There is a rumour going round that Amdocs is about to buy, or in the process of buying revenue assurance company cVidya.
Already the financial analysis is in full swing, even though – as a private company – actual figures are scarce, says Alex Leslie, publisher of Disruptive Views. The conclusion, based on these ‘soft’ facts, is that it is disappointing for cVidya to be bought for the amount that investors and grant providers have pumped into the company. If true, it would be. It may, of course, be a relief, if, for instance, the company is not making enough to invest in the R&D that must surely be essential as we move to a digital world. And if an Israeli company is bought by another Israeli company then the grants granted by the Government are not repayable. They are if the buying company is an overseas entity.
cVidya was a company that jumped onto the revenue assurance bandwagon when the telecoms train hit a bump and spent the next 10 years in the doldrums. The dark decade for telecoms was triggered by a press release from Nokia, the then completely dominant handset manufacturer, saying that their sales would ‘only’ increase by 66% the following year. Imagine that now, there would be parties in the street.
cVidya was not alone. Most of the 150 or so billing companies at the time became instant experts in revenue assurance. They simply could not sell billing systems. Most went bust or were bought during the mid-2000s for a fraction of their valuations in the last days of the 1990s.
The real revenue assurance experts made some money. In the early 2000s there was certainly a living to be made, and the ‘low hanging fruit’ of revenue lying around unbilled was a major focus. Telecoms companies went from focusing on top line growth to focusing on bottom line sanity. Anecdotes abounded of companies finding hundreds of millions of dollars in reject files, the result of those lazy, sunny days of the late nineties.
Since then life has become tougher. Revenue assurance is one of those self-defeating processes. Once you have it under control it is only worth investing in if the return on that investment continues. Once you have fixed the problem, the revenue assurance team has done itself out of a job. The silver lining is that we keep coming up with new services that need to be tightly managed and in real-time.
Now revenue assurance is an accepted part of doing business. It is not valuable in its own right, unless it can provide that return. To deliver that return requires investment in how to manage rapidly maturing real-time products and services.
Interestingly, if you go to the Amdocs site and search for revenue assurance, very little comes up. The description of the Collections part of their Billing and Financial Suite says it ‘facilitates an accurate and manageable collection process to improve revenue assurance by preventing and detecting revenue leakage.’ The only other result that appears is that Amdocs and cVidya are partners and there is a (rather good) shared blog about managed services.
So, not a big focus then. But they know each other well.
Now, though, as telecoms companies go digital and everything is controlled and responded to in real-time, keeping control is vital. Requirements for, and explanations of, revenue assurance capabilities probably appear in most RFPs at the moment. Some companies would like that revenue assurance capability to be built in and provided by the billing company. Others, of course, might want the independence of having revenue assurance provided by another company.
Either way, Amdocs would benefit from a revenue assurance capability. Particularly so, if by buying one it would inherit 165 service provider customers across 70 countries. Particularly if the price was right. And particularly if it got round the need to repay those Government grants.
Let us just say that if Amdocs is not buying cVidya, it should definitely think about it.
The author of this blog is Alex Leslie, publisher of Disruptive Views.
This article first appeared on Disruptive Views — see: http://disruptiveviews.com/is-amdocs-buying-cvidya-if-not/
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