Billing is now widely considered to be strategic -- a key element in the struggle for better customer service and cash flow management. But it has also split into two parts, says Alex Leslie
The cynics amongst us -- and by that I mean those of us who spend too much time at telecoms conferences -- often become philosophical in bars at airports. 'The problem,' we say, after a sip of alleged Chardonnay, 'is that nothing changes.' We then nod, and take another sip, and wonder when the plane will arrive to take us home.
I believe we think this because we are suffering from Powerpoint poisoning, and simply do not recognise the symptoms. We have come to believe that there is nothing new because the slides look the same as they did several years ago. I have been guilty of this. I used to show a slide at billing conferences. It said that the next generation of billing system needs to be scalable and flexible and have far better reporting capabilities and be properly integrated with customer care. True, but possibly boring -- until I flipped to the next slide, which said that this list of 'requirements' was presented at a conference in 1994.
It is when you rewind to 1994 itself that you see the awesome changes that have actually occurred. A plethora of new services, true competition, almost universal mobile phones, 'free' voice -- all of which would have been greeted, in fact was greeted, by conference audiences back in 1994 as pie in the sky fantasy.
The fact that the slides have not changed much actually means that we got the fundamental 'to do' list right. We will always need greater flexibility and scalability and, to an extent, speed, and certainly greater integration. Those truths are, as Mr Jefferson said, self evident. It also means that, depending on where you are in the world, and where you are in the development of the telecoms market, you will be somewhere on a 'line' of maturity, where the focus changes depending on whether there is huge subscriber growth, or a more sophisticated, customer centric, mature market place.
Here in Europe, I think billing is coming of age. Billing managers now have regular meetings with CFOs, which is a major breakthrough. Billing, by which I mean the whole revenue management process, not just the system in the middle of the process, is widely considered as strategic -- a key element in the struggle for better customer service, and cash flow management. It is now a process that is regularly measured, whereas before it was not. There are now teams -- that, as often as not, spring from billing -- that roam the corridors looking for revenue leakage. Revenue assurance is becoming a way of life, not an audit. Â©
Billing has changed in other ways. It has split into two parts. One part is responsible for the process, the whole process. This job has, as its primary goal, to make the process completely independent of people, who are generally the things that change and mess things up and make the midnight pizza delivery guys rich people. These process people do not care, except in a high brow intellectual way, about 3G and VoIP and Triple Play, and all the things that we go to conferences to watch slides about. When a new service is launched they want the CDRs, or whatever event record is used, to go through the process smoothly, produce a bill and thus produce money.
In this part of billing, this new maturity was hard won. The Telecoms Troubles gave them no capital, less people and more responsibility. The days of buying a new system to launch a new service disappeared. The process became king. Many vendors reinvented themselves as revenue assurance specialists. Many operators at this point joined the ranks of the cynical.
The other part of billing is responsible for figuring out whether the process is capable of supporting the new services that marketing wants to launch on the world. In some operators, this role is actually now part of product management or strategy. In one or two operators, this role has the right of veto on a new product that they cannot bill for. This is the person that vendors take out to dinner. The process person would probably join them, but he is too busy shouting at the network people who did not tell him they had upgraded the switches without telling him, again. More midnight pizzas were delivered.
Whilst this maturity was hard won, it was at least, won. Looking at the billing industry now, it is a mature industry, and 10 years ago it was certainly not that.
Can I talk about convergence, please?
I hate to add another favourite from slide packs, but the evolution of the billing process is, to a great extent, being driven by convergence. I cannot remember when I first saw a slide with convergence written on it, but it was certainly back in the days when conference speakers had to take their word processed text to a graphic design shop, wait a week, and then collect a box of 35mm slides. I miss those days -- there was less writing on the slides.
The funny thing is that we are now realising that convergence is about the customer. The headline grabbing projects involving hundreds of millions of euros, converting businesses to IP, are about offering the customers a range of services, cheaper, faster and better than the competition.
For the billing process, this actually means less emphasis on the billing system itself and more of a focus on order processing (being automated at a telco near you), service provisioning and CRM, and integrating these into the whole process, better than before. The goal is to provide a single view of the customer.
The mature billing world, in Europe, is becoming a world where the process is stable and independent of people, and integrated. And because of all this, the customer experience is becoming better.
It also means that if a new system is needed, then mature and tough negotiations take place, and this has ramifications which I am not too happy about, but I fully understand. The downward pressure on the cost of billing systems means that the resources being ploughed into R&D and new functionalities are under pressure. It also means some vendors decided to provide their own professional consultancy and integration services and now this has been taken for granted among the operator community, which left the systems integration community exposed, and they were already under threat from the fashion for offshoring.
Around the world
I have to confess that once I had decided to provide a round up of the major regions and where they were in the 'maturity matrix' of billing processes, I found that my knowledge was not as up to date as it should be, and so, faced with the Â£64,000 question, I decided to use a lifeline and phone a friend -- well several, actually.
First I phoned Andreas at Orga Systems, to help me out with what is going on in Latin America. In the mobile market, which completely dominates, massive growth is the theme. In Brazil, net additional subscribers for 2004 was just under 20 million. In Argentina the growth rate is 75 per cent. In Colombia just under 60 per cent. The vast majority of the market is prepaid. Competition is fierce, and thus pressure on ARPU is intense.
The result is that the underlying issues in the region are not too different from the ones we know from the recent past in Europe. Although they are happening faster, and all at once, in Europe we had the luxury of seeing the fastest growth period happen during a mainly 'voice' period. In Latin America it is happening at the same time. Billing processes are therefore still relatively unstable, as one might expect, only the first attempts at measuring and controlling them are emerging, and the keys for success or survival are real time Â© systems, and scalability.Then I phoned Mike at Portal Software in Cupertino, and asked about the state of the market in North America. He was upbeat. The telecoms market in the US, generally speaking, is improving and is about the three 'C's'. Consolidation is ongoing, and on a scale that is awesome, and as we thought several years ago, is shaking out into the dominance of a very few players. The challenges that consolidation brings in terms of the billing process and the systems that support the process are huge, and generally take time to sort out. Consolidation, as many of you will know, is a real enemy of a stable process!
The second 'C' driving the market in North America is our friend Convergence. It is happening, IPTV is in the wings, and is not only a huge opportunity but a huge challenge. In fact, it is a completely new business. Everything over IP is, as I have said, about the customer, and delivering services better, faster and cheaper than the competition. It also enables innovation in pricing, which brings with it sophistication and the potential for differentiation.
The third 'C' is content. Content is becoming king in North America, driven as much by the fabulous popularity of iPods and games, as anything else. The US, particularly, is now becoming about prepaid. It was, as we know, slow to take off, but is now forecast to be the biggest growth area in mobile, helped along by the emergence of MVNOs.
The market in Africa would require a separate article to do it justice, it is simply too complex. However, it would be fair to say that, again, mobile is not only the driving force, but in some cases is driving the economy. The constraints are the lack of capital and the challenges of supporting billing implementations.
I phoned the GBA's Asia team to get an up to date view of that huge and varied market. They surprised me by being less upbeat. New contracts for billing vendors are few and far between, and those few are hard won. Content is one area where there is light, but it is not providing many opportunities for innovative and sophisticated pricing and billing. Indeed the emphasis seems to be on the content provider providing priced records to the billing system, whether the content provider is the dominant partner, or not. In fact we are now seeing content providers providing value chain pricing as part of their offerings. Perhaps Asia is once again breaking the mould and bending other people's innovations around their own processes.
The trends in billing must be broken into two parts. The trends in the process part will be towards more and more stable processes, independent of people and reorganisations. It will also be towards quicker processes -- in mature markets there is now an emphasis on shortening the 'time to cash' as a constant goal. Part of this is integrating the 'front end' of the process better. In emerging markets, stable processes will seem a dream at the moment, but the journey is already starting, and will follow a well trodden and rocky path.
In terms of billing development, the focus is on convergence, and now, not just on slides, but in the real world. IP will deliver services better, faster and cheaper, and if the process is mature, then the customer experience will genuinely be enhanced.
There is also an opportunity in the mid-market section of our community. The larger billing vendors used to concentrate on the very top end of the market, and the smaller ones provided niche players with billing systems during the past few years. There is an opportunity in the middle, both here in Europe, and in North America, where the tried and trusted drivers -- time to market and flexibility, will create these opportunities.
The winds of change are blowing, and blowing at different speeds around the world. In Latin America, they are blowing hard and fast, in more mature markets such as Europe, they may be easing off, but they still seem to have some surprising eddies in them. n