3 Approaches

By Ringside Talent Partners

May 22, 2024

What makes billing transformation so difficult? Could it be trepidation about replacing the one platform that manages the largest amount of monthly billables throughout the entire company? Or might it be that previous failed attempts at billing transformation left a chilling effect on the part of technical leaders?

In fact, business leaders can redirect spending so that their companies are better positioned to support new charging models without tearing out the underlying billing foundation and placing the company at risk. But doing so can be a daunting task.

For some, the reasons for updating billing systems starts with advancements with on-demand access to services and products. Keeping up with those marketplace changes can require reimagining the customer experience, redefining offerings, reinventing business models, and reprograming sales channels. Evolving customer expectations and new digital revenue streams can also have potential implications for the billing ecosystem, involving a transformation of platforms with new capabilities and support.

Telecom Billing: A Brief History

In the 1960s, when computing was in its infancy, telecommunication providers were early adopters of mainframe computers. With the growing volume of wireline calls, large telecommunication providers implemented stand-alone billing platforms, which provided faster, more accurate, and efficient billing operations than previously experienced. In the 1980s and 1990s, as mainframes were replaced with smaller and faster computers, billing applications were integrated with a variety of applications supporting all areas of the business. As a result, billing became increasingly complex and highly customized, functioning as the central application for a variety of customer services and operations.

When the wireless industry began to grow exponentially, trends shifted to include even more customer information and logic in billing applications. Telecommunications providers began to think of billing as the platform to manage the customer relationship, making billing even more entrenched as the central focus. Heavy system-to-system integration to billing further served to make the billing platform the hub of the operational wheel. This laid the foundation for monolithic billing platforms, which, over time, would become just as critical to telecommunications operations as the wire the companies installed in the ground and the wireless towers they stood up.

Today, telecommunications providers are increasingly offering value-added products to augment their connectivity services, while striving to enhance their operational efficiency. For instance, determining customer eligibility for products and services, a process once largely managed by billing, now has moved closer to the network edge. This movement away from billing to real-time decision making at the network edge necessitates a reevaluation of the billing architectural approach. Further, the degree and speed with which digital transformation is occurring compels companies to reexamine the billing road map and the path forward to right size the billing footprint.

In the course of time, telecommunications companies recognized the imperative for strategic evolution to remain competitive in an environment marked by rapid go-to-market strategies, innovative product offerings, and a commitment to superior customer experience. To keep up with the pace of marketplace change, they needed to offer innovative products and customer experiences, while retaining agile billing processes.

However, a billing metamorphosis is no small feat. Billions of dollars currently flow through the legacy billing systems. Despite the inherent difficulties, the imperative for telecom companies to undergo billing transformation remains. The strategic approach to this change is pivotal, helping to ensure alignment with business objectives and minimizing operational disruptions.

In navigating this complex landscape, a judicious blend of foresight, planning, and adaptability is required. Consider the following three options for billing transformation.

Transformation Approach No. 1: Break the Monolith

One option for revamping billing platforms is tackling the task incrementally to strategically minimize the challenges and uncertainties inherent in such an effort. Based on the organization’s level of risk tolerance, leaders can choose to set their own pace to decouple non-billing capabilities step by step, with the goal of creating a more modularized architecture. By compartmentalizing the billing ecosystem, the organization can then redirect attention and resources toward billing modernization efforts.

Successful execution of this approach requires a leadership team to take several key steps:

  • Ensure they have a thorough understanding of the web of capabilities their current system supports, such as online bill payment processing, online sales, and online account maintenance.
  • Define a clear road map of which capabilities will be decoupled and which alternative systems will assume the responsibility.
  • Agree on which components of the billing system to invest in for modernization.
  • Coordinate with the existing vendor to enable billing modernization efforts and third-party integrations for non-billing functions.

A vital assumption underlying this choice is that the current billing system aligns seamlessly with the company’s vision for modernization. The potential benefit of this option over a traditional “rip and replace” is to help avoid wholesale customer data migration and minimize disruption to the legacy business.

If the existing billing vendor lacks a strong modernization road map, or misaligns with the company’s transformation goals, an alternative solution is to introduce a lightweight “sidecar” biller. It would support next-generation, greenfield offerings while the legacy biller supports traditional offerings for a period of time. Businesses would then be able to implement new innovative products and services without adding to tech debt and increasing dependency on the aging legacy application.

Transformation Approach No. 2: Take the Plunge

A second option is for companies that prefer to make a complete departure from their existing billing platform. Making this leap can offer considerable benefits to an organization looking to leverage a new, state-of-the-art platform. There are two approaches to this exist strategy:

Growing greenfield. One potential method for making this happen allows the telecom provider to introduce a new billing infrastructure—for example, cloud-based, vendor-hosted Software as a Service (SaaS)—for new products or service offerings, such as usage metering and compliant revenue collection. It may also help manage upfront capital costs. Over time, the telecom provider can transition services from the existing billing platform to the “growing greenfield,” which represents a slimmer version of the large legacy billing footprint. To achieve this, the telecom service provider must be able to conduct a thorough assessment of its existing billing vendor’s offerings, identify the next-generation capabilities that can be provided by a lightweight biller, and carry out a vendor assessment to onboard a modern sidecar biller.

A significant benefit of this approach is avoiding migrating existing customers from the old billing platform to the new version in totality. That’s because the introduction of new products or services would be handled via the sidecar biller. At the same time, this process involves a high degree of business and technology preparation. An additional challenge is running the legacy billing platform and optimizing the new greenfield billing instance in parallel.

Rip and replace. The approach involves a full transformation from current billing to new, modern billing and a customer migration from the old system to the new system. A successful transition involves an analysis of all system interfaces, end-to-end design impact, and process changes. Because it has a significant business and technology impact, the approach calls for a longer preparation timeline and evaluation of every aspect of the business. On the other hand, the advantage to this approach is that billing migration can occur quickly once all of the analysis and system integration are completed, placing the business on a highly scalable platform.

Transformation Approach No. 3: Keep and Evolve

Even with multiple options and an evolving technology stack, businesses may choose to retain their existing system if they believe that making incremental changes is ultimately the most cost-effective strategy.

Companies that have good working relationships with their existing billing vendors may choose to upgrade or migrate to another version, such as cloud-based options, with the same vendor—the expectation being that existing integrations will be minimally impacted. However, because upgrades frequently require interface updates, trusted vendor partner relationships are an important consideration for future commitments, and upgrades or migrations to cloud-based options require transparent conversations about the real cost and time involved.

Reviewing the short-term and long-term vendor road map is key to understanding whether next-generation products and services will be supported in the current billing application—or if migrating to the vendor’s next billing version is the best option. Companies should also consider if there are options to modify or influence their current and future road maps. In addition, organizations should bear in mind that a billing upgrade can be as significant in terms of time and cost as a migration to a new billing platform. Careful planning and detailed analysis are necessary to help reduce risk and minimize timeline extensions and cost overruns.

Ultimately, one imperative is clear: For any business, a successful billing transformation journey must start with a thorough evaluation of each option’s advantages and disadvantages in the context of the company’s business strategy.

Courtesy of Wall Street Journal