Chief Strategist Teresa Cottam looks at revenue optimisation and some overlooked causes of revenue leakage.
Barrels of Money, Victor Dubreuil, c. 1897
Never has it been so important for the telecoms industry to run 'a tight ship' when it comes to their revenues. With constant downward pressure on margins, high levels of indebtedness and the cost of major network upgrades, the industry has never before needed so urgently to collect all the revenues it's due.
Of course it's never going to be possible to reduce revenue leakage to zero, but the rates in telecoms are still high. On average across the industry 2.8% of revenues are lost to leakage. That's a big chunk of profit. And while 2.8% may not seem unreasonable, if all CSPs reduced leakage levels to best practice levels of below 1% the industry could reduce losses by more than EUR23 billion per year. Or put another way, they would gain EUR23 billion in revenues without selling a single thing more.
Even this figure is on the low side, though, as 53% of CSPs say they either don’t have a reliable measure for losses, or are consistently underestimating them. For example, one CSP reported that his company performed at the best practice level but commented that this was only for defined and well-understood leaks, and since revenue assurance was not end-to-end the true level of loss was likely higher.
The causes of losses are numerous and range from the malign to well-understood operational weaknesses. New sources of leakage continue to emerge, but tellingly the single biggest cause of loss reported is not fraud or other external threats, but the misalignment of systems - something that is entirely fixable.
If readers would like a free copy of the research this story is based on, which is provided free to market thanks to sponsorship from Orga Systems, please email email@example.com.