Getting revenue management wrong can cause serious harm, and yet, there are a few mistakes in this realm that CSPs continually fall into. In this blog, Merima Žiko, Product Manager at ZIRA examines three common beliefs around revenue management that may be negatively impacting CSPs’ customer relationships – and their bottom line.
In today’s communications ecosystem, revenue management is much more than supplying a bill to a customer. Comprehensive revenue management means bringing together the entire revenue flow, from rating and charging to managing invoices, often involving more complex processes such as disputes and settlement. It is the beating heart of CSPs’ BSS systems, and a key aspect of creating and maintaining strong customer relationships and providing reliable services.
Given the crucial role of revenue management in business success, it is in every provider’s interest to continue evolving its revenue management processes to improve cash flows, support new revenue streams, and deliver better experiences. However, as well as the growing IT complexities, there are a few commonly held beliefs that are holding CSPs back from fully modernizing their revenue management systems. Let’s explore what these are and how CSPs can go beyond them.
The telecommunications space has experienced an unprecedented transformation in recent years. From relatively straightforward providers of voice communications, CSPs have now become the orchestrators of a complex, intricate ecosystem managing unimaginably vast quantities of data (PwC anticipates global data consumption to reach 9.7 million petabytes by 2027).
Since the advent of 5G, CSPs have continued to offer increasingly sophisticated products and services: voice, video, text, data, broadband, fiber, IoT – the list goes on. These are then packaged within convenient and profitable X-play bundles to maximize customer convenience. On top of this, payment preferences have also changed dramatically, with more and more customers demanding more personalized, customized subscription plans.
At the same time, wholesale providers are looking to extend their income opportunities by establishing new partnership and business models, such as B2B2X and Marketplace models. Though often extremely profitable, multi-party billing makes revenue management processes far more complicated.
The evolution of services and payment models means that revenue management must also follow suit and take into account the diverse needs of B2B customers and consumers alike. Within B2C, the revenue management component of BSS systems needs to accommodate both pay-as-you-go and subscription customers and support different billing formats (paper-based, online, mobile) to suit the preferences of various consumer populations. For wholesale providers, flexibility is even more important as they have to control multiple accounts, each with independent billing cycles.
ZIRA Revenue Management
ZIRA Revenue Management
To manage billing complexity, CSPs need an agile revenue management system that offers:
- Multi-party billing enablement offering full settlement support for B2B and B2B2X business models
- Complex discount options enabling elaborate (corridor) discounts
- Revenue share models for digital partner settlement
- Dispute management for improved resolution of complaints
In the olden days of 2G/3G telecoms, it was largely sufficient for a billing system to be accurate, so that each customer knew they were paying just for what they were using. Now, not only is the ecosystem far more complex, but providers are also facing much more intense competition, with the barriers of entry being lowered and hyperscalers threatening to take over the space.
Under these circumstances, CSPs must look at every aspect of service through the lens of customer retention and find opportunities for improvement. Within billing, this means providing not just an accurate breakdown of charges and services, but also using bills and invoices as important communication touchpoints with the customer. This is an opportunity to share helpful information such as usage analytics and available promotions and discounts that customers can benefit from. These can become vital value-adds for customers and, therefore, act as differentiators between CSPs looking to fight off competition.
In certain segments, providing this level of transparency is not just an addition, but a requirement. For example, since 2021, the UK regulator Ofcom has mandated telecoms resellers to provide consumer and small enterprise customers with information on their tariff usage and notify them if their allowances are running low or have been used up. It is important that CSPs arm themselves with agile and adaptable BSS that can support this level of transparency.
Mergers and acquisitions (M&A) are a frequent occurrence in the lives of many telco players. However, one might expect that amid current inflationary pressures and tightening budgets, CSPs might be holding off on costly business transactions.
In reality, rather than abandon it altogether, many operators are considering a more strategic approach and are looking to transform their business through M&A. Take the $1.8bn acquisition of VOO SA by Orange Belgium, which was completed in June 2023, or the sale of Vodafone’s German fiber business to Altice, which created a €7bn joint venture. PwC predicts that in 2024, telcos ‘will seek to gain economies of scale and synergies through mergers’, so we can expect the current level of deal flow to continue.
This is worth investigating in the context of BSS and specifically that of revenue management, given the considerable infrastructure issues inherent in merging two businesses. There is an obvious impact on customer and partner relationships, all of which have to be migrated into a new system, causing uncertainty for customers. But revenue management is often also negatively influenced, with heaps of data being migrated from one platform to another – and potentially lost in the process.
For CSPs, a prerequisite of successful M&A – and new partnerships more generally speaking – is technical interoperability with other players. For that, CSPs need modular, flexible BSS solutions with a strong revenue management component that allows CSPs to keep track of their finances. ZIRA’s contract management and billing features are well equipped to support CSPs undergoing M&A, for example by allowing them to move billable data in recurring orders until the details of easier invoice delivery options become available. Reducing friction in this way is important steppingstone to making large-scale business transactions available to CSPs.
As telecommunications products and services continue to evolve, the corresponding revenue management systems must adapt. This is the only way to ensure that CSPs remain competitive and overcome what TM Forum CEO Nik Willetts calls the industry’s Code Red moment. Modern BSS solutions allow CSPs the flexibility and transparency they require to cope with increasing complexity and continue to add value to their partners and customers.