To Share or Not to Share—The EBPP Question

The market for electronic billing presentment and payment (EBPP) is growing so rapidly that it is nearly impossible to get through a day without hearing about another way to pay bills on-line. Vendors of every shape and size have proliferated within the past year, making it complicated to sort out who’s offering what. As high-volume billers, telcos are hot targets, accounting for about 80 percent of the annual volume of recurring bills in the United States, according to the Gartner Group. And Killen & Associates predicts telcos will capture 22 percent, or $110 billion, of the projected $500 billion market for EBPP-related services by 2005.

In order to keep pace, telcos are scrambling to get their bills out on the Web in as many places as possible, which involves both presenting the bills directly on their own corporate Web sites, as well as making them available to bill publishers and consolidators. This has created a rather frenzied environment, where bills are available in multiple places and customization efforts are rampant. Adding to the confusion are differences in presentment, especially in the level of bill detail and functionality.

Although presenting bills in multiple places can help increase market penetration, giving away bill detail can cause a telco’s EBPP strategy to backfire. By holding onto billing detail, carriers maintain a link to their customers, offering them capabilities to not only view and pay bills, but also sort and analyze the data, a particularly attractive prospect to business customers. In addition, by drawing customers to their site, telcos can increase product and service awareness and enhance customer relationship management (CRM) through Web self-care options.

The Many Flavors of Electronic Billing

There is no “best” way for telcos to deploy EBPP, as noted by a recent report by research firm Ovum. Simply put, they have to decide how to get their customer bills on the Web and where they want them to reside. In the “thick consolidator” model, all the biller’s data is hosted on the consolidator’s site, which creates fewer opportunities for interaction with customers. However, in the “thin consolidator” model, only bill summary data is hosted on the consolidator’s site; bill detail is kept on the biller’s own site, which serves to lure customers back.

For example, MCI WorldCom is using the thin model via CheckFree, drawing customers back to its Online Account Manager Web site to see call detail and MCI product and service offerings. “We’re interested in servicing our customers with our products on our site, realizing customers will want to do other things besides paying bills,” says Kathleen Rumfola, director of on-line marketing. However, MCI also wants to be part of billing consolidator sites, where customers can go to pay all their bills, and is currently seeking partnerships. “The consolidator model offers increased avenues to customers, sending a message about how easy it is to pay bills and manage their account on-line,” explains Rumfola.

Other carriers are focusing more on the biller-direct model, because it creates possibilities to become a consumer service provider, increasing “sticky” time—how long consumers spend on their provider’s Web site—says Jeetu Patel, vice president of research and chief technical officer for Doculabs. He cites AT&T as a classic example, since it already has a credit card service and many products that can be consolidated, and predicts it will eventually evolve into a vertical portal with AOL as its biggest competitor.

The biller-direct model is especially appealing for carriers targeting the business-to-business market. It’s more convenient for a biller to set up its own system to perform critical business functions that require connecting back to legacy or production systems such as segmentation, provisioning and on-line dispute resolution, says Jim Flynn, CEO of @work. And in the consumer space, the relationships owned by telcos are extremely important. The relationship “begins between the telco and the customer, and it should end between the telco and the customer, … and it should happen on regular basis,” says Michael Lynch, executive vice president of Novazen. “Telcos don’t want to give this relationship up—they don’t want to send customers out to an aggregator’s site where they could even see advertising from a competitor.”

According to Patel, the current trend for telcos is hedging both ways, which makes the bill available to as many channels as possible. Some bills, such as those sent by utilities, he explains, don’t do as well in a biller-direct environment, since there is just a single charge with little detail customers need to see. However, a telco bill is “superhit” in all aspects, because sometimes people want to see just the summary data when paying all their other bills, but other times they may want to go to the telco’s site and look at the bill detail. “Telcos have the advantage to attract consumers more than once to their site because of the nature of the bill,” says Patel. “For example, customers can view already incurred charges mid-month and ‘ration’ calls for the rest of the month.”

Still others within the EBPP space feel customers are more interested in the direct-debit model, where organizations such as telcos are serving as bill publishers and customers simply receive notification that their bills have already been paid. “Customers want billing to be easier, but the way consolidators are set up right now, it isn’t easier [with links to direct sites],” says Flynn. This avenue is more appealing to smaller telcos that can’t implement on-line presentment in house—but, again, they must be aware they are sharing information that has lucrative potential.

Legacy Systems Complicate EBPP

Electronic billing for telcos requires data transfer from up to 40 different systems, whereas non-telcos usually have only one to four systems to deal with, says Mike Seppi, director of electronic bill presentment and payment for Cap Gemini America. “Telcos were actually among the first to try to adopt electronic billing,” he notes. “They tried to do it on their own, convinced that they were best able to do repurposing of data from legacy systems to the Internet. But the complex nature of telco billing systems slowed down the process.” According to Seppi, this is one of the reasons telcos increasingly are getting their bills to as many aggregators as possible: the biller-direct model is simply too challenging for some.

EBPP vendors have recognized this situation and developed ways to connect to telco legacy systems. The ways of getting to the data depend on the system, but extracting data is much better than print stream “scraping,” where there is not enough data to perform analysis, says Anand Schah, chief architect for Logical Design Solutions’s (LDS) Telco Vertical. The amount of functionality on the front end is relative to the data that can be extracted from legacy systems, he adds: “The more, better data you can get, the more functionality you can provide to the customer.”

Novazen has also had better results linking directly with legacy systems, although the variety of system types can complicate this process, says Lynch. “Format conversion engines designed to work with various data structures help immensely most of the time, but on occasion there are times where we run into very archaic systems.” He gives the example of working with Swiss PTT Swisscom. Its billing system didn’t store the bill totals in a persistent database, instead only writing the amount to the bill image. As a result, Novazen had to parse the total out of a proprietary image format, since there was no industry standard image format available.

Originally an electronic lockbox provider, Princeton eCom already had experience connecting to legacy systems to ensure payment to billers, but now it offers bill presentment and payment as well. Serving as a gateway with one feed into each telco, Princeton eCom extracts billing data, validates it for accuracy and then provides Web pages customized to each biller. Bills can then be posted directly to the biller’s Web site or sent to payment processors. As a “biller-centric” service, the level of bill detail is whatever the biller requests. “Almost every [telco] is trying to connect to a financial institution and present bills,” explains Steven Ringwood, the company’s senior vice president for marketing and strategic alliances. “In order to get out to the rest of the world, they need to bring the function in-house and create a direct relationship with processors, making sure their bills are presented everywhere payment processors patch their bills.” Princeton eCom doesn’t have its own proprietary interface; instead the company makes sure it can “talk to” every existing payment process protocol in the industry. For example, Intuit requires Open Financial Exchange (OFX) for sending data, whereas Transpoint uses Biller Integration System (BIS) protocol to transmit large batch financial information. Princeton eCom can connect to both, as well as any others used by banks to process payments.

As an EBPP publisher, @work needs its WorkOut software to receive a carrier’s billing feed in order to correctly publish computer-generated bills and statements on the Web. This can be a particularly complicated problem for telcos, says CEO Flynn, since many have three main databases for rating, customer information and transactions, all running on separate systems. The software can go back to the original data and essentially recreate the accounts receivable system, but when changes occur, the tedious task of updating and reconciling both systems is required. Instead, @work pulls the billing information out and makes sense of it by converting a mainframe print stream to Extensible Markup Language (XML).

Technologies Facilitate Biller-direct Model

BlueGill Technologies has software that sits on the back end of a telco’s billing system, enabling data sorting, analysis and tracking using XML technology. According to Richard Pickering, marketing vice president, XML allows BlueGill to transfer massive amounts of data, with scalability spanning both large businesses and individual consumers. Its software supports multiple data inputs and print streams, the company says, and will also work in a biller-direct model, where the presentment is at a client site, and the payment and summary information is passed on to a processor.

A carrier serving mostly small and medium businesses, Teligent developed its own EBPP system after concluding that most commercial packages deliver only static information. “We found most software takes billing system output from the print stream, wraps HTML text around it and splashes it up on a Web site,” says Phil McKinney, chief information officer. “We wanted to transform [the output] into active data, so customers can drill down into levels of detail for their own trending and analysis without the limitation of traditional bill-up.” The direct biller model works for Teligent because of its business-to-business customer base, he adds. While Teligent interfaces to Saville’s billing platform, the carrier wrote all of the interface code. Billing information is extracted from its system each night and then hosted immediately to the Teligent Web site.

Also realizing businesses need more than just bill presentment, edocs introduced its Bill Direct application with the biller-direct model in mind. The company developed its software—touted as the only off-the-shelf EBPP product for Web-based composition—as a way for customers to preserve their existing billing investments and get to market quickly, says Jim Moran, senior vice president. By loading the edocs CD-ROM on their server, billers can extract billing data, create and deliver Web content, integrate payments and enroll customers. Although designed for out-of-the-box implementations, about 90 percent of its customers seek edocs’ help for their legacy extractions, according to Moran.

The company has also teamed with Adesso Software, Logica and Group 1 Software to form the Electronic Invoice Data Management Consortium. Combining call center capabilities, a legal archive component and the ability to present paper-based bills electronically, the integrated approach enables customers to see and pay bills on-line. In the process, the existing print streams (used to produce paper bills) are run through Group 1’s document composition system, creating a formatted electronic bill. The remaining software is an adjunct to a carrier’s core billing system, with capabilities delivered by each vendor independently. Customers receive an e-mail when their bill is ready, which they can view on the carrier’s Web site, as well as get access to self-help and self-provisioning. The archival system serves as a repository for dynamically formatting e-bills per customer requests.

EBPP Evolves into E-Commerce

As EBPP becomes a more apparent and even necessary competitive tool, more service providers are using electronic billing as a starting point for customers to do business on-line. “The act of presenting is just one interaction,” explains Novazen’s Lynch. “Telcos have to build and deploy their own biller-direct sites, which are really customer-direct sites where they can interact with customers directly.” Although it sees EBPP as the next logical extension for billing and customer care systems, Novazen recognizes that billers may not want to send customer data to an aggregator. If a telco does not want to pass on bill detail, Novazen won’t turn on that functionality. On the other hand, if customers don’t mind or even want bill detail sent to an aggregator, then Novazen sends summary bill events to the aggregator. “The only caveat today,” Lynch adds, “is that it has to be an aggregator a telco has already signed up with; in the future it will be an aggregator of the consumer’s choice.”

Just as presentment is only one part of a biller’s overall business strategy, many companies are beginning to view EBPP as just one piece of the entire electronic commerce puzzle. For example, Logical Design Solutions (LDS) is using the Web and e-commerce to manage relationships between telcos and their business customers, integrating bill presentment, payment, call analysis, customer service, trouble ticketing, and ordering and provisioning. The bill presentment area allows customers to get questions answered without calling into the telco, and they can also design their own bills by looking at bill summary data and sorting it however they need.

“In the business-to-business market, electronic bill payment isn’t as much of an issue,” says Len Genovese, telecommunications practice manager at LDS. “Presentment is more important and e-commerce is a significant value add, with most businesses wanting to keep capabilities in-house to provide personalization, add value and manage their customer interface.” LDS has partnered with Netscape as an integrator around Netscape’s BillerXpert EBPP application. LDS has taken BillerX, originally designed for the consumer market, and extended it out to the business-to-business environment by customizing the front end and providing an interface to the back end.

Another example is the on-line customer service site recently launched by AT&T. While still in its early stages, the service gives customers control over account ordering, billing and management. Customers choose their preferred payment method (either credit card or direct debit), and can then view and manage their bill. Capabilities such as looking up numbers on bills and adjusting incorrect charges will also be incorporated. As part of its “e-relationship” strategy to give customers a better customer experience, no additional fees are involved to enroll in AT&T’s Online Customer Service.

Looking Ahead

Although it is obvious the EBPP adoption rate will continue to grow, many within the industry feel the next few years will not be as dramatic as analysts have predicted—namely, the majority of bills paid on the Internet. According to Patel of Doculabs, it will probably be 5 to 10 years before EBPP is standard. Most systems are still immature, with the majority of products not where they need to be at this point, he explains. It takes time to integrate Web initiatives with legacy systems, since each must be handled case by case depending on the resource allocation and integration required. In addition, it will be key for large billers to keep pace with market demand, since they may face scalability issues trying to process hundred of millions of transactions, says Seppi at Cap Gemini America.

Most telcos are now trying to get out in as many channels as can; they’re not thinking too much about which model is “better,” says Patel. They will address the biller-direct model first to build a customer base for presentment, then move on to the consolidated model either through banks or a portal, predicts Kurt Bolling, senior product manager for customer relationship at the Sun-Netscape Alliance. He expects consumers will look for sites that are associated with a particular brand and that have security mechanisms to make them feel safe in going to that site for bill presentment and payment, citing telcos and financial services as potential starting points.

This puts even more pressure on service providers to maintain a competitive edge. According to James Shuder, director of customer relationship software for Sun-Netscape, the appeal of consolidators’ sites will be the breadth and variety of the billers that sign up. For example, in areas with a deregulated power industry, multiple billers from different power utilities could sign up with a thin consolidator, and they could vie for a consumer service to do switched services if part of that same environment. “This is part of the necessity in having consolidator sites updated and valuable for consumers,” says Shuder. “Once the site is up and running, it is important to begin thinking about how to attract customers to that site.”

Patel predicts outsourcing will become a big deal in the long run, with telcos becoming outsource providers, actually building infrastructure in-house for their own purposes and then rolling it out to large billers. He cites AT&T as a leader in this area, forecasting the company will become a bill consolidator once it is able to offer both local phone service and long distance in all areas, thus completely changing the dynamics of telco payments.

E-Commerce Just for Telcos

A supplier of e-commerce and OSS applications for telecom companies, Cygent recently announced its business strategy to provide e-commerce software targeted specifically at the telecom industry. According to President and CEO Kevin Elmore, the software focuses on problems particular to telcos in terms of kinds of services, account management, service ordering and network configuration—challenges that are much different from the point-click-and-shift world common in e-commerce today.

Elmore emphasizes that EBPP is just one component of Cygent’s electronic commerce focus, which spans all customer interaction—from customer creation, hierarchy management and ordering to provisioning, bundling and up-selling. “Billing presentment becomes the ‘sticky’ part of applications, part of the content that brings customers back,” he explains. The biller-direct model should do more than just help customers look at products, he adds; it should also give them the tools to manage their account.

Cygent is designed more like a portal than a call center; where the application is housed depends on the carrier’s marketing approach. Telcos can host it on their own Web site, and set up any number of links from “community” Web sites or banner headers geared for specific industry segments—such as restaurants, for instance—which then link directly to their offerings. “It is the ability of the telco based upon their marketing strategy to specifically pick what channels they want to operate on,” says Elmore.

The software sits on top of the carrier’s OSS, extracting relevant customer data. How it does that depends on a carrier’s existing technology architecture. For example, in the case of a large telco where integration from many different systems could be required, the Cygent software could be used to create a business process that extracts data from the carrier’s legacy system and allows customers do account consolidation themselves. A customer would log on, register as a new user and enter the accounts they already have. The Cygent e-commerce application then sends an e-mail to the customer when the consolidated account is ready to use.

In terms of integration, Cygent doesn’t believe there are any green fields out there, says Elmore. To ensure interoperability with telco systems of all shapes and sizes, the company has created partnerships with BEA Systems, Sun Microsystems and those within the enterprise application integration space like Vitria, so that tool sets are incorporated. He expects a progression comparable to what has occurred with regular billing systems. “It used to be that every billing system was custom, but over time telcos realized the economics of buying and integrating best-of-breed were much more compelling than the economics of building and supporting,” he says. “The same thing will happen in electronic commerce.” Currently in prerelease to customers, Cygent plans a fourth quarter launch to the public.