Dear Gadi,
Thank you for your response.
The idea is RA should no longer be quarantined within CSP only, this is a very pertinent paradigm we at TMF have to think through. I know Radio, Movie, SAAS, Healthcare and other big organizations are following the same order to cash process in the subscription industry. So why only have to think RA as CSP Assurance. Overall now I am working with CSP's who are going to Cloud Business on their existing backbone but using the same systems and control point to give SAAS or even IoT.
I beg to differ with your point that the subscription industry is not new. The amount of flexibility and innovation that today's subscription industry demands was never a cup of tea in DSL days and there was no concept of CHAOS in CRM to ERP process or Quote to Cash or even ARR/MRR or mid-month subscription cancellation along with refund/credit process impacting revenue recognition.
ARR is not only an important metric but unlike traditional backwards-looking Revenue, it's forward-looking accounting ARRn + New Contract - CHURN- Cost of Sales = <g class="gr_ gr_94 gr-alert gr_gramm gr_inline_cards gr_run_anim Style multiReplace" id="94" data-gr-id="94">ARRn+1 .</g> So where the entire revenue recognition process is changing how GB941 or standard revenue recognition will suffice as usual? Then again MRR, Trail, Churn etc has to be taken into account.
Another very important point was missed in your address was Revenue Recognition based on ASC606 compliance, where transaction price has to be determined by the performance obligation of the contract and then only allocate and recognize revenue.
Hence, I think we need to relook to our standards and finetune them quickly to keep RA more business and industry trend aligned than a defined standard which then regulates the industry business model. It should be another way around.
Let me know your specific thoughts if with an example would be academically empirical for this forum as well.
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<g class="gr_ gr_69 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling" id="69" data-gr-id="69">sahasrangshu</g> Pal Choudhury
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Original Message:
Sent: Feb 07, 2019 11:21
From: Gadi Solotorevsky
Subject: Revenue Assurance in the ERA of Subscription Economy
Indeed <g class="gr_ gr_76 gr-alert gr_gramm gr_inline_cards gr_run_anim Grammar only-ins replaceWithoutSep" id="76" data-gr-id="76">subscription-based</g> economy is growing significantly, and "Digital" greatly impacts the traditional CRM to ERP cycle. Next week we will discuss at the TM Forum action week the impacts of this on RA and on #BusinessAssurance in general.
Saying <g class="gr_ gr_84 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-del replaceWithoutSep" id="84" data-gr-id="84">that,</g> <g class="gr_ gr_82 gr-alert gr_gramm gr_inline_cards gr_run_anim Grammar only-ins replaceWithoutSep" id="82" data-gr-id="82">subscription-based</g> economy is not something new, and many services have been mostly subscription based for many years, e.g., DSL. The actual version of GB941 considers subscription-based services, an proposes many best <g class="gr_ gr_83 gr-alert gr_gramm gr_inline_cards gr_run_anim Grammar only-ins replaceWithoutSep" id="83" data-gr-id="83">practices</g> how to apply RA on these services. So, I do not think that a revolution of GB941 is needed, but some adaptations are certainly desired.
Regarding ARR, I think that it is an important metric, but as far as I can see it is an <g class="gr_ gr_75 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-del replaceWithoutSep" id="75" data-gr-id="75">addition,</g> and not a substitution for CSPs traditional way of measuring revenues. Do you agree with this?
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Gadi Solotorevsky
Amdocs Management Limited
Original Message:
Sent: Feb 06, 2019 04:07
From: <g class="gr_ gr_68 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling" id="68" data-gr-id="68">sahasrangshu</g> Pal Choudhury
Subject: Revenue Assurance in the ERA of Subscription Economy
The business model is changing now to the subscription-based economy and growth is phenomenal with a plethora of services and models.
The customer is able to now subscribe to any service or group of service at his or her free will and get a customized quote for the products he or she chooses and be a subscriber at his/her will. The IT process is no longer linear from CRM to ERP, rather extremely dynamic between from CRM-> Quote-Order-Fulfill- Invoice-Collect-Recognize->ERP allowing customer subscribe, unsubscribe, upgrade or even leave at will.
Unlike <g class="gr_ gr_78 gr-alert gr_gramm gr_inline_cards gr_run_anim Grammar only-ins replaceWithoutSep" id="78" data-gr-id="78">traditional</g> way, Revenue is now Tracked based on ARR (Annual Recurring Revenue) every quarter. Not to mention Usage from Rating perspective may or may not be significant or even generated at all.
My question is what will be the role of Revenue Assurance now?
How will it break the barrier of traditional RA and which all controls will be of utmost importance to manage for a subscription economy based service provider?
Is it the time now to look for a change to GB941?
#BusinessAssurance
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sahasrangshu Pal Choudhury
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