THE VIABILITY OF BUSINESS

PROCESS REENGINEERING:

“INTRODUCTION OF ELECTRONIC

BILLING PRESENTMENT AND

PAYMENT (EBPP) FOR

TELEKOM MALAYSIA BERHAD”

BY

JASON SIM KIAM HOWE

A Research Paper Submitted in Partial Fulfillmentof the Requirement for the Degree of

Corporate Master in Business Administration

Faculty of Economics and BusinessUniversiti Malaysia Sarawak

2003

The Internet usage has increased drastically in thecountry with the development of its infrastructureprovided by the telecommunications companies in thecountry; hence increase the accessibility to theInternet.

Table 1: Internet Subscribers and Users Statistics, ComputerStatistics In Malaysia

Demographic 1997 1998 1999 2000 2001 2002

March JunePopulation(mil) 21.7 22.2 22.7 23.5 24.0 24.3 24.5

Internet Subscribers (Dial-Up)

TotalSubscribers 0.205 0.405 0.668 1.659 2.115 2.203 2.297(mil)No. of InternetUsers (mil) 0.615 1.215 2.004 4.977 6.345 6.609 6.885

% AnnualGrowth 220.3 97.6 64.9 148.4 27.5

Penetration(persons per1 0 0 0 .9 1.8 2 .9 7.1 8 .8 9 .1 9.4

population)

Information Technology

No. of activepersonalcomputers 1.03 1.36 1.80 2.20 3.00

(mil)No. ofcomputers per 4 7 6 1 7 9 9 4 1 2 6100 population

Source: Malaysian Communications and MultimediaCommission (2002) and Economic Report (2002/03)

The growth in the users of Internet and informationtechnology has basically been growing at a nearexponential rate. Much of the growth has taken placeover the past two years as people become aware of theuse of Information Communication Technology (ICT).This is in-line with the government effort by

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allocating billions of ringgit towards increasing theusage and penetration of ICT in all walks of life.

The statistics recorded a total of 2.297 millionnumber of Internet subscribers with 6.885 millionInternet users in June 2002. The rise in Internetusage is not limited to high family incomes or largecities. The Internet usage grew among households inrural and urban areas. In other words, the Internetusage will increase and represents a healthy annualgrowth.

Electronic Billing Presentment and Payment (EBPP)offer a powerful new opportunity for a business tostrategically use its billing processes to sharpen itscompetitive edge. EBPP systems are new forms ofonline payment systems for monthly bills. It offersthe corporation the ability to send monthly bills orstatements to consumers and process electronicpayments via the Internet. Consumers can view, storeand pay bills using their web browser.

EBPP functions as an efficient vehicle for providingonline customer care; building customerrelationships, and enabling targeted marketing andpre-emptive customer communication. [l]

1.1. PROBLEM STATEMENT

Telekom Malaysia Berhad existing billing systemencounters problems- on the billing, in which affectsthe customer satisfaction and cash inflow. With theexisting traditional system, the bills were sent to thecustomers by post, which is not timely and alsounreliable as the bills might be lost.

The implementation of Electronic BillingPresentment and Payment (EBPP) depends greatlyon the acceptance of the users of the system, which

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are the customers of the organization. Factorscontributing to the acceptance of the system includethe reliability, viability and practicality of the system.

This study will focus on the factors contributing tothe success of the EBPP system for the organization,including the accessibility, security, reliability,strategic planning and system design.

1.2. HYPOTHESES

There are several hypotheses on the study of factorscontributing to the success of the EBPP system. Thehypotheses are as the following:

HO 1 : Security of the EBPP system ensures theconfidence of users on the system

Ho 2 : Strategic planning of the systemimplementation determines the success of thesystem

1.3.OBJECTIVES

a) To study the implementation of an e-billingsystem

b) To study the critical success factors of ElectronicBilling Presentment and Payment (EBPP)

c) As a proposal to the management for theimplementation of the Electronic BillingPresentment and Payment (EBPP)

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On top of that, this study also includes theanalysis on the acceptance by the customers thatis taken from a sample of random population. Thestudy on acceptance by both customers and thestaff involves the system design. This systemdesign consists of user interface and design, andalso the process flow of the proposed system.

2. LITERATURE REVIEW

2.1.Strategies for Business ProcessReengineering

The paper “Strategies for Business ProcessReengineering: Evidence from Field Studies” by Earl,Michael J., Sampler, Jeffrey L. and Short, James E.(1995) reports on early results from case studyresearch into the relationship between businessprocess reengineering (BPR) and strategic planning.First a framework for analysis is proposed based onthe concept of alignment. This “process alignmentmodel” comprises four lenses of enquiry: process,strategy, information systems, and changemanagement and control.

2.2.Implementing Business ProcessReengineering

The paper “The Implementation of Business ProcessReengineering” by Grover, Varun, Jeong, Seung Ryul,Kettinger, William J. and Wang, Shouhong (1995)stated that the issues in implementing BPR projectsbecome a major concern. This field research seeksempirically to explore the problems of implementingreengineering projects and how the severity of theseproblems relates to BPR project success.

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mechanisms, privacy and security, reliability and alsodispute resolution.

On the other hand, the biller expectations consist ofcost reductions, dispute resolution mechanism,reliable delivery mechanism, ability to up-sell andcross-sell, control over customer data and broaddistribution I reach.

2.4.Security for Internet Billing Systems

The paper “Conceptualizing and Implementing anInformation Strategy Billing Systems” by PanagiotaPapadopoulou, Nicholas Kolokotronis, PanagiotisKanellis and Drakoulis Martakos (2000) emphasizedthat Internet billing must be thought of as aSet&escape, the environment within which directinteractions between the customer and the businessoccur.

The richness of information about individuals thatcan be gleaned from the Internet makes it anenormously powerful marketing medium, whichencourages relationship building with the customerbecause of its real time and interactive nature.

The achievement of customer acquisition andretention and strategic goal like increasing marketshare are directly related to the reliability of thenetwork infrastructure of organizations.

In the paper, security is advocated as theindependent variable for the success of the EBPPsystem. Any information security strategy should beformed taking into account the business vision andthe business strategies adopted to meet the vision.The definition of any effective security strategyshould thus be well planned and concentrated effort

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FI SSL SETDbjective (i) To secure (i) Provide

connections confidentiality ofbetween two parties paymentthrough information iscryptographic transmitted alongsecurity. with the payment

(ii) T0 ensure information.interoperability (ii) Ensure the integritybetween of all transmittedindependent data.implementations of (iii) ProvideSSL. authentication

(iii)To ensure that a cardholderextensibility by is a legitimate usercreating a of a brandedframework into payment cardwhich public key account.and bulk encryption (iv)Providemethods can be authentication thatincorporated. a merchant can

(iv) To handle accept brandedcryptographic payment cardcomputations and transactionsnetwork activity through itsrelatively relationship with anefficiently. acquiring financial

institution.(v) Ensure the use of

the best securitypractices andsystem designtechniques toprotect alllegitimate parties inan electroniccommercetransaction.!

Source: K. Hickman, T. Elgamal, (1995) and SET Secure ElectronicTransaction Specification (1997)

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SSL meets several of the business objectives definedfor SET. For example, SSL provides a secure“electronic pipe” for transactions. Data sent throughthis pipe is encrypted and therefore providesconfidential communications between the partiesinvolved in the transaction. [2] Through the use ofencryption, SSL is also able to ensure the integrity oftransmitted data. Through its integration with thedominant browsers and web servers, SSL hasachieved interoperability and applicationindependence. [3]

In addressing the business objectives above, SETprovides other important benefits that differentiate itfrom SSL: authentication of both the consumer andmerchant, heightened security for credit cardinformation, and the technical infrastructure toprovide non-repudiable transactions.[4]

2.6.Electronic Bill Presentment and payment(EBPP) - a Powerful Customer Loyalty Tool

The article “Electronic Bill Presentment and Payment(EBPP) - a Powerful Customer Loyalty Tool” byGarry Young (15 June 2001) highlights the EBPP asa tool for enhancing customer loyalty and also costreduction for the company.

Electronic Bill Presentment and Payment (EBPP) canmake a significant cost-savings over the long-winded,manually intensive and antiquated alternative. Thedesire to save money is not the most strategic reasonfor putting EBPP in place, but it is nevertheless apowerful motivation at this stage in the market.Billing is a highly repetitive, resource-intensive, andprocess-driven task which is crying out for furtherautomation.

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There are significant costs involved in resolvingdisputed bills, including the cost of staffing acustomer call center and the elapsed time involved inrecovering the money owed; which can be reduced byEBPP.

The market research shows that EBPP’s ability toenhance and deepen the customer relationship is thegreatest incentive for its adoption. EBPP deliversconvenience and control into the hands of theconsumer. With EBPP, the billers will be able to buildup an excellent profile of how valuable theircustomers are, their creditworthiness and paymenthabits. Organizations can further attract customerswith differentiated value-added services, such asfinancial analysis services and the promotion oftargeted products.

2.7. EBPP Solution Models

The article “Electronic Bill Presentment and PaymentWhite Paper” (1999) described the two types pfsolutions of presenting bills on a corporate web site:the direct billing model and the consolidation model.

2.7.1 The Direct Model

In the direct model, a biller uses its corporate website to present bills to customers and/or send billsummary notices via email. Payers must visit the website to review bill summaries and details and pay thebills. The direct model enables a biller to maintainfull control of the display of bills, other services andmarketing content. It also allows the biller topreserve in-house control of important customerprofiles and billing data.

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Consolidation requires billers to expose customerdata to the consolidator and relinquish direct controlover the presentation of content and marketingopportunities.

Two distinct types of bill consolidators are emerging.“Thick consolidators” which gather billing data,include transaction details, from billers. “Thinconsolidators”, on the other hand, collect andaggregate only bill summary information. Bypreparing all billing data, including transactiondetails for presentation on their own web sites, thickconsolidators eliminate direct contact between billersand consumers. In contrast, thin consolidators collectand prepare only bill summary information frombillers; customers requiring transaction details aresent to the specific biller’s web site, enabling thebiller to directly provide customer service options andmarketing. Thin consolidation has developed inresponse to billing companies that desire the broadreach of consolidation while retaining the strategicmarketing and in-house data control of directpresentment.

Of the two types of consolidation, thin consolidationbest meets the need of customers for one-stop billpaying, as well as the needs of billers for data controland building customer relationships. Through thinconsolidation, billers are able to achieve the broadestreach and still attract customers to their web sites forbill details, customer care and targeted marketingprograms while leveraging their investments in adirect billing site.

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