Four directions of billing convergence

Summary

Vendors' billing solutions have expanded the functional range and product segments they can bill for. Billers have been able to use this to converge their billing systems by deploying solutions that bill a broader range of products, by consolidating billing systems, by offering pre-payment options, and by applying rating consistently across all billing platforms.

These options allow billers to focus on product design rather than the constraints of their various billing systems. Customers can be offered improved bundle choices because the data is co-located, and enhanced rating engines can apply more complex pricing structures.

Actions

Review where new products are billed to avoid a post-implementation migration
Identify how a product's bundle and contract needs may influence where its billing can be performed
Consider whether the consolidated number of billing systems is one, or another (small) number
Isolate customer and user interfaces from the billing platforms to reduce the impact when systems change

Billing Convergence

Historically billing systems have been built, or installed, to focus on specific product sets and market segments. This approach has generated multiple billing systems within each biller tied to the product and segments they operate. Billers are now reducing the number of billing systems they operate to reduce their operating costs and enable additional marketing options, such as cross-product bundling, to be offered.

Over the same period, vendors' billing systems have expanding their functional range and the product segments they can bill. This means that billers, along with their vendors, can converge their billing in four ways:

Develop solutions that bill a broader range of products
Consolidate the number of billing systems
Offer pre-paid as a payment option
Apply rating consistently across all billing platforms

Develop solutions that bill a broader range of products

This improvement is the key enabler for system consolidation. Until vendors can offer a billing solution that addresses a biller's multiple product segments, there is little incentive to consolidate. Billers will continue to develop or purchase segment specific solutions that target specific needs.

Segment specific solutions for mobile phone, cable TV and ISP operators were developed historically. The solutions offered by many of today's billing vendors evolved out of these niche solutions. Initially this meant that vendors that commonly billed subscription services (e.g. ISPs, cable TV) were not well adapted to bill transactions such as phone calls or content, and systems that were initially focused on phone calls could not address the billing needs of data networks.

Billing vendors have developed their solutions to address multiple market segments and more of the end-to-end billing functionality. Contemporary solutions now address billing from transaction mediation through to financial applications (e.g. account receivables) where once these were addressed by separate niche offerings.

Consolidate the number of billing systems

With vendors' billing solutions enabled across multiple product segments, billers can consolidate their existing siloed billing platforms.

Billing platforms may have been siloed based on market segment (e.g. consumer, corporate, wholesale), or product offering (e.g. mobile phone, fixed phone, internet services), or a combination of the two. Whilst supporting the different complexity levels of each customer group, market segmentation can require multiple implementations of corporate-wide initiatives. Product segmentation can mean that bundling and whole-of-customer processing is difficult to support.

The final (or perfect) number of billing systems is not necessarily one. The correct number may be two or three depending on the processing needs of different market segments, and the ability of the biller to direct charges from a common source to multiple billing platforms.

Offer pre-paid as a payment option

Pre-paid is not appropriate for all billers (e.g. utilities). Other billers, such as those in telecommunications and digital content delivery, can use pre-payment as a way of reducing their credit risk (i.e. no money, no access) and broadening their customer reach (e.g. teenagers without credit cards).

Historically, billing for pre-paid products and services was performed by separate billing systems. These systems were close to, or inside, the network to access the customers' balances with high performance and availability. This real-time balance management (RTBM) allows a customer's product balances to be accessed within the sub-second call setup periods required of, for example, fixed and mobile phone networks.

Convergence allows billing to consider payment method as an option rather than a platform-wide 'either / or' decision. When implemented, customer hierarchies can mix payment methods within one customer's account with some products being post-paid and others pre-paid. Some family members (e.g. teenagers) could have their phone access post-paid by their parents, but have to pre-pay their calls and data product consumption (i.e. SMS, MMS, ringtones, etc.). Alternatively, billers could ask for pre-payment across a broader product range for customers with bad credit.

Apply rating consistently across all billing platforms

Billers were unable to offer consistent rating across their billing platforms due to the limitations presented by each siloed solution. Each siloed solution offered only what the vendor (or bespoke) system had developed. With different solutions across their products and market segments, the biller's choices were limited and the ease of update and maintenance varied.

Consolidating market and product segments to an improved platform allows billers to offer the same rating methods and pricing points to all customers. For example:

Mobile phone calls can be priced the same way whether pre-paid or post-paid rather than differently based on system constraints
Phone operators can charge the same rates for international calls for both fixed and mobile networks
Phone operators can 'pool' call minutes across their fixed and mobile networks

Operating with Converged Billing

Operating a converged billing environment can provide benefits, but also comes with its own problems and issues that must be addressed.

Benefits

Development re-use: Capabilities developed for one segment (market or product) can be leveraged across other segments. The 'true' quantity of shared development may be limited to that imposed by outside groups such as regulators or requirement. Market segments are likely to require different processing for their day-to-day changes.
Product bundles: With co-located data, billers will find it easier and less expensive to offer a variety of bundling options.
Consistent billing experience: Customers purchasing multiple offerings will receive a consistent billing experience. This can occur whether a customer's services are invoiced on one bill, or provided on multiple bills from the one billing platform.
Improved customer service: With co-located data and improved functionality, billers will be able to say 'yes' to their demanding customers more often, and more cheaply.

Problems and Issues

Data security: Security needs to ensure that co-located data from different market segments is not accessed inappropriately.
Outage impacts: System outages will impact more of the biller's customer base increasing the pressure for service restoral.
Development contention: The biller's business units may contend over which development should be deployed into the billing environment first. With constrained development funding or limited expert staff, the biller's business plans may be constrained.
Vendor dependency: Once consolidated to a vendor's solution, the biller becomes dependent on the vendor's future development program. This dependency may be moderated by biller development, but this approach reduces the R&D leverage offered by the vendor's solution.
Customer and user interfaces: Consolidation will require users to operate new systems. Billers may choose to decouple the billing user interface from the billing application to isolate the impact of future changes.

Tags: Billing, Convergence