To Move Beyond Pilot Projects, Electronic Billing Can't Fly Solo

In the last few years, telecommunications companies and other billers have implemented electronic bill presentment and payment (EBPP) as pilot projects, apart from paper billing operations. If the volume of electronic bills grows as projected, however, billers will need to consider ways to integrate EBPP with paper billing operations. This integration will simplify the movement of customers from one delivery method to another, improve marketing efforts, ensure seamless customer service, streamline data processing and measure the performance of the entire billing operation.

While a pilot program can be a useful introduction to EBPP, systems and processes that work in a pilot project may not scale to high-volume operations. Customer enrollment and information retrieval methods that seem adequate for a small number of accounts, for example, might prove too time-consuming and inefficient for larger systems.

Today’s Billing Environment

Industry analysts report that more than 15 billion recurring consumer bills are processed in the United States each year. The largest billing industries are financial services, health care, utilities, and insurance.

According to Gary Craft of BancAmerica Robertson Stephens, nearly one-third of billing volume is generated by the financial services industry through auto and home loan statements.

Electronic bill delivery accounts for a tiny fraction of all bills delivered, but it is expected to grow rapidly during the next five years. Piper Jaffray forecasts that 535 million bills will be presented electronically by 2001, a compound annual growth rate of 275 percent from 1997. This growth will be enabled by growth in Internet usage and home computers and fueled by the benefits of EBPP to consumers and billers.

According to a recent study by International Data Corp., the percentage of all personal and network computers that access the Internet will grow from 53 percent at the end of 1998 to 87 percent by the end of 2002. The percentage of U.S. households with personal computers is expected to grow from 45 percent in 1997 to 66 percent in 2005. Many of these households are already engaged in on-line banking, on-line investing and automated bill payment. Forrester Research predicts that the number of on-line investing accounts will grow from 1.5 million in 1996 to 10 million in 2001. Currently, about 47 percent of U.S. households use direct payment, including bank drafts and other forms of automated bill payment, for at least one type of payment, and another 17 percent say they would use it if it were available to them. As EBPP becomes more available and familiar to consumers, its benefits are likely to convert more interested observers into users.

The Need for Integrated Billing Processes

As electronic billing grows, so does the need to integrate it with paper billing processes. Billers will need to manage customer delivery preferences, access and prepare data from legacy billing systems and support customer services.

Managing Customer Delivery Preferences

If customers can choose how they receive their bills, billers must maintain a database to capture and track their delivery preferences. Those data could be incorporated into the legacy billing system, if a carrier has the available data fields. But not all companies have the capacity or the expertise needed to change legacy systems.

Even if the capacity exists, billers must find a way to get that delivery preference data into the legacy system from multiple sources. Customers could enroll in electronic billing programs through an interactive session at the biller’s Web site, at a bill consolidator’s Web site, by calling a toll-free phone number or by sending in a response card. Billers will need a method for handling enrollment information that comes in as a data file from a variety of Web sites or is entered manually by an employee who has taken a call or received a response card. Most billers don’t have the interfaces necessary to update a data field in their billing systems, and few would relish the notion of so many entities changing fields in their database.

Another approach would be to create a separate delivery preference database with a simple user interface for manual updates and an automatic interface that can take enrollment data from a Web site. A separate database creates additional cost and must be designed carefully to ensure that customer account numbers correspond to information in the billing database. Those considerations must be weighed against the complexity and security issues of maintaining enrollment data within a legacy system.

Billers launching an EBPP program also must decide how much and what type of enrollment information to request from consumers. At minimum, they must verify customer identity (account number, name, address, mother’s maiden name, etc.) and identify how delivery and payment will occur (e-mail address, bank ID, bank account number, etc.). This initial enrollment process is also a good time to collect other demographic data and determine customer preferences for use in one-to-one marketing programs.

Integration of electronic and paper billing becomes even more important when customers want to ease into electronic billing by receiving two versions of the same bill-print and electronic-for several billing cycles. Dual delivery is simplified by an integrated billing process where both bills are automatically produced and a message is added to the paper bill identifying it as a duplicate of the electronic bill.

The ability to deliver a paper version of an electronic bill also is critical as a backup delivery method. Advanced software systems in the paper billing process can automatically generate a reprint if a bill is damaged or mishandled.

Similarly, an integrated electronic and paper billing system can generate a paper bill automatically if a consumer has not opened an electronic bill within a specified time. Web server technologies, such as cookies, make it relatively easy to track and record when a consumer has accessed and opened an electronic bill. Rules can be programmed in the billing Web server to generate messages back to a bill reprint system whenever an electronic bill has not been viewed by specified date. The bill reprint systems can also handle reprints of paper bills damaged in the printing or mail finishing process. With an integrated backup delivery process in place, late payments caused by computer or networking problems can be avoided.

Accessing and Processing Data from Legacy Billing Systems

Regardless of the delivery method, the billing process begins by extracting raw billing data, such as customer information and transaction data, and running it through a billing application. This application adds other information necessary to make the raw data useful to customers. It looks up a rate table and calculates the charge for that time of day and service level, calculates subtotals and totals for all charges and provides the correct due date.

The billing application produces a print stream of summary data and transaction details for each customer account. That electronic print stream is then formatted and printed. When implementing EBPP, billers must decide where they will get the data for the electronic bill. The two main options are to: 1) access the data directly from the raw data in the billing system, or 2) parse the data from the billing print stream. The best method for each biller will depend on the complexity of the billing system, the availability of information systems staff, and the types of customers they are serving.

Extracting raw billing data and converting it directly into an electronic format can eliminate the processing time needed to create a print stream and parse data for electronic billing, but some billing application functionality used to create the print stream would still need to be duplicated. Using raw billing data also makes it easier to retrieve data from previous months’ bills, rather than just the current billing month.

The downside of raw data is that most are located in old, complex legacy systems. Local telephone companies, in particular, are heavily invested in legacy systems. The challenge is to salvage that investment and deploy new systems that can carry data for the complex technologies of today.

One large telecommunications company implementing an EBPP pilot found that the most difficult part was gaining access to the billing data for accounts that enrolled for electronic delivery. The complexity of the billing system eventually forced it to get the billing data from an internal management reporting system.

By using print stream data to create electronic bills, billers know they have all the billing information that will be presented to customers in the paper format. Connecting to the print stream requires less detailed knowledge of the legacy system, saving valuable programming resources and avoiding duplication of billing application functionality.

Print stream data is also more pragmatic for companies wishing to consolidate different types of communication services¾cellular, local service, long-distance service¾on one bill. Extracting raw data from three different billing systems only adds to the complexity of changing legacy systems. Telecommunications companies that are processing bills for other carriers on an outsourcing basis or who are combining other companies’ data into a convergent bill may only have access to a print stream.

If the print stream is used, the data in it must be parsed and converted into a format suitable for presentation on the Internet, using HyperText Markup Language (HTML). This parsing engine needs to be able to handle a variety of popular print stream formats, including IBM’s AFP, Xerox’s Metacode and DJDE. It should also be able to combine print streams from multiple billing systems for convergent billing.

For paper delivery, this print stream also must be manipulated before printing to add finishing equipment instructions, verify addresses for postal discounts and improve the appearance of the bill. This data preparation process can be integrated for electronic or paper delivery, using common tools for print-stream manipulation. A single tool set for both delivery methods can reduce training and support costs.

One limitation of using the print stream is that it typically contains only the data for the current billing cycle. It does not allow access to data from previous billing cycles for trend analysis, for example, unless this data is provided on the paper bill. This need for access to current and previous bills is driving many telecommunications companies to implement document archiving systems, which are frequently linked to customer service to provide on-line access to bills. For business customers, billers can use these systems to provide historical information and trend analysis.

The following diagram (see figure 1) shows the components of a high-level architecture that integrates paper and electronic delivery of bills. This architecture converts a single print stream from the existing billing system, then routes and transforms each customer’s bill, based on the customer’s delivery preference. The creation and delivery processes for electronic and paper bills are linked to a common reporting and control system, customer service system and marketing applications.

The module for print stream routing and transformation manages customer delivery preferences and validates new enrollment requests for electronic delivery. When a customer signs up for electronic delivery, the next bill is automatically rerouted from the paper to the electronic process. If desired, this module can also send both paper and electronic bills for a specified period.

For paper bills, the print stream routing and transformation module can improve the appearance of the bill through reformatting, add customized marketing messages to the bill and generate instructions for selectively inserting additional marketing messages into the envelope.

Supporting Customer Service Requests

As delivery options expand, it becomes more difficult for the customer service representative to answer questions about an individual bill. The second page of a paper bill, for example, may contain different information than the second page of its electronic counterpart. Electronic versions may vary depending on which Web site is used to view them.

The ability to link customers to customer service easily is an advantage of biller direct and thin consolidator EBPP models. From the biller’s Web site, customers can click a button and be transferred to customer service. Maintaining the detailed bill data on the biller’s Web site also eliminates the need for customer service to deal with multiple versions at different Web sites and makes it easier to access the same version as the customer.

Customer service can also be enhanced by providing access to updated bill status information. For paper bills, this information includes when each was printed, when each was mailed, and when payment was received. For electronic bills, it includes when each bill was sent to the appropriate Web site, when the consumer was notified that it was available, when it was opened, and when payment was received. This information can be made available to customer service representatives or, when appropriate, directly to consumers.

An integrated system should provide customer service representatives with information about each customer’s delivery method and delivery status, and also allow them to access an image of the bill as it appears to the customer. If electronic bill delivery is not linked to customer service, then the postage and paper savings of electronic billing can quickly be outweighed by the cost of prolonged customer service calls.

No matter which electronic model is used, call volumes will increase as customers attempt to understand the new system. Billers who use the biller direct or thin consolidator models of EBPP must train customer service representatives to handle technical issues associated with electronic bills, such as how to print the bill. If customers can’t get answers to their questions quickly, customer service calls take longer and payment could be delayed. In some cases, bill consolidators provide customer service. Phone calls to the biller’s customer service phone number can be easily transferred to the consolidator’s customer service line.

Bill Walker is executive director for digital messaging at Bell & Howell Mail Processing Systems. He can be reached at 919-941-8505 or walkerb@mps.bellhowell.com.