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Qtel Revenue Assurance and Fraud Management Program Adds $146 Million Recovered Revenue to its Bottom Line
Published Jan 22, 2013
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Qtel Group has grown from being Qatar’s incumbent operator to a large communications group with operations in markets in the Middle East, North Africa region and Southeast Asia. They collectively serve more than 83 million customers. The company’s key markets include Qatar, Kuwait, Oman, Iraq, Algeria, Tunisia and Indonesia, through companies operating GSM networks and WiMAX infrastructures. Its key brands include Qtel, Indosat, Asiacell, Wataniya, Nawras, Nedjma and Tunisiana.
Qtel Group is approaching the completion of a three-year plan to deliver revenue assurance and fraud management capability to 17 operators across the company. It set targets based on the TM Forum’s maturity benchmarking self-assessment program, which enables operators to evaluate the maturity of their revenue assurance practices in terms of five key elements: organization, people, process, tools and influence.
The project has been a huge success. In 2010, the first full year of the project, more than $50 million was contributed to the bottom line. In 2011, revenue recovered was double the target at $146 million. This year, with four months to go, the target for the entire year has already been passed. “We’ve delivered over and above the targets we set ourselves,” says Lee Scargall, Group Director of Enterprise Risk Management, Qtel.
Beyond recovery
However, Qtel wasn’t simply looking to stop leakage and recover missing millions in revenue, it wanted to position itself for the future in terms of managing risk in the wider sense. Being able to attach hundreds of millions of dollars in recovered revenue is a straightforward business case for investing in revenue assurance, but the group also wanted to address less tangible issues related to fraud management and revenue assurance.
Moving through the steps of the TM Forum maturity program was therefore critical. “Every year we have done a maturity assessment to see if the progression has been as expected across the five key pillars and, as we have rolled out, each pillar has had a gradual progression in maturity,” adds Scargall. “That increased maturity increases our ability to determine leakage and leads to greater recovery.”
He emphasizes that putting vendor framework agreements in place and rolling them out across the Group’s properties was a key step, along with training. “We set up training academies in Doha, Qatar, where the analysts could come in and learn how to work more effectively,” says Scargall. “It is a totally different landscape now and obviously the business has seen this through the improved revenue recovery.”
However, justifying investment in fraud management is less clear cut, as David Stuart, Associate Director of Revenue Assurance, Qtel Group, explains: “The difficulty with fraud management is that, unlike revenue assurance where you can walk in and evaluate how much of the gross revenue is being lost, it isn’t really about the operator, it’s about the environment in which the operator sits. For example, you can’t predict the extent to which fraud exists in the company when assessing it – we can only look at what we can detect.
“In the last three years we have seen an increase in the amount of fraud we detect,” he adds. “At the beginning we found very low levels but the program has helped us to mature and understand what fraud is and how you find it. Even so, when it comes to a maturity grading, there really isn’t a benchmark for fraud out there.”
A question of culture
Qtel Group has used the benchmarking activity related to revenue assurance to help develop its fraud management. Having a large group of operators to draw upon and share data and techniques between has enabled it to achieve good results. However, having such a diverse range of operations means taking into account lots of different cultures too when managing fraud.
“In some of the places we operate, the corruption index is high and it can be a cultural norm to take from your employer,” explains Scargall. “In the U.K., for example, employees might take the odd item of stationery but in Indonesia employees think it is within their right to provision family and friends with SIM cards. They don’t see it as crossing the line.”
In addition, Qtel Group has used elements of the TM Forum’s revenue assurance benchmarking program for fraud management where applicable. “Where the five pillars [organization, people, process, tools and influence] of the revenue assurance maturity assessment model are relevant to fraud management we have utilized them,” says Stuart. He adds, “Organizationally revenue assurance and fraud management sit under the same head within the Group, which has helped where we look at people and organization. The same head, with the same understanding, doing the same work in each discipline is important.”
Placing clear targets on fraud management and measuring success, remains difficult. “A fraud such as PBX hacking will occur where default passwords haven’t been changed, for example,” says Stuart. “The solution to that is to change the passwords, but how do you report what the benefit of that has been? You can’t put a number on it. In revenue assurance, on the other hand, prevention can be quantified. The simplest way is by doing pre-implementation testing and identifying an underlying leakage of 10 percent, for example. It is then clear that if you didn’t undertake revenue assurance you would be 10 percent down.”
Exaggerating fraud
In addition, the fraud problem probably isn’t as big as some of the headline statistics suggest. “The big four consultancies all put out survey results suggesting that all operators are losing 10 to 20 percent of their revenues and that gets everyone worried,” says Scargall. “Those surveys are designed to do that and bring [operator] customers in – we’re certainly not seeing 10 or 20 percent losses.”
Scaremongering aside, maturity aids detection. “We’ve analyzed several projects over the last six or seven years and we can see empirical data sets that show that in an operator at level one maturity, we’re seeing 0.25 percent leakage detection. At level two that rises to 1.5 percent and, by the time they’re up to level four, maturity detection rises to 3 percent,” he adds. “It is very hard to estimate the value to the business of fraud management because there is no model to benchmark yourself against. We’ve trained the people and deployed the toolset. We’ve put in the alerts system and wiki sites to update across the group and in revenue assurance. We’ve got the group up from beneath level two maturity and are easily at level four.”
That improvement can also be attached to fraud, thinks Stuart: “If the fraud maturity model existed, you’d expect the fraud maturity model to be on par with revenue assurance because it’s all run by the same people.”
A mature approach
For Scargall, maturity is about having the understanding that, in addition to the clearly identifiable revenues recovered, there are less tangible benefits. “What we do isn’t just about revenue assurance and fraud management, it also aids the business in general,” he says. “A metric I would love to produce is one for the maturity of the whole organization.
“What you would see if you looked at Qtel Group revenues over the last three years is that we’re one of the few that continued to grow during the financial crisis. In terms of revenue assurance, last year we added $146 million earnings before interest, taxes, depreciation, and amortization [EBITDA] contribution and that makes the difference between a good year and a very good year or a bad year and a very bad year.
“The years of bad recession have been going on around us and operators have seen people choose to make fewer calls,” he adds. “Over-the-top players are taking revenue from them so revenues are on the slide but, if you can generate an EBITDA increase that comes from revenue assurance that can be offset.”
For Stuart, that’s part of the reason why operators are so interested in fraud management and revenue assurance. “This project has been extremely well received across the entire group,” he says. “If you asked executives within the operating groups what are the top three things the group has done to aid their performance, the second or third item would be this revenue assurance program.
“They see real benefits from the toolkit, the dedicated processes and the training academies. Maturity has developed because we have linked people around the Group and they see the power of working together in this way. Revenue assurance has become one of the top items in terms of being well received by CFOs and CEOs.”
This case study is an excerpt from TM Forum’s Case Study Handbook 2013 which is available free to members and non-members of the TM Forum, a global, non-profit association focused on enabling service provider agility and innovation. To learn more about how service providers in the Middle East use TM Forum’s Frameworx suite of standards and best practices to improve business agility, increase revenue, reduce fraud and more, be sure to attend TM Forum’s Middle East Summit in Dubai from Feb. 4-5, at Grosvenor House.
Posted by
VMD - [Virtual Marketing Department]
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