Shredding the Paper Habit

Remember the sweet promises of electronic bill presentment and payment (EBPP)? They went something like this: Spend a little now, and you'll get much more later. When your customers learn how good EBPP is, they'll want it. Then you can eliminate most of that expensive paper, with its unattractive printing and mailing costs.

EBPP didn't take as long to seduce enterprise customers as it did consumers. They, like carriers, want to avoid the costs of paper.

Unfortunately, getting corporate customers to embrace EBPP isn't enough. Many corporations want EBPP, but they also want to keep their paper bills. This is a “pain point” for carriers, because dual invoicing eliminates the cost savings EBPP promised.

So carriers are mulling ways to wean business customers from paper bills and lure them online for complete wireless account management.

Equal Desire

AT&T Wireless has migrated more than 2 million consumers to its online platform, said Judy Cavalieri, AT&T Wireless director of e-business strategy and marketing.

For large corporate customers, AT&T Wireless moved from paper bills to compact-disk bills. The next step is online billing applications, according to Cavalieri. She expects even greater success with enterprise EBPP than in the consumer arena, because businesses prefer a flexible format that allows them to manipulate the data.

AT&T Wireless plans to raise enterprises' comfort level by going beyond mere presentment to a total account-management model, which includes enabling enterprises to pay bills by department, charge back to departments, analyze bill data and perform exception reporting.

Enterprise EBPP, in general, is moving toward total account management and the integration of customer care and provisioning.

“In large companies, the phone bill can be hundreds and thousands of pages long for a monthly period,” said Ken Kerr, Gartner Group senior research analyst. “It's a major effort to review all of that, get it approved, get it paid and go through the dispute process, which is a lengthy and expensive process on both sides of the fence.”

According to Kerr, the telecommunications industry has outpaced other industries in adoption of business and consumer online billing and payment applications. He said carriers have more to gain from the adoption of EBPP than other billers.

“Bills like the water bill are not that sexy,” Kerr said. “There's not that much to look at. If the amount seems reasonable, we just tend to pay it and not look at it too closely. But a telco bill has line-item detail, so that needs to be viewed.”

After reviewing a bill, several of a corporation's accounting reps or individual corporate subscribers might call customer service to dispute charges. Many calls might be disputed for one billing period, which translates to lots of hold time by the corporation's staff. For the carrier, it can translate into delayed payments, as well as call-center costs to handle the disputed items.

A Carrot & a Stick

Old habits die hard. Corporations have settled into the paper routine and accept the security of it. As a result, carriers have to find ways to convince them to release the paper, at least most of it.

Making paper less desirable is one strategy. Sprint recently employed this method by charging enterprise customers that sign up for online billing and want to keep receiving paper bills as well.

Another strategy is to add incentives. Kerr said he's seen this method first-hand. A couple of months ago, Kerr's long-distance carrier announced plans to add $1.50 to his monthly bill. The company explained that it was passing along the local exchange carrier's charge for including the long-distance charges on its bill.

However, Kerr's long-distance carrier encouraged him to sign up for electronic billing by agreeing to postpone the additional charges for a year, if he did so. The carrier also offered an additional $1 off his monthly bill for a year and a $25 Amazon gift certificate, if he'd accept online billing.

“They used both a carrot and a stick,” Kerr said. “They said you're going to receive a penalty for a paper bill, or you can have the penalty waived and receive discounts.”

Sprint PCS' approach is similar. The carrier wants to eliminate detailed paper invoices in the future, according to Kristin Cooksey, Sprint PCS business marketing manager.

Sprint PCS' paper invoices are available in three forms: detailed invoices, summary invoices or 1-page call-remittance records. The company's goal is to reduce paper significantly by providing customers with 1-page paper invoices and access to detailed statements online.

“We're finding that 70% of businesses in the United States still pay by check,” Cooksey said. “We looked at that and said, ‘We need a 1-page invoice that meets the needs of the accounts-payable organization while the (online) billing product meets the needs of the rest of the company.”

Power Customers

Another trial carriers face is meeting differing requirements from various large customers.

“Some very big companies, either on the payer side or the (biller) side are recognizing the benefits of (electronic billing), and they're not waiting for the general market to take off,” said Gartner Group's Kerr. “General Electric is a good example.”

Kerr said GE realized it could save millions of dollars with EBPP. So the company developed an electronic system of handling purchase orders and invoices for products. If a biller agrees to use GE's system, GE offers to pay the biller within 15 days, rather than the usual 30 or 90 days. With this arrangement, GE also gets a 1.5% discount from the supplier.

Kerr predicts other companies will adopt similar systems.

“What you're going to have is a bunch of splintered connections,” Kerr said. “If you're a supplier to GE, for example, you're going to connect into the GE system, but you're also a supplier to a hundred other companies. As they develop their own systems, you're going to have to connect to a bunch of proprietary systems.”

Jason Briggs, Yankee Group senior analyst, billing and payment application strategies, agrees. He said that although carriers might dictate their presentment terms to many corporate customers, some of the larger corporations may demand that carriers use their systems when supplying phones and other products. If the carrier refuses, it could lose that customer.

Some Don't Want It

Some carriers and analysts envision EBPP dominating enterprise billing in the future and predict carriers routinely will charge for paper bills. However, they also concede that paper's not going away because some business customers just won't adopt EBPP.

“Theoretically, they all want it, but to the extent that it disrupts their existing payables process and work-flow approval process, they're just not ready for it in many cases,” Kerr said. “Flexibility on the payer side is what's really critical to make this take off. Some (corporations) are just more flexible to the extent that they can modify their existing payable systems to use electronic processes.”

The Yankee Group's Briggs said companies that don't like their carriers' presentation of online bills won't use EBPP.

“From surveys I've seen on the small to medium business side, as you get smaller and smaller as a business, the preference to be able to (handle the) bill online goes down,” Briggs added. “With the larger entities, there's more of a need to view the bill online.

AT&T's Cavalieri expects enterprise customers to adopt EBPP in stages, first using it to perform bill analyses and resolve disputes, then to pay.

“It's going to be a continuum,” she said. “But there certainly will be some customers who never want to migrate to an electronic relationship.”

However, AT&T Wireless ultimately wants to migrate 80% of its corporate customers to EBPP. The goal is to get 20% to 30% of them using the service by next year.

“There are a lot of companies that have internal documentation requirements that state that they must keep paper copies of telephone or communications records for a year,” Sprint PCS's Cooksey said. These companies, as well as companies with decentralized accounting departments, will be slow adopters.

“If the company has 25 divisions across the United States, and each division manages its own business, in many cases, those types of companies will take much longer to move into this type of environment, because there are multiple points where you need to invoice them,” Cooksey said.

The E-Commerce Connection

“Our ultimate goal would be to Web-enable every product and service that we have and provide the customer access to that through a portal,” Cooksey said. “So regardless of whether it's billing or account changes or address changes or purchasing handsets, we believe there's a large market out there that would seize that kind of an opportunity.”

Cooksey's team is working on management tools that will enable enterprises to purchase equipment and provision services online, as well as view and pay bills.

Sprint PCS is not alone. AT&T Wireless is following a similar path. It has enabled large corporate customers to purchase equipment and services online through Ariba and Commerce One or through e-procurement sites.

According to some vendors, integration with carriers' other back-end systems is in EBPP's future.

“Really becoming the Web interface to all of the back-end OSS systems will be where our investment will be,” said Steve Schmitchel, edocs industry solution executive, telecommunications.

Schmitchel said edocs wants to enable enterprise customers of carriers such as AT&T Wireless to provision new services and order handsets from their online accounts.

“You're going to see, over the course of the next year, an increased focus in the industry on integration to different systems,” said Jeff Wood, Check-Free director of product marketing, telecommunications group.

CheckFree's software can extract online billing data and put it into XML format. The data then can be fed into other business systems.

A couple of months ago, CheckFree released a new version of its software. It includes a rules-based system that enables corporate customers to route bills to the appropriate departments or executives.

“We want to make it as easy as possible for wireless carriers to get their clients to move to the electronic bill,” Wood said. “The best approach is trying to offer as many different options as you can. One way you do that is to introduce the presentment for their invoices online, and you keep the paper coming. As they begin to get more comfortable with their electronic invoices, eventually they'll come around, and they'll say: ‘We really don't need the paper anymore.’”

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The Price of Paper

Gartner Group's most recent research of cyclical billers found that B2B paper invoices cost telcos about $2.43 per invoice and that electronic invoices would save carriers about 92¢ per invoice. Here's how the savings would look in real life.

Monthly B2B Invoices Processed	Monthly Cost Paper Invoices	Monthly Cost Electronic Invoices	Monthly Savings
25,000 Invoices	$60,750	$37,665	$23,085
50,000 Invoices	$121,500	$75,330	$46,170
75,000 Invoices	$182,250	$112,995	$69,255