Over the past two years there has been increased attention directed by the media, analysts, regulators, enterprise customers and, most importantly, end-users toward service providers about billing. All want CSPs to make the billing process less complex and more accurate while providing a web 2.0+ style online experience.
The heart of the issue is that CSPs must differentiate at an unprecedented rate through organic and partner-based service innovation. This increases the need for sophisticated bundling and the ability to manage the billed revenue stream and compensation due to suppliers and channels. It also means that flat-rate bundles or even tier-based customer usage plans are no longer enough as issues with content consumption and supplier/partner management continue to mount.
Enter the world of agreements-based billing (ABB). In its simplest form, agreements-based billing recognizes that business models are relationship-driven and characterized by fluid, individualized and interrelated agreements across customers, suppliers and channels.
For example, at the beginning of a business relationship, all parties define terms and conditions, along with the associated financial definitions. In essence, "agreements are about the dance between the customer and the CSP, in which the customer is seeking customized services and discounts and the CSP is seeking financial commitments."
Relationship definitions can be between an organization and its customers (B2C), between two work teams internally, or between one organization and others in a wholesale arrangement (B2B) that will eventually play out to end-user customers. Obviously, relationships can become quite complex, especially when the agreement requirements are extensive, terms are interconnected within and across participants, and monetary measures flow in multiple directions.
Flexibility to support changing business needs is essential as technology advances, market conditions are redefined, business relationships evolve and organizational structures are transformed. On the other hand, if support for new business models and service personalization options is limited, the business typically forgoes opportunities or creates workarounds which can result in issues with accuracy, auditability and scalability. At a time when business change is needed the most, inflexible systems will cause an organization to just "get by". Such a scenario, especially as the communications industry moves to greater levels of complexity, is not an acceptable option.
Consumers of communications services want intuitive online usage controls and account-level insights to reduce bill shock if their consumption exceed bundled limits. They also want to pick-and-choose payment methods or pricing options on a self-service basis, when it is convenient. This level of customer control applies to not only postpaid customers but an increasing number of prepaid users as well.
Enterprise customers, on the other hand, want to negotiate tailored agreements that match their unique needs and consumption patterns, while rewarding them for their total spend across all regions and products. They also want to summarize usage by department or their corporate hierarchy in increasingly flexible ways.
In addition, they want to know when usage goes outside pre-determined limits - outliers in the form of individual users or their volume commitments to certain products - which could be tagged for more intense scrutiny by a business unit manager, the accounting department or even a security team, as the need might arise.
Metratech, which introduced ABB, recently explained to Stratecast how one conferencing and collaboration service provider built a differentiating brand in a very competitive field based on its ability to monetize complex B2B agreements and provide an intuitive on-line billing experience. The operator helped its enterprise and consumer-level customers overcome a significant level of bill shock each month because they can now view billing details per collaboration session, at any point in time. This includes items such as rate per minute costs for each connection and any international long-distance dial fees associated with a collaboration call. It also shows all associated fees, including: add-on fees, participant fees, non-show fees, add-new-user fees, re-issue fees and wallet card fees.
The service differentiator for this operator is in intuitively providing billing details after a collaboration session has ended, which allows the company's IT resources to dynamically control and model its business, as it helps its customers to better manage their collaboration session costs.
Agreements-based billing defines what, how, when and where services are supplied, along with how much the supplier expects to be compensated. For the CSP marketplace, the agreements-based billing approach means offering customers an understanding of billing charges, compared to their discount tiers and volume commitments, at any time. From a supplier perspective, this approach means delivering a cloud service operator with a snapshot of "billing status" and a "compensation status" for associated partners and suppliers on frequent time intervals. Agreements-based billing and compensation means that each customer transaction may result in multiple interrelated partner transactions.
Future success of all service-oriented business in all industries now depends on how quickly the end-to-end monetization and partner compensation processes can be addressed whenever business change occurs. Only a handful of software suppliers have grasped this degree of the business monetization concept.
MetraTech for example, has made ABB a reality for not just the communications industry, but a host of others including the financial services, conferencing and collaboration, cloud services, and transportation services industries. Agreements-based commerce is today's new business reality.
Karl Whitelock is director of OSS/BSS strategy at Stratecast (a division of Frost & Sullivan) - [email protected]
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