CIOs can play an important role in increasing corporate revenues by improving customer billing operations. This case study demonstrates that a properly selected billing solution can help companies boost cash flow by reducing their billing cycle, stopping revenue leakage through underbilling, and cutting the total cost of billing operations through electronic bill presentment and payment (EBPP) technologies. The latter is noteworthy because Web-based billing technologies allow customers to receive, scrutinize, dispute, and pay their bills online.
Search for a solution
Who's Calling Inc. needed to make a change in its billing system. The growing company measures the effectiveness of direct response advertising and, according to Who's Calling CTO Dan Horton, the company had outgrown its previous billing system, provided by Switch Solutions, Inc. "We were looking for something that would take us into the future and would be a better tool," said Horton. Who's Calling sought a new billing solution that would do a number of things:
- Allow a tighter integration with its own .NET-based architecture
- Keep maintenance to a minimum
- Speed up the processing time of bills
- Cut the cost of presenting bills to customers
In 2002, Who's Calling began evaluating billing software, no small feat considering more than 800 companies offer billing services, according to industry analyst Daniel Longfield with the research firm Frost & Sullivan. The market leader in the billing space is Amdocs, a Ra’anana, Israel-based firm with $1.5 billion in revenue, said Longfield. Convergys, also a market leader, sends 12 million bills per month for customers, including ATT Wireless. Both companies offer an EBPP solution.
To develop a short list, Horton read industry trade publications, talked to billing industry consultants, and attended Billingworld 2002, an annual conference of billing software providers. Horton followed his initial selection with RFPs and then requested a full demonstration of how each system would handle Who's Calling's complex billing matrices. Horton said any technology executive wanting to evaluate billing options should see a proof of concept from the vendor. "Most vendors will put together a sample billing, or take the more complex billing challenges and set a system for doing that," he said.
Based on this proof of concept, the scalability and adaptability of the product, its support structure, maintenance costs, architecture, and price points, Who's Calling decided on what Longfield called a midsize entrepreneurial company, MetraTech Corp. of Waltham, MA. MetraTech's product, MetraNet, an XML-based billing solution with e-billing and e-pay features, is built on a .NET platform. The typical install requires three dual-processor Dell boxes—one committed to the database, one to Web serving, and one for encrypted credit card processing, according to MetraTech president and CEO Scott Swartz.
Pricing extremely negotiable
In the competitive marketplace for billing applications, software costs are extremely negotiable, according to Longfield. "Most of the larger billing companies and almost all of the smaller ones will work any sort of agreement that they can," he said. The same is true with MetraTech, which can offer perpetual licensing, term licensing, or a hosted solution billed monthly.
Although Who's Calling wouldn't reveal the price it paid for acquiring and installing MetraNet, MetraTech's Swartz said the hosted solution as sold under a three-year contract could run $15,000 to $200,000 a month, depending on the components of the software used and the amount of billing volume. Set-up fee for the hosted service is $50,000 with professional services billed at rates typically lower than competitors, according to Swartz. To purchase the software outright, the software can run upwards of $250,000, based on the amount of data processing. An annual maintenance fee covers software updates. The price can be set based on the number of bills sent, amount of revenue billed, or number of people receiving bills.
One key to negotiating an appropriate price for billing software is to keep an eye on the total cost of billing operations. Billing operations, including staff, should cost no more than three percent of total revenue, according to Longfield. Who's Calling has been able contain costs to under three percent, said Horton, in part by purchasing the software outright, hosting it, and basing the software license on revenue increments. In other words, the more money Who's Calling makes, the more it pays for the software each year.
"It was the most logical way to tie it out, because if you look at the number of call records, or the number of customers, either one of those can sway greatly," said Horton. "They don't seem to be a normalizing factor in terms of usage." Horton also wanted to avoid the possibility of being billed based on number of transactions. The company sends 5,000 bills monthly—some of the bills run higher and some of them run lower. If Who's Calling had months when the billed amount was low, a cost-per-transaction (cost-per-bill-sent) could be prohibitively high, said Horton.
Phasing part of a smooth integration
Who's Calling spent five months on the integration, from initial selection to launch. The integration team on the Who's Calling's side consisted of one billing manager, who led the project team at Who's Calling, two support people, and a small team from operations to configure and install the hardware. Who's Calling also requested one dedicated resource from MetraTech, who had a custom development team backing him, said Horton.
Along with installing and customizing the software, Who's Calling did barebones integration with the company's general ledger program, Best Software's MAS90. In the future, Who's Calling may move its accounting systems to Microsoft Business Solutions–Great Plains because MetraNet integrates with Great Plains, as well as PeopleSoft, SAP, and Oracle Financials, according to Swartz.
The MetraNet system rolled out in July 2002 and Who's Calling is now using the system for all new customers. It is migrating in old customers on a phased approach with the goal of completing the migration of customer data by October 2003. The phased migration has allowed Who's Calling to carefully bring complex legacy information into MetraNet, including customer history and records as well as product and pricing lists, which can differ in terms of service offerings to the various industries that Who's Calling serves. The phased migration of customer data into MetraNet also has allowed billing staff to get comfortable with the production process and billing cycle and the customer satisfaction group to also train themselves on how to access and interpret the new bills.
Keys to project success
Keys to the success of the project have been a thorough scope definition and tight communication with the vendor, according to Horton, "so we understood what we were getting and they understood what they were building." The scope document clearly outlined the commitment in terms of work and resources and "kept everyone working on a common goal," he said.
Training also provided the proper foundation for product adoption. Billing managers had two weeks of product training, and members from the customer service group received a week on the actual working system at MetraTech's campus. Then these workers returned to Kirkland and trained other staff members on how to use the system.
Early ROI looks promising
Who's Calling has already seen significant improvement in cycle processing time—from the time it takes to process call records to the time it takes to print and deliver bills. Processing time will continue to be the primary metric for success of the project, said Horton. "If we can process the bills quicker and get them through quicker, we can reduce the days outstanding on our accounts receivable," he said.
Once Who's Calling rolls out MetraNet's electronic bill delivery ability, customers will have the options of receiving bills electronically or through the mail in summary or full detail. This will further compress the days outstanding for billing, because bills will no longer have to be handled by the U.S. Postal Service. Electronic billing cuts paper costs and shipping and mailing expenses, and shifts the burden of printing extensive bills to the customer for additional cost savings. In the end, if the true costs of a billing service are considered, streamlined billing can be another way of bolstering a company's bottom line.