Back Office Takes Center Stage

Posted: 06/1998

Back Office Takes Center Stage
Maintaining Your Billing Process–and Your Cool–is Easier Said than Done

By Peter Meade

A recent survey revealed that 36 percent of responding resellers were "largely
dissatisfied" with their current billing system. Worse yet, the survey conducted by
Young Communications Inc. found an even larger number of respondents feel they are too
deeply entrenched in their current billing systems to make a major change.

While billing systems traditionally have been considered part of the back-office,
resellers need to realize that billing systems and software must take center stage when it
comes to the long-term success of the operation.

"Billing is in an absolute state of chaos right now," says Jim Dawson, CEO of
Datex Communications Corp., an Oaksville, Ontario-based billing service bureau. "It’s
hard to find a success story as everyone’s experience is different."

So what’s a reseller to do? Certainly not lose all hope, says Kevin Young,
president of the Pasadena, Calif.-based consultancy that conducted the survey.

Instead, start by taking a system assessment to gain knowledge of the billing process
at hand.

"What management reports are being created?" Young asks. "Are there
reports that have been generated for three years to deliver some focused data on a
particular product that is no longer relevant?"

Then review all the reports that are being created on a regular basis. If there is
uncertainty about the use of any of the reports, stop printing them and see whether anyone
in the organization complains, Young says. Continuing to generate information on obsolete
products or services only clogs up the internal processes, Young says.

Break Out

For carriers looking to break out of their back office "prison," Young has
compiled a checklist of ways to better run and maintain the billing process.

He suggests getting the chief financial officer (CFO) involved in the billing process.
Not only does the CFO understand processes and procedures, this person has the financial
savvy to push for dropping outdated products or features that may be generating more time
and effort than revenue, he adds.

According to John Hart, vice president of marketing for Saville Systems PLC, a
Burlington, Mass.-based provider of high-end billing systems, besides getting the
CFO–nominally the "economic buyer" of the system–involved in the process, make
sure the ultimate "user" of the system, represented by an individual from the
information technology department, has equal say.

"While the CFO may be responsible for making the buying decision, the user-buyer
is the strongest influencer," Hart explains.

Acquiring a billing system is not purely a business decision, according to Dawson.
Beware if management is adverse to risk-taking. The credo of "if it isn’t broke,
don’t fix it" may apply here all the way to the existing system’s last breath, he
says.

"Choose your vendor carefully. I can’t over-emphasize that," Dawson adds.
"Make sure to get everyone to [sign] off on the process, because if someone wants it
to fail, it will."

It is important to keep service rates in a standard structure, says Young. This
practice makes it easier to change vendors and it also can dramatically reduce costs from
system changes. This is especially true once a reseller changes its billing platform.

"Typically, you have one chance to get it right," says Jef Morrow, director
of corporate development at Axiom Inc., a Moorestown, N.J.-based provider of billing, data
collections and traffic management. "If any customers are looking for an excuse to
change [providers], one mistake [in billing] and you’ve given it to them.

"It all comes down to managing your data," says Morrow. "You can have it
all–the products, services–and still lose [customers] if your billing is not good."

Stay in Touch

Meeting with billing vendors or service bureaus on a regular basis is a good practice,
Young says. It’s important to keep them abreast of future plans as early as possible.
According to Young, the more time a company gives its vendors and service providers to
deliver solutions, the less chance there is that the vendor delivers a one-of-a-kind
patchwork solution–the kind that is both expensive to maintain and difficult from which
to transition.

Saville Systems uses a "customer intimate model" to stay current with all its
users, according to Hart. The process starts with a specific account development manager
being appointed to each user. As Hart explains it, "This person is responsible for
customer satisfaction, their success with our product." Meetings between the two
sides typically should take place monthly, but no less than quarterly, he says. Saville
also suggests that a performance evaluation group meets quarterly to make sure the billing
system is measuring up to expectations.

In addition, Saville holds two annual user meetings, one to discuss technical issues
and the other for high-level executives to meet with their Saville counterparts.

Gather Intelligence

Consultant Young suggests that resellers go through a request for proposals, or RFP,
process every two years. While this exercise may not change existing processes, the
discipline of researching and documenting an existing system on its present and future
requirements are worthwhile, he says.

Once a year, Saville demonstrates the latest version of its offering in individual
one-day sessions for all of its user base.

"We want to show them the best of what our new products can accomplish," Hart
says. "It’s our intention to share, because our best ideas come from our customers.
It’s our job to carry them out."

According to Young, resellers should not hang on to their hardware or software just
because it’s paid for.

"The excuse of ‘Don’t laugh, at least it’s paid for’ may work as a bumper sticker
on a beat-up car plugging down the road, but it doesn’t apply here," Young says.

If a reseller’s or carrier’s billing engine is stopping it from offering new services
such as Internet access, frame relay or asynchronous transfer mode (ATM), it needs a new
system, says Tom Rodgers, director of marketing for Intertech Management Group Inc., a
Chesterfield, Mo.-based provider of convergent billing and customer care solutions.

"The billing system should help, not hinder," he says.

If it costs more to maintain and improve the system than go to an alternate, drop it,
says Young.

Resellers need to bring in their vendor for training or develop an annual internal
training program, Young says. This will deliver the backup needed and also will help
reduce those esoteric applications or reports that only one person knows how to generate,
he says.

"It’s important that your billing system not be in the hands of one or two
‘specialists,’" Young explains. "Make sure the knowledge is spread around."

Saville has taken steps in this direction recently by releasing a new series of
training products, which the vendor plans to offer as a value-added service, Hart says. As
with most vendors, basic training comes with signing on the dotted line, but Saville also
offers ongoing support with its upgraded Gold package, he adds.

In addition, Young recommends that resellers train their sales team on the capabilities
of the billing system.

"It is just as easy to say, ‘This is what we offer’ rather than, ‘Tell me what you
want and I’ll see if we can do it’ when talking to customers," he says.

This approach, in addition to reducing development resources on one-time applications,
helps make optimum use of the salesperson’s time, he adds.

A reseller also may want to consider developing an internal billing steering committee
from the different disciplines of its organization.

Hart suggests performing business model training, which would include documenting all
aspects of the operation from business practices to integration with associated systems.
"This helps you understand your business, even beyond aspects that might relate to
the billing system," he says.

Consider A Change

For resellers that might be considering a change in billing systems, Young suggests
cultivating a relationship with an alternate billing provider or service. Being in contact
with another vendor or a service bureau helps keep the company abreast of industry changes
from another viewpoint, Young says.

This approach also gives the alternate vendor time to become familiar with the
reseller’s operation if it ever decides to review alternatives. "If you are upfront
with the alternate-billing provider, the company should be glad to spend time with
you," Young says.

According to Dan Baker, research director at Technology Research Institute Inc. (TRI),
a Sudbury, Mass.-based research house, many small or fledgling resellers are more likely
to seek an outsourcing solution, such as a service bureau, in the early going.

"This lets the reseller focus on the business at hand," he says. "Once
there is a revenue stream and other pertinent business issues are taken care of, the
reseller can review its options."

Established resellers are more likely to internalize their billing system, Baker says.

"Given the choice, most resellers will choose to have control over all aspects of
customer contact," he adds. "Today’s generation of billing systems have the
flexibility and scalability to keep pace with even the fastest-growing companies."

Resellers looking to sell out in four years definitely should outsource, says Young.

"If you’re in an acquisition mode, it’s a flip of the coin," he adds.
"But then the bureau has the responsibility of making the acquired accounts fit
seamlessly with the existing customer base."

If it does come down to choosing a new vendor, make sure your existing vendor will
cooperate in the transition, says Datex’s Dawson.

"This won’t always happen," he adds. "So be careful; you cannot allocate
enough resources, people and money for the situation."

It’s important to maintain these relationships because it’s not as if anyone ever
completely throws out a billing system, explains consultant Baker. The more likely
scenario is that functional elements from a new system are added to the existing system,
he says, creating a new vendor and "stepvendor" situation.

Bundle Billing

The trend toward convergent billing, which combines two or more services on a single
bill, brings added complexity to billing systems.

According to TRI’s Baker, the toughest challenges face the "pure" long
distance resellers, which use local exchange carriers (LECs) to provide their billing.
"With the trend going toward offering local with long distance, these resellers are
facing a real dilemma," he says. "These resellers typically do not have an
information technology staff, so they may be forced to [outsource] their business to
provide the bundled solution their customers want."

Intertech’s Rodgers says most service providers will never make the move to bundled
services without a new billing system."

And convergent billing that simply puts together separate bills from existing systems,
a practice known as "electronic stapling," is just a stopgap measure and lacks
the power of convergent billing, which allows the service provider to create discounts or
special pricing across product lines easily, Axiom’s Morrow says.

But moving convergent billing is not nirvana, warns Datex’s Dawson.

While one bill may decrease the possibility of customer churn, resellers must be wary
that the total of all the bundled services will pass the customer’s comfort threshold.
"Would you rather pay one bill of $400? Some customers prefer separate bills,"
he says.