Matrixx Software founder and CEO Dave Labuda tells why operators need to move to sophisticated, real-time billing solutions for the enterprise and, in doing so, claw back lost millions and create true market efficiency.

Mike Hibberd

November 23, 2012

8 Min Read
Enterprise billing and the move to market efficiency

Given enough time any market will move towards efficiency, says Dave Labuda, CEO of real-time charging system provider Matrixx Software, and confusion will give way to intuition. He offers the example of the grocery retail market, which despite many thousands of prices and many thousands of products, all of which can change from one minute to the next, has evolved to allow consumers to shop without confusion thanks to a level of efficiency that makes the navigation of a vast amount of data relatively simple.

The consumer knows, he says, that if they want to buy an expensive bottle of wine for a celebration there are just as many options open to them as if they want to buy a cheap one for commiseration. Market efficiency allows the seller to provide a product or service matched to whatever sum of money the buyer wants to spend.

The market for mobility services has yet to reach this point. In many instances operators have resisted moves to efficiency defined in this way, preferring to reap the benefits of higher margins than are truly justified. This may work in the short term, Labuda says, but it is not a sustainable model.

Matrixx recently conducted some research with analyst Stratecast into enterprise market mobile spend that threw up an effective illustration of inefficiency in action. The firm found that 60 per cent of mobile operators are leaking $20m/month apiece because enterprise customers are refusing to pay bills that are substantially more expensive than they were expecting.

Over many years enterprise customers have become used to predictable mobile bills for voice and text services. But since the widespread uptake of mobile data services—both corporate and consumer—bills for a large enterprise can vary by as much as $200,000 per month due to unanticipated overages, Labuda says. And, when that happens, the enterprise will as often as not simply refuse to pay.

“Even more interesting,” Labuda says, “is that some operators don’t even bother to send the bill when this happens. They just write it down to the normal monthly amount before the invoice is issued because they don’t want the confrontation. They just eat the difference because they know it will be disputed.”

At first glance this sounds like a simple enough situation to judge; enterprise customers are behaving unreasonably by taking what they want and refusing to pay for it. But Labuda argues that the fault is not all theirs, returning to his retail comparison by way of explanation. “Whose fault is it if you go shopping and you have no way of knowing what you’re spending because there are no prices on anything?” he asks. “The enterprise and its employees, the end users, fundamentally lack control over what they’re spending. Is that really their fault?”

The problem is already being exacerbated by the growing popularity of BYOD (Bring Your Own Device). The explosive uptake of smartphones and tablets in the consumer sector has changed the face of corporate mobility, as employees begin to look upon their clunky, centrally allocated QWERTY Blackberrys or their functionally limited voice-centric devices with something approaching scorn. Factor in the increased usage of temporary staff and external contracts and you have a mass of personally sourced devices that people want to use for corporate access. Control and security, so beloved of CIOs and admin teams, are very much under threat.

One of the leading enterprise concerns with BYOD is the additional cost it might entail. How can they be certain that the bills they’re footing on BYOD devices relate to legitimate, enterprise usage? “You have end users with no visibility, no transparency and no control running freeform across the smart device space, doing whatever they want at the company’s expense,” says Labuda.

In the face of this trend, enterprise customers are beginning to figure out what they want. It might be that they’d like to specify that they won’t pay for any access to streaming video for employees while roaming, on the reasonable assumption that the video is not business-related. Or maybe they want to be able to define their liability by the hour of the day, paying for all usage between 9am and 6pm, but nothing outside of these times. Broadly, they don’t want to pay for anything that doesn’t benefit them—and their specific requirements are starting to feed back to the operators.

As is often the case, the problem for operators lies with their legacy systems, Labuda argues. That simple, reliable voice and text usage paradigm that enterprise customers became used to was easily managed by old batch-oriented postpaid billing systems. Real time visibility of what users are spending and the ability to manage the service in real time is, in many cases, simply not available to corporate customers.

“Enterprise is the last bastion of the classic, batch billing relationship—and that is because of scale and complexity,” Labuda says. “If you’ve got an enterprise customer that spans six countries and has 100,000 employees, the legacy billing system that’s built for it is very complex and the traditional real-time systems can’t handle that complexity. It’s only with the new, emerging systems that you can look at moving that type of relationship to real time. ”

Most of the network equipment that Matrixx encounters has the ability to provide the real time interface that more sophisticated billing solutions can exploit, Labuda says, and most platforms have the kind of flow-based capabilities that allow them to distinguish email traffic, say, from YouTube. “What’s really lacking is the on the business support side, in terms of the actual, real-time charging platform that can handle the scale and complexity of this kind of model,” he says.

With such a platform in place, enterprise customers can start to get access to the level of sophistication they’re looking to apply to their mobile spend. They can buy service in bulk and distribute it as they see fit across different departments. If an employee is on leave for two weeks that person’s usage can be reallocated to a department that, in that particular month, is generating particularly heavy usage. And employees using their own devices can be required to pay for whatever services they’re using on their own time, or for their own purposes.

Nor is this just about giving the customer what they want. Some of that $20m/month that 60 per cent of operators are letting slide can be reclaimed if the operators’ billing systems can offer proof to the enterprise customer that the usage was known about, requested and not blocked by the customer.

Here the use of self-service solutions is very important. But while the enterprise has full control over their service allocation and can distribute it at will—and in line with their own rules, checks and balances—it is crucial, says Labuda, that operators don’t relinquish all control.

“If operators give complete control to the enterprise then the enterprise can turn off all the transparency and claim ignorance,” he says. “What the operator wants to do is overlay certain levels of real time notification and visibility which the enterprise can’t fiddle with, because that’s the operator’s financial defence.”

Operators are famed for inertia when it comes to B/OSS upgrades, motivated by the scale of the job and the very real fear that, if you start to tinker with substantial upgrades, your existing billing functions might fail. Nonetheless, says Labuda, they are embracing the move to real time solutions for enterprise customers.

Operators’ first use of real time was a negative one, he says, as they used it to throttle back the service of anyone who had exceeded their spending or usage limit. Now they want to move to a positive approach, with more sophisticated pricing and transparency of spend that allows them to create upsell opportunities. And, he says, legacy systems need not kill their enthusiasm.

“When I look at the projects that we’ve got underway, in every case there is a legacy billing system that will be sitting behind us. What we’re doing is absorbing all the real time chaos and complexity and providing a nice batch view to the legacy billing system. It doesn’t know the world has changed, it sees things as it wants to.”

There is no hiding the complexity of the modern world from the people running mobile operators, though, and there’s never a good time to spend money or make a change. Timescales for the shift to sophisticated, real time charging solutions for the enterprise market will vary tremendously from operator to operator but, says Labuda, we might see some emerging market players overleap their counterparts in more developed markets.

“In countries with very high prepaid penetration, operators’ postpaid billing systems are almost exclusively used for enterprise customers,” he says. “There’s a tremendous financial motivation to move that relationship to real time and retire that legacy system because it’s very expensive to have to maintain it for such a small percentage of your customer base. In a classic postpaid world getting rid of that legacy billing infrastructure will be a very slow process, but over time it will become less strategic and less visible.”

The process will be slowed, no doubt, by the fact that some operators will choose the path of least resistance and eke out their flat rate enterprise charging for as long as they can, continuing to tolerate the leakage because it’s simpler. But the winners, in Labuda’s world view, will be the ones that spot the opportunity to strengthen their customer relationship by innovating.

“If you have an inefficient market that allows you to charge 1,000 times your cost for something that’s great—but it’s not going to stay that way. Efficiency allows for tremendous opportunities but you have to be aggressive and innovative to win.”

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Mike Hibberd

Mike Hibberd was previously editorial director at, Mobile Communications International magazine and Banking Technology | Follow him @telecomshibberd

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