Telecommunications and Data: What If Your Fiancée Flunked Finance?
About 15 or so years ago, some friends of mine called me to share great news. Their dating relationship had become serious and they were headed toward marriage. After a romantic proposal and a beautiful ring, it was time to plan the wedding and invite the guests.
This exciting time was confounded by a significant challenge. Though they were very much in love, one of them had an incredibly tough time making wise financial choices. During the wedding planning process, the financially astute fiancée grew concerned about the problems the challenged partner could bring. Even though the financially illiterate fiancée had every other admirable quality, the finance issue nearly created enough doubt to end the engagement. Fortunately, my friends moved forward with the ceremony, were married and immediately went to work on learning new healthy financial habits as a couple.
Let’s segue into how this relates to telecommunications and data, specifically to your average communications operator. Just like a concerned fiancée, you’d think twice about making a commitment to an organization that didn’t have a strong foundation.
Like the financially challenged fiancée, the average operator has a number of excellent qualities: functioning business model, great branding, international roaming, creative ads, long-term prospects, smart people at the helm and all the data and IT assets you can imagine. Unfortunately, despite the externally visible bells and whistles, over time they tend to lose operational soundness around the basics. Specifically, their lack of data quality causes them to forfeit an ever increasing amount of billing revenue. Their poor data costs them millions each year.
A recent set of engagements highlighted this phenomenon. The small carrier (3-6 million subscribers) who implements a more consistent, unique way to manage core subscriber profile and product data could recover underbilling of $6.9 million annually. A larger carrier (10-20 million subscribers) could recover $28.1 million every year from fixing billing errors. (This doesn’t even cover the large Indian and Chinese carriers who have over 100 million customers!)
Typically, a billing error starts with an incorrect set up of a service line item base price and related 30+ discount line variances. Next, the wrong service discount item is applied at contract start. If that did not happen (or on top of those), it will occur when the customer calls in during or right before the end of the first contract period (12-24 months) to complain about the service quality, bill shock, etc. Here, the call center rep will break an existing triple play bundle by deleting an item and setting up a separate non-bundle service line item at a lower price (higher discount). The head of billing actually told us, “our reps just give a residential subscriber a discount of $2 for calling us”. It’s even higher for commercial clients.
To make matters worse, this change will trigger misaligned (incorrect) activation dates or even bill duplication, all of which will have to be fixed later by multiple staff on the BSS and OSS side or may even trigger an investigation project by the revenue assurance department. Worst case, the deletion of the item from the bundle (especially for B2B clients) will not terminate the wholesale cost the carrier still owes a national carrier for a broadband line, which often is 1/3 of the retail price for a business customer.
To come full circle to my initial “accounting challenged” example; would you marry (invest in) this organization? Do you think this can or should be solved in a big bang approach or incrementally? Where would you start: product management, the service center, residential or commercial customers?
Observations and illustrations contained in this post are estimates only and are based entirely upon information provided by the prospective customer and on our observations and benchmarks. While we believe our recommendations and estimates to be sound, the degree of success achieved by the prospective customer is dependent upon a variety of factors, many of which are not under Informatica’s control and nothing in this post shall be relied upon as representative of the degree of success that may, in fact, be realized and no warranty or representation of success, either express or implied, is made.