Testing

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  • Why inline fraud management is necessary to combat POS Frauds?

    Why inline fraud management is necessary to combat POS Frauds?

    Over the years Fraud Management teams have been more reactive in nature and Frauds were usually detected once the event has occurred and the losses are incurred. With the revenues from the traditional services such as Voice & SMS crumbling down and operators looking for newer avenues to sell products and services, it is essential that the wafer thin margins are well protected. This has also forced the Fraud Management teams to be more proactive in nature.

    One of the key focuses of being proactive is to prevent Fraudsters from entering the network. Fraud protection at point of sales stage has got an increased focus in the recent years. CFCA Fraud survey report of 2011 estimates global Point of Sale fraud at almost $5.5 billion. One other startling fact reveals that UK Mobile Operators lose £136M annually to fraudulent transactions at Point of Sales.

    Some of the traditional challenges at Point of Sale include Subscription Fraud and loss due to Handsets being bundled to subscriptions. However with 4G and data heavy environments coming into play there would be more products, services and content sold over various sales channels such as Web Stores and Retail Centers.

    To meet such requirements Fraud Management systems have evolved from being just Near Real Time systems to Real Time Inline systems which can integrate to various Sales Channels. On receiving the orders the system evaluates various order attributes such as Location, Subscriber demographics, Type of order, Type of Retailer and evaluates whether the order is genuine or not.

    If an order is found suspicious, the request can be routed through various workflows within the system such as generating an alert for analyst approval or declining the order directly. Fraud Management system should be flexible enough to add new rules and workflows as the

    new products are launched by the product teams. Behavioral profiling can be also used to track and monitor suspicious behavior patterns on the orders that have been placed.

    Benefits of proactive and inline fraud management is unchallenged. Banking & Payments industry has been practicing these for a long time. By configuring and fine tuning the rules over a period of time it would be possible to detect and prevent majority of Fraud events. One of the recent implementations of Inline Fraud Management for Subscriber Acquisition helped save the operator nearly 2 Million $ in losses and it was observed that Fraud Hit ratio was about 60%. It was also noted that the Fraud Hit over the weekends where as high as 100%. However care has to be taken during such an implementation that only confirmed fraudulent orders are directly rejected by the system as any rejection of genuine orders can give a direct blow to Customer Experience.

    To download infographic, click on the link: Inline Infographic

  • Chasing the Elusive Business Case

    Chasing the Elusive Business Case

    Let’s say that you’re ready to take the plunge and  launch a business optimization project to make the world a better place.  You’re convinced that the benefits of the project will be quite compelling.  Who could argue the value of reducing revenue leakage, mitigating fraud risk or recovering stranded network assets?   There’s only one thing standing between you and your dream of making a significant impact to the bottom line—a winning business case!

    In times past, the decision to pursue a new project was generally driven by a combination of need and budget.   If there was a manifest need, and appropriate budget had been allocated, then it was generally a matter of stack-ranking solution alternatives and picking a winner.   Ah, for the good old days…  today’s reality is that Opex and Capex are tightly managed and projects need to sink or swim based on rigorously scrutinized financial metrics such as NPV, ROI and Payback Period.    Business optimization projects that remove costs from operations, improve the leverage of Capex dollars or manage risk more effectively tend to score quite favorably against these metrics compared to many other candidate projects competing for enterprise budget allocation.

    Which brings us back to the business case.    Years ago, when I worked for a major North American operator, the business cases I developed to get IT projects over the line were founded on “guestimates”.  Remember those?   They were cool because everyone knew that once the budgeting exercise was done, and the project approved, no one was going to come back and hold you accountable.   Remember what I said about the good old days?   In today’s business climate, defending a business case is akin to defending a master’s thesis.

    In our Managed Services practice, I have spent a lot of time coaching clients on their business cases.  Before you read this as “here’s how to overstate the case to bump it to the head of the line,” think again.  Executives and finance departments are too savvy.  Plus, overstating a case ultimately serves no one’s interest.  My approach is to gather the best possible information to produce a solid and realistic case.  Look at the business case as a tool—it can help ensure that you are pointing scarce resources in the right direction and may indicate that your original direction needs to be changed.

    Based on my experience, a well-constructed business case should:

    • Illustrate not simply costs and benefits but the expected timing of each.   It may be just as important to understand how long the project will be generating negative cash as the 3-year NPV.
    • Garner buy-in.  No, not just from the executive committee who will evaluate the project, but from the impacted stakeholders.   Do the groups most impacted by your projected Opex or Capex savings agree with your assumptions?  When they line up behind you, they can be a powerful force to help promote the benefits of the project.
    • Avoid “MBA math”, i.e. a small percentage of a large number is still a large number—look what we can save you!   Benefit calculations need to be specific, as granular as possible and have defensible and traceable assumptions– ideally using data sampling techniques or a limited-scope assessment.
    • Use a WACC (Weighted-Average Cost of Capital) that is approved by Finance for calculating discounted cash flows.
    • I could go on, but you get the idea…

    Once you have completed a draft of the business case, there are other questions I suggest you consider, including:

    • Do I have Opex or Capex dollars to spend?
    • Does the project need to be self-funded?
    • How is the case improved if there is limited up-front investment or if I spread out my payments?
    • Do I need an operational assessment to derive my business case assumptions?
    • Will my solution and/or services partner stand behind the numbers in the business case and offer to put some “skin-in-the-game”?

    Admittedly, these are leading questions.  Managed Services can influence the answers to these questions in a significant way and may just give you the flexibility you need to get the business case, and your project, over the line!

  • 5 Questions to consider before starting RA activities

    5 Questions to consider before starting RA activities

    In my last post, I tried to highlight the “revenue” aspect for RA and the way KRA’s should be worked on. In continuation to that post, here are 5 questions that should be considered before starting of the RA activities:

    1. Who is responsible for RA?  It has to be a collective responsibility across the organization where every team/department has their role to play. Being in the Revenue Assurance department, is almost as good as being a Product Manager- where the individuals do not have a lot of control on the rest of the organization, yet they are suppose to own and be “solely responsible” for the role/product in the company. Hence, aiding in RA activities is as much a responsibility of Marketing and Network departments as it is for the core RA team.
    1. What should be viewed as the tactical task for the RA department?  All actions/activities that has the ability to allow the operator to generate revenue needs to be monitored to make sure there are no leakages.
    1. What is the ideal number of controls that should be worked on by the RA teams? This depends on the maturity of the organization in terms of organization, influence, people, process and tools. Hence it is always preferable to perform a quick maturity analysis, based on which primary focus areas would be identified and controls created. Not all controls would necessarily impact revenue. Understanding the maturity enables the creation of a roadmap for improvement across the organization. Typically there is NO need to have hundreds of KPIs to monitor each segment or process. This is because of the 80-20 rule. 80% leakages can be found by 20% of appropriate controls. Hence it is essential to work on controls/KPis that have maximum impact, rather than trying to monitor hundreds of them.

     

    1. 4.       Is Cost Management a part of RA activities? Only when the RA team is capable enough to secure the top-line for the organization, should they focus their activities on more strategic objectives like cost and margin assurance and management. Revenue maximization should ideally not be a part of RA department activities.  Most RA teams should venture into this area solely to ensure they provide ample Business Intelligence for marketing and sales departments to take the information to the market to generate more revenues.

     

    1. 5.       What are the most important parameters to report on?  RA departments should look to quantify the findings from data analysis to provide view of
      1. a.       leakage detected
      2. b.      leakage corrected and recovered
      3. c.       leakage corrected and recovered as percentage of detected
      4. d.      leakage detected as percentage of revenue
      5. e.      leakage detected as percentage of EBIDTA
      6. f.        time to recover from detection of leakage.

    In a nutshell, RA is not rocket science, but it is an extremely important and challenging aspect of business- not only telecoms but across other industry verticals as well. The effect in telecoms is much more because of the complexity of operations.

    In following articles, we would talk more on RA, scope, new horizons and verticals for RA. Stay tuned.

  • Managing Product Performance Using Advanced Analytics

    Managing Product Performance Using Advanced Analytics

    It seems there is an endless array of products being offered to mobile customers every day.  Prepaid plans, postpaid plans, new bundles, new handsets, movement to services on tablets, increase bandwidth offers for data streaming, etc.  As operators load the consumers up with more and more choices, understanding what is being bought, who is buying it, is the product making money, when does it start making money, will a new plan rob my bottom line accidentally, etc, are all questions operators must be able to answer, and on an almost daily basis.

    As an operator, you should be asking a series of daily questions that need to be answered to protect your business and identify significant revenue opportunities and risks:

    1.  What are your product margins today?  Which products are generating positive returns?  Which programs are missing their business plan?  By how much?

    2.  When a new product is proposed, do we understand what the impact will be from our existing customers that migrate from their current product to this new product?

    3.  When a competitor responds to your new offer with a comparable offer, how fast can you see that impact to your market?

    4.  What is the right product offer, the right price, for the right customer segment, in the right section of the network that we should be focusing our marketing resources around?

    Many of these questions require much, much more than simple metrics and reports generated by mining activities.  They require advanced analytics that allow operators to predict behaviors and successes (and failures) before those events come to pass, and most importantly, before budget and resources are focused in the wrong areas!  Advanced analytics offer predictive, detailed analysis about what an operator should do, why they should do it, when they should do it, and what the expected outcome should be.  Unlike simple forecasting, analytics is based on science, and offers a proven methodolgy for establishing successful strageties in the business in a near real time environment.

    ROCware Product Performance Management (PPM) addresses these (and many other) issues, in a near-real time, high performance analytics environment.  Using ROCware’s advanced analytics technology, PPM is able to provide operators with a full view of their products, margins, and a highly robust future-view into margins, customer and product behaviors, and many other factors that are crucial to properly track and manage your product portfolio.

    It is very common today for an operator to have access to limited product data.  Looking more closely at what the operator actually does have access to, it is really often based on excel spreadsheets, with limited information around sales metrics, with some segmentation.  This is not set up as a repeatable process, and thus the requests are completed manually, and most commonly with 4-6 week latency.  This doesn’t help an organization understand margin and profitability; it doesn’t help an organization understand competitive impacts, or the impact of a proposed plan on your existing market.  ROCware PPM does all of this automatically, every day.

    There was a time when a monthly performance report was adequate.  That was before products became far more complex, and competitive pressures were measured in days (sometimes hours).  An operator without daily views into their product health and threats is vulnerable to risks that could cost the business millions of dollars in just a single month.  ROCware PPM, along with the other ROCware suite of advanced analytics solutions, takes this worry off the table, allowing operators to quickly and confidently mange changes in their business.

  • Traditional Capacity Management is doomed to fail and cost CSPs millions in unnecessary CapEx!

    Traditional Capacity Management is doomed to fail and cost CSPs millions in unnecessary CapEx!

    Most CSPs today adopt a traditional capacity management approach that consists of planning their network resource requirements over the next 12 months based on past consumer trends.

    Reality check! In today’s fast paced end-user consumption and service demand, trying to predict resource needs 12 months out based on past end-user behavior is like playing a lottery based on past outcomes in hopes to hit it big – More often than not you will lose big time.

    The reality is that the past doesn’t predict the future anymore and that end-users are causing unpredictable shifts in resource consumption in the network as they tune into major events and build their life around real-time communications. Oh sure, many CSPs will read this and think, we have the latest probes in the network giving us loads of real-time data and complex flows where we know if packets are traveling left or right in the network. And yet with all this information CSP still can’t keep ahead of today’s data tsunami, without being concurrently choked by escalating CapEx. Having loads of low-level information more often than not causes data overload: You have so much raw data that you don’t know what it means from an overall congestion perspective without weeks or months of analysis.  Or even worse, you may interpret trends differently depending on the data sample you examine, making it virtually impossible to project congestion and business impacts. Many CSPs with whom I have spoken face the same problem: When in doubt, pour more CapEx into the network, in the hope of adding the right resources to alleviate congestion.

    What if there is a way to more precisely target the CapEx spend needed in the network, to deliver the services the CSPs need to thrive?  In fact, there is, and it’s called “Real-time Capacity Analytics”!

    Real-time Capacity Analytics is about understanding all capacity-related data rather than looking at it on a per attribute or device perspective – which provides little more clarity than just a blip in an ocean of traffic – instead looking at capacity consumption as it relates to end-to-end path and services to end-users. It is amazing how CSPs are concerned about how capacity congestion affects their subscribers and yet most solutions today fail to look at capacity from an end-to-end end-user perspective. Without an end-to-end view and understanding of how different segments of the network path and services affect congestion, CSPs may be spending CapEx in portions of the network that may temporarily relieve the symptoms of congestion rather than resolving the root cause.

    So as a CSP, the next time you face customer impact based on congestion, ask yourself: Did I see it coming? Did I get the right warning signs that congestion was building up over time? Did I get a read of time to exhaustion that could have helped me plan added capacity before impacting my customers? Is my solution pinpointing where to target my Cap Ex? And finally, do I have a solution that can tell me if my network can accommodate new subscribers or services, and, if not, where will the congestion hot-spots occur and how much Cap Ex is needed?

    If your current solution isn’t helping you answer any of the above questions, it is time to consider Real-Time Analytics for Capacity Management before your business gets swept away by the tides of capacity congestion.

  • Mobile Money – Are your customers secure?

    Mobile Money – Are your customers secure?

    KARIBU !!!

    ‘ M-Pesa’  has been leading the revolution of mobile wallets across the globe. Over 50% of the adult population in Kenya today use M-Pesa service to send money to far-flung relatives, to pay for shopping, utility bills or taxi ride home. While East Africa has been dominating the numbers in the past few years other regions including APAC, EMEA, Europe and Americas are about to explode sooner or later with their own models – NFC, Google Wallets, Mwallets, Apple Passbook,etc

    More operators are walking down the path of offering Mobile Banking services in some form or the other every year. These players might get caught off-guard & face what a leading operator in Uganda recent got  hit with– a million dollar mobile money fraud loss !! News articles indicate that a recent internal fraud in a leading operator in Uganda lead to 3.5 Million Dollar loss, Mobile Money boss losing his job & 8 other employees getting fired. Operator also received reprimands from the regulator and had significant dent to its brand image. This mess also opened up competition for other players in the country.  Regaining confidence of customers and regulators will not be an easy job for such operators. They will be looking to enhance security within their mobile money offerings.  It might be a differentiator and lead to uplift in adoption.

    This incedence clearly presents a learning for other operators about to offer Mobile Money services. Moving forward, one of the key areas of focus for operators will be to provide a secure mobile money platform to users and manage frauds beyond the traditional regulatory requirements. Below infographic highlights some variants of Mobile Money frauds already rampant within operations and potential damage they might cause.

    Mobile-Money-Risks-Infographic14

  • Fraud has the potential to affect entire business adversely !!!

    Fraud has the potential to affect entire business adversely !!!

    Here’s a recent incident with one of FM head in SE Asia. The FM head said, as an organization, the focus last financial year (FY) was on acquiring subscribers. The situation however when the annual report was published was :

    (a) High growth in subscriber numbers
    (b) Significant drop in revenues
    (c) Drop in ARPU & AMPU

    So, what had not gone according to the plan? Marketing had come up with “jazzy plans” to attract new subscribers. This was an avenue for dealers to inflate sales and earn commissions, as they realised the controls were not stringent (falsified subscriptions, dummy subscribers etc). Hence a significant portion of the new customers were taken on-board, but not generating revenue. This not only affected the top-line growth and in turn impacted the health indicators (ARPU and AMPU), but had a snow balling effect on investor confidence. The stocks have since then taken a beating.

    This year the Telco is focusing on cleaning the subscriber base and finding ways to have the others generate more revenue. The FM head said, had we been vigilant while growing, we could have avoided a lot of negative consequences. The learning is fraud not only impacts small pockets of revenue streams. It could potentially impact the business at large. Hence it is imperative to consider fraud aspects as part of the proactive controls when launching new products and services.

  • The “Revenue” of Revenue Assurance

    The “Revenue” of Revenue Assurance

    What is the scope of Revenue Assurance? Honestly, this is a vendor / RA team/ consultant capability dependant age old myth, leading to the term being a misfit for the purpose. There are always things that one can debate on such as what is in scope and what is out of scope? However, if one takes the terms “revenue” and “assurance” at the face value what would be defined as the scope of work? It would simply mean any activity/event that has the ability to generate revenue should be monitored to ensure that the associated ‘revenue’ is generated; and if it is not, ensure steps are taken to fix it. Sounds fair? But then, this brings in another primary question: “What is “revenue”?

    Ask personnel from finance and they would give you the most appropriate and correct answer. Now if you ask the same question to an RA professional, the response would not be encouraging. It is not to say that such individuals don’t know anything- but it is a matter of knowledge w.r.t the financial context. Typically, the individuals working in the RA department have sound knowledge of KPIs, data analysis and such items that are monitored as part of RA activities.  However, often the large part of data analysis related to finding leakage is not translated in the correct/appropriate terms for business benefit.  The net effect of this at times, results in inappropriate KRAs for the RA department. I remember hearing somewhere, the KRA for the RA department for an operator was to detect x% more leakage from the previous year!  I don’t think that is a valid KRA.

    The solution therefore is to establish the following two things:

    1. KRA’s for the RA department need to be worked backwards: The KRA’s of the department need to be defined keeping in mind the core business objective of the operator.  In this aspect, one would have to determine, how to map the organization KRA’s to that of the RA department? This would definitely vary across operators. Example, if the organization’s focus is to improve profitability of services, one would have to determine the impact of the same in cases of leakage.  Hence, the KRA for RA department would have to be worked backwards to ensure that the efforts put in by the RA department are aimed at fixing leakages around activities that would improve profitability.
    1. Accounting of detected leakages in a manner that makes sense:  The “revenue” calculations should be used only for quantification and gauging the leakage potential and recovery. This may or may not be the most accurate revenue calculation because RA is not accountable for revenue generation. However, there are a few methods  which use the following of revenue calculation
      1. ARPU
      2. “best fit rating” of usage xDRs
      3. Effective rate of XDRs
      4. Effective rate of files

    NOTE: A revenue assurance department should ideally NOT even attempt to calculate Revenue per Stream/Service/Business Unit, ARPU, AMPU and other revenue figures. These should be obtained from the financial systems for quantification of the leakage detected and to understand the potential impact of leakage on the top line of the company.

    Besides “revenue” there are multiple other aspects of RA that should be addressed and answered much before the start of RA activities. In the next post I would try to address the following 5 questions that should be looked at, as the business aspect around RA:

    1. Who is responsible for RA?
    2. What should be viewed as the tactical task for the RA department?
    3. What is the ideal number of controls that should be worked on by the RA teams?
    4. What are the most important parameters to report on?
    5. Is Cost Management a part of RA activities?
  • Should the government be in the business of running a business? – Subex Limited

    Should the government be in the business of running a business? – Subex Limited

    Could privatization of Air India have saved this day? Should the government be running a business? Should it have left the business to people with the necessary skills and expertise? It is argued that privatization, which is a part of disinvestment process, results in better use of resources and efficient allocation. Around the world, many instances of businesses that have thrived after government relinquishing control are common place (there is also the other side that have not taken off well due to various other critical success factors not being met).Nevertheless, increasingly, governments are taking the role of regulators and not producers.

    Is it not a similar situation being observed in Telecom industry? From a situation where the Telco’s produced (or managed) everything themselves, they are shifting their focus to building brand equity, customer satisfaction and user experience. Thus, telco’s are deciding how their eco-system needs to shape and work to achieve their goals (regulators), while a partner is delivering the required results (producers). Some of the strategic outsourcing engagements in India (Bharti and IBM for example) are very good examples of a thriving partnership. What was common place for networks is now spreading its tentacles to B/OSS.

    Of course, many Telco’s are in a quandary on where to fit in functions like Revenue Assurance & Fraud Management – firstly, does it come under tactical operations or strategic business? One RA business head that I know of in the region has been tasked, by the CFO, with a specific KRA of increasing revenue by “x%” from the existing customer base in the current FY. Many more are likely to follow suit in the coming years (refer to KPMG Global RA survey 2012). The profile of RA/FM is changing – in addition to protecting revenues; they are involved in the areas of enhancement & managing revenues. Hence, the answer to the question above – RA/FM are both tactical (producing the desired results) and strategic (supporting the strategic initiatives of the organization).

    Now what would be the right strategy – should I outsource or not? There is no one answer that is right. The only right answer is “what suits you”, depending on the organizational social & cultural makeup, risk appetite and the scale of economic issues. When I meet my customers, we work with multiple options and eventually decide on the best fit. Here are a few possibilities that could be looked at:

    • Pilot program (minimal scope, few people, short duration etc) for the risk averse
    • Bonus / Gain share to ensure accountability from vendors
    • Part outsourcing the tactical part and retaining strategic initiatives (remember one main challenge is to retain resources for career progression reasons. This would be an opportunity to give them the much needed upward movement into a new area)

    No matter what the option chosen, it is important that it works for both the partners in meeting the common goals.

    And, I hope Air India takes off well again – they have better leg-room and delicious food compared to other airlines in the sector.

  • An economical approach to Mobile Money?

    An economical approach to Mobile Money?

    It’s clear to all that the advance of mobile money and NFC services has become an unstoppable force, with the latest estimates putting global NFC m-payment transactions at US$50 billion by 2014. For the Fraud & Security teams in mobile operators this heralds arguably the single biggest change in the risk landscape since the original proliferation of mobile services back in the late 90s and early 00s.

    Where there is money, there is fraud. It was therefore inevitable that when mobile phones became a financial instrument, they would immediately become a target for fraud. Mobile phones were already a very popular target for fraudsters and the combining of the 2 is simply irresistible. This has presented Fraud & Security teams with a fresh sets of challenges and opportunities, the first of which is how they are going to monitor the new services.

    Many operators are looking to the financial services industry for best practice and whilst this certainly makes sense, I’m not so sure that the purchase of monitoring tools from the financial services environment is as wise. By buying in such systems, mobile operators run the risk of creating a siloed view of their customers, with one system looking at mobile money usage and others looking at calls, SMS etc. Surely the most effective way forward is to have a single view of every customer, assessing risk across all services.

    Almost all operators have some form of Fraud Management System (FMS), monitoring their customers’ calls, SMS and data traffic. Mobile money services are relatively simple when compared to those offered by banks and insurers and the same is true of the data that they produce. It is therefore well within the capability of an FMS to take in mobile money and NFC transaction data and present it alongside the calls, SMS and data usage.

    To avoid unnecessary expenditure and inefficient use of resource, my advice to mobile operators is to challenge your FMS supplier to provide you with a solution for monitoring your mobile money services. Only if their answer is ‘no can do’ should you be looking elsewhere!!