Electronic billing, e-billing, EBPP (electronic billing and payment presentation) - call it what you wish, but you can't ignore it. For the past 18 months or so, start-ups and established developers alike have been investing big time in e-billing technology R&D, marketing spin doctors have been producing press releases that promise the software and the strategies to put it all into place. As a consequence, the media has been quick to publish claims that human involvement in the invoice and payment process on-line as we know it will soon be eliminated.
Yet evidence of any sea change in financial transactions, on-line or off, is pretty hard to spot. Some cynical old hacks may even think we've been conned once more, but is e-billing really just another case of 'push syndrome' - promise, hype, technology and industry enthusiasm aplenty, but no real world support or, for that matter, demand?
So what is it?
So what is EBPP or electronic billing? "EBPP is still regarded as a relatively new and immature industry," says Nick Khatri, programme manager for industry solutions and marketing at Xerox Europe. "Today, most EBPP implementations offer only the basic capabilities, presenting just the transactional data. Advanced capabilities, which transform the statement or bill into a dynamic and interactive document, are still in their infancy."
But Karen Hautz, e-billing manager at Microgen, the first UK company to offer outsourced e-billing services two years ago, believes the term, which originated in the US, is not appropriate to the UK and is a misnomer. "From a B2B perspective, electronic presentment of invoices and payment are not linked at all," she tells MicroScope. "You need to appreciate the accounts payable process from a corporate perspective. The person receiving the invoice, whether on paper or electronically, will need to make sure it matches with a purchase order and, in many cases, a goods received note, before it is approved for payment. Once approved, the invoice is typically paid via BACS (in a batch along with other invoices) or by cheque."
She claims it is not a question of technology, but process. In the B2B environment, existing processes for invoice approval and payment do not support EBPP. But that does not detract from the value of e-billing, which serves to simplify the invoice approval process. E-billing enables the company issuing the bill to present the data in a format that can be loaded onto the customer's accounting system, removing the need to manually re-enter the data and assisting the invoice approval process. Another benefit is that invoices can be distributed internally between employees for approval purposes.
Look at it from a B2C perspective and while it is possible to link electronic bill presentment with bill payment, whereby a consumer views a utility bill on-line and has the option to pay on-line by entering credit or debit card details, the two functions do not have to be linked. Hautz cites TotalCard as an example, pointing out that "all retail customers of TotalCard's fuel cards (part of TotalFinaElf) must pay via direct debit". TotalCard launched its e-billing service last autumn, using Microgen's outsourced services. Many customers have chosen to migrate from paper invoice to e-bill, but clearly this has not affected the payment process in any way, she says.
Linking electronic bill presentment to payment is context-specific in the B2C environment. Amerada, an on-line provider of gas to consumers, operates only on-line. BT is due to migrate its retail customers from paper itemised bills to on-line itemised bills, but will that alter the way its customers choose to pay?
Just another year
And what about the situation in 12 months' time - how will things have changed by then? Glen Manchester, president and CEO of Xenos, a provider of software that Web enables the billing process, transforming legacy stuff and feed content into EBPP front-end engines, points to the fact that leading analysts are predicting some serious growth. "Killen & Associates predicts EBPP is the 'killer' application for the fee-based financial services market," he says, adding the market is expected to "reach nearly $500bn (£345bn) by 2004. Xenos partners with EBPP providers such as i-Planet E-Commerce Solutions, the Sun-Netscape alliance, to provide end-to-end EBPP systems. If these guys don't recognise a significant market opportunity, who does?"
Simon Brooks, marketing director at Worldpay, believes the direction it will take will be that of the consolidator model, where you can go to a single Web site and pay all your bills in one place. "But for billing organisations (telcos, utilities, etc), the bill is a point of customer contact and they won't want to be disintermediated," he argues. "In the UK, it will probably still be biller direct in 12 months, unless a strong, trusted, 'brand agnostic' consolidator emerges. Either way, Worldpay is positioned to offer payment services in both models."
But if there is a small flood of systems reaching the market, how can those looking to implement an e-billing system be sure they are choosing wisely for the future? Are there any industry standards emerging at this early stage, for example? George Ogden, development manager for S2 Systems International, believes XML will be the standard. "It is unlikely that the systems available today will survive without significant change," he predicts. "The systems emanating from the US are even less likely to fit today or tomorrow. The banking infrastructure is fundamentally different and in many cases requires a different approach. The business model and the commercial relationships are the real issue.
Brooks agrees that, as with most issues of standards and compatibility, EBPP is highly fragmented at present. "Some attempts have been made to introduce standards," he says, "but as with anything like this, there's no guarantee that any of them will win global recognition." The most important point is to work with established, trusted suppliers. For instance, in practice, most EBPP technology vendors actually deal with the EBP part, i.e. the billing and presentment only. "For payments, it's important that trusted third party organisations are involved to effect the actual payment transactions, through the on-line use of credit and debit cards, for instance," adds Brooks.
The legacy problem
So what are the strategic, technical and financial challenges facing businesses that want a painless transition from legacy systems to EBP? Manchester thinks most large billing organisations seriously underestimate the pain and cost of transforming customer documents and data into e-content that can be fed into EBPP front-end systems. "These organisations have spent years building content and business logic that appears on customers' printed bills and statements," he says. "Extracting and transforming that information to provide the same customer experience on-line can be a nightmare. Many of the organisations, as well as systems integrators and EBPP systems providers, are seeking the out-of-the-box transformation software that we provide to ensure rapid time-to-market for on-line billing initiatives."
Roger Lawson, marketing director at StreamServe, a software developer providing business communication systems that enable companies to manage document exchange, personalise interactions and automate processes, thinks the prime directive is not to see EBPP as some kind of limited "replace paper bills by electronics" system, but rather to see it as a more generic problem of opening communications up to electronic transactions, both for consumers and businesses. "And that not only includes financial transactions, but the associated processes such as purchase ordering," Lawson argues. "Having a system that has limited technology and is not open to other capabilities, such as XML or other newer technologies, limits the potential and locks you into a single supplier. An open, flexible approach is better, which is what StreamServe aims to provide."
Some, however, would argue that there is no transition from legacy systems at all, instead looking at EBPP as a supplementary service to existing billing methods. One such person is Ogden, who says: "Initially, all the company presenting the invoice needs do is redirect the bills from a printer to a file. Reformatting for presentment is a service opportunity for the EBPP service provider."
Brooks goes back to the original question and sees the strategic issues as being to recognise that "EBPP is actually a function of CRM and allowing customers to view, query and act on bill data at their convenience 24/7 will enhance overall customer experience and improve loyalty. On another note, accept that it won't necessarily cut costs. Deciding which cards to accept is important and companies deploying EBPP need to be careful they don't become financial organisations themselves. The answer is to outsource and buy in - and let trusted third parties handle the payment end of the transaction."
Khatri tackles the matter of technical challenges and sees them centred around building a scalable, robust and flexible system that will meet current and future needs in an environment where adoption rates are still low and numerous EBPP models exist. "Other technical challenges involve leveraging vast customer databases that institutions have to increase relevance to customers and improve response rates through targeted one-to-one marketing." The financial challenges, on the other hand, come from identifying a crisp and clear ROI on EBPP projects, which encompass not only the cost savings, but also the potential benefits of how EBPP could positively affect CRM and e-business strategies.
The final word goes to Manchester, who wisely reminds us all that "we've been through the 'early adopter' phase and the uptake has been slower than predicted. And it has not been helped by the economic downturn in the US, which has had a knock-on effect in Europe. However, the opportunities for electronic billing remain significant as businesses seek to maintain competitive advantage by providing an increased number of on-line services to customers and business partners alike".
KAREN HAUTZ PINPOINTS THE BENEFITS OF B2B E-BILLING