As technical and regulatory environments become more complex, relying on outdated transactional systems that cannot effectively address the move to next-generation network technology and the impact of legislation offers little assurance for success. In addition, new marketing ideas or strategic initiatives will remain on ‘wish lists’ if a service provider hasn’t equipped itself with the systems to match its business growth plans. Despite these issues, for many service providers concerns over system implementation risk, capital expenditure controls and disrupting existing billing processes are still regarded as sufficient barriers to new technology adoption.
Legacy Billing Systems Carry Hidden Costs
At first glance it may appear that old legacy billing and customer care systems (including proprietary in-house systems, point-solutions and heavily customised merchant applications) and the core business processes they support, still meet the needs of many service providers. It is also common for billing and customer care departments to adapt to the inefficiencies of their old systems – unable to recognise that established working practices are labour intensive, cumbersome and prone to errors. The reality is that legacy systems carry hidden costs and risks that offer a compelling reason to seek replacement, including:
- Rising maintenance and support costs
- Fragmented software applications performing discrete tasks for individual lines of business
- Inability to react rapidly to market demands for new and innovative services
- A high degree of reliance on in-house IT departments to configure, manage and process commercial requirements
- Increasing number of bill queries and error rates; and rising bad debt and collection costs
- Lack of transparency of complex bill data including 3G and value added services
- Multiple points of data entry and repositories for contact and customer information
- Significant amount of manual intervention required to process and manage enquiries
- Inability to produce meaningful management information outside the billing & CRM system
- Difficulty in enabling third party access to billing and charging domains
Billing Compromised at the Expense of Network Consolidation
Currently service providers are looking to reduce investment and maintenance on separate voice and data networks and unify communications by delivering voice, data, e-commerce and content over a hybrid network infrastructure. However many are neglecting to consider how these services will be managed and billed until much later on in the service creation process, often having to ‘hard-fix’ stove-piped, fragmented BSS/OSS architectures. Next generation services bring more pricing options, additional business model complexity and increased billing options. In order to capitalize on opportunities, service providers need a flexible and open billing environment that supports their business objectives and ensures that billing quality is not compromised. Waiting to replace legacy billing and customer management systems as they come to the end of arbitrary financial ROI life-cycles restricts the potential benefits associated with introducing new technology quicker.
Introducing New Billing and Customer Care Technology
Admitting that your billing and/or customer care system needs an overhaul is just the first step. Identifying the system that will best support an organisation and its business processes is more difficult. Leading service providers are purchasing billing systems not just for their billing, revenue management and accounting capabilities or to simply achieve cost efficiencies, but as a strategic platform to support their marketing, revenue generation and customer management objectives. The replacement process must address a number of strategic issues surrounding the choice of not just a new system, but a strategic business tool:
- Systems and enterprise consolidation
- Integration with CRM and ERP systems
- Service and Subscriber convergence options
- Addressing new digital content business models
- Impact of network and technology evolution
- ‘Pros’ and ‘Cons’ of a custom versus packaged solution
- Software licensing versus hosted solutions
It is imperative that telecoms executives shrug off the shackles of thinking about information systems as purely a cost and seek to identify the impact that legacy systems and fragmented business processes have on the entire organisation, such as:
a) Inefficient Front-Office Management
- Service inconsistencies due to multiple instances of customer data
- Inability to offer consolidated bills, effective loyalty schemes or cross service discounts
- Difficulty in creating and managing advanced payment options
- Disparate call centre processes and activities
The ability to support convergent services and complex content and bundling strategies requires billing to be an integral part of the sales, marketing and service delivery strategy by providing a 360 degree view of customer activity and a simplified customer interface. This means when managing customer accounts service providers want the ability to offer customers a variety of ways to pay and control their service accounts or perhaps transfer charges between Prepaid and Postpaid accounts. In addition, they want to be able to consolidate multiple services onto a single bill, presented simply, and give customers access to billed and unbilled information. They also require the business insight necessary to offer real time cross-product, cross-account, and cross-customer discounts or promotions based on usage patterns. Finally, this offers the opportunity to streamline call centre processes to improve the efficiency of workflows including sales order management, problem resolution, post-billing processes and customer management.
b) Difficulty in Managing Sophisticated Product Offerings
- Inaccurate data held in multiple, disparate systems
- Unwieldy new product development processes
- Difficulty in integrating third-party services
- Limited view of customer activity across services
In a multi service environment service providers face significant challenges when implementing service bundles that might include voice telephony, broadband internet, television, content services and related e-commerce services. When managing these services they want the ability to rapidly model product, pricing and service bundles by centralizing core product information, integrated with back office applications. This includes verifying and updating third-party information for easy deployment of services as integrated offerings within their own portfolio. Marketing departments would like to be able to streamline product definition, configuration and management processes, synchronise new product data across the enterprise and achieve better control of often very intricate business processes, to cut costs and reduce time to market. In addition, when managing customer retention schemes, they want visibility of ‘total customer life-cycle value’ to help identify and deliver competitive and innovative pricing across all services.
c) Inaccurate and Inflexible Transaction Management
- Discrete processing of multiple transaction types
- Inability to accurately manage third-party costs
- High number of invoicing errors & collection costs
To remain competitive service providers need the flexibility to achieve dramatic process improvement and efficiency gains through access to key tools and data, ensuring the day-to-day activities of the customer care, billing, marketing, finance and revenue management departments are as smooth, reliable and complete as possible – no matter their scale or complexity. This includes the ability to support ever-increasing volumes of customers and transactions, support for a mix of payment methods, revenue risk-management for high value transactions (content services, e-commerce and, m-commerce etc), and third-party revenue settlement in real-time to assure revenues and provide up to the moment information for business intelligence processes.
d) Poor Financial Management, Control and Revenue Assurance
- Reliance on manual spreadsheets and stand-alone solutions for managing revenue
- High percentage of revenue leakage
- Inadequate regulatory compliance
The old cliché about needing to achieve more with less holds true for margin challenged communications service providers. Identifying performance improvements and efficiencies in the context of delivering value is therefore critical. Service providers need to remove dependence on costly manual processes, in order to drive more process automation (and accuracy), as well as gain enhanced control over financial management reporting. They require complete visibility of billing information and the tools necessary to examine financial data to support business objectives. This means optimizing order-to-cash business processes and financial assurance controls through active reporting and exception management. Offering safeguards to ensure regulatory compliance activities are streamlined, controlled, visible and easy-to-audit is also becoming increasingly important. Service providers need complete and accurate information about accrued and deferred revenue processed by the billing system, total management over billing models, and the highest levels of insight and control over financial reporting.
Conclusion
For service providers, maintaining an out-dated billing system can prove to be a false economy that can impede growth and reduce service responsiveness. An explosion in content and data services is prompting service providers to re-evaluate their billing and customer care systems as strategic assets rather than as purely transaction processing engines. A number of strategic issues surround the choice of a replacement system, but with the increased product and service possibilities provided by moving towards converged, next generation networks, flexibility and scalability are crucial; especially for service providers experiencing fast-growth and where maintaining consistency of service and controlling costs is a challenge. Convergence is leading to the penetration of new market segments, the identification of new customer groups and the exploration of new channels to market. In any competitive economy, service providers need to be able to identify and exploit opportunities that arise – before their competitors. Updating legacy billing and customer care systems in conjunction with an overhaul of organisation and management processes may enable them to do just that.
The Business Case for a new Billing System:
It is possible to model a variety of operational scenarios through which it can be shown that very attractive financial payback can be associated with new billing system investment. Over a 3 or 4-year production period, with even modest subscriber and ARPU growth assumed, revenue and margin improvements can be realized through the introduction of content, data and next generation services. By contrast, without the ability to launch and properly derive revenue from these new services it is likely that ARPU for voice revenues will decline. When the revenue benefits associated with new service introduction are also combined with some typical operational cost benefits including increased CSR productivity, and shortened new product development lifecycles, then the investment decision becomes even more attractive. By introducing a new billing system, under the right circumstances payback should be achievable in as little as 18 months, with strong financial ROI.
Author: Simon Dadswell, Advanced Solutions Marketing Manager, Intec.