to increase as service providers add more and more non-core products and services to their portfolios. Those being acquired from third parties are of particular concern because there is the possibility of leakage at the cost side of the equation as well as revenues.