InformationWeek

May 3, 1999

IT Impact:
Get Facts On E-Billing

Make sure you do your homework before plunging into an E-billing strategy

By Jeetu Patel

lectronic bill and statement presentment and payment is hardly a new concept. Banks and financial institutions have been exploring electronic bill presentment for more than a decade as part of their home-banking offerings.

But with the emergence of the Web, the electronic-billing market has grown real legs, especially in the past year or so. The proof is in the players: Big vendors such as Microsoft and CheckFree have made substantial investments in building the technology.

One of the reasons for electronic billing's growing appeal is its clear demonstration of revenue generation. When E-billing first started gaining momentum, billers and banks were looking at the technology as a way to reduce printing and mailing costs and speed payment collection.

But today, E-billing has taken on more strategic tasks: one-to-one marketing and dynamic information presentation. These new frontiers for building customer intimacy play to E-billing's strengths. Through electronic billing, organizations can increase their contacts, deliver customized information, and provide online services that aren't possible with paper billing.

Billers, banks, or statement consolidators shouldn't add electronic billing purely for cost savings, however. They may save money, but the real value will come from reaching customers in new ways, creating a brand, fostering loyalty, and generating repeat business.

E-billing's potential for generating revenue has lured an interesting mix of entrants to the market. Of course, there are the big players--Microsoft (through its TransPoint initiative) and CheckFree,

a longtime force in the payment-processing arena. But there are also companies such as @Work, BlueGill Technologies, eDocs, and Novazen. Finally, service bureaus and billing-service providers such as IBS, Pitney Bowes, and Bell & Howell are joining the market, making it easier for their customers to move to E-billing.

More recently, the portals have started to look at E-billing. Yahoo, America Online, and other portals are allying with billing companies to add yet another service to these full-service sites. Vertical portals such as Quicken are also using billing services to generate traffic. Billing can also increase the amount of time users linger on a Web site--a key metric for ad tracking.

Banks and financial institutions have their own motives for supporting E-billing. Leaders in this space include Bank of America, Chase Manhattan, Citibank, and Wells Fargo. But it remains to be seen whether banks can effectively compete with fast-paced financial-services firms and online brokerage houses such as Charles Schwab and E-Trade. As the number of trades conducted online continues to skyrocket, bill and statement presentment seems like a natural value-added extension to the services that online brokerages already offer.

These trends indicate that E-billing has evolved from an operational initiative akin to paper-based billing into a strategic revenue generator that's a key element in any successful E-commerce strategy. For this reason, business-side and IT interest in E-billing is in the name of E-commerce, not operations.

Even so, it will take a while for software and service providers to catch up with the demand for E-billing. Though many E-billing products and services are impressive, they're still somewhat immature. In addition, plenty of confusion remains for billers: Should they buy their own software and build their own applications? Hire an outsourcing firm? Go through a billing consolidator?

Whatever your approach, understand that E-billing represents a new opportunity, and turnkey solutions are not the norm. To make the most of the E-billing opportunity, prepare to invest in technological expertise, marketing expertise, customer-service expertise, and advertising--and be sure everybody in the company is prepared to deliver on your vision.

Jeetu Patel is VP of research at Doculabs, a Chicago advisory firm that focuses on the Internet, intranets, electronic commerce, document management, and knowledge management. He can be reached at info@doculabs.com.