Enterprise Spend Controls

Protecting this valuable customer segment

from bill shock and churn
MATRIXX Enterprise Spend Controls
CONTENTS
EXECUTIVE SUMMARY ......................................................... 3
MARKET DYNAMICS AND BACKGROUND ........................... 4
The lack of real-time for enterprise customers .............. 4
QUANTIFYING THE ISSUE ..................................................... 4
Bad debt write-offs .......................................................... 5
Bill reconciliation and dispute resolution ...................... 6
Customer churn ................................................................ 6
Conventional wisdom ...................................................... 7
THE DRIVERS FOR ENTERPRISE SPENDING CONTROLS
AND PREDICTABLE BILLS .......................................................7
Improved KPIs ...................................................................7
WHAT ENTERPRISE SPENDING CONTROLS LOOK LIKE ..... 7
Greater control, flexibility and clarity .............................8
Use cases .......................................................................... 9
Developing a business case ...........................................11
THE MATRIXX SOLUTION ..................................................... 12
MATRIXX Enterprise Spend Controls
EXECUTIVE SUMMARY
In today’s global economy, corporations require
communications solutions which include a myriad of
devices, global roaming plans, ubiquitous connectivity and
also a method of rapidly and accurately paying for their
service usage.
Enterprise subscribers are more likely to have smart
devices, use business or productivity applications, use 3G
cards and are also more likely to roam due to business
travel. This puts them at higher risk of bill shock – where
the monthly bill is higher than expected - primarily because
many are unaware of roaming charges, of overages applied
once they consume their allotted amount of data and lack
of understanding about how corporate email is charged for,
both in-network and while roaming. Demand for spending
controls that help subscribers manage their mobile account
is consequently rising because many enterprise customers
and even many consumers are experiencing bill shock.
This lack of visibility and control of service usage leaves the
enterprise without insight into spending until it receives a
monthly statement of charges. This results in unpredictable
monthly costs and no ability to do long-term budget
planning. Communication Service Providers (CSPs) are
responding by trying to educate their enterprise customers
to the true cost of service overages, but are hampered by
lengthy and costly bill reconciliation and dispute resolution
processes. At stake are millions of dollars per month in
uncollectable revenue due to write-offs when enterprise
customers refuse to pay the bill.
Results from a recent study commissioned by MATRIXX
Software, indicates that the average monthly write-off for
a CSP is 10% - 15% of total enterprise revenue, with 60% of
the CSPs surveyed writing off as much as US$20m a month
or more.
Even if a dispute is resolved or the bill is written-off,
the study found that over 90% of CSPs have experienced
customer churn as a result of enterprise bill shock – ranging
from individuals up to entire organizations, which poses a
high risk to the CSPs’ business. As a result, 75% of enterprises
have asked their CSP for real-time spending controls, and all
of the interviewed CSPs in this study recognized that as smart
device, laptop and tablet usage continues to explode, a cost-
effective long-term solution is needed.
3
Real-time enterprise spending controls promise mutual
benefits for enterprises and CSPs. With such controls in
place, CSPs can:
Minimize bad debt write-offs caused by enterprise
bill shock.
Decrease enterprise customer churn.
Improve critical KPIs such as data revenue collected,
roaming revenue, and customer satisfaction.
Streamline revenue assurance processes,
reduce time-to-cash and improve profitability.
Avoid resource-draining bill reconciliation and dispute
resolution processes, and the customer bad-will that can
result from them.
Enter into a real-time financial relationship with their
enterprise customers that stimulates:
Proactive, mutually beneficial business
objective setting.
A transparent, shared understanding of enterprise
spending on communications services that allows
CSPs to accurately design offers and packages for
specific enterprise business requirements.
With real-time spending controls in place, enterprises can:
Manage employee usage and make bills more predictable.
Avoid overage charges through flexible and configurable
credit limits and notifications across all levels and
hierarchies of the organization.
Avoid service use restrictions imposed by CSPs when
bills are disputed.
Take advantage of preferential account top up rates or
discounted bundles based on historical usage patterns.
Uncover usage patterns and trends that allow CFOs to
better-manage budgets and make long-term planning
easier through negotiation of communications services
packages which better fit the enterprise requirements.
Ensure that the enterprise only pays for
business-based usage.
Today, bad debt write-offs present a major financial risk
for CSPs that will only grow worse as service usage, the
number of services used, and the number of smart devices
and 3G cards increases. Enterprises are already requesting
better spending controls and it is now incumbent upon
CSPs to develop features that will meet the demand of this
important and high value customer segment.
MATRIXX Enterprise Spend Controls
MARKET DYNAMICS AND BACKGROUND
Growth in mobile broadband data traffic is presenting
a number of challenges to CSPs and their enterprise
customers. Driven by an increase in smart device usage
and roaming, enterprise employees are incurring large
mobile service overage charges as they unknowingly
exceed their allotted voice and data package limits.
The main culprit is that enterprises generally have no
visibility into the charges they incur until the end of each
billing cycle—typically at the end of each calendar month.
Increasingly, the bill is larger than anticipated, which makes
these high-value, high-volume customers continuous
victims of bill shock. If they refuse to pay the charges, then
a dispute resolution process is instigated. This usually
results in a lengthy and costly investigation for the CSP,
often leading to bad debt write-offs, and sometimes
customer churn even if the dispute is resolved. It also
leaves the enterprise with no ability to predict monthly
costs, thereby leaving the root cause unresolved and often
leading to a recurrence of the issue.
From a billing perspective, enterprise accounts are unique
in that each enterprise typically negotiates discrete rates,
plans and volume discounts for its employees. Often,
departments share bundles of minutes and data usage
allowances between staff. Billing relationships can be
complex and hierarchical. Historically, traditional batch-
based billing systems were the only tool CSPs had that
could model these relationships, support customer specific
pricing, volume discounts, and the sharing of pooled data
or voice minutes across different departments. Until now,
batch systems were the only way that CSPs can process the
sheer volume of transactions generated by large enterprise
customers, as data usage continues to rise.
Dependence on batch rating and billing infrastructure
alone has created an environment fraught with bill shock
and billing disputes. For enterprise customers, CSPs are
often days behind in processing usage or sometimes
even wait until the end of the month to process usage
so that volume discounts or payment relationships can
be applied. Because of this, the enterprise customer has
no visibility over spending, overage charges, or the cost
attached to employee usage until the bill comes at the end
of the month. Additionally, the operator has no ability to
track against data quotas, credit limits, or alert enterprise
customers when they are reaching a roaming limit or a data
allotment. So far, there has been no way to address this
issue, and bill shock is rife.
4
As a result, CSPs are placed in the difficult position of
either choosing to write off service overage charges as bad
debt, or sacrifice relationships with valuable enterprise
organizations which could churn to other CSPs. This
limits profitability and introduces a high degree of risk
and unpredictability into the CSP’s business. It leaves
enterprises feeling dissatisfied, with unpredictable business
and operational expenses, and at worst, employees who
are unable to communicate because their services have
been throttled or cut off.
The lack of real-time for enterprise customers
Bill shock is predominantly caused by heavy usage of
data services and international roaming services, where
enterprise employees don’t understand the frequency,
applicability or size of charges debited to their account.
This is particularly true for email usage, where employees
often believe that email does not count against their data
allowance.
On page 5 is an example of a monthly billing process
flow for enterprise customers showing where CSPs and
enterprises have pain points due to the lack of real-time
visibility throughout the process.
Because usage is not rated in real-time, and the CSP does
not provide real-time information or communications
about spending levels, the enterprise is in the dark until
the end of the month. When the statement is received at
the end of the bill cycle, there are unforeseen charges and
no predictability from month to month of total costs. If
the bill amount is disputed, the CSP incurs reconciliation,
resolution and write-off costs. Even if the dispute is
resolved and the enterprise bill is written off, in some cases
the enterprise churns and their revenue stream is lost.
MATRIXX Enterprise Spend Controls
Enterprise billing process flow

Price Negotiation Potential Churn

» Enterprise negotiates communication package » Enterprise churns to another CSP
» CSP has only limited options to offer » CSP loses revenue from write-off and
potentially loses revenue stream permanently

Price Configuration Write-offs

» Enterprise has few options how it is charged » Enterprise service is disrupted during
» CSP must go through timely process dispute resolution
to implement pricing » CSP has to write-off some portion of bill

Usage Processed Dispute Resolution

» Enterprise generates a large number » Enterprise refuses to pay the bill
of billable events » CSP enters into lengthy and costly
» CSP processes usage in batch dispute resolution process

Bill Generation Bill Reconciliation

» Enterprise has to wait until the end of the month » Enterprise disputes the bill amount
for the bill, and has no spend visibiliy » CSP allocates resources to reconciling the bill
» CSP aggregates all costs together into a bill

Bill Shock
» Enterprise calls CSP call center to complain
about high bill
» CSP call center is overloaded

QUANTIFYING THE ISSUE Write-offs as a percentage

Study results show there are three primary areas where of total enterprise revenue per month
CSPs are negatively impacted because they lack the ability
to provide real-time visibility of enterprise spending.
These are quantified below as bad debt write-offs, bill 35
reconciliation and dispute resolution, and customer churn.
30
Bad debt write-offs
Where payment of a bill is refused by the enterprise, bad
25
debt write-offs seriously impact the bottom line of CSPs –
particularly at a time when properly monetizing network 20
usage in the face of mobile data growth is already a
challenge. This can also lead to revenue leakage above and 15
beyond the write off amount as settlement charges must be
paid to roaming partners whether or not the CSP collects 10
the disputed charges from its customers.
5
While each dispute resolution is unique between a CSP
and an enterprise customer, write-offs can range widely 0
from specific charges to 100% of a disputed amount,
making the financial outcome of dispute resolution totally < $5m $5 $10 $15 $20 > $25m
TO TO TO TO
unpredictable.
$10m $15m $20m $25m

Source: Stratecast, a division of Frost & Sullivan, December 2010

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MATRIXX Enterprise Spend Controls
Write-offs range from less than US$5m a month to
over $25m, with 10% to 15% of total enterprise revenue
representing the average. These figures are significant
alone, but they make an even greater impact when
understood in the context of the percentage of overall
monthly revenue that enterprises deliver to a CSP’s top-
line revenue. Based on subscriber volumes, enterprise
customers account for 10% - 15% of all subscribers but
deliver up to 40% of total revenue. They are also heavy
data users contributing up to 40% of data revenues.
Bill reconciliation and dispute resolution
Reconciling a disputed bill is universally acknowledged by
CSPs as problematic and complex. It can affect customer
goodwill, and places a heavy burden on the Revenue
Assurance (RA) group. This group must ascertain the true cost
incurred by an enterprise, department or individual user, and
the amount of effort the CSP has used to recover a payment.
% large enterprises contribute
to overall revenue
50
40
30
20
10
0 70
10-20% 20-40% 50%
Source: Stratecast, a division of Frost & Sullivan, December 2010
The dispute resolution process can be open-ended in terms
of the time and resources required to reach a conclusion.
Service revenue from that customer is effectively put on
hold while the dispute is resolved, particularly where
services have been restricted or denied as a consequence
of unpaid, outstanding charges.
A lack of flexibility in overdue bill payment arrangements
means that an enterprise’s communications services can be
completely cut off until payments are received. Meanwhile,
the enterprise can experience disruption to vital business
functions such as voice or email access as services are
throttled or denied. Additionally, disputes also increase
the cost of handling customer care inquiries. Finally, if the
CSP does not throttle or cut off services during the dispute
period, revenue leakage increases as employees continue
to use services beyond the agreed limits, making the write-
off larger every day the dispute continues.
Customer churn
All CSPs expect a certain level of customer churn as a fact
of doing business. Gone are the days when enterprises had
only one or two options when choosing a communications
provider. Enterprises now have a wide array of providers
to choose from. So even if disputes with enterprises
are resolved, there is no guarantee that individuals,
departments or an entire organization will not leave and
sign up with an alternative CSP. This compounds the
impact of dispute resolution costs and write-offs as it
results in the complete loss of revenue from an enterprise
as it churns to another provider.
In the present survey, over 90% of CSPs had experienced
enterprise customer churn resulting from spending
disputes. As one CSP stated, “Whenever we get complaints
we try to resolve the issue at our end, but even then, some
still switch to another [provider].”
Customer churn from
Conventional spending
wisdom disputes
100
90
80
> 50% 60
50
40
30
20
10
0
Yes No
Source: Stratecast, a division of Frost & Sullivan, December 2010
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MATRIXX Enterprise Spend Controls
CSPs are responding to these numerous challenges by
exploring the potential of enterprise spending controls.
The survey found that nearly 75% of enterprise customers
requested better spending controls from their CSP in order
to help them manage their accounts and gain visibility over
employee and overall corporate spending. The objective
for CSPs is definitely clear; to provide predictable bills
which enterprises do not dispute, and ultimately to
offer better financial planning tools that provide their
enterprise customers forward budgeting and greater
spending control.
More predictable bills would allow these high-value
customers to better plan their budget cycles, and predict
roaming usage spikes in advance. They could also
understand if there were problems with specific user
overages, which could be addressed if enterprises had
sufficient – and timely – information about how their
employees used communications services.
Customer education was also viewed as a key factor by
CSPs in making bills more predictable. And all CSPs taking
part in the research agreed that real-time spending analysis
would help them significantly.

THE DRIVERS FOR ENTERPRISE SPENDING Improved KPIs

CONTROLS AND PREDICTABLE BILLS
There are a number of drivers behind these requests
for enterprise spending controls and predictable bills
including:
Some enterprises believe that CSP pricing plans no
longer fit their usage needs.
Enterprises realize that crucial communications services
will be affected by non-payment of bills.
Enterprises now have a choice when it comes to who voice minutes or data transaction volumes to avoid any
supplies these services.
Real-time enterprise spending controls hold the key
to increased CSP business performance. Every CSP in
this study agreed that such controls would bring better
awareness of real-time enterprise spending, and improve
customer satisfaction. CSPs who deploy such spending
controls could expect to see tangible improvements in the
following KPIs:
Data Revenue Collected. Revenue leakage and debt
write-offs would be minimized, since enterprises would
be aware of their spending and be able to negotiate extra
bill shock.

Large enterprises believe that some CSPs are unable International Roaming Used. Roaming premiums would
to see the ‘big picture’ from the enterprise business be easier to apply. The enterprise would have insight to
perspective and therefore are inflexible in their approach the additional charges related to roaming usage, and also
to dispute resolution. be able to see employee roaming usage patterns.

Day Sales Outstanding (DSO). DSO would be tightened

through a real-time financial relationship with the
Enterprise customers asking for better enterprise customer.
spend controls and predictable bills
Customer Satisfaction. Enterprise customers would be
more satisfied with their experience and would be less
80 likely to churn.
70
60
50
40
30
20
10
0
Yes No
Source: Stratecast, a division of Frost & Sullivan, December 2010
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MATRIXX Enterprise Spend Controls
WHAT ENTERPRISE SPENDING
CONTROLS LOOK LIKE
Enterprise spending controls allow the CSP to manage
subscriber balances, spending limits and usage in real-
time. They administer subscriber policy, backed by a
pricing catalog, thereby allowing real-time credit control.
Notifications can be offered to the enterprise that spending
limits or usage thresholds are about to be reached. This
provides a real-time decision point for the enterprise
that allows it to top up employee credit, select and buy
additional service bundles at preferential rates, or decide
how certain services are throttled given a number of
different usage scenarios.
Enterprise spending controls provide CSPs and enterprise
customers with a shared view of service usage and
spending, providing the real-time balance management
features that offer the visibility and control that both
require; the CSP provides a clearer view of how services
are consumed, and the enterprise gains the ability to better
control its spending based on a wide variety of parameters.
Greater control, flexibility and clarity
In marked contrast to batch processing—cycle billing and
then paying for overages at the end of the month—real-
time enterprise spending controls offer greater control,
flexibility and clarity for the enterprise on a day-by-day
basis as its staff consume services.
At the beginning of the month, service usage and spending
limits can be allocated from a central package directly
to departments or individuals based on their individual
needs. For example, field services staff may need more
mobile voice minutes to check in with HQ, whereas
executives based at satellite offices may need greater QoS
for video calls or a bigger data allowance for reviewing and
authorizing documents or files. Everyone needs an email
allocation. Spending controls allow department heads to
understand email usage and be notified in real-time if the
data allowance threshold, which underpins email usage, is
approached.
8
Notifications of any spending or usage metric can be
configured by the enterprise to be sent to both individuals
and department heads to alert them of high spending
levels. This helps the enterprise manage its budget and
usage dynamically. If a spending threshold is about to
be passed, an employee or administrator is notified and
given options on how to resolve the situation. Crucially, it
allows the enterprise to adjust usage quotas or allocations
between hierarchies, departments or individuals that
share pools of minutes or data capacity, and, for example,
reallocate spare credit from areas of low use to those
of high use. Enterprises can adjust to dynamic market
conditions in this way, responding to specific demands
placed on their communications services during any given
moment. It also allows them to dynamically provision
extra credit to areas where it’s needed, rather than face an
overage charge or service usage limitation from the CSP
further down the line.
Real-time spending controls provide an unprecedented
level of granularity in how the enterprise budget is
applied and shared across hierarchies, departments and
individuals. At any given point, there is clear visibility
into what’s in use, how much it’s costing, who’s using it,
where they are and which device they are using. Usage
trends such as these can be extrapolated by an enterprise’s
accounting team, who is in a better position to realign how
the budget is spent, reinforce enterprise usage policies or to
rationalize spending based on understanding where it’s likely
needed most today, tomorrow or months into the future.
MATRIXX Enterprise Spend Controls
Use cases
The following use cases illustrate how enterprises become
more empowered to control their own spending, and how
CSPs benefit through dispute avoidance and increased
opportunity to sell-in top-ups and new offers.
Facilities management
A corporation negotiates a mobile package for all
employees which includes 200,000 voice minutes and
500GB data allocation per month, where roaming and
overage charges apply. There is a total overage cap of
$10,000 across all employees during any month.
The facilities manager allocates 150,000 minutes and 350GB
to the Sales department, and 50,000 minutes and 150GB
to Engineering. But, during the month, the package can be
managed in real time by the facilities manager as below.
In this use case example, the facilities manager has live
spending visibility from notifications, and when balances
run low, has the control to proactively purchase more data
allowances as required. Note that if the facilities manager
decides not to buy an additional quota and incur overage
charges, then he is not in a position to later dispute overage
charges as he has been made fully aware of these charges
in advance.

Engineering uses
Overage charges GB allowance before
are avoided month end

Facilities manager buys an

extra GB bundle to ensure Facilities manager is
departments last until Facilities notified in real-time
the month’s end manager

Engineering Sales
Facilities manager is Facilities manager reallocates
notified in real-time GB from sales to engineering

Sales uses its GB allowance Overage charges

later in the month are avoided by reallocating
credit to engineering

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MATRIXX Enterprise Spend Controls
Employee application control
Enterprise spending controls are also flexible to allow
department managers to ensure that employees pay for
private usage on their device:

Not only can the department manager enforce corporate

device usage policies, but more GB can be allocated
to heavy data users, or more voice minutes for off-site
employees. Most importantly, the enterprise benefits from
tighter budget control and can elect what type of employee
usage it will pay for including voice, data, Web browsing,
file sharing or chat.

Employees are allowed

up to $10 per month for
personal use

Enterprise is charged for its

usage, employees are Some individuals exceed this
charged for personal usage
Comms limit and the communications
Director director is notified in real-time
that exceeds limits

HQ Field Sales
Inappropriate charges to
the enterprise are avoided

Individual Individual Individual

Enterprise saves money by Comms director reminds staff
not paying for employees’ of enterprise $10 policy
excess personal usage regarding personal usage

Users of non-business Individuals who exceed

services are notified of the threshold know they
their excess spend must pay the balance

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MATRIXX Enterprise Spend Controls
Developing a business case
The business case for CSPs to implement enterprise
spending controls can be made through these four
fundamental drivers:
Reduced debt write-offs. Bad debt can be limited, and
the cost of bill reconciliation and dispute resolution
dramatically lowered.
Improved customer retention. Retention is key, because
churn is costly. According to Stratecast, customer churn
costs CSPs in North America approximately $75M to
$100M per quarter in total on average. According to Nexus
Telecom, CSPs can have a churn rate up to 7% of the
subscriber base, with a cost per churn event of between
US$200 and $600, and customer acquisition up to ten times
this cost.
Revenue increase. Enterprise spending controls provide
greater opportunity, and more inflection points during the
working day for enterprises to understand what they’re
paying for and to make better-informed decisions about
spending more. The provision of spending controls is also
a service in itself that CSPs can offer as an “extra” to some
customers and offer it as a loyalty factor to others.
Reduced dispute handling costs, which vary depending on:
The total time spent with the customer resolving
the dispute.
The number and type of offers made to the customer.
The number of times the problem has occurred historically.
The level of write-off provided to the customer.
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Enterprise spending controls also provide benefits to chief
financial and marketing officers at CSPs:
CFOs can:
Recover bad debt.
Gain a real-time revenue view.
Enjoy a dramatic reduction of credit risk and bad debt.
Prevent roaming revenue leakage for data services.
Reduce the number of disputes and the associated costs.
Remove back office processing costs.
Reduce DSO (Days Sales Outstanding).
CMOs can:
Attract more enterprise customers by offering spending
controls and real-time notifications.
Gain the ability to track customer usage and market to
them in real-time.
Take advantage of spending controls that remove ‘fear of
use’ for new service offerings.
Easily deliver customer-negotiated pricing, packaging and
billing relationships.
Gain a real-time view of enterprise customer
consumption and behavior.
MATRIXX Enterprise Spend Controls
THE MATRIXX SOLUTION Enterprise customers can enjoy full flexibility to:

At MATRIXX, our vision is that both enterprises and Help configure their own spending controls and gain
CSPs should benefit from real-time spending controls. better visibility over their spending.
Enterprises should gain the visibility and control that Act on real-time notifications by reallocating usage or
helps them better manage their budgets, while CSPs can spending from a central pool, or simply topping up
avoid bill shock, bad debt, disruptive and costly dispute with more.
resolution scenarios and better monetize the network
– all while improving customer loyalty. Additionally, Construct balance sharing plans between hierarchies,
MATRIXX Enterprise Spend Controls are specifically departments or individuals, with controls that mean a
designed to allow for maximum business flexibility in single balance can be shared by 10 or 10,000
managing corporate billing relationships and negotiated subscribers, across any number of different devices.
pricing including unlimited balance sharing, unlimited Track how resources are being used at any level and use
pricing configurability and actionable, real-time enterprise that information to plan for the future.
spending visibility.
For more information about enterprise spending controls,
please contact MATRIXX Software.
Unlimited flexibility to control spending
With MATRIXX Enterprise Spend Control, CSPs can:
Appendix: notes on research methodology
Instantly make real-time balance information available to All data points referred to in this paper are from unique first-line research
the subscriber. conducted by Stratecast in Nov-Dec 2010. MATRIXX Software commissioned
Stratecast (a division of Frost & Sullivan) to conduct interviews with a global
Set usage and spending controls across any number of
sample of CSPs, to understand the demand from their enterprise customers
levels in the organization. for greater visibility and control over enterprise spending on communications
Give volume and cross product or cross departmental services, primarily mobile services. Multiple personnel from 12 CSPs were
interviewed covering North America, Europe and India. Interviewees held
discounts.
positions in billing and revenue assurance organizations.
Price according to any metric including Kbs/MBs, content
downloads, bandwidth or service QoS.
Offer a set amount of resources for a specific time period
– daily, monthly or weekly.
Vary prices and policies based on an employee’s level in
the hierarchy and executive status.
Charge the enterprise for enterprise service consumption,
and separately to the employee for personal usage.
Easily set sharing rules across hierarchies, departments
or individuals.

MATRIXX Software
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