Trade Shows

October 30, 2002
Is the billing-CRM gold rush really over?

NEW DELHI -- The billing gold rush is all but over, opined a majority of the speakers at the recently-concluded Billing & CRM 2002 international conference organised by Convergence Plus on 11 October 2002 at New Delhi.

Convergence is the major development in billing that pushes the operators' networks up the value chain. Shailendra Singh, country manager for SAARC at Portal Software (Asia Pacific) Ltd explained how this could be implemented to enable operators to raise their total revenues and average revenue per user (ARPU).

He pointed out that people like multiple buying options, especially when usage patters are not understood. He did not see any reason why it should be different when it comes to mobile services. The value chain challenge is in catching every opportunity that ever presents itself, and in this context, to have a proper mix of content to attract the customers to use the mobile phone. "Creating differentiated value" is the trick of the trade.

Andreas Huggel, senior consultant with iSoftel, presented two sides of the billing-CRM coin. According to him, one side read: "Billing has undergone a seismic shift from being a sleepy backoffice system to an explosive growth industry, attracting attention throughout the industry." Then he read the other side that loudly announced that the "billing gold rush is over". Was he contradicting himself?

No! The iSoftel executive was giving a superdose of the reality in a market bloated by lots of myths and hyperboles. On the side is the current situation where billing systems are already in place — otherwise the networks would go broke. These existing systems are meeting current requirements "more or less." The operators who are facing uncertainties of changing technologies, failing business plans, etc., are unwilling to experiment further. The reasons given out are that WAP flopped; GPRS hasn't taken off yet, and 3G seems to be a disaster before it even began!

However, this is not a flop show. Wireless, as we all know is shooting past wireline, and everybody wants new services. The operators who experimented with cutthroat price cuts are licking their wounds. Now they have realized that the competitive edge is provided by customer support, effective billing, single platform for different services, new bundling alternatives and content. "Content is king," is industry’s faithline.

Prasun Nigam, director, Estel Communications defined the situation for the faithful: prepaid dominates, carriers do not know who the customer is; usage and ARPU is lower than postpaid; churn is rampant; carriers have lower control on prepaid business. However, the larger fact is that "most prepaid solutions do not address these concerns effectively."

Experts whom Convergence Plus showcased at Billing & CRM India 2002 were telling a packed audience of, mostly, telecom operators from all the major and minor networks, to repeat the mantra for their success: compete on differentiation. The three sessions on convergent billing, billing for quality of services (QoS) and integration of applications had eminent chairpersons from the telecom profession: Sudarshan Banerjee, CEO, Hutch Telecom, TRAI member R.R.N. Prasad and AK Bhargava, MTNL’s GM for IT, respectively.

Karanvir Singh of Voxtron analyzed the pitfalls of the industry: "Most companies spend too much of their budget on the first two stages, that is, "awareness" and "trial’ customers. They leave little or no resources to pay attention to the "repeat’ and ‘loyal" customers. Consequently, there is high churn rate and price war. The root cause of this is that sale success is measured on the number of new customers gained and not on high-value customers lost."

The Voxtron executive had a formula for creating customer loyalty: customer loyalty = trust plus affinity. He drew up the trust ladder, which begins with the customer asking you only when he is considering a purchase and ends up with letting the service provider decide for the customer what he (the customer) should purchase. The companion affinity ladder also starts at the bottom with the customer liking the association with the supplier and ending up with the discovery that both the customer and supplier are thinking alike.

The solution to the loyalty challenge, said Karanvir Singh, lies in an "organisational response founded upon cross-functional teamwork that integrates functions and processes around the experience that attracts and keeps the right customers." Prasun Nigam thought that the solution to the low revenue stream lay in integrating "high-value business applications into the operators' existing business support systems." He suggested adding standalone applications to the existing support systems, and using independent system integrators. He and other experts were unanimous that the crux of the revenue stream were the killer applications and customer segmentation so that the high-end could be served with special cuisine while the commoner remained satisfied with chicken soup.

Andreas Huggel’s segmentation metrics included the up ladder for revenue and down ladder for costs. For revenue increase: improve customer retention rate, increase products per customer and perfect rate of collection. To decrease costs, reduce advertising, reduce salary costs and increase efficiency. There are revenue leaks in your system, he said and advised you to go into these leakages thoroughly. One useful question to be put to your present billing system would be; Is there an end-to-end record accounting process that would allow measuring the effectiveness of the operations?

Nigam’s idea of a closed user group (CUG) and services within that is bound to improve customer loyalty and rewards. If you segment customers into groups that share a common interest, you can use TTI value-added module to direct targeted marketing campaigns, create such a group and manage it and with this module support both prepaid and postpaid wireless and wireline services. The module helps reduce costs of acquisition of new customers. The CUG helps reduce churn, reduces cost of acquisition of new customers, gain competitive growth differentiation and become growth drivers as CUG's flexibility allows creation of innovative services.

Therefore, what does the customer expect, was the question with which Robert Machin, head of billing, Logica Global Telecom, began his presentation. All that your subscriber wants is one handset, one operator and one bill for all services he can afford or need. That is convergence -- a unified customer accounting that the customer prefers but could be the operator’s nightmare. However, with the right billing system in position, both the customer and the operator benefit. The customer could be offered multiple payment options, flexible account rules and multiple accounts per customer, while the operator gained rapid time-to-market with new packages, simplified, consolidated systems architecture bringing lower operating costs.

"Convergence and consolidation will continue" in the billing and CRM area, said the Logica executive. This would be driven by a dynamic business model -- from utility to retail, customer demand for normal choice of payment, corrections over time to organic system development and platform rationalisation. Of course, full convergence "is still a long way off." Nevertheless, you have a roadmap until then that is exciting and challenging.

Oracle’s Jagmohan Marwah was quite emphatic that the customer heaven in the network services cannot be achieved without a proper CRM plan. CRM will require real-time analysis and predictions of what the customer wanted which meant lots of data and computing power to make use of it without increasing manpower requirements. Oracle’s CRM e-business suite meets the operator’s requirements in this area. For instance, for Tata Teleservices, who use this software, it provides a single view of many pieces of data, and a single place to check all customer interactions, workflows and escalations, customer profiling and improved marketing efficiency. In turn, it means greater employee confidence and greater customer delight from customization and transparency while the operator reduces costs.

Giving the user reaction, Alok Kumar, chief of operations, Touchtel, of the Bharti Group said that CRM deployment within telecom could create customer segments from market segments if the billing system incorporated basic profiling engines. The test would be in the service guarantee support the system gives, like correct billing, measurement of service, provisioning time from customer sign date, hot account closure and refund and online letter module for customer communication. "There is space between the current customer care of billing system and full-grown CRM solutions with data warehousing and data mining," Kumar said.