Accenture Communication Solutions

Accenture Helps VimpelCom Take Strides Toward High Performance Through a New Revenue Assurance Program

Client profile
The VimpelCom Group consists of telecommunications operators providing voice and data services through a range of mobile, fixed and broadband technologies. The Group includes companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia, Armenia, as well as Vietnam and Cambodia, in territories with a total population of about 340 million. As those countries developed healthy appetites for communications products and services, VimpelCom saw an enormous spike in the demand for its services. The company has been on a strong growth trajectory, having posted a record revenue of $10.1 billion for the 2008 fiscal year.1

partners increases and, subsequently, so do the chances of revenue leakage. Revenue leakage is particularly difficult to control during periods of robust growth. For example, as a communications company rapidly gains new customers and develops new products and services to serve them, tracking network usage and ensuring accurate billing becomes very complex. Indeed, a major contributor to the strong growth posted by VimpelCom in the past few years has been the broad array of plans the company has offered: pre-paid and post-paid services, short message services (SMS), and voice and mobile data, all delivered across a variety of technologies and on varying terms (with respect to marketing offerings, tariff plans and options). The combination of offering complexity and VimpelCom’s rapid growth meant that simply understanding what customers had bought, what they should be charged and how the company’s infrastructure was being utilized was a significant challenge. While VimpelCom management was pleased with the company’s high rate of growth, they were also concerned the company might be losing revenue. Thus, they embarked on an initiative to develop the revenue assurance capabilities they needed to identify and eliminate sources of revenue leakage. Importantly, the solution ultimately developed would not only have to provide immediate impact in terms of revenue recovery, but also would need to be scalable to accommodate VimpelCom’s longterm growth plans and its pursuit of high performance. Indeed, Accenture’s ongoing High Performance Business research has found that distinctive capabilities that enable a company to out-execute its competition are a building block of high performance. A revenue assur-

ance function and its supporting system that can help companies work to minimize revenue losses and maximize profitability are a prime example of such distinctive capabilities in the communications industry. To help achieve its goals, VimpelCom teamed with Accenture. VimpelCom’s executives viewed Accenture as a valuable collaborator in the communications company’s revenue assurance effort for several reasons: Accenture had a long history of serving some of the world’s most influential communications companies and extensive experience in designing and implementing industry-leading revenue assurance capabilities. Furthermore, Accenture would bring to the project its insights into how leading communications companies use distinctive capabilities such as those supporting revenue assurance to help them achieve high performance. Finally, Accenture’s global resource footprint meant the company had people in the areas in which VimpelCom operated and, thus, could bring to the project insights into local requirements and culture.

Business challenge
No company wants to miss out on opportunities to reduce leakages and costs and to maximize revenue and profitability. But that’s precisely what many communications companies are doing because they do not adequately ensure they are billing for and collecting all the revenue they are due. Accenture research has found communications operators, on average, lose at least 1 percent to 2 percent of their revenue due to network and accounting inefficiencies, increasingly complex technology and delivery models, a focus on metrics that do not ensure orders translate into cash and a lack of visibility into the customer-to-cash cycle.2 On the other hand, the same research highlighted that, on average, at least 2 to 3 percent of total revenue that otherwise would have been lost could be saved through the use of structured revenue assurance controls and tools. Furthermore, meeting the revenue assurance challenge is only getting more difficult. As carriers introduce advanced data services and digital content, the number of trading
1VimpelCom 2Accenture

How Accenture helped
After carefully assessing VimpelCom’s situation in terms of risk areas and revenue leakages, Accenture set out to help the company design and build its first-ever revenue assurance function and implement both a set of effective quick-win solutions and a new cutting-edge switch-tobill monitoring system. Together, the new function and system would help position managers to detect, prevent, analyze and fix revenue leakages all along the revenue stream. The joint Accenture and VimpelCom project team followed Accenture's four-phase revenue assurance program. The first step of which was assessing VimpelCom's revenue streams to identify areas of potential

4Q08 and FY08 Financial and Operating Results. Revenue Assurance Benchmark Survey. January 2007.

leakage. After studying four segments of this stream—order-to-delivery, order-to-bill, usage-to-bill, and billto-cash—the team found 75 potential areas leading to actual leakage of several million dollars and a possible several million dollars in additional lost income. Further analyzing VimpelCom’s existing business processes, the Accenture team determined the company could eliminate approximately nearly $3 million of identified and estimated leakage with minimal effort by implementing a set of “quick win” solutions. One such solution was implementing standardized error management procedures. Another was deploying a test call program, which would enable VimpelCom to model customer behavior and network usage across regions, technologies and plans. This activity would help managers to quickly identify where revenue was being lost—for instance, through inaccurate billing for the amount of data services actually used or failure to reprocess and resubmit the service usage information due to errors in the application architecture. Having identified several areas where an effective revenue assurance function could add business value quickly, the team moved on to the second phase, in which it designed and built just such an organization. The function Accenture ultimately created in conjunction with VimpelCom’s professionals was centralized under the company’s chief financial officer at the corporate level and comprised approximately 50 employees from across Russia identified in the initial phase. Once VimpelCom’s new revenue assurance team had been established and quick wins captured, the project team set out to complete phases three and four: defining and implementing an automated switch-to-bill system to help support the detection, prevention, analysis and resolution of

“ Accenture was an excellent partner in our revenue assurance program,” said Andrey Maneshin, Revenue Assurance & Fraud Management Director at VimpelCom. “Their insights and experience were really valuable in helping us create a solution that enables VimpelCom to more closely manage our revenue streams and minimize losses. That adds up to a lot of money saved—and, thus, greater profitability—every year.”
revenue leakages. VimpelCom chose WeDo Technology’s RAID solution for this task, and asked Accenture to help the company gather user requirements for, and subsequently implement, the tool. Implementation occurred in four stages, beginning with the SMS prepaid and postpaid end-to-end revenue streams, followed by revenue streams from voice, GPRS and roaming, and finally integrated revenue from interconnection, including payment channels monitoring. In its finished state, the new tool automates and manages VimpelCom’s end-to-end revenue assurance processes, seeking out evidence of revenue leakages in large volumes of data from a wide variety of sources, including the company’s voice, SMS, roaming and interconnection traffic. revenue assurance function to identify, analyze and fix revenue leakages. Finally, its user-friendly interface enables VimpelCom’s revenue assurance managers to spot problems and develop innovative solutions. In fact, in the four months after VimpelCom’s new revenue assurance capabilities and processes went live, the company saved several million dollars. On an annual basis, the program allows VimpelCom to save more than three percent of the company’s total revenue and identify more than one percent of revenue losses to be controlled and minimized. Beyond pure financial value, Accenture’s capabilities have helped VimpelCom position itself for high performance. The new revenue assurance tool gives the company unprecedented visibility into the usage, performance and limitations of its existing infrastructure, in addition to better knowledge and control of revenue leakage. Also, by the time the project was completed, VimpelCom was ready to assume sole responsibility for fully managing the released controls, solutions and tools and was equipped to enhance them accordingly. VimpelCom's revenue assurance capabilities are expected to be a major asset for the company as it looks to continue its strong growth and pursue high performance in the years to come.

High performance delivered
With its new capabilities in place, VimpelCom now can closely monitor the revenue chain from the point at which a new subscriber begins using the company’s network to the generation of accurate invoices for that usage. In fact, the new system achieves up to 99.8 percent reconciliation accuracy, despite processing more than 1 billion call data records (CDRs) in 26 different data formats per day. The new switch-to-bill system also provides VimpelCom with more than 100 key performance indicators and 30 reports that enable the

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