Introduction
Is your billing strategy (if one exists) outdated? Are you still generating bills in-house on creaky, old equipment? Would you like to make billing statements part of your marketing strategy? If you’ve answered “yes” to any of these questions, then outsourcing your billing statements may be a cost-efficient and effective way to achieve your business goals.
According to Gartner Dataquest, the North American IT outsourcing market will grow from $93.8 billion in 2000 to $159.6 billion in 2005. In an InformationWeek survey, utility companies projected spending 20 percent of their total IT budgets for IT services and outsourcing, which was the highest of all the industries profiled. These studies show that outsourcing is increasingly recognized as an important component of an overall IT strategy, and that utilities may in fact be taking the lead in outsourcing functions when it makes good business sense.
What is Outsourcing?
Outsourcing is simply letting an outside supplier or vendor handle the operation of a business process when a company deems that it is not worth investing its own time and resources into the particular process and that the outside vendor can do it more efficiently or cost-effectively. For example, the key business process and competency for utility companies is the provision of electric, gas and water services for their customers. They are not in the business of printing, designing and mailing statements or providing electronic bill presentment and payment (EBPP) services, which is why outsourcing this entire function is a natural fit.
Why Outsource?
Many companies make the decision to outsource because of a change within the organization.
In the last decade, the largest change in the utility industry has been deregulation, which has not only created a move toward consolidation but at the same time has opened the door for new, smaller companies to compete against entrenched providers. In addition, deregulated divisions of utility companies are allowed to sell services other than electricity and gas, such as satellite television.
Why is this significant? When companies merge and acquire other utilities, there is a need to standardize the utility bill. A newly merged utility must start from scratch to create a dynamic bill. In this case, it is easier to let a third party that specializes in this area handle the process than to let one of the merger partners lead the effort. And utility companies offering cable television, Internet service and other services will probably look to invoice all of these items on one statement, which requires significant billing expertise.
When a company must go through the process of upgrading equipment, it may be more open to outsourcing because it is a natural time to focus on core competencies and reduce infrastructure costs. It makes sense for utility companies to invest in the equipment and technology to deliver gas and electricity more efficiently. However, it does not make sense for these companies to purchase the equivalent of a mail house, with printers, inserters and other mailing equipment, to process their billing statements.
Functions to Outsource
Bill print, electronic bill presentment and payment (EBPP) and customer correspondence are some of the main functions utilities should consider outsourcing to a reliable vendor with a track record of success in the industry.
Bill Print
Outsourcing bill print means a vendor will design and layout the bill, handle and process the data through an Application Service Provider (ASP) center, format, print, finish and mail the bills. The largest benefit is a faster time-to-market because the supplier houses all the software, printers and technologies at its own center, so all the utility needs to do is send the raw data. Another benefit is reduced risk because the vendor is responsible for purchasing the latest technology, including hardware, software and other equipment, and integrating everything itself, an activity which can quickly become onerous for large billers.
EBPP
More customers want to receive their statements electronically, and also to pay their bills online. EBPP gives customers information in their hands, so they can analyze their account information anytime from a secured Web site. Benefits include reduced billing cost, reduced payment processing cost, fewer late payments and an opportunity to mix in dynamic marketing messages. However, this too is a daunting task and can quickly overwhelm a utility that does not have the expertise to integrate all the necessary technologies, so it makes sense to let a vendor that has an efficient, repeatable methodology already in place handle the process.
Correspondence Automation
With customized applications, customer service representatives can generate personalized correspondence for every customer contact. In an outsourcing arrangement, after handling a customer call, CSRs can send a service confirmation immediately without ever having to touch any paper. The correspondence can be created from pre-existing documents with logos and graphics and retrieved and generated online when needed. The letter can then be sent to an ASP where it is printed and mailed in bulk with other correspondence letters. Benefits include making predefined letters for most every situation available at the CSRs fingertips, the ability to generate and mail without the CSR ever having to handle a paper document, and enhanced communication with customers.
Outsourcing: A Better Option?
Many companies believe that they lose control when they outsource, however, they actually gain more control if they work with a vendor that allows them to track their jobs. If maintaining a sense of control is a requirement for you, it’s important to select a vendor that offers job-tracking software that enables you to see where a job is at any point in the cycle. Plus, it is easier to begin working with another vendor if service level agreements aren’t met than it is to totally revamp existing hardware and software if the process is handled in-house and problems arise.
Other Benefits Include:
Two main models of bill outsourcing exist: a turnkey operation with limited customization and a turnkey operation with complete customization.
For a small- to medium-size utility with a limited budget, there are vendors that have a generic outsource service offering limited customization. With this option, utilities can select from a few paper and bill designs, and their bills are commingled and processed in a group of similar bills to achieve greater savings.
For larger customers, vendors have more options to customize a solution and design a billing process. In this case, the design options are almost limitless and can include dynamic marketing messages being placed in each customer’s bill. Larger utilities can also take advantage of EBPP, so that customers can view their current or past utility bills as well as pay over the Internet.
Considerations
Because outsourcing the billing process does involve entrusting an important process, as well as customer data, to a third party, it’s important to choose a partner that has proven experience, a variety of models from which to choose, and can scale to meet the needs of almost any utility.
Some questions to ask: Is the vendor flexible? Who are their clients? How long have they worked with them? What solutions have they provided these clients? Are their customers satisfied? Does the vendor utilize its own software solutions or someone else’s to design and publish the bills? How stable and profitable is the company?
Utilities must have the assurance that the vendor they select will be here tomorrow and is able to make the investments necessary to maintain the latest technological expertise.
Future of Outsourcing
The convenience, cost-savings and enhanced customer service offered by outsourcing is almost certain to make it an option more often chosen by utilities in the future. By focusing on their core competencies and letting an expert third party handle the billing process, utilities will become more competitive in the eyes of customers who now have more options when choosing a provider.
Kerry K. LeCrone is senior vice president of ASP for Dallas-based Docucorp International. For more information, email info@docucorp.com, visit www.docucorp.com or call 1-800-735-6620.
Sources:
“IT Outsourcing Services Growth Continues in North American Market,” Bruce Caldwell, November 14, 2001.
InformationWeek, September 17, 2001: InformationWeek 500 issue
www.informationweek.com/story/IWK20010913S0005
Is your billing strategy (if one exists) outdated? Are you still generating bills in-house on creaky, old equipment? Would you like to make billing statements part of your marketing strategy? If you’ve answered “yes” to any of these questions, then outsourcing your billing statements may be a cost-efficient and effective way to achieve your business goals.
According to Gartner Dataquest, the North American IT outsourcing market will grow from $93.8 billion in 2000 to $159.6 billion in 2005. In an InformationWeek survey, utility companies projected spending 20 percent of their total IT budgets for IT services and outsourcing, which was the highest of all the industries profiled. These studies show that outsourcing is increasingly recognized as an important component of an overall IT strategy, and that utilities may in fact be taking the lead in outsourcing functions when it makes good business sense.
What is Outsourcing?
Outsourcing is simply letting an outside supplier or vendor handle the operation of a business process when a company deems that it is not worth investing its own time and resources into the particular process and that the outside vendor can do it more efficiently or cost-effectively. For example, the key business process and competency for utility companies is the provision of electric, gas and water services for their customers. They are not in the business of printing, designing and mailing statements or providing electronic bill presentment and payment (EBPP) services, which is why outsourcing this entire function is a natural fit.
Why Outsource?
Many companies make the decision to outsource because of a change within the organization.
In the last decade, the largest change in the utility industry has been deregulation, which has not only created a move toward consolidation but at the same time has opened the door for new, smaller companies to compete against entrenched providers. In addition, deregulated divisions of utility companies are allowed to sell services other than electricity and gas, such as satellite television.
Why is this significant? When companies merge and acquire other utilities, there is a need to standardize the utility bill. A newly merged utility must start from scratch to create a dynamic bill. In this case, it is easier to let a third party that specializes in this area handle the process than to let one of the merger partners lead the effort. And utility companies offering cable television, Internet service and other services will probably look to invoice all of these items on one statement, which requires significant billing expertise.
When a company must go through the process of upgrading equipment, it may be more open to outsourcing because it is a natural time to focus on core competencies and reduce infrastructure costs. It makes sense for utility companies to invest in the equipment and technology to deliver gas and electricity more efficiently. However, it does not make sense for these companies to purchase the equivalent of a mail house, with printers, inserters and other mailing equipment, to process their billing statements.
Functions to Outsource
Bill print, electronic bill presentment and payment (EBPP) and customer correspondence are some of the main functions utilities should consider outsourcing to a reliable vendor with a track record of success in the industry.
Bill Print
Outsourcing bill print means a vendor will design and layout the bill, handle and process the data through an Application Service Provider (ASP) center, format, print, finish and mail the bills. The largest benefit is a faster time-to-market because the supplier houses all the software, printers and technologies at its own center, so all the utility needs to do is send the raw data. Another benefit is reduced risk because the vendor is responsible for purchasing the latest technology, including hardware, software and other equipment, and integrating everything itself, an activity which can quickly become onerous for large billers.
EBPP
More customers want to receive their statements electronically, and also to pay their bills online. EBPP gives customers information in their hands, so they can analyze their account information anytime from a secured Web site. Benefits include reduced billing cost, reduced payment processing cost, fewer late payments and an opportunity to mix in dynamic marketing messages. However, this too is a daunting task and can quickly overwhelm a utility that does not have the expertise to integrate all the necessary technologies, so it makes sense to let a vendor that has an efficient, repeatable methodology already in place handle the process.
Correspondence Automation
With customized applications, customer service representatives can generate personalized correspondence for every customer contact. In an outsourcing arrangement, after handling a customer call, CSRs can send a service confirmation immediately without ever having to touch any paper. The correspondence can be created from pre-existing documents with logos and graphics and retrieved and generated online when needed. The letter can then be sent to an ASP where it is printed and mailed in bulk with other correspondence letters. Benefits include making predefined letters for most every situation available at the CSRs fingertips, the ability to generate and mail without the CSR ever having to handle a paper document, and enhanced communication with customers.
Outsourcing: A Better Option?
Many companies believe that they lose control when they outsource, however, they actually gain more control if they work with a vendor that allows them to track their jobs. If maintaining a sense of control is a requirement for you, it’s important to select a vendor that offers job-tracking software that enables you to see where a job is at any point in the cycle. Plus, it is easier to begin working with another vendor if service level agreements aren’t met than it is to totally revamp existing hardware and software if the process is handled in-house and problems arise.
Other Benefits Include:
- Cost effectiveness: With outsourcing, companies do not need to hire personnel and purchase capital equipment to handle the bill printing function, yet they still achieve the benefit of volume mailing rates.
- One standardized bill: Whether utility companies have one service or 25 services, customers receive one bill.
- Market/Cross-sell: Being able to utilize the latest software will enable customized marketing messages to be included each month on the utility bill.
- One supplier, one solution, one point of accountability: One supplier handles the entire process—from receiving your data, processing, finishing and mailing the bills.
- Increased customer retention: When a third party who is an expert in designing bills takes over the process, bills become easier to read and understand, making customers more willing to keep doing business with the provider. This is especially important in the competitive environment created by deregulation.
- Scalability without the capital investment: Outsource vendors can work within your budgets and create a solution that fits the size of the utility company, and which can grow as you grow.
Models in Outsourcing
Two main models of bill outsourcing exist: a turnkey operation with limited customization and a turnkey operation with complete customization.
For a small- to medium-size utility with a limited budget, there are vendors that have a generic outsource service offering limited customization. With this option, utilities can select from a few paper and bill designs, and their bills are commingled and processed in a group of similar bills to achieve greater savings.
For larger customers, vendors have more options to customize a solution and design a billing process. In this case, the design options are almost limitless and can include dynamic marketing messages being placed in each customer’s bill. Larger utilities can also take advantage of EBPP, so that customers can view their current or past utility bills as well as pay over the Internet.
Considerations
Because outsourcing the billing process does involve entrusting an important process, as well as customer data, to a third party, it’s important to choose a partner that has proven experience, a variety of models from which to choose, and can scale to meet the needs of almost any utility.
Some questions to ask: Is the vendor flexible? Who are their clients? How long have they worked with them? What solutions have they provided these clients? Are their customers satisfied? Does the vendor utilize its own software solutions or someone else’s to design and publish the bills? How stable and profitable is the company?
Utilities must have the assurance that the vendor they select will be here tomorrow and is able to make the investments necessary to maintain the latest technological expertise.
Future of Outsourcing
The convenience, cost-savings and enhanced customer service offered by outsourcing is almost certain to make it an option more often chosen by utilities in the future. By focusing on their core competencies and letting an expert third party handle the billing process, utilities will become more competitive in the eyes of customers who now have more options when choosing a provider.
Kerry K. LeCrone is senior vice president of ASP for Dallas-based Docucorp International. For more information, email info@docucorp.com, visit www.docucorp.com or call 1-800-735-6620.
Sources:
“IT Outsourcing Services Growth Continues in North American Market,” Bruce Caldwell, November 14, 2001.
InformationWeek, September 17, 2001: InformationWeek 500 issue
www.informationweek.com/story/IWK20010913S0005
