When it comes to profit margins, who can rely on hope and, in turn, hope to survive?
Surprisingly, a lot of companies have done just that. They hoped their cost calculations were correct. They hoped they were charging enough and they hoped they were collecting on everything they charged for. Lucky for many communications service providers over the past few decades, volumes were sufficient and competition sufficiently insufficient that hope was good enough. Not anymore.The B/OSS report, "Embracing the Eureka Moment of Granular Margin Management," shows why.
As it turns out, the hopes of many service providers was off anywhere from 3 percent to 15 percent. That is the range of revenue loss still being admitted by service providers around the world. It is such a broad range because of the low visibility into cost and revenue, into manual and error-prone processes and an inexplicable lack of resources to address the problem. Emerging markets have the dubious distinction of claiming the highest (worst) percentages as they are too busy raking in revenues to bother plugging the leaks at this time.
Service providers in mature markets have made great headway recovering millions of dollars in lost revenue thanks initially to consulting initiatives that (1) identified errors and inefficiencies in manual and semi-automated processes, (2) found discrepancies in customer and intercarrier billing and (3) accounted for misallocated costs and uncollected revenues.
However, networks and services continued to grow in number and complexity and the never-ending quest for visibility and control of those margins continues. This has pushed the market for the revenue-assurance solution portion of this equation to over $400 million per year in the U.S., according to a 2010 report from Stratecast, a division of Frost & Sullivan. The firm also says that the cost equation is a bit more slippery because it must include network costs as well as operational expenses and that network costs alone accounts for 45 percent of revenue on average.
This report examines how a holistic view of costs and revenue can provide actionable business intelligence based on a very granular knowledge of margins as they relate to groups of customers, individual customers, services and singular instances of services as well as how those margins are being managed.
