XO Banks on a Billing and OSS Overhaul

Surviving the current telecom quagmire is not an easy task. Many remaining CLECs are looking toward billing, customer care and OSS to differentiate themselves from competitors, because CLECs that can offer services with more internal ease than their competitors can often be more profitable.

Many providers, however, are too timid to consider overhauling their entire billing platform, especially when they have more than one. CLEC survivor XO Communications, which has been restructuring through bankruptcy, is not only combining its three existing billing platforms into a newer version of one system, but it has also implemented new CRM, provisioning and middleware systems.

XO will be using a newer version of Siebel for CRM, MetaSolv for provisioning, Vitria for its middleware layer and ADC for billing. Needless to say, one of the most pressing issues for the company is systems integration. “Integration is everyone’s number one challenge these days. It’s probably even more so at XO,” says Rob Geller, the company’s CIO. He believes that all of the system changes will put XO in a strong position. “There’s no question this will be a competitive differentiator.”

Ed Connolly, vice president of sales for major accounts at ADC, points out that if the systems are not fully integrated “you have people touching data, and when people touch data they’re going to input problems into the data.”

Order Management

For many providers with multiple systems, information about the services are not kept in the same way in each system, which makes organizing this information across various systems difficult. For XO, order management and provisioning is not as automated as it should be, Geller says. “We’re touching orders more than we want to.”

Geller explains that at XO, manually inputting orders has opened the systems up for errors or has caused discrepancies in the data. This was causing order rejection problems and costing the company time and money because it had to perform reconciliation between the systems that played a part of the order process. XO is seeking a shorter service delivery timeframe for provisioning and believes a hands-off automated approach would be the best option. Geller notes that many companies seeking telecommunications services will put an order in with three or four telcos and cancel the rest of the requests when the first company fulfills its order. Thus, an opportunity exists for providers who can turn up a service correctly in the shortest amount of time.

In addition to data discrepancies, if an order is manually entered into several systems, it is often translated differently by the time it reaches provisioning. An order may not reflect what the customer wanted or may not include the discount the customer expected. This can lead to problems on the bill, which would likely lead to calls to the call center and a greater cost to the provider. XO dealt with this billing issue by calling customers to verify that their first bill was correct. Geller says this is a great practice for the company because it is an opportunity to check the order with the customer early on. “Once you get the bill right, it tends to come out right,” Geller says, so getting the bill correct up front is key. At the same time, XO could possibly upsell, cross sell or shift the customer on to a better rate plan to increase customer loyalty.

In XO’s case, the company’s existing billing system did not possess all the necessary functionality that the company wanted. In the legacy product, just changing the invoice required writing custom code, Geller explains. Yet, the company knew that changing systems would not be easy.

“We didn’t want this to be a painful implementation,” Geller says. For this reason, the company moved from the old Saville product to ADC’s Singl.eView. ADC acquired Saville in 1999. If XO had gone to another vendor’s billing system, Geller says the company would have had to write conversion software for the billing system, which would have been a tedious process and could have caused problems.

The Product Catalog

Geller believes the compatibility between Siebel and ADC’s Singl.eView product will improve XO’s order success rate. XO had previously performed a lot of work between the old billing system and its previous Siebel version to turn on a new customer. “If you don’t have good compatibility between the product catalogs, it really takes a lot more work to build a customer [profile and deliver services],” he says. In addition, if it takes a long time to code a product into the catalog, revenue is delayed. He believes that the product catalogs between Siebel and ADC mesh well.

ADC is working to change its product catalog to include a higher level of integration between various systems. “We’re exposing our catalog to XML calls,” says ADC’s Mike Henderson, senior vice president of sales and marketing. This is to give others access to add or take products out of the catalog more easily. This functionality will be released in a number of phases. The first phase sets basic rules of how an integrator using XML would map to Singl.eView or how Singl.eView would map to an integrator. He explains that the XML format would eliminate the EAI layer traditionally used to connect systems. The next release would wrap the XML calls into specifics like a customer profile, so that instead of having to facilitate four or five different calls to get a total customer description, objects would be developed to fit the entire profile.

Bundling

Bundling is a key way for CLECs to differentiate themselves, and Geller points out that many RBOCs are moving toward CLEC-type products and packages. But, as AMS Senior Principal Marc Price notes, “The entire back office is organized in such a way that it is not set up to handle these packages.” Customers, he says, want a single invoice and a single discount applied across multiple services.

Likewise, CLECs want to offer the optimum mix of services for their bundles. They want to know which services yield what levels of profitability and which may actually be a cost to the provider. They also want to know which bundles are right for particular customers. David Meredith, director of AMS’ customer intelligence and churn practice, believes CLECs tend to be more nimble with bundles than their larger competitors. They are able to go deeper to a smaller customer to make specific offers says Price. “It’s not the one bill that makes the difference, but it’s the package that creates the stickiness.”

A key differentiator for CLECs is the ability to support complex account hierarchies for their business customers. Invoices must depict the various department levels within the company and must delineate geographic locations. Fitted into these departmental breakdowns need to be the discounts the customers receive for either volumes or bundles of a service. Systems at some companies cannot support such complex hierarchies and sometimes end up producing four to seven different invoices just to be able to bill for all the services

Business Intelligence/CRM

On the CRM front, XO’s marketing people are working with AMS on a customer loyalty and churn initiative. In this process, XO will provide a feed from its database to AMS’ software, which performs churn prediction. This work is done offline and is not tied to the Siebel system. In the first phase of the project, AMS will pull together statistics, generate insight and determine the profitability mix of various bundled offerings. AMS’ Strata engine will be used to perform an analysis about whether the customer is on the appropriate rate plan; yet, what the provider does with that analysis after it is performed is critical. In the initial phases of the customer loyalty initiative, XO will identify segments of customers. Meredith says the goal is to constantly drill down into smaller groupings of customers until the company can achieve an understanding down to each customer as an individual. “The goal is a segment of one,” he says.

Managing and Measuring Profitability

ADC has been working to support measurement of service profitability, mainly because many CFOs are taking a greater interest in this. ADC’s product supports a parallel offline rating of any transaction that occurs, including such metrics as wholesale, retail, value chain and content provider costs. The rating dynamically prices these services to understand down to the transaction level the cost and profitability of services for the provider.

In addition, XO is measuring the point at which an account becomes a loss or a write-off. Connolly says that as many providers’ accounts mature over time, people often lose revenue once the account becomes delinquent in payment. He points out that often there is leakage as companies transfer the management of these accounts to third-party collections processes. Companies also lose time and continuity and lose the valuable understanding of the history that led to the account delinquency.

Connolly says one issue many companies face regardless of size is that they are managed by their systems instead of managing the company with the systems. Many providers push out products before they are able to even price them. And, manual processes often exist where systems cannot support automation. Because a great emphasis is being placed on operational excellence to increase profit and maintain revenues, providers know well that internal efficiency can make or break the competitive advantage.