Guest post by Kobi Shitrit, Head of Revenue Assurance, HOT (Israel)
When I was asked to share my perspective with the wider RA community, I hesitated at first because my background in revenue assurance is relatively short. Actually when we formed the RA team at HOT two years ago, we built it up from scratch and this was my first experience in RA. Luckily I learned enough to build the domain and I would say our RA program is very active these days.
First, let me explain a bit about my company, HOT, which launched back in 1991 selling cable TV. Cable has been our main business for some time and we now have about 900,000 subs, roughly 60% market share in Israel. In recent years we’ve become a full “triple play” operator expanding into high speed internet and fix line telephony. Altogether we now serve about 1.2 million subs out of which 40% are triple customers, and our company has 5,500 employees. Recently, we purchased a cellular company, which we now call HOT Mobile.
Now I wish I could say that our traditional cable TV business will be a highly profitable and “smooth sailing” business in the years ahead. But to be honest, that’s not the case because we face a new reality. The telecom regulator in Israel is allowing new competitors to enter the market in several domains, cable T.V. being one of them, so the two operators who have dominated cable TV thus far - HOT and the large incumbent operator Bezeq – face a tough time holding onto market share. Another major threat/challenge is the younger customer segment viewing habits which is moving more and more towards the internet.
In fact, we fully expect to lose a certain percent market share but we intend to make up for that by gaining new share in domains like cellular.
As you can imagine, HOT faces lots of new and challenging changes in our business. We have to adjust our business models, pricing, and there’s lots of pressure to maintain our profit margins and reduce our CAPEX and OPEX as much as possible.
We knew we needed a revenue assurance capability and we considered either buying a solution or building one in-house. In the end, after an extensive selection screening, we chose to buy the MoneyMap tool.
Some of the factors in our “buy” decision were: 1) the IT department had no knowledge of RA practices; 2) buying a third party solution would shorten the time-to-market; and 3) having an in-house solution would make RA dependent on scarce IT developers and schedules.
Revenue Assurance Programs
Our first revenue assurance controls were inserted in an obvious area: checking the data integrity between engineering and billing system, including all the equipment, services and definitions between the systems. We have the systems you’d expect: multiple billing systems for subscriptions, VOD, Voice, HSD. Multiple network systems handle each service and we bundle services like TV, telephony, and broadband access.
The business acquisitions HOT has done have given us plenty of work to do. Besides QA, Revenue Assurance is the only department that checks end-to-end new processes and the integration of new and legacy systems.
As a relatively new department within the organization, and as our business and market is so dynamic, we are creating new controls & inspections and performing refinements on them all the time in order to cover additional LOBs, Business processes, etc. For instance, after we built the data integrity checks, our second thrust was to look at rating, collections and the third parties we deal with.
All in all, the revenue assurance program has met with great success. We got great value from the tool, so we decided to buy the FraudView Fraud Management solution from the same vendor.
One indicator of this is that senior executives have the RA team present its findings in monthly management meetings. Another is that the business gets the RA team involved any time a new service is being launched in HOT. So the organization appreciates our help and considers us a vital watchdog over the revenue chain.
The Challenge of Revenue Assuring Outsourcing
Actually, the tougher competitive climate has forced HOT to outsource many business functions, such as customer installments, customer service, and telemarketing.
Managing the outsourcing of business functions is a very big challenge: lots of ways for us to lose money from revenue leakage and fraud. To get a handle on our partner’s activities, we not only insert new business controls, we also analyze the data in detail to ensure the contractors are correctly performing what’s specified in their contracts.
And you have to be very careful to oversee the work they do. We’ve experience many issues, including basic things like selling the customer a service, and not ensuring the customer is actually receiving the service.
To conclude, I would say that it’s not been easy learning the RA business. The closest background I had was working in the economic branch here at HOT for four years. But that experience didn’t really prepare me for all the things I needed to know to grow the RA team. So one piece of advice I have for other RA managers is it’s a good idea to hire a consulting firm to come and speed up your RA learning process.
It’s great to explore and learn things on your own, but when time is money you can’t afford to do that.
Read more about the project in the Case Study here.