By Anthony Haines
As electricity providers prepare for the competitive market, they are integrating customer information systems that will enable them to deliver better service to customers, and are capable of handling large data transfers between wires companies, retail marketers and customers. As a result, their customer information systems (CIS) are becoming mission-critical to business operations and critical to their bottom-line results. These factors are driving the trend to outsource the CIS solution to service providers with the skills, expertise and infrastructure capable of handling their processing demands. According to the Meta Group, the IT outsourcing market for energy utilities will reach $12 billion (USD) by 2006.
In the competitive electricity market, an unprecedented battle will be waged to win customers. The winners will be those who deliver superior levels of customer service, and develop new and innovative products and services, using their CIS as the backbone.
At most utilities, the CIS serves as the core intelligence gathering application. TodayŐs CIS solutions go far beyond the traditional process of simple billing and collecting revenue, enabling electricity providers to:
- Collect vast amounts of usage data and billing information within critical time constraints;
- Implement targeted marketing initiatives as a result of access to raw data which reveals trends in usage; and
- Integrate and automate Internet billing solutions for customers.
Why Outsource?
According to a survey of North American utility companies conducted by Chartwell Inc., progressive electricity providers are selecting to outsource specific IT functions such as the CIS, rather than the entire IT infrastructure, as a way to minimize capital investment, take advantage of leading-edge technologies, and leverage the expertise of niche service providers.
During this period of flux in the electricity industry, there will be only one constant: change. This will be seen most in the shift by utilities from a focus on maintenance, transmission and distribution, to a customer service oriented approach.
To be successful in the competitive market, electricity providers will extend current offerings to incorporate value-added products and services, such as automated meter reading, remote meter disconnects, load management, pricing at the meter, customer determined billing cycles, outage detection and restoration at the meter etc. This means the introduction of a myriad of new technologies, which often cannot be supported by the staid IT infrastructures found in-house at utilities.
According to the Chartwell report, 29 per cent of companies surveyed outsource operation of some aspect of their CIS. Those surveyed chose to outsource for the following reasons:
- Lack of in-house resources;
- Cost savings;
- Faster development and time-to-market; and
- Obtaining outside expertise.
Selecting an outsourcing partner
Start your assessment by investigating several potential outsourcing partners. Key to your selection criteria should be their ability to demonstrate proven experience and repeatable methodologies. As well, a service provider with knowledge that extends beyond just the CIS to automated meter reading, utility communication networks, and customer relationship management will inevitably be able to help you achieve full automation from meter to cash.
Ask for references of current and former customers and look for demonstrated expertise in the energy and electricity industries in the North American energy sector. Selecting a service provider who does not have the capabilities to meet your ongoing and changing technology requirements could lead to increased expenses within the system later.
Assess hardware and software capabilities to ensure that applications are robust enough to meet your computing requirements and are run on a stable and credible infrastructure. Determine whether the service provider has the capability to integrate the latest and greatest in CIS technology, such as Web-enabled billing services. And donŐt overlook their ability to keep your CIS secure.
Meet the team who will staff your CIS initiative. Ensure the service provider has the staffing capability to facilitate your outsourcing arrangement. Their understanding of leading-edge technologies for the electricity industry will be key to your roll-out and ongoing success.
A good service provider will have properly defined and well-implemented quality and standards policies. Examine what their process and review system is and how they track quality results. Due to the evolving nature of the market, a service provider should provide some flexibility in the agreement and define how changes in the scope of the agreement will be handled.
Once a service provider has been selected, develop a contract that meets the short-term and long-term needs of your business. Ensure that the contract is flexible enough to accommodate the unforeseen.
Establish a schedule for the project roll-out. This includes procedures for delays or deviations from the schedule, and an agreed upon timeframe for responsiveness. Setting milestones, design reviews, and regularly scheduled meetings will help ensure the ongoing success of your CIS.
Electricity providers preparing for the competitive market are well advised to take a long hard look at their current customer information system. Overlook-ing the competitive opportunities new CIS solutions can provide, such as the powerful data collection and the ability to bill for thousands of different rates, means a missed opportunity to deliver unprecedented levels of customer service and to stay ahead of competitors in the deregulated environment.
Anthony Haines is President of Enlogix CIS. ET