By Robert Granger
Interest in business-to-business e-commerce is exploding. Total sales using business-to-business e-commerce have soared from near zero only a few years ago to $114 billion today, according to Goldman, Sachs & Co., and current estimates are that more than 90 percent of U.S. businesses will do their purchasing via the Internet within the next three years. Deloitte Consulting LLC estimates business-to-business sales will grow sixfold over the next three years.
Why? Because business-to-business e-commerce offers the promise of lower prices, lower labor costs and higher productivity. For utilities initiating e-commerce applications, the opportunities include improved customer relations, faster bill payment and direct marketing to individual customers.
As utilities scramble to take advantage of all the Internet Age offers, a huge stumbling block has become apparent-serious e-commerce applications are dependant on information contained in legacy applications, but legacy application output and the Internet are not compatible.
Most major utility companies have an Internet strategy. They also have inherited a legacy strategy. Many are finding that combining the two into a comprehensive e-commerce strategy can be frustrating, time-consuming and costly.
For any utility that relies on large computer systems, the incompatibility of the Internet and legacy systems is a fundamental problem. IBM estimates that as much as 85 percent of all business information resides in mainframe applications and formats. Hence, there is a major obstacle to creating fully functional Internet applications-non-Internet formatted information must be made Internet-ready before the full value can be realized.
The good news is that this problem can be avoided if utilities contemplating electronic bill presentment and payment (EBPP) and Internet statement delivery plan for legacy-to-Internet integration. By involving Internet applications providers early on, utilities can bypass many of the problems that are typically associated with making legacy output Internet-ready.
Here are some common issues that utilities embarking on the e-business track should contemplate as they develop their EBPP strategy:
- Success is built on the legacy output. EBPP is driven by the legacy billing application. If a utility can’t make efficient use of its legacy output, it makes little difference how well its HTML presentation can be done or how sophisticated its one-to-one marketing strategy is. That’s what makes legacy-to-Internet integration planning so critical.
- Don’t underestimate the complexity of the project. Almost all utilities seem to underestimate the complexity of mapping and transforming legacy information to the Internet bill platform. A legacy system is typically structured in whatever format was appropriate at the time of the application’s creation and few, if any, of these formats take the Internet into account. Almost every Internet billing platform requires mapping and transformation of data to derive meaning out of the information in the legacy billing application. The question of “what legacy billing application data elements are equal to the data elements in the Internet billing target?” is simple in concept but very complex in execution.
For example, a utility’s legacy billing application probably contains information elements that are not reflected in the e-bill platform’s data model, so the biller must be able to extend the e-bill model to incorporate the required information. Alternatively, the Internet billing platform may require data that the does not exist in the billing application. In this case, it must be derived.
- Analyze the source data early. Many companies are well into the design and implementation of e-commerce applications before they ever look at their source data. When this happens, there is a high probability that the implementation will be delayed because of incompatibilities between the legacy and e-commerce applications.
- A thorough understanding of the entire billing system takes time. For any utility that has been around for several years, there is rarely one person who understands the entire system. Most billing systems have been around a long time and multiple programmers have touched them over the years, each with their own style. Project time will need to be spent researching the billing application’s structure.
In many cases, the printed bill is the only place where all this information comes together. In those instances, data is funneled from several sources into the print stream to appear on the bill. Establishing the sources of all points of data is a time-consuming process.
- Don’t think that things will continue to change slowly. Many IT groups believe that because the paper bill has not changed much over the years, it will continue to remain stable in the Internet world. This is an inaccurate assumption. Simply putting a paper bill online is not taking full advantage of the Internet as a dynamic medium. The reality is that customers will demand new features. Marketing departments will demand direct marketing capabilities, tailored to individual customers. New services will be added. Both the e-bill and paper bill will have to change quickly and often to adapt. The implication is that e-bill implementations will have to be flexible enough to support yet unknown demands. Simply hard wiring the old to the new only works until the first change arrives.
- Don’t underestimate the complexity of receiving payment information and getting it posted to the accounts receivable application. It is one thing to send data out to the billing platform; it is quite another to bring it back in quickly and accurately.
There are dozens of accounts receivable packages in use and thousands of in-house systems. All of them have different data structures. Few, if any of these, were designed with Internet billing in mind. The information has to be mapped into any Internet billing application to ensure there are no delays in updating accounts receivable. The information return trip may be as complicated as sending it out in the first place.
- Billers don’t get information to the e-billing implementation vendor in a timely manner. E-bill implementations are held up a surprising number of times because there is a lack of detail from individual billers on where the information is, how it’s laid out, the format, and all the other variables the Internet billing platform requires. The vendor can implement the plan only as fast as the customer provides the baseline information.
- What utilities need for output today, they probably won’t need tomorrow. While a simple ASCII file output may be useful today, tomorrow it may be HTML or XML. The most useful legacy-to-Internet application can take one single source of information and turn it into multiple outputs to fit both today’s and tomorrow’s needs.
E-business is not a simple venture, but the potential rewards are huge. A business-to-business e-commerce system can be developed and installed fairly painlessly if the vendor is involved early and customer expectations are realistic.
Robert Granger is a vice president with Interface Systems, which specializes in electronic delivery of statements, as well as electronic bill presentment and payment and other legacy content to the Internet, fax, e-mail and other destinations. Mr. Granger is a long-time leader in the electronic bill payment and presentment industry. Recently, he was a featured speaker at The Electronic Bill Payment and Presentment Conference (EBPP II) held in London, England. Mr. Granger can be reached at Interface Systems, 5855 Interface Drive, Ann Arbor, Michigan, 48103; phone 734-769-5900; e-mail email@example.com; Web page www.intface.com.
PECO Energy Makes the Transition
Philadelphia-based PECO Energy looked at getting e-bills in customers’ hands in 1998. The company knew it wanted to step into the e-game, and it knew it needed to get legacy data into a usable format so it could put information onto the Internet.
PECO saw three options. The energy company could hire outside consultants to write code needed to convert the legacy data, PECO’s IT staff could write the code or PECO could tap an outside source to bridge the legacy-to-Internet gap. After carefully considering the options, PECO elected to implement Ann Arbor, Mich.-based Interface System’s L2i technology, which allowed PECO to access the legacy data and put it into a state-of-the-art Internet billing system. The solution allowed PECO to extract the data from its print stream so it could be converted for the Internet.
PECO identified which data elements in the old billing system would be used in the electronic system, and the software made those elements accessible and viewable on PECO’s Internet bills. Interface’s software allowed PECO to join its pre-existing billing system with TransPoint’s Biller Integration System (BIS).
The savings are substantial. PECO estimates that e-bills can save the company as much as 80 percent per bill. Currently, 3,000 of PECO’s 1.5 million customers are taking advantage of e-billing. However, PECO anticipates that more than 25,000 will hop on the e-bill bandwagon by fourth quarter of 2000.
“Over the next three to five years we expect Internet bill delivery and payment to become more and more popular with consumers,” said Charles Gunn, PECO Energy’s payment supervisor. “Most experts predict that in about 2004, more than 50 percent of homes in the United States will have personal computers and that is when we expect to see significant increases in the number of households wanting Internet billing services.”