Telecommunications Survey 2008

Descriptor

Audit & Enterprise Risk Services

Telecommunications Survey 2008

Revenue Assurance
Where to focus?

Telecommunications Survey 2008

Descriptor

Content
Foreword
Executive summary
Introduction Revenue Assurance
Survey set-up
The survey results
Contact information

3
5
7
8
11
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Telecommunications Survey 2008

Foreword

Foreword
Looking back to 2007, different trends in the Telecommunication market emerged. All had their own specific challenges:
Decrease of termination rates and roaming tariffs. Even though the number of customers is still increasing, most of the Telecommunications
companies offering voice services suffered from a drop in revenues due to the decrease of mobile termination rates and roaming tariffs. We notice
a similar trend for the prices of SMS, MMS and other data exchanges.
Limited success of multimedia sources. Mobile data, which are often products with lower margins, continue to be dominated by exchange of
small packets of data, such as messaging and ring tones, rather than large multimedia files.
Limited market response to triple play product. Fixed operator triple play launches were widespread, but discounting remained the main
marketing tool leaving its value proposition open to questions.
IPTV remains a niche product. Mobile television failed to gain significant traction, with some services ramping down or shutting down entirely
due to weak demand. IPTV struggled to differentiate itself from the regular television and the overall demand for the medium remained niche.
2008-2009 promise to be equally challenging years: the impact of a possible economic downturn on the telecommunications sector, concerns
about inadequate capacity of the network, the convergence of GPS and mobile technology, the growing importance of communications to new
media companies, the accessibility of communications to all consumers and the outlook for mobile phones as it reached 21 years of age to name a
few.
Revenue Assurance has not yet properly responded to these challenges. Progress has been made in terms of minimizing revenue leakages, but only
a limited number of companies have moved beyond this point. At its start-up, Revenue Assurance has indeed dealt with the most urgent problems
in the company, evolving from an ad hoc fire fighting mode in the late 90s to an acknowledged contributor and creator of customer value. Since
then, its achievements have been less spectacular and in some cases also less visible as not all of the Revenue Assurance functions report the
prevented revenue losses. This has had an impact on the perceived added value of Revenue Assurance, with responsibles having to justify the
existence and scope of their activities.
However, Revenue Assurance still has an important role to play. In a market with profits under pressure, the impact of proper Revenue Assurance
processes on the bottom line, and hence its added value to the company, increases significantly.
By promoting world-class operations across the entire value chain, by assuring the completeness, accuracy and optimization of the revenue
stream, the Revenue Assurance function can assist the organization in bringing profitable and sustainable products and services to the market. The
broadening of the Revenue Assurance scope to the end-to-end value chain (including a.o. product development and customer care), is essential for
a telecom company to survive in a highly competitive environment where time-to-market and customer retention make the difference.
We note some of the more advanced Revenue Assurance functions moving away from their traditional role of custodian of the revenues. In order
to further increase the added value to the business, cost assurance has been added to their activities portfolio.
Evolutions in the scope of the Revenue Assurance function as described above may put it back on top of the corporate agenda, as a mean to
respond to the challenges, assisting in creating the value that shareholders expect. The Revenue Assurance responsibles should however not loose
track of their core responsibility. A scope extension can only be successful in the long run if it is built on the solid foundations of the basic Revenue
Assurance tasks: providing assurance that the revenue leakages are and remain limited.
This report guides you through the results of our market study on Revenue Assurance in the Telecommunications sector and can assist you in
benchmarking your company with respect to the EMEA Telecommunications industry average. The study has been designed to provide a diverse
selection of views and thoughts that challenge, inform and engage executives and Revenue Assurance leaders. I hope the results provide you with
plenty of food for thought on the road towards the future Revenue Assurance function.
I wish you a pleasant and inspirational reading.

Laurent Vandendooren
Partner Deloitte Enterprise Risk Services
EMEA Revenue Assurance team

Telecommunications Survey 2008

Executive summary

Executive summary
The Revenue Assurance function today
The Revenue Assurance function is further gaining importance in the Telecommunication
industry. This is indicated by the increasing number of organisations with a dedicated
Revenue Assurance function: 71% of the participant organisations report to have such a
dedicated function.
In most of the Telecommunications companies the Revenue Assurance function has reached
an average maturity level. The Revenue Assurance function exists and is well embedded in
the organization.
The Finance function remains the main sponsor of Revenue Assurance within the company:
96% of the Revenue Assurance Managers report to the CFO whereas in companies without
a dedicated Revenue Assurance function the Finance department remains an important
sponsor. Although the place of the Revenue Assurance function in the organisation is not
that important, but rather the empowerment by the CXO level, the Finance function seems
to be a good promoter given its experience with risk management, internal control, variance
analysis and reconciliations.
The cost of the Revenue Assurance function (0,013% of the total revenues) is fairly limited
compared to the revenue leakages detected and prevented by the Revenue Assurance
function. The average estimated revenue leakage today is about 1,5%. Although this is still
high, it is a tremendous improvement compared to a number of years ago.
An important contributor to this realisation is the in-house expertise on Revenue Assurance
that has been built up over the last years. Some companies in our survey started with
Revenue Assurance about 13 years ago, giving them plenty of expertise to rely on. Others
benefit from the best practices available at other companies within their group. In 52%
of the cases, the Revenue Assurance function is shared across multiple business locations,
fostering the dissemination of Revenue Assurance knowledge and best practices.
Does this mean that the glory days of Revenue Assurance have passed? No, there is still a
road ahead.

Telecommunications Survey 2008

Executive summary

Whats next?
Revenue Assurance has achieved some tremendous successes over
the years, but it will have to address some key challenges in order to
fulfil the expectations of management and shareholders.
Cover the entire value chain. When in the late 1990s growth was
starting to slow down and the availability of external financing was
decreasing, telecom operators began to verify whether every single
service delivered to a customer was actually billed. This was the start
of the Revenue Assurance activities as we know them today.
Today we observe that data collection and billing is still the main
focus of the Revenue Assurance departments. In less than 24% of
the cases, the entire end-to-end revenue value chain is in scope of
the Revenue Assurance department.
Companies, confronted with a saturated market are forced to
focus more on customer retention. Telcos are starting to realize the
importance of an adequate feedback loop on customer feedback
and behaviour. Revenue Assurance functions are gradually turning
their attention to the end-to-end revenue value chain, looking at
the business performance and the interaction between the different
parts of the chain. Customer Care is slowly getting into the picture
as it deals with customer dissatisfaction, typically caused by incidents
earlier in the value chain. Currently, Customer Care is only in scope
of the Revenue Assurance function in 57% of the cases. Revenue
Assurance will need to realign its activities to respond to these
challenges.

Finding the right balance. Due to the success of the Revenue

Assurance activities, some Revenue Assurance managers have to
defend the cost-benefit of their activities and the added value
to the business. We noted through our survey that a number of
Revenue Assurance functions consider expanding the scope of the
Revenue Assurance activities with revenue enhancement and/or cost
assurance as a solution to that challenge.
While this shift in focus can indeed be of added value to the
company, Revenue Assurance responsibles should be careful not to
loose track of the Revenue Assurance principles. The continuous
monitoring of the basic Revenue Assurance controls must remain a
top priority, given the rapidly changing environment.
Another risk is the potential transfer of ownership of controls from
the business towards the Revenue Assurance function. Revenue
Assurance is by nature a controlling body and should be careful not
to jeopardize that role by taking over activities performed by the
business.

Telecommunications Survey 2008

Introduction Revenue Assurance

Introduction Revenue Assurance

The Revenue Assurance processes?

Products & pricing: the process from product/pricing concept to

development, testing and go-life.
Order intake & provisioning: the process of capturing the order
and customer data, customer acceptance and provisioning in the
systems/network.
Fraud prevention & detection: the set of controls and processes
in order to detect and prevent internal and external fraud.
Data collection & billing: the process of capturing the events in
the network, processing them in the billing system and issuing a
customer invoice.
Interconnect & roaming: the process of handling interconnect
and roaming invoices and controlling incoming interconnect and
roaming invoices.
Customer care: the process of handling customer complaints,
including root cause investigation and the granting of credits,
compensations and refunds.
Collections: the process of handling payments and managing the
customer account, including dunning and bad debt management.
Accounting & reporting: the process of financial accounting
and management reporting.

The sub-processes of the revenue cycle have been defined as

following:

The graph below provides an overview of the end-to-end process

flow:

What is Revenue Assurance?

Revenue Assurance is a combination of organizational structure,
processes, technology and information responsible for monitoring
the revenue process. Its activities are designed to provide assurance
that business processes and systems are performing as developed, in
order to:
Reduce the risk of revenue leakage, by ensuring that risks have
been identified and appropriately addressed.
Promote operational efficiency, by analyzing processes and
systems, identifying gaps and design flaws which drive up
operating costs.
Effectively communicate business risks to management, in order
to allow informed decisions and eliminate surprises (dashboard/
monitoring).

Products &
pricing

Order intake &

provisioning

Fraud prevention
& detection

Data collection
& billing

Interconnect
& roaming

Customer
care

Collections

Accounting
& reporting

Telecommunications Survey 2008

Survey set-up

Survey set-up
The survey evolution

The participants

This is the 4th time that the Deloitte Revenue Assurance team is
organizing a benchmark survey for the Revenue Assurance function
in the telecommunications market. The surveys topics reflect the
evolution of the Revenue Assurance function over time:

Product representation

The surveys of 1999 and 2002 focused on addressing revenue

leakages and implementing a structured approach. The key
challenge in the telecom market at that time was the transition
from a reactive to a pro-active Revenue Assurance process.
Once the basic processes were under control (mostly data
collections & billing, interconnect & roaming and accounting
& reporting), the next step was to implement an end-to-end
Revenue Assurance process covering the whole of the revenue
chain. This was addressed in our survey of 2005: Revenue
Assurance, where to focus?.

42 Telco companies across the EMEA region participated to this

years survey. The participants cover a vast majority of products
(voice, internet and data) and customer types (residential and
corporate markets). The following graph gives an overview of the
set of products offered by the 42 participating companies:
The products offered by the survey participants

30

28

28
24

25

20

20

19

15

14
10

10

The current trend of market convergence results in a more global

Revenue Assurance approach. A lot of the major international
telecom companies are consolidating their local efforts and best
practices to a worldwide approach. The goal of this years survey
is to analyse the maturity level of the Revenue Assurance function
on EMEA level and to provide a benchmark with respect to the
organization of the Revenue Assurance function, its costs and
number of FTEs. This should allow the telecom companies to
benchmark their own performance on an international level and
to identify the international best practices and the main trends of
Revenue Assurance within the EMEA telecom market.

9
4

5
0
Wireless Internet Wireline Leased
data
(Cable,
Voice
Lines
(HSPDA, Broadband)
GPRS,
I-mode,...)

Wireless Wireless Internet

Voice
Voice (Wimax)
as an
MVNO

Digital
TV

Overview of the company size per revenue and per #

FTEs
The participating companies are also representative for the EMEA
telecommunications market in terms of revenue and number of
FTEs. Their yearly revenue varies between K 322 and
K 11.531.000 while the company sizes vary between smaller
Telco players and large multinational organizations. The table below
provides an overview:
Revenue in EUR for participating companies
35%

32%

32%

30%
26%
25%
20%
15%
10%

10%
5%
0%
< 25 M EUR

CAT
TV

250 M EUR 1.000 M EUR

1.000 M EUR 5.000 M EUR

> 5.000 M EUR

Telecommunications Survey 2008

Survey set-up

Company size in # FTEs

45%

Geographical representation

42%

40%
35%

32%

30%
25%
20%

18%

15%
10%

8%

5%
0%
< 1.000

< 5.000

< 20.000

> 20.000

Geographical representation
For analysis purposes we clustered the participating companies into
geographical areas:
Western Europe (19 companies): UK, Belgium, Italy, Spain,
The Netherlands and Germany;
Central Europe (9 companies): Albania, Poland, Czech republic
and Turkey;
Eastern Europe (7 companies): Moldova, Romania, Latvia,
Lithuania and Azerbaidjan;
Africa (7 companies): Nigeria.

Western Europe: 19
Central Europe: 9
Eastern Europe: 7
Africa (Nigeria): 7

Most of the surveys respondents are part of a multinational group,

which allows them to benefit from the experience and best practices
available at the various entities.

Telecommunications Survey 2008

Survey set-up

Survey definitions
The differentiation in maturity levels is based on the following:
Maturity level 1 - Initial: No real process is in place. The focus lies with a reactive action (fire fighting);
Maturity level 2 - Repeatable: The process is dependant on individuals, it is informal and inconsistently applied;
Maturity level 3 - Defined: Revenue Assurance is defined and a central part of the organization. Process
measurement, quality assurance and detective controls are in place;
Maturity level 4 - Managed: Revenue Assurance is measured (KPI dashboard) and issues are detected in an early
stage (ongoing testing, preventive controls). The responsibilities for Revenue Assurance are more decentralized
through the organization;
Maturity level 5 - Optimized: Advanced methods are used and feedback into the process is optimal (e.g. cost
assurance, customer / product profitability analysis).
Overview of Revenue Assurance maturity levels

Optimized
Managed
Defined

(Ad hoc)
No RA processes

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Telecommunications Survey 2008

The survey results

The survey results

The first part of the survey focuses on the position of the Revenue Assurance within the company
(centralization of the Revenue Assurance function, the reporting lines, etc.). Some benchmark figures
on the costs of the Revenue Assurance function, the number of FTEs within the Revenue Assurance
department and the experience (in number of years) of the Revenue Assurance function are also
reported in this section.
A. Organization

Sharing of the Revenue Assurance function

Does a dedicated Revenue Assurance function exist

within the company?

100%
90%
80%
70%

We asked the respondents whether the Revenue Assurance activities

within their company are centralized via a dedicated Revenue
Assurance department or if the activities are scattered across the
various departments involved. The graph below gives an overview of
the results:

60%
50%

48%

52%

40%
30%
20%
10%
00%

Dedicated Revenue Assurance function

No

Yes

100%
90%
80%

For 52% of the respondents, the Revenue Assurance function is

shared across the company. These respondents can benefit from the
experience and best practices available at the various entities.

71%

70%
60%
50%
40%

29%

30%
20%

The position of the Revenue Assurance function

within the organisation

10%
0%
Dedicated RA function

No dedicated RA function

We notice the vast majority of the respondents (71%) have

centralized their Revenue Assurance activities within a dedicated
Revenue Assurance department.

For the participating companies with a dedicated Revenue

Assurance department, we verified the direct report lines of the
Revenue Assurance manager.

Revenue Assurance department within the organisation

100%

Is the Revenue Assurance function shared across the

company?

90%
80%

96%

70%

We assessed the number of Telco companies within our survey

where the dedicated Revenue Assurance function is shared across
the company. We defined this as a dedicated department that is
responsible for the Revenue Assurance activities in multiple business
unit locations.

60%
50%
40%
30%
20%
10%

4%

0%
Finance

Legal & Regulatory

11

Telecommunications Survey 2008

The survey results

Similar to the results of our previous surveys, the Revenue Assurance manager typically
reports to the Finance director. Finance has traditionally been a sponsor of the Revenue
Assurance activities given its experience and buy-in with respect to risk management and
internal control.
We performed a similar analysis for the companies where the Revenue Assurance activities
are performed by several departments (29% of the participant organizations).
Revenue Assurance activities within the organisation
100%

100%
90%

76%

80%

67%

70%
60%

50%

50%

42%

40%

33%

30%
17%

20%

17%

10%
0%
Finance

Network Customer Other Legal & Internal

Billing
operations operations
Regulatory audit department

IT

We noted that the Finance department is always involved. The IT and Network Operations
departments provide the necessary support to cover the process chain.

Number of employees in the Revenue Assurance department

For benchmark purposes, we compared the number of FTEs working in the Revenue
Assurance department to the yearly revenue generated by the company.
FTEs per EUR 10 mio revenue
6,05

0,25

0,21
0,20
0,15
0,10
0,07
0,5

0,04

0,05
0,03

0,02

0,02

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On average, the Revenue Assurance department employs about 0,05 full time equivalents
per 10 million EUR revenues.

12

Telecommunications Survey 2008

The survey results

There is a clear correlation between the number of FTEs employed by a Revenue Assurance
function and its maturity level. The graph below illustrates this evolution:
Revenue Assurance FTEs vs. maturity level

#FTEs

Maturity 1

Maturity 2

Maturity 3

Maturity 4

Maturity 5

Immature RA
processes

Mature RA
processes

Initially, when revenue leakages are identified within the company, a number of employees
are designated to deal with these individual incidents. A dedicated Revenue Assurance
function does not exist at this point.
As the root causes of the incidents are investigated, other issues arise. Management
becomes aware of the risk and invest in proper Revenue Assurance controls. The number
of FTEs employed by the department grows rapidly at this stage due to the high level of
manual controls (no automation yet) and due to the high visibility of the results of the
Revenue Assurance activities, which are a good business case for more resources.
In maturity stage 3, the scope of the Revenue Assurance activities is enlarged: the accuracy
and completeness of the invoice is no longer the sole concern. The Revenue Assurance tools
available at this point do not cover the entire value chain. Additional resources are required
to acquire an overview of the controls in these processes and to monitor them.
The integration of the different controls and KPIs throughout the value chain, the
development of a set of preventive controls and the automation of controls and reports
completes the transition of Revenue Assurance to a stable and repeatable process. Although
new products are still added to the scope of Revenue Assurance and existing processes
and systems still often change given the continuous changes of the Telco environment, the
number of FTEs required will therefore stabilize and even decrease somewhat.

Average total cost of the Revenue Assurance department

We analyzed the annual cost of the Revenue Assurance department, i.e. the outsourcing
costs, operating expenses, contracted services and direct labour costs. The acquisition and
maintenance costs of the Revenue Assurance tools were not included in this analysis.

13

Telecommunications Survey 2008

The survey results

Cost of the RA department vs. company revenue

0,250%
0,195%

0,200%
0,150%
0,100%

0,068%

0,050%

0,030%

0,027%

0,021% 0,004%

0,024%

0,025%

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The average cost for the survey population amounted to 0,025% of the total company
revenue.
A further breakdown of the various cost types reveals that the vast majority of the costs
can be attributed to direct labour costs (68%). Other significant costs are contracted
services (18%) and operating expenses (13%). Outsourcing costs (1%) can be considered as
immaterial for most of the participating telecom companies.
Cost breakdown per country / region

Outsourcing fees
Operating expenses
Contracted service
Direct labour

100%

23

36

19

14

18

22

13

80%

18

2
36
60%

46

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20%

100

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We noted that companies where the Revenue Assurance activities are scattered across the
various departments, lack an overview of the total number of FTEs working on Revenue
Assurance activities and of the total cost of these activities.

When were the Revenue Assurance activities formally developed?

The participating Telco companies indicated when they formally started the Revenue
Assurance activities. The graph below also includes the results for the companies where the
revenue activities are not centralized via a dedicated Revenue Assurance function.

14

Telecommunications Survey 2008

The survey results

Avg. number of years Revenue Assurance activities

6,00

5,33
4,87

5,00

3,60

4,00

3,50

3,46

3,39
2,82

3,00

2,50
2,00

2,00
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For the entire EMEA region, the Revenue Assurance activities started on average 3,5 years
ago. 2 companies even started their Revenue Assurance activities 13 years ago, while for
others this is only a few months.
The UK and the Central European countries in the scope of our survey clearly have a longer
history in Revenue Assurance. There is a correlation between both as a large part of the
survey participants in the Central European region have UK-based global headquarters. As
such, they were able to benefit from the experience and best practices provided by their UK
headquarters.

B. Scope of the Revenue Assurance department

This section of the survey provides details on the activities of the Revenue Assurance
function: the processes in scope of the Revenue Assurance and the type of activities
performed.

Processes in scope of the Revenue Assurance department

To assess the scope of the Revenue Assurance activities for the participating Telco companies, we
asked the respondents to indicate the processes in scope of their Revenue Assurance activities.
Processes in scope: RA department vs dispersed RA activities
98%

100%
90%

90%
83%

83%

80%

83%
76%

70%
60%

62%

57%

50%
40%
30%
20%
10%

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The data collection & billing and the interconnect & roaming processes are the core
processes for most of the Revenue Assurance departments. This result is similar to previous
survey findings where we noted that in most companies Revenue Assurance starts with the
monitoring of the completeness and accuracy of the invoices to the customers.
Only 24% of the respondents have the entire value chain in the scope of their Revenue
Assurance activities.

15

Telecommunications Survey 2008

The survey results

The Revenue Assurance activities

Next to the processes in scope, we analysed the type of Revenue Assurance activities
performed by the participating companies. These activities can be divided into 5 clusters:
Basic Revenue Assurance tasks, i.e. standard controls and monitoring,
management reporting, project management and team management;
Optimization initiatives to enhance the Revenue Assurance function;
Tasks related to cost assurance;
Sarbanes Oxley compliance activities;
Other, company-specific, activities.
Overview of activities per country / region
Other
SOX
Cost Assurance tasks
Revenue optimization
Basic RA tasks

100%

5
13

12

80% 5

3
6

25

12

15

15

11

4
5

10
23

25

65

60

10

16

26

60%

40%

52

20%

81

80

65

85

78

70

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On average about 70 % of the time is spent on basic Revenue Assurance tasks.

A significant amount of effort also goes to the revenue optimization initiatives (16%).
The latter is however often limited to the identification of quick wins rather than the
development of a continuous and structured process whereby Revenue Assurance analyses
assist in the definition or fine-tuning of the business strategy.
About 52% of the surveys respondents have participated in a Sarbanes Oxley program.
However, the time spent on SOX by the Revenue Assurance function is limited as the
Revenue Assurance activities are by nature not operational.
We also noted 2 respondents where the Revenue Assurance department was actively
involved in the closing process or in the monthly financial reporting. The Revenue Assurance
Manager function should be an assurance function. We sometimes see companies where
this function is operating certain controls. This often results in a lack of ownership by the
business and in the Revenue Assurance department being blamed when something goes
wrong.

16

Telecommunications Survey 2008

The survey results

C. Maturity levels
We requested the survey respondents to assess the maturity level of the Revenue Assurance
activities for each of the processes of the value chain. We also assessed the impact of the
implementation of a SOX compliance program on the process maturity assessment.

Maturity of the RA processes

For each of the processes of the value chain, we assessed the average maturity level as
perceived by the survey respondents (also see section survey set-up for more details on the
definition of the maturity levels).

Maturity of the RA processes

4,0
3,5

3,5
3,0

2,7

3,2

3,1

3,0

2,8

3,1

2,8

Maturity level:
from 1 (ad hoc)
to 5 (best practice)

2,5
2,0
1,5
1,0
0,5

in
rt
po
re
&

g
in
nt
ou

on

cc

rc
te
In

ns
ct
lle
Co

er
Cu

st

om

ro
&
ct
ne

io

re
ca

in
am

lli
bi
&
n
io

ct
lle
co
a
at
D

ng

n
io
ct
te
de
&

n
tio

d
au
Fr

rd

er

pr

In

ev

ta

en

ke

Pr

&

od

pr

uc

ov

t&

isi

Pr

on

ic

in

in

0,0

The Revenue Assurance managers feel most comfortable with the data collection & billing
process. The processes where they perceive the maturity as the lowest are product & pricing,
the order intake & provisioning and customer care.
This result is consistent with previous surveys where we also noted a lower comfort with respect
to the processes at the beginning of the revenue chain. Customer Care is (as we noted earlier)
often not in scope of the Revenue Assurance function and therefore more of a black box.

17

Telecommunications Survey 2008

The survey results

Impact of SOX programs on the maturity of the processes

As 52% of the participating Telco companies have implemented a SOX program,
we investigated the impact on the assessed maturity level of the processes.
Impact of SOX on process maturity
No SOX Program

SOX Program

3,8
3,6

3,6

3,4

3,4

3,4
3,2

3,1

3,2

3,1 3,1

3,1

3,0

3,0

3,0

3,0

3,0

2,8

2,8

2,6

2,6

2,6

2,5

2,4
2,2

g
or
tin

ct
io

re
p

lle

&

Co

g
cc
ou

te

In

ns

ca
re
st
om
er

rc
on

nt
in

ne

ct
io
le
co
l
at
a

Cu

ct
&

&

ro
a

bi

lli

m
in

ng

n
de
&
n

d
Fr

au

rd

er

pr
ev

en

In
ta
k

tio

&

Pr
od

pr
ov

uc
t&

isi

on

te
ct
io

in

Pr
ic
in

The SOX program has an impact on the maturity level of the order intake & provisioning and
the Customer Care processes. The maturity level of the collections process also increases
with the implementation of a SOX program. These are the processes that were often not
part of the scope of the Revenue Assurance activities.

D. Estimated revenue leakage

To perform an assessment on the effectiveness of the Revenue Assurance activities, we made
some analyses on the estimated revenue leakages. Additionally, we investigated the revenue
leakages on product level in more detail.

Estimated revenue leakage per country / region

The table below gives an overview (in % of revenue) per EMEA region of the estimated
revenue losses.
Estimated revenue leakage per country / region
3,00
2,50

2,40

2,00

1,75

1,68
1,42

1,50

1,51
1,30

1,25
1,10

1,00

0,78

0,50
0,00
Nigeria

Spain

Benelux

Central
European
countries

UK

Italy

Eastern Germany Grand

European
Total
countries

The revenue leakage is estimated to be on average about 1,5% of the total company
revenue. For the entire survey population, the estimated revenue leakage varies between
0,05% and 5%.

18

Telecommunications Survey 2008

The survey results

Revenue leakage on product level

The table below gives the estimated revenue leakages on product level. Only the core
products of the respondents have been included in this analysis.

Estimated revenue leakage per product

2,50

2,38
2,12

2,00

1,99
1,56

1,50

1,52
1,20
1,02

1,00

0,74
0,50
0,00
Internet
(Wimax)

Internet
Leased
(Cable,
Lines
Broadband)

Wireline
Voice

Wireless Digital TV Wireless

Voice
data
(HSPDA,
GPRS,
I-mode,...)

Wireless
Voice
as an
MVNO

Revenue Assurance has always paid considerable attention to the voice products due to the
usage based billing. These efforts pay-off as the graph clearly indicates.
The data products are still fairly limited in use and generally dont have complex billing
structures. That explains the good result (1% for wireless data) for this product set.
The revenue leakages are estimated the highest for the internet products (respectively 2,4%
for Wi-max and 2,1% for the regular internet product).

The correlation between Revenue Assurance maturity and estimated

leakage
Our survey demonstrated a clear negative correlation between the maturity of the Revenue
Assurance processes and the estimated revenue leakage. On average, a maturity increase of
1 point on a scale of 5 (e.g. from maturity level 1 to maturity level 2) results in a decrease of
estimated revenue leakage of about 1%.

19

Telecommunications Survey 2008

The survey results

E. Revenue Assurance tools

In this section of the survey, we analysed to what extend the Revenue Assurance activities
are supported by the necessary tools. We also assessed their cost-benefit, i.e. the average
cost of the tools compared to their impact on the revenue leakage.

What are the tools available to the Revenue Assurance function and where
do they come from?
The graph below gives an overview of the type of Revenue Assurance tools available to the
participating Telco companies. We distinguish 4 kinds of tools used by the different Revenue
Assurance departments:
Reconciliation tools;
Fraud monitoring tools;
Test call generators;
Various auditing tools.
The graph also indicates whether the tool was developed in-house or if it was an external
acquisition.
Revenue Assurance tools
100%
90%

No tool available
Combination of in-house developed
and externally acquisitioned
In-house developed
External acquisition

26%

80%
70%
60%

14%

55%
64%

71%

50%
40%

40%

7%
12%

30%

12%

10%

2%
10%

20%
19%

26%

24%

17%

0%
Reconciliation
tools

Fraud monitoring
tools

Test call
generator

Auditing tools
(e.g. ACL)

Tools are mainly used to automate reconciliations performed between system or process
data. As these reconciliations are generally company and process specific, most of them
(40%) are in-house developed.
This is not the case for the fraud monitoring tools, the test call generator and the auditing
tools: they are generally less available to the Revenue Assurance function and most of them
are purchased from outside vendors.
The average appreciation of the tools is rated on average at 3,7 on a scale of 5 by the
participants. We did not notice a significant difference between in-house developed and
externally purchased tools.

20

Telecommunications Survey 2008

The survey results

The average cost of the Revenue Assurance tools

The average total cost of the software acquisition for Revenue Assurance tools is K 15.442,
while this is K 4.252 for the hardware acquisition. The average yearly maintenance cost for
the Revenue Assurance tools amounts to K 6.601.

The impact of tools on the estimated revenue leakage

The graph below illustrated the impact of the use of tools on the estimated revenue
leakages: the coloured bar on the left represents the estimated revenue leakage for Telco
companies with supportive tools, while the bar on the right indicates the estimated revenue
leakage for companies that lack the necessary tools.
Estimated leakages vs. usage of tools
3
2,6
2,5
2
1,5
1,21
1
0,5
0
Yes

No

There is a clear correlation between the use of Revenue Assurance tools and the estimated
revenue leakage: companies with tools estimate their revenue leakage to be about 1,2%
while this is 2,6% for the others. This result is also correlated to the maturity of the Revenue
Assurance processes: mature companies are more likely to have the appropriate tools
available while in turn their revenue leakage is also lower on average.

21

Telecommunications Survey 2008

The survey results

F. Revenue Assurance reporting

We assessed the level of (dashboard) reporting available to the participating telco
companies. Additionally, we also assessed whether the reporting on the Revenue Assurance
realizations covers both leakage detection and prevention.

Availibility of dashboard reporting

About 69% of the respondents currently have a Revenue Assurance monitoring dashboard
available. Generally, the maturity of the Revenue Assurance activities has reached a certain
level before a monitoring dashboard is implemented. The participating telecommunications
companies that have implemented a dashboard reporting started with Revenue Assurance
on average 4,3 years ago while this is 2,2 years for the companies who are lacking a
dashboard monitoring.
In line with the other survey results, the KPIs that are monitored are mostly related to the
data collection and interconnect & roaming processes. KPIs are often not available for the
customer care and product & pricing processes within the Revenue Assurance dashboard.
Most dashboards are updated on a daily basis (54%) or on a monthly basis (25%). Only 4%
of the available dashboard reports are available in real-time.

Measurement of the Revenue Assurance realizations

The pie chart indicates the percentage of participating companies where the reported
Revenue Assurance realizations:
Are not reported;
Relate to detected revenue leakages;
Relate to prevented revenue leakages;
Relate both to detected and prevented revenue leakages.
Revenue Assurance realizations measurement

14%
17%

19%

50%
Leakage detection
Leakage prevention
Both
None

22

Telecommunications Survey 2008

The survey results

14% of the surveys participants have no reporting available on

their achievements, while for 17% this is limited to reporting on
the leakage detected via the control set. 69% of the companies are
capable to report the revenue leakage prevented by the Revenue
Assurance function to management.

Dashboard reporting vs. estimated revenue leakage

We investigated the correlation between the availability of dashboard
reporting and the estimated revenue leakage. The bar on the right
indicates the estimated leakage for companies with monitoring
reporting, while this is not the case for the bar on the left.

G. Future Challenges
The participating companies also provided us with their current
and future top priorities. These priorities were clustered into 4
main areas: basic Revenue Assurance, cost assurance, revenue
enhancement and optimization initiatives and the implementation
of a SOX compliance program.
The spider graph below gives the results for both the 2007 and
2008 priorities, whereby 0 is a low priority and 5 is a top priority.
Priorities for 2007 and 2008

Impact of dashboard monitoring on revenue leakage estimate

Basic Revenue Assurance

5

3
2,5

2,46

3
2

Cost
Assurance

1,5

Revenue
enhancement /
Optimization
initiatives

1
0,5

Priority 2007
Priority 2008

0
Estimated leakage
without monitoring

Estimated leakage
with monitoring

A substantial drop of the estimated revenue leakage can be noted

for companies with dashboard monitoring: from 2,46% to 1% for
companies with dashboard reporting. The root causes are twofold:
First of all, less mature telecom companies often have not yet
developed a Revenue Assurance dashboard reporting, while in
turn their revenue leakage is still relatively high compared to more
mature companies.
Secondly, the lack of proper dashboard reporting seems to lead to
a more negative perception of the revenue leakage performance.
This is because companies without dashboard reporting are more
reliant on individual incident reporting (e.g. fraud cases, major
billing problems, etc.). Since this type of reporting is focused on
quantifying the financial impact of incidents rather than reporting
the overall performance, the general assumption of the Revenue
Assurance performance will be more negative.

SOX

Although the basic Revenue Assurance tasks remain the top

priority in 2008, we note a tendency for Revenue Assurance
functions to also start focusing on cost assurance and/or revenue
enhancement.

23

Telecommunications Survey 2008

Contact information

Contact information
Core team members
Laurent Vandendooren
Partner
Deloitte Enterprise Risk Services
lvandendooren@deloitte.com
Tel. + 32 2 800 22 81
Tom Van Cauwenberge
Partner
Deloitte Enterprise Risk Services
tvancauwenberge@deloitte.com
Tel. + 32 2 800 22 79
Nico Vandamme
Manager
Deloitte Enterprise Risk Services
nvandamme@deloitte.com
Tel. + 32 2 800 23 25

For more information about this study, contact us via e-mail: nvandamme@deloitte.com

25

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