Service providers have been struggling for years to implement convergent billing. On one hand, they need convergent billing to take advantage of new business opportunities and reduce costs. On the other, it’s always been viewed as expensive and risky. Dave Labuda describes a new way forward.
Service providers have been struggling for years to implement convergent billing. On one hand, they need convergent billing to take advantage of new business opportunities and reduce costs. On the other, it’s always been viewed as expensive and risky. Dave Labuda describes a new way forward.
Examples of successful billing consolidation projects are few and far between. We’re instead more familiar with service provider war stories as they strive to reduce the number of systems and silos, normalise data and billing processes and attain a single view of their services, offers, customers and revenue. Such billing transformation projects can take years to complete, to the point where some service providers have pointed out that by the time a billing system is implemented, it’s often already obsolete.
While that statement is a little bleak, it goes to the heart of the issue: how can convergent billing projects become more successful? At MATRIXX Software, we’re suggesting a radical new answer to this question: forget about convergent billing altogether. Why? Because it is prohibitively expensive in terms of total cost of ownership, is too risky and doesn’t provide a clear return on investment.
Objectives of billing transformation
While convergent billing should deliver a host of benefits to the operator, there are classically three main objectives. First, service providers strive to speed time-to-market by creating a single view of services, packages and pricing. A single repository for all offerings results in much faster time-to-market, reduces redundant processes and ensures that what is listed on the bill or statement is consistent for all subscribers.
Second, service providers look to build brand loyalty and customer loyalty through converging pre- and post-paid subscribers onto one system. This allows a consistent brand to be presented across pre- and post- paid customer segments and also enables real-time functionality for post-paid subscribers such as spend control and real- time promotions. Third, service providers look for operational expenditure efficiencies and improvements by reducing the number of systems and processes, which also reduces the risk of revenue leakage and billing errors.
Why transformation projects fail
The TM Forum defines the billing domain as mediation, rating, charging, external partnerships and the final production of an online or paper bill. Billing systems are, by their nature, complex and contain a number of functional attributes, including tracking and rating subscriber usage, calculating recurring and non-recurring charges, tracking A/R and bad debt, payment processing, dunning, G/L accounting, revenue assurance, product catalogue, provisioning interfaces, partner settlements – and the list goes on.
Each of these functions has multiple integration points with other functions and systems. Multiply this complexity by the number of billing systems that service providers typically own – between five and fifty – and we can see that trying to consolidate them into a single convergent solution is an enormous undertaking.
Solutions Insights recently described how a large carrier in Asia-Pacific launched a two- year, $200 million project to replace its customer care and billing system. Four years later the cost had doubled but the first release was still unusable. Gartner and other analyst firms suggest that up to 40% of major ITprojects fail. Other studies suggest that implementing new billing systems often involves doubled project timelines, costs escalating by tens or hundreds of millions of dollars and only a minority of projects ever being fully deployed. With such overwhelming odds against success it’s not surprising that most service providers prefer to continue sweating their current billing assets.
Focusing on the goal
Given the highly competitive landscape, the growth of mobile broadband, and the growth in pre-paid, operators cannot stick with the status quo. They must figure out how to increase operational efficiency, reduce time-to- market and build subscriber loyalty.
Innovative service providers are beginning to forge more personalised financial relationships with their subscribers, where service usage and preferences, QoS policies, credit history and average spend can influence the price paid for services. As smartphones and devices proliferate and mobile HD video permeates our culture, operators will continue to move away from one size fits all pricing models. Segmentation, class of service, application and service context will drive how mobile data services are offered and charged for and will become both a key differentiator for the operator and a source of additional revenue and profitability.
Consequently, the parts of the billing system that actually touch the subscriber, such as packaging, pricing, real-time interactions and spend control are becoming far more strategic than payment processing, bill generation and other back-office billing functions.
The solution is convergent rating and charging
So what’s the answer? At MATRIXX Software, we believe implementing a convergent online charging layer, rather than trying to consolidate all legacy billing systems, will help operators achieve most of the value of converged billing but at a much lower cost and risk. After all, subscribers are not won or lost by back-end billing functions, but pricing and charging have a very real impact on subscriber service usage, loyalty and ultimately profitability. In fact, the value of converging entire billing systems is questionable, particularly when a convergent charging layer offers the ability to consolidate packages and pricing onto a single system, provides a single view of subscriber usage and revenue, and converges pre- and post- paid subscribers under a single brand. In addition, significant operational simplifications and savings can be realised by consolidating all pricing and charging onto a single platform.
In fact, a convergent real-time charging solution acts as a funnel to streamline and simplify many operational processes. All service usage – voice, messaging and data as well as pre- and post-paid – feeds into the charging platform through well-defined network or mediation interfaces. Here it is transactionally processed and charged for and a full audit trail of rated events is created. The rated events are then published to various downstream systems for invoicing, ERP and data warehousing. By funneling all the usage through a single convergent charging layer, processes such as revenue assurance and fraud detection become more focused and efficient and the integrity of the data published to downstream systems is improved.
With all this convergent real-time information at their fingertips, service providers may well agree that consolidating their legacy billing siloes is an unnecessary undertaking and that it’s more likely these systems will be decommissioned over time as all subscriber interactions, including billing and payments, evolve to become more real-time.
Dave Labuda, CEO, MATRIXX Software
