IssueAlert Emerging Technologies ~ June, 2004

Electronic bill presentment and payment is by no means the new kid on the block when it comes to creating efficiency and automation in the utility back office. For nearly a decade, utility and energy company business executives, as well as their counterparts in other industries, have been aware of the many benefits of EBPP, including lower customer service costs, less bill duplication, reduced mailing costs, faster payment, and streamlined reconciliation. However, in the utility industry to date, EBPP remains a back burner customer service and technology enhancement. Many utility customer service executives and information technology professionals that UtiliPoint has spoken with cite high start-up costs and low adoption rates among customers as the primary reasons for the slow penetration of EBPP in the market.

Although UtiliPoint recognizes these market-retarding forces, it is clear to us that just around the corner, there is new life for the proposition of EBPP for both utilities and customers. Though it may sound repetitive, the imperative that utilities cut cost and increase efficiency, as well as improve service, demands that utilities seek improvements across customer segments and the customer relationship value chain. Additionally, utilities remain largely poor performers when benchmarked against other customer service organizations, including Telcos and cable providers, when it comes to collections and debt recovery. EBPP is, as a result, an ever more attractive vehicle, forming part of the basis of a solution for these industry ills.

As far as EBPP is concerned, banks have been one of the most successful providers of electronic bill presentment and payment for customers, as they remain one of the trusted providers of all financial services. Originally, a joint venture between Microsoft and First Data Corporation known as MS-FDC spurred interest only to be acquired by rival CheckFree. Logically, however, there is no reason why utilities couldn't partner with banks, or other organizations for that matter, in order to shape the best balanced, convenient and secure EBPP value proposition for customers. In order to do this, however, utilities will have to overcome their unreasoned but long-held view that to bill a customer is to own the customer relationship.

From the customer perspective, EBPP, when properly deployed and with thoughtful workflow and customer education, does present a highly convenient mode for bill presentment and payment. UtiliPoint research has found that few utilities have identified the right formula and optimized workflows for both articulating and delivering the convenience of an electronically-presented bill. Moreover, utilities' reluctance to articulate and implement a clear paper-to-electronic migration path has left many of the industry's most adventurous early adopter customers with a puzzling receipt of redundant paper and electronic bills after enrolling in EBPP services.

The Challenge of Legacy Systems

Another challenge for utilities has been the melding of electronic bill payment and presentment systems with legacy or outmoded CIS and CRM systems and applications not designed to handle multiple bill generation presentment formats. Thus entangled in a complex and expensive overall utility technology and business process conundrum, EBPP has been tarred with the same brush of disenchantment as customer care systems in general. Of late, many bill print presentment and collection outsourcers have done little to evangelize the potential of EBPP, opting instead to sell utilities incremental services that, while adding some value, will not take utilities to the next level of automation efficiency and improved customer service.

Backing up a few years, both in time and in utility IT sophistication, EBPP was viewed by many utilities as the perfect fulfillment of the promise of wide scale use of the Internet, giving utilities better reach, higher touch and better quality of interaction with their customers. Security concerns, slower than expected adoption of home use of the Internet, and a lack of sophisticated bill aggregation or biller direct payment and presentment business models coincidentally conspired to relegate EBPP to the dusty corners of the utility technology budget. Today, a few practice years later, e-commerce has solved—or at least substantially mitigated—most security concerns, and far and away more residences than ever have regular access to the Internet. Add to this a spate of new technologies that literally makes secure EBPP as simple as the creation of an email. UtiliPoint believes that EBPP should once again be a member of the roster of near-term to-do's on the desks of utility customer service executives.

Specifically, UtiliPoint sees commerce-ready html, the concept of emerging utility vendor Transactis, and their BillMail™ product as poised to catalyze the sleeper of EBPP and a harbinger of other utility commerce-driven information presentment such as demand response reaction, to come. Transactis founder and CEO Tom Kohn believes that this next generation of commerce-ready email technology not only reanimates the utility value proposition of EBPP, but also does so in a way that adds only incremental cost and relatively small dollar capital investment to deploy.

“The concept of BillMail has been readily endorsed by a number of utility executives that Transactis has approached,” said Kohn. “While there are multiple non-electronic methods of payment, up to now there has only been one electronic method—online payment—offered, and it hasn't been adopted readily because it's a multi-step process, it's not pushed to the customer and because the customer can't print out the bill. If you were a utility customer would you turn off your paper bill? Customers want the bill sent to them via email. They want the ability to pay the bill in the email itself, securely. They want to be able to file the bill on their hard drive and print it out. Only under these more favorable conditions will customers begin to feel comfortable enough to turn off their paper bills and only then will utilities begin seeing 25 percent, 35 percent and maybe even 50 percent of their customers turn off their paper bills, like they've long-imagined.”

UtiliPoint International interviews with customer service professionals and executives in the utility industry reveal a strong affinity across the industry for cost-effective customer service functionality and applications that enhance existing systems, thereby adding longevity and extending the value utility IT investments.

“In addition to EBPP applications, UtiliPoint has seen the rise of other innovative solutions such as call center applications that add outbound calling functionality to IVR systems and personalization technologies that customize direct mail campaigns that similarly extend the value of marketing and customer service dollars,” said UtiliPoint International COO Jon T. Brock.

Like other emerging technologies, the business case for EBPP has yet to be fully fleshed out and its ultimate value is contingent, like all other technologies, on the specific requirements and environment of individual utility back offices. Moreover, the alignment of a utility's bill presentment and payment system with overall organizationally-established customer service and customer care business goals and objectives remains a challenge to emerging EBPP technologies and vendors.

Despite this, UtiliPoint research and our intuition lead us to the conclusion that bill presentment, payment and reconciliation will again gain prominence as an area for discovery and investment in the utility industry. UtiliPoint will be launching a multi-client study in early summer, focused on a detailed examination of EBPP technologies, value propositions, business cases and use scenarios. The goal of this study is to yield utilities a more complete understanding of the ultimate costs, benefits and choices of EBPP systems.