Friday, June 11, 2010

Show me the Money!

“Revenue Management… isn’t that really just about billing?”

Well actually - and as I’m very quickly learning - no it’s not. It is however, a key business process within all service providers that covers the income of cash from customers to whom goods and services have been provided.

Now that definition is a bit of mouthful, but in terms of systems it covers nearly all the functions within the finance domain of a service provider including billing (yes it's in there amongst the other important bits!), fraud, credit and collections, and revenue assurance… and it's big, big business!

Around 1% of customer revenue for telecoms service providers' is lost to leakage, which equates to around £1Billion of leakage annually for the four main European fixed-line telecoms operators.

But it’s not just the telecoms companies who have leaky revenue systems; in fact any service provider running a business around complex or high-volume transactions with customers will typically have similar business challenges to the telecoms service providers, and so Revenue Management is highly relevant across a range of industry sectors such as media, finance, utilities, logistics and increasingly also the public sector.

Especially given the current economic climate, this subject is very interesting and as a consequence there's quite a gold rush amongst the IT Services players who see Revenue Management as a great opportunity to add value.  Indeed many have moved to address this opportunity by investing in additional capability to support the delivery of their propositions.  It's difficult to argue against taking action when many Revenue Management services can be delivered on the basis of true risk-reward commercial models, with little or no initial investment, and with payments for Revenue Management services linked to achievement of measurable increases in revenue for the service provider.

However, service providers should take care to ensure their IT Service partner's eco-system does actually include the depth and breadth of finance domain-expertise needed to deliver the benefits required from Revenue Management services, and should satisfy themselves that their partner is able to deliver the quick wins that today's business demands, which is essential to ensure a strong business-case exists to invest in any subsequent platform transformation needed to secure ongoing delivery of multi-year business improvements.