"The real solution is not EBPP but financial supply chain management," he says, noting that vendors have focused too narrowly on just billing and payment. Alliances are being forged among ERP players and e-commerce vendors such as Oracle, Ariba and Commerce One, giving rise to the promise of a complete EBPP solution, he says.

Single-purpose providers of EBPP solutions, of course, disagree. "We welcome the announcements from ERP vendors," insists Brian Hinton, vice president and director of e-bill services for Bottomline Technologies in Portsmouth, N.H. "We think they will raise corporate awareness of the benefits and ultimately drive business to us. We have the data transformation tools that add the real value."

The Three Bs

The single-purpose vendors are attempting to distribute their systems through banks rather than directly to companies. In addition to Bottomline, the principal technology platforms for EBPP are BillingZone, of Pittsburgh, and BCE Emergis in Toronto.

The "three Bs," as they are sometimes known, have made slow progress so far. Bottomline, for example, has installed just one B2B EBPP system directly to date–at a division of Uni-ted Technologies–and has set up alliances with five banks, or "channel partners." Despite the slow start, however, many analysts believe that the electronic billing and payment model will become as common a part of the procurement and accounting landscape as ATMs are in retail banking.

Marketers at the three Bs, meanwhile, insist that their single focus on billing and payment makes for better service and product than the secondary focus on EBPP of the ERP vendors. The ERP offerings are "EBPP lite–just basic presentment of an invoice," sniffs Bottomline's Hinton.

Juergen Weiss, product manager for SAP's nascent EBPP solution, counters that narrowly focused vendors are just niche players. Their offerings must be supplemented by a complex network of other vendors and internal departments to bring the simplicity that billers and payers need, he says.

Nothing But a Niche

"If you implement a niche solution, you will have trouble with back-office integration," Weiss insists. "It's easy enough to export an invoice file to an aggregator, but when payers dispute invoices and make partial payments, how can you ensure that your A/R [accounts receivable] database stays consistent with the aggregator's database? We have 19,000 installations.

We will offer not just bill presentment but account presentment. Payers will see the status of their entire relationship, including credits."

But Eric Smith, chief executive of BillingZone, says even the ERP vendors will need the expert services that his niche company can provide. "We see ERP vendors as more of an opportunity than a threat," he asserts. "They have a large installed base of corporate customers who will need to bill and pay electronically, and since they provide the A/P [accounts payable] and

A/R systems, they certainly have leverage. But they sell software, not service. We're a services company."

Both the single-purpose vendors and the ERP providers depend on banks to help market their products, and ultimately the banks may require the two to join forces on electronic solutions. Meanwhile, though, the rumble to control the EBPP turf has begun in earnest. Which is likely to win?

"That's hard to say," says Craig Jeffery, senior vice president and practice leader for e-commerce and automation consulting at Wachovia Treasury Consulting in Atlanta. "In some ways, logic favors the ERP vendors and their substantial franchises, but the banks have a head start. Still, it's developing slowly enough that being a front-runner doesn't assure victory."

In an early attempt to handicap the race, Celent Communications in June released a 42-page report called "Ranking the Vendors of B2B EBPP Solutions." Celent is a consulting firm specializing in Web services for financial institutions.

Out of seven vendors, Celent ranked BCE Emergis at the top, followed by

Bottomline and Avolent, a San Francisco-based vendor with an anchor in the business-to-consumer EBPP market. It did not break out the remaining four–BillingZone, docSense (from Pitney Bowes), edocs and iPlanet. And it did not evaluate PeopleSoft. The rankings considered breadth of features, number of customers, cost of solution, customer service, the "look" and ease of using the Web-based solutions and the speed of deployment. (See table, page 40.)

Rankings are made to be challenged, of course. Joseph Marino, principal analyst for Internet commerce at Current Analysis, disparages the offerings from the three Bs. "Anyone who signed on with BCE Emergis doesn't know what they're doing, because it's a dreadful, dreadful product," says Marino, who is based in Sterling, Va. "BillingZone is really bad stuff, and Bottom line knows it has to rewrite its whole application to adopt more open standards. These are not companies that show up as promising on the radar screen."

Flexible for the Future

Bank One, which has signed up with BCE Emergis, begs to differ.

"They're definitely a top-tier player with strong dispute-resolution functionality and good ability to customize invoices," says David Holly, head of e-commerce business development at the bank. "They're also a full B2B company with more to offer than just e-invoicing. We wanted a partner that could grow with us in the future."

Deutsche Bank, meanwhile, is one of the first intermediaries to have gone outside the three Bs for an EBPP solution to offer its customers. When it began searching for a vendor last summer, none measured up, says Peter

James, director of U.S. cash management products. But Deutsche chose iPlanet, the Sun Microsystems/Netscape joint venture, because it appeared best positioned to develop a workable solution. "We needed something flexible with open standards that would be easy to interface," James says.

"If you try to make all the payments by direct ACH [Automated Clearing House] debit, it won't fly."

The bank tested the solution in a Singapore pilot last year, and plans to roll out the multicurrency, multilingual EBPP product in the U.S. this summer, says James. Bottomline's Hinton dismisses Deutsche's choice, saying all it got from iPlanet was a "tool kit" to help it build a proprietary system. "They have no product at this point," he asserts. Within a year, he predicts, they will be back talking again to the three Bs. Who's right? The three Bs are "definitely the ones the banks are looking at," says Ariana-Michele Moore, research analyst at Celent and principal author of its report, "but no vendor or group of vendors dominates this market yet. It takes months for banks to program their own systems once they choose a vendor and then more months to sell it to corporate billers and get them implemented on the system."

Meanwhile, corporations remain wary of presenting or paying bills with electronic solutions. The reasons are cultural and technological. Countless clerks at billers and payers have been using paper-based systems all their lives. Many feel threatened by systems changes, and the arguments for EBPP's efficiencies rarely penetrate upward to senior executives.

An even more conspicuous hurdle is that payers see little benefit to converting to electronic acceptance of bills and debiting of their accounts.

And the results of the first-generation billers are hardly inspiring.

Procter & Gamble, for example, has signed up fewer than 20 customers for the BillingZone system it has been offering since last April. "It's more than anyone else has at this point," says Craig Brinkman, global manager of accounts receivable at the Cincinnati-based consumer products giant, but he concedes that he was surprised by the tepid response P&G got from a targeted list of customers to whom it offered the service earlier this year.

"One company told us that they'd like to do it, but the only PC is in the owner's office and they don't have access to it," he says. Another customer's A/P staff liked the idea but its treasury department vetoed it because of a policy against Automated Clearing House debits. "The A/P people are still trying to convince treasury to go along," he adds.

From P&G's viewpoint, the BillingZone system is extremely efficient since it translates all payer files into the EDI format that it uses. "We send BillingZone our standard EDI invoices, and we get back an EDI 820 payment transaction that conforms exactly with the way P&G defines EDI formats," says Brinkman.

Payer Reluctance

What's a slick system for the biller, however, is often difficult for the unsophisticated payer. Many supermarket chains and other P&G customers do not use EDI, so theymanually reenter the data despite the fact that BillingZone, like most EBPP vendors, provides downloadable export files.

"We explained the export function to customers who signed up, but we don't know if anyone is using it at this point," says Brinkman. He expects the feature to attract more users after BillingZone enhances its export features in its next release. "As more customers start to use export files and give us feedback, the process should improve to the point where it meets customers' needs," he says.

Habit Forming

Brinkman also expects that Billing Zone will develop an import feature that can intercept data coming out of a payer's check-writing program and feed it back to the vendor to make the electronic payments. It would let payers process EBPP transactions out of their A/P systems without special handling, just as they do with checks that they write. "The bigger shops that have automated workflow processes will expect both an export and an import capability," he says.

EBPP, he concludes, cannot be a half-measure solution, but must become the normal way that buyers make payments. "They have to be able to go to a Web site regularly and view and pay a bunch of bills," he says. "If it continues to be an exception, participation will dry up."

Procter & Gamble itself has not yet paid any of its bills using EBPP, although it is designing a template for its small suppliers to use to send it electronic invoices. Tellingly, no supplier has asked P&G to use EBPP, and Brinkman says itwould do so only on its own terms. "We have the same problem getting away from paper with payables that we do with receivables," he says.

Meanwhile, EBPP vendors are frustrated with the snail-like pace of adoption and are turning their attention to payers. "Catering to payers' needs is a huge opportunity that's just starting to be addressed," says Jeetu

Patel, executive vice president of research at Doculabs, a Chicago-based business research firm. He names BillingZone as making a particular appeal to payers, and says that e-procurement vendors Ariba and Commerce One are considering offering an EBPP function to their customers.

BillingZone's Smith is now flaunting a study his firm commissioned which concludes that purchasers want a more efficient method of payment and accounting. "More than half of the potential payers said that if the service included even a handful of their biggest, messiest billers, they'd sign up in a heartbeat, and a quarter said they'd sign up if asked by just one of their big billers," he reports.

Another issue for EBPP vendors is figuring out how to help potential customers on the billing side get internal clearance to adopt a system. To date, vendors have been approaching treasury and finance executives, but more often than not they must get additional clearance from their information technology and marketing colleagues. Moreover, many companies now have e-commerce groups that must give clearance, but the techies rarely comprehend the benefits of converting paper invoices into electronic documents and providing an electronic pathway for processing and settling them, Smith says.

Modest Stampede

Despite its modest launch, every week brings new announcements of EBPP offerings from big cash management banks. "If we aren't the EBPP provider, we could lose traditional treasury business, especially from our lockbox area," says Bank One's Holly. "Being the EBPP provider [also] can help us gain business."

He says the prime candidates for the service on the billing side are lockbox customers that generate large volumes of invoices, particularly those that have a lot of working capital tied up in days sales outstanding (DSO) as a result of disputed invoices. On the paying side, he believes EBPP will appeal primarily to companies that receive enough invoices from a biller to justify building an interface to their A/P systems. Effective biller consolidation that would give a payer many invoices at one site will have to wait until "the next generation," he concedes.

In the end, payment experts are loathe to predict whether EBPP will ultimately succeed in the B2B world. "I have scars that are still healing from predictions I made about financial EDI," says P&G's Brinkman. "I know we're moving in the right direction. As long as we save enough to cover our expenses, we will go forward."

"You've Got Bills"

What can SAP and PeopleSoft bring to the EBPP party? "We will go beyond standard electronic bill presentment and payment and offer real collaboration over the Internet," says Juergen Weiss, product manager for SAP's EBPP product.

However, his description of the operation sounds pretty similar to what the stand-alone vendors offer. Payers with SAP systems can click on a hyperlink in an e-mail message that alerts them to a waiting bill at a biller's site. There they can review open items and available credits, drill down to line items and authorize payment by check, p-card or ACH debit. The biller generates the direct debits. For other payments, a payment advice is created automatically and routed to an A/R manager.

The first release of SAP's product will not support future dating of payments or biller consolidation, but upcoming releases will, Weiss promises. Making it work will require the addition of sophisticated layers to a core SAP system. "Users will need a front layer," he says, noting that Java server pages usually will live on a Web application server and function on top of A/R systems. "And they will need a middleware layer to connect the Java server pages to A/R," he adds.

With PeopleSoft's MarketPay, "buyers and sellers share documents in ways that make the action of presenting an invoice moot," claims Craig

Himmelberger, director of product and technology. "We support true collaboration among trading partners in a shared environment." However,

he admits that the system makes sense only for trading partners with billion-dollar relationships. For smaller players, PeopleSoft this year

introduced an e-billing feature in the 8.0 release of its ERP system. While MarketPay and e-billing weren't built to be compatible, some firms are using them jointly to reach large and small customers, Himmelberger says.