Billing systems classification
Currently the utility market has two basic types of billing systems:
- "Turn-key" solutions - systems tailored by developing companies for certain needs, in compliance with certain legal requirements.
- "Heavy customized" for all types of business ERP systems for data management.
Of course under "turn-key" solutions we mean applications which are instantly ready for operation, they require no additional coding or debugging and contain no accounting errors.
If we compare "turn-key" systems which operate improperly and there are plenty of them in Russian and Ukrainian markets with "heavy customized" systems, the latter would have less errors in design and programming. Thus nobody gives you 100% guaranty of errors free operation and consulting companies which customizes "heavy" systems for you can bring you an unexpected surprise. When you buy a “turn-key” system you at least can see what you have instead of "we are planning to design it like this". Thus you need to understand that if you buy a "heavy" system, you buy not a “turn-key” solution, but tooling for designing this solution, a universal work piece. It's clear the more universal this work piece is the more customization it requires. If we compare it with a construction of a house, then instead of a finished building you get its drawing, foundation, bricks and a float. Of course you can't live in such a house. Several years should pass before you finish customizing your "heavy" system. For sure it would be difficult due to a number of reasons. For example, as real life experience shows, in two cases out of three several years of delay before the ready solution is installed (if any) influence badly the career of officials who make decisions on purchasing a "heavy" system, because "money was spent, and no result followed". Such a vulnerable situation for an official is preserved during whole time the “heavy” system installed and fine-tuned. If implementing was successful everything is OK, but some thoughts left: "why the cost was so high"?
To get a good result with a “heavy” system the buyer contracts a consulting company which is capable of customizing such systems. The cost of customizing virtually equals or even higher than the cost of this system itself. Apart from being capable of customizing “heavy” systems a consulting company should be perfectly aware of the laws in force and technology of work of providing companies, let alone the notions how to optimize the work of a providing company. It is evident that once a system customized under non-optimal technology this results in non-efficient operation of a company for years, thus before customizing a system, a new effective technology should be developed and implemented first. There are very few specialists who can cope with all these issues and their service is very expensive taking into consideration the world level of average cost of “heavy customization” of system. Hence as a rule the necessary requirement on contracting a consulting company is its capability to customize "heavy" systems. It looks as if contracting a team of construction workers because they know how to lay bricks. The role and responsibility of an architect and a project designer is delegated to the Customer - "just tell us what to do and we will do it". Every Customer likes promises that everything he wants will be done. Of course nobody informs the Customer that the task setting stage is the most expensive and labour taking phase of the project where every small detail counts and everything should be taken into account. It is hard to believe, but starting from that point the Customer bears entire responsibility for a whole project, and if something necessary for the Customer is not described in details, the Contractor can design it at his convenience or not design it at all. Certainly it is very difficult to take into account everything and the responsibility for any lag or fault shall be born by those who set the task, by the architect and the designer in this situation by the Customer.
Finally we have the Customer who paid double price for a consulting company work on the project (generally more expensive than the cost of a system itself) and "heavy" system (a tool for a consulting company to complete the project), has to prepare technical specification and as the result bear all responsibility for any faults. However!
Let's look in details why companies choose such a long and winding road to their success - effective operating business in utility assets selling?
- The status value of a "heavy" branded system, (more capitalization required) is necessary produce an impression for public or a potential buyer, if it is time to sell business because of its low financial efficiency or other reasons. This statement is hard to argue. A brand always makes impression. As usual a company works for its name then the name works for the company.
- A "heavy" system has more functions. This statement can be true, but lots of different functions of a "heavy" system without deep study of a number of issues don't always serve properly. There are too many unused functions of a "heavy" system due to its flexibility and universality. Built-in functions of such a system will be used in 10-20%, at the same time functions which are vital for a system will be coded with a help of APL.
- Independence from a "turn-key" billing system provider. Here probably two options are meant: collapse/liquidation of a developer company or some unreasonable financial demands from a developer. In the first case the developer is to blame, because lack of competence and management led to collapse. The second case is possible if you work with a developer who is interested in immediate profit and doesn't care of reputation and future relations. Both two options are not good. The statement if you choose a "heavy" system you will be independent is a myth. First, you will be totally dependent from a consulting company which is responsible for the so-called "customizing" of the system. In fact "customizing" also means adding necessary missing functions. Developed modules are not a part of a "heavy" system. Taking into account that such developed modules as a rule are critically important for this billing system. Outside is the brand but inside are home-made modules. Second, you become totally dependent from the developer of a "heavy" system and the communication level with which is much to be desired. They won't notice if you break down, the only good thing to you that they won't break down.
- Flexible "heavy" system is easy to tweak (modified, developed and supported) also including continuous changes in legal system and optimization of technological process. Unfortunately, in practice the effect is opposite. The idea of a Customer that once he spent a big amount of money and can save on system support does not go in line with the policy of "heavy" systems developers. As a rule a Customer has an unpleasant surprise - the cost of support of a "heavy" system for five years nearly totals its market price, purchase discounts don't count. If you don't pay for support after several years you'll have to buy licenses for new software versions. And please mind that amount paid for support doesn't include amount for modification and support to comply with changes of legal system which is payable to a consulting company. Thus regardless your wish a very big foreign company chosen by you will enjoy running your business together with you for indefinite period of time.