The utility industry has been on a roller coaster ride for much of the past few years. Caught in the midst of fitfully starting and stopping deregulation, aging infrastructure, higher than ever demand, and the need to cut costs, increase operational efficiency, and return value and dividends; the utility enterprise must continue to focus on delivering the highest quality of service and care to its customers. The utility customer service imperative is simple and straightforward. Utilities must provide reliable, affordable electric power, natural gas, and/or water to customers while also communicating, billing, and collecting payment from customers in a courteous, efficient, and proactive manner. Although this customer service imperative is simply stated, in the world of utility operations this easy to state mission entails complex business processes and creates multiple challenges for utility management, staff, and information technology (IT) systems.
For many years, energy and utility companies have been devising new information technology strategies and spending millions on computer systems, software, and business design to streamline operations, drive down internal costs, and create new revenue opportunities. While there are many success stories and many more lessons learned from across the industry, the majority of utilities are still not fully customer service focused organizations – despite their best efforts to improve customer service, many utilities still see it as a business function rather than a core business process. Truth be told, the utility industry still needs to understand that customer information and customer care are among the most important functions of the utility enterprise and that customer information systems (CIS) and customer care (often called Customer Relationship Management or “CRM”) really do have bearing on every aspect of utility operations and utility planning and decision making.
Over the past decade, utilities have invested substantial resources in CIS, CRM, and other customer care systems and architecture. However, the utility industry is only now beginning to realize that effective and efficient customer service rests not only on hardware but on selection and deployment of customer care applications (software) and customer service optimized business processes. This same hardware- or systems-centric mode of investment has created an environment in which many utilities possess a critical mass of customer care technology, yet they are not realizing the level of cost savings, efficiency, or customer satisfaction expected after making investments in CIS and customer care infrastructure. This has led some utilities to the erroneous conclusion that customer information and customer care systems are not worth the large investment, and therefore, should not remain a high priority in the enterprise. On the contrary, all indications are that customer service and customer care must be the top priority in the utility enterprise.
The Heart of the Matter
Notwithstanding cross-industry comparisons, and the kind of “back-to-basics” approach utilities across North America are now embracing, many utilities, - especially small to medium investorowned utilities - municipal and public utilities, and cooperative utilities are still struggling to really leverage CIS, CRM, and customer care systems and technologies to their full potential. Caught up in the need to upgrade transmission and distribution infrastructure, increase service reliability, and the ongoing need to serve customers with reliable electric power, natural gas, or water before serving the “softer” needs of customers, many utilities are failing to approach the service question holistically. That is, they are not yet seeing the delivery of power, water, and gas along with the pertinent information about these services (e.g., usage volume and consumption rate data; billing, credit & collections; etc.) as a dominant utility business challenge and/or responsibility.
The proof of this rests in fact. Only a handful of industry leaders, particularly those at small- to medium- sized investor-owned utilities and municipal utilities, surveyed in the past year said that the technologies they use to manage customer relationships are integrated with one another and with the rest of the enterprise. Even fewer indicated that they are very close to achieving goals of making better use of customer care and information systems and customer records. This is not to say that utilities are not making progress; the issue is rather that the majority of utilities still fall short of the goal of having customer-care applications that integrate sales, service, billing and collections and provide customer service organizations with a single extensible view of customer data. This spotty integration prevents the utility from delivering what customers really want and expect; “The full resources of the utility in addressing customer |service calls and requests.”
The good news, however, is that customer care research consistently shows that utility managers are increasingly turning to IT departments and information technology solutions to aid in addressing the “total customer service issue.” In fact, the vast majority of utility executives surveyed in the latter part of 2003 and early 2004 said that their companies are making customer care and customer management a higher priority for IT departments and for the entire utility enterprise.
A recent survey of more than 500 utilities (jointly sponsored by UtiliPoint International and InfoNetrix) identified more than $119 million in Billing, CIS, CRM, Call Center and related Utility Customer Care Solutions (UCCS) project opportunities, summarized in Table 1, below. Of this total, a substantial majority of the expenditures will be by municipal and investor-owned utilities. Moreover, spending on customer service and customer care is expected to grow even more robust throughout 2004 and beyond.
Addressing the Challenge
In addressing this continuing customer service imperative, utilities have essentially three choices to consider with regard to their information technology and business process needs. That is, utilities can: 1) choose to in-source solutions, creating their own proprietary systems and software; 2) purchase or license systems and software; or 3) outsource the entirety of systems, software and business processes.
Today, more than ever, utilities - especially municipal and rural electric cooperative (REC) utilities – are increasingly looking to third-party providers for assistance with customer service and customer care business processes and functions. Recent research also shows that utilities are regularly outsourcing billing, collections, and call overflow, and many are outsourcing even more of the “core” customer information, customer service, and customer care systems business processes. Indeed, another recent survey estimated that some 30% of utility companies outsource at least some portion of their customer care operations.
While it is obvious that there are real business risks to outsourcing customer service and customer care, within the larger outsourcing trend there are a number of areas where outsourcing and third-party services can work very well. Again, recent research conducted with over 250 utilities shows that utility outsourcing of several activities (Table 2, following) provides excellent traction for IT service providers. These are also areas where utilities are finding many positive reasons for outsourcing. More specifically, outsourcing of these IT functions and business processes are yielding time and cost savings in training and personnel development, as well as in system development and testing, mitigation of technology risk, and providing vastly better implementation of competitive industry customer service best practices.
Outsourcing isn’t the only option, however, and while it is clear that more and more utilities will outsource business functions and processes, the number and quality of hardware, software, and technology solutions vendors licensing and installing technology is also increasing favorably. Although the market for CIS, CRM, and customer care solutions remains very competitive, there is a good deal of business available to suppliers of these solutions.
Embracing the Holistic View of Customer Service
For most utilities, addressing the multifarious challenges of providing “total customer service” will likely mean creating a portfolio of solutions that include in-sourced, licensed, and out-sourced solutions and business processes. Many utility managers have gotten so involved in feature issues and functionality requirements for technology solutions that they have lost sight of the critical business needs and business drivers that compel them to improve customer service to begin with. It is simply not enough to improve customer service, rather it is an imperative that utilities must recognize in response to customer, market, and industry needs.
By itself, technology has little capacity to create business efficiency or true competitive market advantages. Yet, technology remains an essential tool for raising the competitive bar as well as for creating better business processes, capturing efficiency, raising productivity, and reducing costs. When building customer relationships, utilities and energy firms must distinguish between technology’s usefulness and its limitations to extract the greatest value from technology.
Utility executives are sometimes confused by the hyperbole that often accompanies technology, especially on the leading edge of new developments. However, customer service and care excellence isn’t really measured by what is possible technologically, but rather by customer wants, needs and expectations in the context of the customer-utility relationship. Even given the significant advances of today’s technology and utility markets, many utilities still do not fully understand customer needs and desires when it comes to service, information sharing, communications, and dispute resolution.
Because a large portion of customer relationship management — both the business process and the technology — involves capturing customer information and what the utility does with that information once it is captured, utilities often miss the fundamental purpose of collecting information to begin with; that is, communication. Obviously utilities should use the information they collect to communicate with customers, but there is a common dilemma regarding which information should be going to which customers and when. The fact is, many utilities really don’t know (or aren’t sure), especially when it comes to providing outage information. Deciding what information to communicate and how often is a formidable challenge in light of the recent Do-Not-Call legislation. Nonetheless, outbound communications is a vital part of a bestpractices customer relationship strategy.
Research suggests that the answer to these questions is to let customers tell you what information they want and how they want it by allowing them to opt-in. In other words, customers must have a way to tell the utility what information they want to receive and when (and how) they want to receive it. In addition, research consistently shows that payment alerts, outage notifications, order status updates and news about new products or services in which customers have expressed an interest are welcome in utility-to-customer communications.
Utilities have not conventionally emphasized outbound communication — in part because they have erroneously mandated that the costs of customer communication be tied to revenue generation (i.e. collection, dispute resolution, etc.). Additionally, utilities have traditionally viewed customer communication as being event specific or demand driven, rather than a resource to manage the customer relationship throughout the entire customer lifecycle. Utilities are now realizing that in addition to improved customer service and customer care, outbound customer communications can dramatically help utilities avoid the future high costs of customer contact and customer service. Outbound customer service and communication applications that are already yielding benefits to utilities include:
Again, the goal of the utility should be to manage customer expectations, provide customer services and communicate with each customer throughout the entire customer lifecycle.
Getting Back to Basics
As the electric utility industry retrenches and focuses on its core business of delivering reliable electric power to customers, utilities must resist the temptation to stop investing in state-of-the-art information technology and customer service and customer care solutions. If anything, utilities must work even harder than ever to bring CIS, CRM and other dimensions of customer care into balance with infrastructure needs and investments. Even though the “Getting back to basics ethos” resonates in today’s economic and energy business environment, utilities should only be turning back the clock to the extent that they are redoubling their commitment to providing excellent service, maintaining community focus, and delivering reliable power to customers. Rather than going back in time, utilities will have to go “Back to the future,” and continue to invest in both infrastructure AND technology in order to meet the new challenges they face.
A guide to where utilities should make these important investments can be found in remembering what customer total customer service means. Utility customers want:
(*In today’s world, this means that customers must be able to contact the utility by phone, fax, email and in person.)
A fringe benefit derived from a renewed customer focus is the good relationship and cooperation with regulators, investors, and shareholders. Regulators should be pleased to see that both the regulated and deregulated entities in the business are providing a high quality of service for a fair price. Shareholders, in their desire for solid company performance, should be the main beneficiaries of diligent deployment and use of information technology; reductions in direct costs and overhead; and better allocation of resources.
At the end of the day it is clear that refining business objectives through the mind’s eye of the customer will help utility executives prioritize decision making and yield valuable insights, both in terms of high-level utility strategy, as well as at more basic levels in the technology selection process. Total customer service has been, was, and is still the imperative in the utility industry. Some of the primary issues and trends driving – or being driven by – this utility customer care imperative are summarized in Table 3, following.
About the Author
Ethan L. Cohen, is Director, Utility and Energy Technology for Practice UtiliPoint International, Inc. Prior to joining UtiliPoint, Mr. Cohen was a manager at Blue Ridge Partners, an energy and utilities business process outsourcing consultant. Mr. Cohen also has experience as Research Director Energy and Communications at Aberdeen Group, a leading information technology market research and consulting firm and as Senior Analyst with The Yankee Group, where he built the first energy technology focused market research and advisory practice. Mr. Cohen also worked for a period in the United States Senate as a legislative staff member, where honed his energy industry regulatory expertise. Mr. Cohen is quoted frequently in energy and utility industry trade journals and in the business media. He holds an A.B. with subject honors from Vassar College and an M.A. from Brandeis University.
UtiliPoint International, Inc. is a leader in providing consulting services to the energy industry, and has a 71-year history and over 50 utility clients worldwide. UtiliPoint International's staff is comprised of leading energy experts with diverse backgrounds in utility generation, transmission & distribution, retail markets, mergers and acquisitions, emerging technologies, investment capital, information technology, renewable energy, regulatory affairs, and international issues.
For many years, energy and utility companies have been devising new information technology strategies and spending millions on computer systems, software, and business design to streamline operations, drive down internal costs, and create new revenue opportunities. While there are many success stories and many more lessons learned from across the industry, the majority of utilities are still not fully customer service focused organizations – despite their best efforts to improve customer service, many utilities still see it as a business function rather than a core business process. Truth be told, the utility industry still needs to understand that customer information and customer care are among the most important functions of the utility enterprise and that customer information systems (CIS) and customer care (often called Customer Relationship Management or “CRM”) really do have bearing on every aspect of utility operations and utility planning and decision making.
Over the past decade, utilities have invested substantial resources in CIS, CRM, and other customer care systems and architecture. However, the utility industry is only now beginning to realize that effective and efficient customer service rests not only on hardware but on selection and deployment of customer care applications (software) and customer service optimized business processes. This same hardware- or systems-centric mode of investment has created an environment in which many utilities possess a critical mass of customer care technology, yet they are not realizing the level of cost savings, efficiency, or customer satisfaction expected after making investments in CIS and customer care infrastructure. This has led some utilities to the erroneous conclusion that customer information and customer care systems are not worth the large investment, and therefore, should not remain a high priority in the enterprise. On the contrary, all indications are that customer service and customer care must be the top priority in the utility enterprise.
The Heart of the Matter
Notwithstanding cross-industry comparisons, and the kind of “back-to-basics” approach utilities across North America are now embracing, many utilities, - especially small to medium investorowned utilities - municipal and public utilities, and cooperative utilities are still struggling to really leverage CIS, CRM, and customer care systems and technologies to their full potential. Caught up in the need to upgrade transmission and distribution infrastructure, increase service reliability, and the ongoing need to serve customers with reliable electric power, natural gas, or water before serving the “softer” needs of customers, many utilities are failing to approach the service question holistically. That is, they are not yet seeing the delivery of power, water, and gas along with the pertinent information about these services (e.g., usage volume and consumption rate data; billing, credit & collections; etc.) as a dominant utility business challenge and/or responsibility.
The proof of this rests in fact. Only a handful of industry leaders, particularly those at small- to medium- sized investor-owned utilities and municipal utilities, surveyed in the past year said that the technologies they use to manage customer relationships are integrated with one another and with the rest of the enterprise. Even fewer indicated that they are very close to achieving goals of making better use of customer care and information systems and customer records. This is not to say that utilities are not making progress; the issue is rather that the majority of utilities still fall short of the goal of having customer-care applications that integrate sales, service, billing and collections and provide customer service organizations with a single extensible view of customer data. This spotty integration prevents the utility from delivering what customers really want and expect; “The full resources of the utility in addressing customer |service calls and requests.”
The good news, however, is that customer care research consistently shows that utility managers are increasingly turning to IT departments and information technology solutions to aid in addressing the “total customer service issue.” In fact, the vast majority of utility executives surveyed in the latter part of 2003 and early 2004 said that their companies are making customer care and customer management a higher priority for IT departments and for the entire utility enterprise.
A recent survey of more than 500 utilities (jointly sponsored by UtiliPoint International and InfoNetrix) identified more than $119 million in Billing, CIS, CRM, Call Center and related Utility Customer Care Solutions (UCCS) project opportunities, summarized in Table 1, below. Of this total, a substantial majority of the expenditures will be by municipal and investor-owned utilities. Moreover, spending on customer service and customer care is expected to grow even more robust throughout 2004 and beyond.
Addressing the Challenge
In addressing this continuing customer service imperative, utilities have essentially three choices to consider with regard to their information technology and business process needs. That is, utilities can: 1) choose to in-source solutions, creating their own proprietary systems and software; 2) purchase or license systems and software; or 3) outsource the entirety of systems, software and business processes.
Today, more than ever, utilities - especially municipal and rural electric cooperative (REC) utilities – are increasingly looking to third-party providers for assistance with customer service and customer care business processes and functions. Recent research also shows that utilities are regularly outsourcing billing, collections, and call overflow, and many are outsourcing even more of the “core” customer information, customer service, and customer care systems business processes. Indeed, another recent survey estimated that some 30% of utility companies outsource at least some portion of their customer care operations.
While it is obvious that there are real business risks to outsourcing customer service and customer care, within the larger outsourcing trend there are a number of areas where outsourcing and third-party services can work very well. Again, recent research conducted with over 250 utilities shows that utility outsourcing of several activities (Table 2, following) provides excellent traction for IT service providers. These are also areas where utilities are finding many positive reasons for outsourcing. More specifically, outsourcing of these IT functions and business processes are yielding time and cost savings in training and personnel development, as well as in system development and testing, mitigation of technology risk, and providing vastly better implementation of competitive industry customer service best practices.
Outsourcing isn’t the only option, however, and while it is clear that more and more utilities will outsource business functions and processes, the number and quality of hardware, software, and technology solutions vendors licensing and installing technology is also increasing favorably. Although the market for CIS, CRM, and customer care solutions remains very competitive, there is a good deal of business available to suppliers of these solutions.
Embracing the Holistic View of Customer Service
For most utilities, addressing the multifarious challenges of providing “total customer service” will likely mean creating a portfolio of solutions that include in-sourced, licensed, and out-sourced solutions and business processes. Many utility managers have gotten so involved in feature issues and functionality requirements for technology solutions that they have lost sight of the critical business needs and business drivers that compel them to improve customer service to begin with. It is simply not enough to improve customer service, rather it is an imperative that utilities must recognize in response to customer, market, and industry needs.
By itself, technology has little capacity to create business efficiency or true competitive market advantages. Yet, technology remains an essential tool for raising the competitive bar as well as for creating better business processes, capturing efficiency, raising productivity, and reducing costs. When building customer relationships, utilities and energy firms must distinguish between technology’s usefulness and its limitations to extract the greatest value from technology.
Utility executives are sometimes confused by the hyperbole that often accompanies technology, especially on the leading edge of new developments. However, customer service and care excellence isn’t really measured by what is possible technologically, but rather by customer wants, needs and expectations in the context of the customer-utility relationship. Even given the significant advances of today’s technology and utility markets, many utilities still do not fully understand customer needs and desires when it comes to service, information sharing, communications, and dispute resolution.
Because a large portion of customer relationship management — both the business process and the technology — involves capturing customer information and what the utility does with that information once it is captured, utilities often miss the fundamental purpose of collecting information to begin with; that is, communication. Obviously utilities should use the information they collect to communicate with customers, but there is a common dilemma regarding which information should be going to which customers and when. The fact is, many utilities really don’t know (or aren’t sure), especially when it comes to providing outage information. Deciding what information to communicate and how often is a formidable challenge in light of the recent Do-Not-Call legislation. Nonetheless, outbound communications is a vital part of a bestpractices customer relationship strategy.
Research suggests that the answer to these questions is to let customers tell you what information they want and how they want it by allowing them to opt-in. In other words, customers must have a way to tell the utility what information they want to receive and when (and how) they want to receive it. In addition, research consistently shows that payment alerts, outage notifications, order status updates and news about new products or services in which customers have expressed an interest are welcome in utility-to-customer communications.
Utilities have not conventionally emphasized outbound communication — in part because they have erroneously mandated that the costs of customer communication be tied to revenue generation (i.e. collection, dispute resolution, etc.). Additionally, utilities have traditionally viewed customer communication as being event specific or demand driven, rather than a resource to manage the customer relationship throughout the entire customer lifecycle. Utilities are now realizing that in addition to improved customer service and customer care, outbound customer communications can dramatically help utilities avoid the future high costs of customer contact and customer service. Outbound customer service and communication applications that are already yielding benefits to utilities include:
- Welcome Calls
- Electronic Funds Transfer (EFT) confirmations
- Account Activation and Deactivation services
- Payment Reminders & Overdue Notices
- Rate Change Notifications & Tariff Notices
- Crew Mobilization Notices
- Outage/Restoration Notification
- Customer Satisfaction Surveys
Again, the goal of the utility should be to manage customer expectations, provide customer services and communicate with each customer throughout the entire customer lifecycle.
Getting Back to Basics
As the electric utility industry retrenches and focuses on its core business of delivering reliable electric power to customers, utilities must resist the temptation to stop investing in state-of-the-art information technology and customer service and customer care solutions. If anything, utilities must work even harder than ever to bring CIS, CRM and other dimensions of customer care into balance with infrastructure needs and investments. Even though the “Getting back to basics ethos” resonates in today’s economic and energy business environment, utilities should only be turning back the clock to the extent that they are redoubling their commitment to providing excellent service, maintaining community focus, and delivering reliable power to customers. Rather than going back in time, utilities will have to go “Back to the future,” and continue to invest in both infrastructure AND technology in order to meet the new challenges they face.
A guide to where utilities should make these important investments can be found in remembering what customer total customer service means. Utility customers want:
- Access to the utility and to customer service*
- Accurate, timely billing and dispute resolution
- Communication about service outages, interruptions, etc.
- Communication and transparency about tariffs and tariff choices
- Easy access to information about both cost and energy conservation
(*In today’s world, this means that customers must be able to contact the utility by phone, fax, email and in person.)
A fringe benefit derived from a renewed customer focus is the good relationship and cooperation with regulators, investors, and shareholders. Regulators should be pleased to see that both the regulated and deregulated entities in the business are providing a high quality of service for a fair price. Shareholders, in their desire for solid company performance, should be the main beneficiaries of diligent deployment and use of information technology; reductions in direct costs and overhead; and better allocation of resources.
At the end of the day it is clear that refining business objectives through the mind’s eye of the customer will help utility executives prioritize decision making and yield valuable insights, both in terms of high-level utility strategy, as well as at more basic levels in the technology selection process. Total customer service has been, was, and is still the imperative in the utility industry. Some of the primary issues and trends driving – or being driven by – this utility customer care imperative are summarized in Table 3, following.
About the Author
Ethan L. Cohen, is Director, Utility and Energy Technology for Practice UtiliPoint International, Inc. Prior to joining UtiliPoint, Mr. Cohen was a manager at Blue Ridge Partners, an energy and utilities business process outsourcing consultant. Mr. Cohen also has experience as Research Director Energy and Communications at Aberdeen Group, a leading information technology market research and consulting firm and as Senior Analyst with The Yankee Group, where he built the first energy technology focused market research and advisory practice. Mr. Cohen also worked for a period in the United States Senate as a legislative staff member, where honed his energy industry regulatory expertise. Mr. Cohen is quoted frequently in energy and utility industry trade journals and in the business media. He holds an A.B. with subject honors from Vassar College and an M.A. from Brandeis University.
UtiliPoint International, Inc. is a leader in providing consulting services to the energy industry, and has a 71-year history and over 50 utility clients worldwide. UtiliPoint International's staff is comprised of leading energy experts with diverse backgrounds in utility generation, transmission & distribution, retail markets, mergers and acquisitions, emerging technologies, investment capital, information technology, renewable energy, regulatory affairs, and international issues.
