EBPP: Hype or Reality?

With increased competition, carriers are hoping that EBPP will be their competitive differentiator. Many carriers are only ramping up to test the waters. A few pioneers, such as AT&T and MCI WorldCom have already begun, setting the pace for what will eventually be a hot race to win over both consumer and business customer loyalty.

More than eight billion bills will be sent over the Internet by 2007, according to Eric Dunn, senior vice president and chief technology officer of Intuit Inc. Industry analyst Piper Jaffray concurs, predicting that at least 3.5% of all bills, or 534 million, will be presented online in 2001 alone. By year's end, the average household will be able to view and pay about a quarter of its obligations online--and the number of households paying bills online will surge to more than 3 million, according to Jupiter Communications, a market research firm.

A multitude of EBPP companies are emerging such as Edocs, Blue Gill, Interface Systems and At Work Technologies. These organizations are competing with traditional paper archival and printing companies now getting into the electronic space, such as Mobius, New Dimensions, IBM, Bell and Howell, and Pitney Bowes.
There also is the burgeoning area of bank-centric solutions used for home banking. Through interfaces to consolidators (like Check free and TransPoint), companies like Edify, Security First and IntelliData are vying for market share. Then there are the integrators, including EDS and Just in Time Solutions, IBM, Cap Gemini and American Management Systems.

MCI WorldCom has made its foray into the electronic world, whose on-line billing and reporting capabilities fall under the umbrella of its On Net suite of services. “We see the Web as the logical enabler for our goal of integrating support and fulfillment,” says Harper insert attribution, who wants to better manage the ongoing relationship for ordering services, managing those services and paying for those services.

The process of designing an on line user experience is no small task. MCIWorldcom recently contracted with systems integrator EDS to move legacy data to the Web. MCIWorldCom viewed this as one of the most daunting tasks a carrier must undertake in implementing an online billing system. “We wanted to go beyond just slapping an electronic version of bills up on the Internet,” says Harper, who notes the layout of traditional paper-based bills just aren’t accommodated by computer screens. “We didn’t want users to spend their time scanning up and down the page just to view the bill.”

“We focused on getting the data into a database, making it usable for Internet presentment; design a user interface of what the payer sees online; and then determine how it interrelates with other business processes like customer relationship management, registration and other inquiries and processes surrounding billing,” notes MCI’s Tyler West, senior manager of electronic commerce and e-billing. “We have put together a combination of software available in the industry [such as Blue Gill’s One-to-One server] and added pieces to fill in the gaps in the payment process, and we offer it in a service bureau environment,” says Dan Twing, director of interactive billing services for EDS.

One of the first projects EDS undertook with MCI was to break bills into logical pieces for easy navigation. “We had to interlink usable pieces so that customers could drill down quickly to the level they want. If, for examples, a business user wanted to view items for inbound 800 numbers, we had to develop the interface so he or she could drill to phone numbers and call records just for that piece,” notes Harper. “We didn’t want customers to navigate through all the information you’d find in a three-foot stack of paper.”

To make sure the right data was available for customization, MCI worked with EDS to find the best source of data, “going upstream in processes, where data is fully rated, discounted and priced for the customer,” says Twing. He notes that often, that data doesn’t exist except in print image or EDI data outputs. In order for EDS to build interfaces to extract data and load it into their database, they utilized various software tools to read certain print stream formats. “Then our team walks through that print stream and devises extraction rules to pull appropriate data from the print stream and into our database,” notes Twang.

The next step was preparing internal audit, marketing, sales and customer service for the cultural change. “You can’t just ask customers, ‘Do you want Internet delivery...Yes or No?’ And expect your employees to be fully prepared,” notes Harper. Rather, he says, a carrier must determine an entirely new set of protocols and workflow tailored for electronic business. “You need workflow that determines how will user IDs be distributed and by whom; who at the call center will handle calls from users who have forgotten their passwords; who is authenticated to see what portions of the online bill? These are all questions that must be answered ahead of time,” notes Harper.

“We want full business-class functionality for slicing and dicing data, where customers will drill to components and products at one level, location at the next level, and even assign a hierarchy of who sees what, whether individual call records and call detail with phone numbers, locations, outbound/inbound and frame relay services, or by type of product for private link, frame relay, and so on.”

To accommodate that need, MCI worked with EDS to integrate systems so that customer service, internal audit and other areas can all review the same data representation as seen by customers. “Trying to find page 12 on a hardcopy bill to answer the inquiry of a customer that uses online billing isn’t going to work; they need the same representation,” says West, who notes the same consideration must be given to email. “Since email will be one method for disputing or inquiring online, we can’t just throw up an email; we need an interface and support process so that customer service knows the protocol for answering via email.” Twang adds that this is important, since most corporations take five days or more to answer email. “That would never be acceptable through the call center, so why should it be with email-it should be an enabler,” adds Twang.

MCI will monitor the impact of EBPP on its business processes using an EDS administration tool. “Supervisors, CSRs and sales reps will be able to see just how online bills impact customer care and accounts payable.”

After impact is measured in upcoming months, MCI will move onto the next phase for deploying electronic funds transfer (EFT). “EFT will enable companies to pay by entering an account number and routing number, and date to pay,” says Harper. He notes that in March, the organization launched similar capabilities for its consumer business as well.

AT&T to Launch Consumer EBPP

Largely created in-house, AT&T has integrated its customer care functionality and billing for Web applications so that users can interact with their bills. Currently, AT&T customers have the ability to adjust line items on their bills by clicking on line items and e-mailing disputes to representatives, but the organization is looking to loftier goals of gaining loyalty of its high-value customers. “Our goal is to link as much customer contact to the Web in place of a CSR; we want to pull as much manual intervention out of the process,” says Kevin Duffy, district manager, new billing channel development, who expects EBPP to reduce AT&T’s per bill unit costs by 40 to 50 percent this year. “These are savings we can ultimately pass on to our customers, but as more of our customers begin to use the Web for billing and payment, we are aiming to move more customer care to the Internet.”

With that in mind, billing functionality, according to Duffy, will further mature in the next quarter. “By second quarter, customers will be slicing and dicing their bills according to time order, region, call frequency, cost, or any number of factors they choose-all through the click of a button. Eventually, that will evolve so customers make on-line adjustments to line items in real time,” says Duffy, who concedes real-time transactions are still a year or so away.

In that year, companies like AT&T and MCI will grapple with the question of how to maintain control of billing while opening it up on the Internet. As a result, there is the emergence of a new generation of billing models, primarily falling into three categories: thick-, thin- or direct-consolidator models.

The biller-direct model is the quickest to deploy, according to Richard K. Crone, vice president and general manager for PayNowSecure Electronic Check Service, CyberCash. “In this model, billers enroll their own customers to view and pay bills at the carrier’s Web site. It's essentially a simple two-party model-involving only the biller who owns the bill, and payer who is under obligation to the biller.”

Early online bill payers in this model use either credit cards, or electronic checks, which are the Internet's equivalent of low-cost, direct debit payments. In this model, the biller's bank is involved in so far as it supports online deposits into the biller's corporate demand deposit account (DDA). He notes other biller-direct channels include electronic mail, browser subscription using push technologies, and shared link (light concentration) channels or "portals" such as AOL's Digital Cities. In all of these channels, the control sits with the biller.

Then, Crone notes, there are the "shared" channels, including thick concentration and thin concentration models. In thick concentration models, billers send billing information to a service bureau that presents bills on behalf of many billers. In thin concentration, billers send “only the bottom line information” to the service bureau and consumers are referred back to the biller's own site for details.

“Some bill payers might end up utilizing several different channels every month-going direct to the phone company's Web site to view and pay that statement, and then to a homebanking, personal financial software or other third-party concentrator controlled site to pay the balance of their recurring bills. Where they ultimately choose to go will depend a lot on the value that each biller is able to build into its own site. In any case, to meet the demands of their diverse customer bases, major billers will have to eventually support multiple, if not all, IBPP channels,” adds Crone.

However, some argue that both thick- and thin- models are dead on arrival. “In 1997, we went live in production with our PostOffice model-a thick consolidator model. It didn’t work well for the billers because they felt they lost control of essential data. So, we immediately went to thin; it was more a way of throwing billers a bone,” says Ravi Ganesan, chief technology officer, Norcross, GA-based CheckFree, which designs, develops and markets services that enable its customers to make electronic payments and collections, automate recurring financial transactions and conduct secure transactions on the Internet. “We now see direct distribution as the best of all worlds: it has the consumer on top, the biller on the left, the bank on the right, and Checkfree making sure all work together. (Recently, Checkfee signed a service bureau processor agreement with billserv.com. Under the agreement, billserv.com will transmit billing information from its base of biller customers to CheckFree, enabling CheckFree to provide electronic billing and payment services to consumers who want to pay their bills electronically.)

Because billing involves management of distribution rights, Crone believes the decision begins and ends with one thing: enrollment. “The entity controlling enrollment is the entity that controls the revenue stream, the processing cost, and the future potential for having an electronic consumer base.” He notes that enrollment is critical because it involves authentication (identification of the consumer, his or her account and payment information).

For this reason, most industry observers agree that carriers, known to vehemently protect their consumer data, will move to direct or thin-consolidator models where biller control is maximized.

It seems the consensus is that ultimately bill presentment has to be controlled by biller. Bill presentment is a telco’s window for touching their customers once a month, hence, reinforcing branding and loyalty in consumers’ minds.

“It’s the customer’s choice of bank, portal, ATM machine, or, someday, palm pilot or other handheld portable,” says Duffy, who believes that with the growing popularity of wireless modems and remote e-mail capabilities, customers will soon pay bills from PDAs. But rather than give third parties, portal sites and banks full control of their bills, AT&T is making sure to maintain control. “We send portal sites and third parties summary bills, along with information to identify and authenticate customers, due dates and amounts. Customers can view and pay bills from the portals if they wish.” However, to modify bills and interact with AT&T, customers have to click on a hyperlink to AT&T’s site. This, Duffy maintains, is largely a branding and control issue. “It’s our name on the bill, so we should be the ones serving the dynamic functionality to the customer.”

Other than branding and control issues, standards are another factor holding up full-blown EBPP. To galvanize the adoption of standards various consortia are forming to promulgate standards. One burgeoning standard endorsed by AT&T, Intuit and Just In Time Solutions is Open Internet Billing (OIB), a model that enables billers to present their bills over the Internet. It is based on the Open Financial Exchange (OFX) standard for bill presentment (an industry standard format and protocol for exchanging financial information and managing financial transactions).

However, with the emergence of standards and evolution of models, as well as the deployment of actual applications by MCI and AT&T, much of the industry is still balking.

“It’s not necessarily that telcos have been slow to adopt, but rather they’ve been slow to deploy,” says Brian Valente, senior director of marketing for Just in Time Solutions, a developer of EBPP application software. Its flagship product, BillCast, is an Internet Billing and Interactive Customer Care software platform that electronically manages bills and payments through banks accounts or credit cards.

“Electronic bill presentment hasn’t yet taken off in telecommunications, but of all the industries doing the work, telecommunications is ahead of all the others by a long margin,” contends Ganesan.

XML and OFX are Opening Doors

One of the more daunting tasks for carriers is extracting data for bill presentment on the Web. Burgeoning in this area of expertise are companies like Blue Gill Technologies, Cephas Multimedia, E Docs, and IBM. “The print data streams are quite arcane, making it a challenge for carriers to extract data from the print stream and represent it in all of the different data structures and layouts inherent in different bills,” says Ray Simonson, Blue Gill’s chief technology officer. Blue Gill, currently has consulted approximately 25+ customers on EBPP solutions. “It’s particularly difficult if in business-to-business applications, where you are dealing with 40,000 page bills sometimes.”

He says carriers trying to figure out how to extract data from mainframe structures need to ask themselves a few questions: “How many statements do I need to keep on-line, how can I control access to them, and how will I make the connection with the various bill consolidators?” In addition, carriers must contend with making sure commerce, marketing and customer care converge in their EBPP strategies. “When doing billing on the Web, they have to make sure their customer service people see the same as the customers,” says Simonson.

After those questions are answered, many carriers build Web applications using relational databases. However, Simonson believes XML is the more “natural” solution for telco companies. “XML enables you to represent any data structure, hence, simplifying the process of storing and managing different data in statements through XML objects,” contends Simonson.

Blue Gill, for one, puts data in XML objects through rules-based extraction, which can be quickly reused and distributed now that Blue Gill supports Sun Microsystems’ Java Beans. He says there’s no excuse anymore for not going into EBPP: “Carriers need only provide a copy of a print file, and we do the rest,” says Simonson. “We provide GUI tools that map complex bill structures into an XML structure. We help carriers write Web applications to represent XML objects as an HTML bill.” He adds that Blue Gill supports both biller-direct and aggregator models. “We are the only one to link to both Transpoint and Checkfree,” he contends.

Other than the maturation of solutions and increasing ease with which billing data can be moved to the Web, standards are emerging to further push EBPP along. One of the more “exciting,” according to Simonson, is OFX, a standard framework promulgated by Checkfree, Intuit and Microsoft. “It’s great to see companies like IBM, Microsoft and Netscape entering the market and pushing OFX,” according to Simonson, who believes OFX will be the enabler going forward. “OFX is having real impact as a recognized standard now for information exchange; it makes it easier for us to move data among customers, billers and aggregators.”

What is OFX? According to researcher Banc Boston Robertson Stephens & Company’s whitepaper, “The Emergening Electronic Bill Presentment Industry,” OFX is a unified framework, built on existing specifications for the exchange of financial data. It is an Internet protocol that is freely licensed, both cross-platform and multi-institutional. “It will make it easier for the biller and third-party service bureaus to compare services. We envision a system where a high-speed data print stream generated from a biller’s internal applications is broken into constituent parts: print files, the biller’s own Web site HTML format and the OFX Web site of a third party service bureau,” according to Robertson Stephens & Co.’s Gary R. Craft, CFA.

Simonson concurs with that theory, and believes that in addition to OFX, XML and other tools that enable dynamic Web billing applications, there will be new developments to integrate customer care and billing in upcoming months. “Bills will get more dynamic and customer care will get easier. This will lead to a convergence of commerce, marketing and customer care on the Web, starting with bills and then onto other documents.”