financial assurance in the global telecommunications marketplace
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Optimizing the Bottom Line
Financial Assurance in the Global Telecommunications Marketplace
Troy Morley– Operations & Monetization (O&M) Strategy Analyst
Stratecast | Frost & Sullivan
Analyst Briefing Presentation10:00 a.m. EDT – October 15, 2014
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Abstract
�Financial Assurance—Given the continued global adoption of Smartphones and mobile devices, one could envy the financial position of Communication Service Providers (CSPs). However, market saturation in many areas is pushing prices down—reducing revenues—while network and other costs continue to increase to support all these new data-hungry devices. This briefing will focus on the monetization tools suppliers are offering global CSPs in the segment Stratecast refers to as Financial Assurance.
�Key Questions:
• What is Financial Assurance?
• Isn’t Revenue Assurance old-school?
• Are we still dealing with fraud?
• How do we optimize our bottom line?
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Today’s Presenter
�Stratecast focuses on the business strategies of the communications industry. Mr. Morley examines the Monetization (BSS) market in the Operations & Monetization (OSS/BSS) practice, and has done so for nearly a decade.
�He has authored or co-authored over 75 publications concerning problems relative to the O&M marketplace. He covers the Monetization functions, including Financial Assurance (Revenue Assurance, Fraud Management, Margin Assurance) and Billing (Mediation, Rating & Charging, Core Billing, Policy Management, Interconnect & Settlement, Partner Management).
Troy Morley – Strategy Analyst Operations & Monetization (O&M) Global
Strategy PracticeStratecast | Frost & Sullivan
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Agenda
�What is Financial Assurance? Where did it come from?
�What is the state of this market and where is it going?
�What was that about optimizing our bottom line?
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Revenue Assurance:
Stop Revenue Leakage;Internally & Externally
Revenue Recovery
Revenue Verification; Internally & Externally
Revenue Assurance
$$
$ $$
Revenue Assurance• An essential function in CSPs for decades, but leaks
continue to occur• Continual change to networks and O&M, as well
as new services and partnerships• With change comes the risk of new leaks, so Revenue
Assurance is never “done”• For “mature” CSPs, leakage may be less than 1% of
revenue, while less mature CSPs may have leakage greater than 5% or even 10%
• Regardless, even the most optimistic estimates of global leakage are in the tens of billions of dollars, with less than half of that ever recovered.
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Fraud Management
Fraud Management:
Stop Fraudulent Use; Internally & Externally
A Form of Cost Assurance
Fraud Management:• Also been around for decades• Types of fraud continually evolving, requiring both an
automated means to detect and mitigate AND cooperation within the industry
• Communications Fraud Control Association (CFCA) fraud loss estimates for 2013:
• 2% of revenues• $46.3 billion
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Margin Assurance
Margin Assurance:
• New area, brought about by advances in analytics technology: Real-time or near Real-time, Purpose-Built Analytics
• (Profit) Margin = (Revenue – Cost) / Revenue• Increase Revenue, Decrease Cost = Optimized Margin• Revenue Assurance � Increase Revenue• Fraud Management � Decrease Cost• Margin Assurance: Analytics to Increase Revenue, Decrease Costs, Optimize Margins
• No “standard” set of functionality
Margin Assurance:
Fuzzy Middle Ground;
Increase Revenue, Decrease Cost, Optimize Margin
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Revenue Assurance:
Stop Revenue Leakage;Internally & Externally
Revenue Recovery
Revenue Verification; Internally & Externally
Financial Assurance
Business, Networks, and Supplier Operations
Cross Functional Purpose-Built Analytics
Data Management Platform
User & Platform Management
Process & Workflow Mgmt
Data Acquisition & Management
Trend & Pattern Recognition
Reporting & Data Visualization
Fraud Management:
Stop Fraudulent Use; Internally & Externally
A Form of Cost Assurance
Margin Assurance:
Fuzzy Middle Ground;
Increase Revenue, Decrease Cost, Optimize Margin
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Agenda
�What is Financial Assurance? Where did it come from?
�What is the state of this market and where is it going?
�What was that about optimizing our bottom line?
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The Financial Assurance Market and Where it is Going
Almost 30 Global Revenue
Assurance Suppliers
Almost 20 Global Margin
Assurance Suppliers
Almost 30 Global Fraud Management
Suppliers
Over 30 Global Financial Assurance
Suppliers
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Communications Industry – Business Model of Yesterday (and Today)
While the network remains important today, the key is using technology and the network to provide customers a positive experience. This means doing business differently than
in the past. It means using customer insight effectively in a new business paradigm.
Our Connected
World
Fixed-Line
MobileIP �Voice�MMS / SMS
�2.5G Data (GPRS/EDGE)�3 G Data (UMTS)�3.5G Data (HSPA)�4G Data (LTE)
Mobile�Routers�Switches�Databases
IP
�Voice�Broadband DSL
�Cable
Fixed-Line
Network TechnologySource: TAM, TMF GB929
Fulfillment Assurance Billing
Customer Management
Service Management
Resource Management
Supplier/Partner Management
Enterprise Management
Product Management
Market/Sales Management
OSS / BSS
• Consumers• Small Medium Business
• Enterprise
• Fixed-line Voice• Mobile
• Broadband Data
Focus on Customers
Focus on Technology
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Market Changes Have Created Today’s New Business Reality
Convergence of these drivers and other market changes are creating a completely new business landscape, one that requires a reexamination of the role that the monetization
and customer insight processes play today and for which they will play in the future.
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A View of the Old Model
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New Business Models – Real-Time Wholesale and Retail Business Accountability
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Change = Opportunity
• Change will Increase Opportunities for Revenue Leakage and Fraud
• Change will Increase Pressure on CSP Margins
• Change will Increase Opportunitiesfor Financial Assurance Suppliers
• Stratecast Forecasts Through 2018:• Strong Growth for Revenue Assurance• Strong Growth for Fraud Management• Very Strong Growth for Margin
Assurance
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Agenda
�What is Financial Assurance? Where did it come from?
�What is the state of this market and where is it going?
�What was that about optimizing our bottom line?
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Some Examples of Margin Assurance Solutions
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Financial Assurance: Tools to Optimize the Bottom Line
Financial Assurance = Revenue Assurance + Fraud Management + Margin Assurance• Increase Revenue, Decrease Cost = Optimized Margin• Revenue Assurance � Increase Revenue• Fraud Management � Decrease Cost• Margin Assurance � Increase Revenue, Decrease Cost
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Questions and Answers
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