Traditionally, utilities have had little experience with competition or strategies for winning new customers. Consolidation and globalization have changed that, as the industry transforms into a more dynamic market-driven environment with fewer, larger companies.
Deregulation has opened up new opportunities and new threats, forcing utilities to expand their focus from simply providing energy, to rethink their strategies and align them more closely with customer needs. Utility providers are therefore renewing activity directed at improvements in operations, use of information technology and automation of business processes. Additionally, more cross-functional business processes and customer service-focused solutions are being introduced to improve operational efficiency and maintain and expand the customer base.
As customers and business partners increasingly demand greater empowerment, utilities companies seek to improve interactions and relationships in their entire business ecosystems by enhancing software capabilities for collaboration, gaining deeper customer and market insight and improving process management.
The Impact of Deregulation
Although a global phenomenon, the pace and extent of deregulation varies widely across regions and across industries, especially the power and natural gas markets here in the United States. The reasons for such diversity lies in the infrastructure of the supply gird, ownership behavior in the energy industry, currently applicable law and the structure of the population served.
Nevertheless, three key drivers for deregulation are common throughout the world. First, globalization has led to more open markets, enabling companies to enter new markets more easily, but also exposing them to greater competition. Secondly, privatization in some countries has also resulted in the generation of fresh capital, allowing further investments in infrastructure and innovative technology. Lastly, market restructuring has led to more customer choice, competitive pricing and new customer structures, driving utilities to conquer multiple parts of the value chain as best-in-class providers.
One of the major consequences of deregulation is the unbundling of utilities, which in the first instance has split the roles of the energy supplier (RetailCo), the distribution company (DisCo) which operates the grid, the metering operator (MeterOp) and other related players. This means that commercial and industrial customers can purchase energy and related services from multiple vendors.
In the second phase, incumbents are rethinking their strategic focus on unbundled retail activities, choosing to perform one or more of the new energy values chain roles, depending on perceived core competencies, risk appetite and preferred market focus. The depth of specialist competencies needed to met customer expectations and compete successfully requires incumbents to reinvent themselves—for some an evolutionary process; for many, a revolutionary turnabout.
Customer Management Trends in the Utilities Industry
Customer information systems (CIS) for utilities have been around in some form or another for more than 20 years. In the late 1990s, when utilities first began to embrace new software innovations to help manage their customer relations, the market comprised vendors selling missioncritical enterprise systems focused primarily on operational customer relationship management (CRM) functions such as account maintenance, order processing, product and service management, billing, credit collection and accounts receivables, with some collaborative customerinteraction functionality. In this traditional approach, companies deployed expensive, cumbersome enterprise solutions tied individually to different processes. This approach was marked by numerous interfaces, heavy maintenance requirements and unnecessary data replication or manual data capture, resulting in a high cost of ownership and slow responsiveness to changing markets. As the discrepancy between investments and measurable success became more apparent, the initial euphoria evaporated and utilities became more conservative in their solution appraisals.
Today's companies are now seeking solutions that will help them:
The solutions of choice are flexible, scalable, highly integrated and are delivered by a vendor with the industry experience, the technical expertise and the staying power to meet their long-term and short-term needs.
Effective Data and Process Integration
Customers are the cornerstones of business processes transformation in utilities. The changes brought about by deregulation have become most evident in an examination of customer information systems. Deregulation has increased the need for intensive data exchange and better coordination of administration and accounting processes, especially in the sales channel.
As customer management in a utility company is strongly linked to the existing processes and solutions, customer management solutions and technologies must be capable of supporting and maintaining assignments from several company types (DisCo, MeterOp and RetailCo) and from diverse processes such as meter management, meter reading, contract billing, accounting and work management, while also maintaining flexibility and scalability. A prerequisite for this is the ability to integrate data across diverse and complex IT systems, as well as enable immediate, role-based access via multiple communication channels such as desktop, laptop, PDA, phone, e-mail and Internet.
Utilities companies therefore require a customer management system which is strongly linked to processes and solutions along the whole value chain, ensuring real-time collaboration and data integration between the:
Advanced Customer Services at FirstEnergy
FirstEnergy Corporation, the fourth largest investor-owned electric system in the United States comprising seven electric utility operating companies, selected an enterprise platform to support its customer service program. The company was seeking a single, fully integrated solution, which would support all activities of its Corporate Service Group as well as core business functions such as supply chain, finance, and human resources. FirstEnergy’s Customer Service Group is now managing distribution functions such as call centers, billing, credit, and collections for its 4.3 million customers with a seamless, integrated solution.
FirstEnergy is also currently developing a portal based on business intelligence solutions to aggregate data derived from hundreds of off-the-shelf, homegrown, and legacy applications to give its managers a more complete picture of plant and transmission line performance information to help them make more informed business decisions. As the existing multiple legacy systems and the associated interfaces have been replaced with the integrated solutions, FirstEnergy has been able to significantly lower its IT costs and increase data and process visibility across the entire organization.
City of Tacoma Offers Multiple E-Services to Utilities Customers
Like every other city and government organization, the city of Tacoma continues to face budget cutbacks combined with demand for more services. To address these issues, Tacoma recently implemented a comprehensive solution to support the City’s general government departments as well as Tacoma Public Utilities, which provides 183,000 of Tacoma's citizens with electricity, water, storm drainage, residential and commercial solid waste, sanitary sewer, cable and Internet services. In addition to managing the billing service for these accounts, the system calculates the payroll for 5,500 employees and provides a single integrated work management system across all the City's divisions.
The City replaced 100 legacy systems with an enterprise solution, and merged six major databases — including the old Customer Information System, the HR application, Financials, Permitting, and Tax & Licensing. The new endto- end functionality has enabled the City to also streamline its business processes, reducing individual processes from 650 to only 350 in total. For example, the City used to have three or four different ways to create a purchase order, varying by division; today, they have only one.
The City is also planning to promote customer self-services more consistently. As customers gain direct access to their accounts, they will increasingly be able to do more of the work that customer service representatives did, like pay bills, view account information, and answer their own questions about City services. Customers will also be able to choose their payment due dates, combine bills for multiple properties, and have all metered services appear on one bill. This will help the City of Tacoma achieve significant savings on it customer services, while providing its customers the flexibility and the accessibility they demand today.
Customer Self-Service Systems Open New Business Opportunities
Today’s customer is increasingly accustomed to carrying out transactions electronically, from paying bills via the Internet to accessing 24-hour online support and a host of other interactive online services. They therefore expect the same flexibility when communicating with their utilities provider. At the same time, customers are more cost-conscious, seeking greater transparency as to what value they are getting for their money.
Customer self-service is a compelling strategy to increase the speed and effectiveness of after-sales maintenance and repair services. When implemented the right way, such solutions have the potential of yielding significant benefits in the form of reduced service costs and improved productivity. Though industry observers consider a 30 percent deflection of calls to self-service channels as adequate, the rate should and could be closer to 80 percent to maximize the business benefits and cost savings. It is therefore essential that utilities continue to encourage customers to use the self-service channels.
In order to meet the demands of this growing customer segment, utility companies must ensure that systems are in place to deliver highly automated and accurate data transfer, easy navigation, 24x7 availability and convenience.
With effective software solutions in place, utilities can significantly reduce customer service costs, improve customer service, and allow customer service representatives to spend more time pursuing new revenue-generating business opportunities through consulting and telesales.
Advanced Call Center Management at OG&E
Oklahoma Gas and Electric (OG&E), the largest power company in Oklahoma with approximately 720,000 customers, was looking for an advanced and integrated call center solution to handle the daily volume of around 12,000 calls more cost-effectively. In order to raise the number of calls completed in selfservice, reduce call handling times and manage volume peaks in-house while saving outsourcing expenses, OG&E selected a speech-based call management solution which would integrate seamlessly with its existing enterprise resource planning environment. Built on top of a telephony infrastructure, the speech-based application has considerably enhanced self-service capabilities, offering an effective and easy-to-use interface for a higher rate of automated call completion. Furthermore, the integration of the telephony framework with the enterprise solution has enabled relevant customer information to be readily available to customer service representatives when the call is received. Customers no longer have to repeat their account number to the customer service representative, which improves both efficiency and the overall user experience.
Today, all customer service calls to OG&E are initially handled by the self-service telephone application, raising the rate of automated customer handling from 5% to 45% of total calls received. Customer services like outage reporting, account balancing, installment plans, payment office location or transfer and routing to other services are also supported by the new solution.
Reaping the Benefits of Integrated Customer Service
Utility companies are increasingly benefiting from new, advanced technologies which are transforming the dynamics of time-to-market and global distribution, enabling them to:
Utility companies are aggressively implementing new ideas to achieve their operational objectives, and CRM is emerging as the most useful enabler of this transformation.
About the Author
In his role as utilities principal for SAP America, Jim Menton is responsible for advising sales, marketing and development staff on marketplace trends to support the company’s U.S. utilities initiatives. Jim brings 24 years of hands-on expertise in all aspects of the energy industry, including both supply-side and demand-side expertise, energy management, commodity procurement, utility operations, strategic marketing/sales, consulting and software development. Jim also participates at the national level delivering thought leadership and promoting industry best practices.
Deregulation has opened up new opportunities and new threats, forcing utilities to expand their focus from simply providing energy, to rethink their strategies and align them more closely with customer needs. Utility providers are therefore renewing activity directed at improvements in operations, use of information technology and automation of business processes. Additionally, more cross-functional business processes and customer service-focused solutions are being introduced to improve operational efficiency and maintain and expand the customer base.
As customers and business partners increasingly demand greater empowerment, utilities companies seek to improve interactions and relationships in their entire business ecosystems by enhancing software capabilities for collaboration, gaining deeper customer and market insight and improving process management.
The Impact of Deregulation
Although a global phenomenon, the pace and extent of deregulation varies widely across regions and across industries, especially the power and natural gas markets here in the United States. The reasons for such diversity lies in the infrastructure of the supply gird, ownership behavior in the energy industry, currently applicable law and the structure of the population served.
Nevertheless, three key drivers for deregulation are common throughout the world. First, globalization has led to more open markets, enabling companies to enter new markets more easily, but also exposing them to greater competition. Secondly, privatization in some countries has also resulted in the generation of fresh capital, allowing further investments in infrastructure and innovative technology. Lastly, market restructuring has led to more customer choice, competitive pricing and new customer structures, driving utilities to conquer multiple parts of the value chain as best-in-class providers.
One of the major consequences of deregulation is the unbundling of utilities, which in the first instance has split the roles of the energy supplier (RetailCo), the distribution company (DisCo) which operates the grid, the metering operator (MeterOp) and other related players. This means that commercial and industrial customers can purchase energy and related services from multiple vendors.
In the second phase, incumbents are rethinking their strategic focus on unbundled retail activities, choosing to perform one or more of the new energy values chain roles, depending on perceived core competencies, risk appetite and preferred market focus. The depth of specialist competencies needed to met customer expectations and compete successfully requires incumbents to reinvent themselves—for some an evolutionary process; for many, a revolutionary turnabout.
Customer Management Trends in the Utilities Industry
Customer information systems (CIS) for utilities have been around in some form or another for more than 20 years. In the late 1990s, when utilities first began to embrace new software innovations to help manage their customer relations, the market comprised vendors selling missioncritical enterprise systems focused primarily on operational customer relationship management (CRM) functions such as account maintenance, order processing, product and service management, billing, credit collection and accounts receivables, with some collaborative customerinteraction functionality. In this traditional approach, companies deployed expensive, cumbersome enterprise solutions tied individually to different processes. This approach was marked by numerous interfaces, heavy maintenance requirements and unnecessary data replication or manual data capture, resulting in a high cost of ownership and slow responsiveness to changing markets. As the discrepancy between investments and measurable success became more apparent, the initial euphoria evaporated and utilities became more conservative in their solution appraisals.
Today's companies are now seeking solutions that will help them:
- Optimize process efficiency within front, mid and back office
- Develop strategies for adapting change
- Speed time to market
- Grow revenues and expanding market share
- Reduce service costs
- Improve profit margins and drive shareholder value
The solutions of choice are flexible, scalable, highly integrated and are delivered by a vendor with the industry experience, the technical expertise and the staying power to meet their long-term and short-term needs.
Effective Data and Process Integration
Customers are the cornerstones of business processes transformation in utilities. The changes brought about by deregulation have become most evident in an examination of customer information systems. Deregulation has increased the need for intensive data exchange and better coordination of administration and accounting processes, especially in the sales channel.
As customer management in a utility company is strongly linked to the existing processes and solutions, customer management solutions and technologies must be capable of supporting and maintaining assignments from several company types (DisCo, MeterOp and RetailCo) and from diverse processes such as meter management, meter reading, contract billing, accounting and work management, while also maintaining flexibility and scalability. A prerequisite for this is the ability to integrate data across diverse and complex IT systems, as well as enable immediate, role-based access via multiple communication channels such as desktop, laptop, PDA, phone, e-mail and Internet.
Utilities companies therefore require a customer management system which is strongly linked to processes and solutions along the whole value chain, ensuring real-time collaboration and data integration between the:
- Front Office: call center marketing system (business intelligence, reporting, campaign management, demand-side management, sales force management and bill presentation processes)
- Middle Office: data mining, work flow management, Electronic Data Interchange (EDI), churn management, customer database, contract management, billing, debt management
- Back office: trading and risk management, distribution, partner and supplier management
Advanced Customer Services at FirstEnergy
FirstEnergy Corporation, the fourth largest investor-owned electric system in the United States comprising seven electric utility operating companies, selected an enterprise platform to support its customer service program. The company was seeking a single, fully integrated solution, which would support all activities of its Corporate Service Group as well as core business functions such as supply chain, finance, and human resources. FirstEnergy’s Customer Service Group is now managing distribution functions such as call centers, billing, credit, and collections for its 4.3 million customers with a seamless, integrated solution.
FirstEnergy is also currently developing a portal based on business intelligence solutions to aggregate data derived from hundreds of off-the-shelf, homegrown, and legacy applications to give its managers a more complete picture of plant and transmission line performance information to help them make more informed business decisions. As the existing multiple legacy systems and the associated interfaces have been replaced with the integrated solutions, FirstEnergy has been able to significantly lower its IT costs and increase data and process visibility across the entire organization.
City of Tacoma Offers Multiple E-Services to Utilities Customers
Like every other city and government organization, the city of Tacoma continues to face budget cutbacks combined with demand for more services. To address these issues, Tacoma recently implemented a comprehensive solution to support the City’s general government departments as well as Tacoma Public Utilities, which provides 183,000 of Tacoma's citizens with electricity, water, storm drainage, residential and commercial solid waste, sanitary sewer, cable and Internet services. In addition to managing the billing service for these accounts, the system calculates the payroll for 5,500 employees and provides a single integrated work management system across all the City's divisions.
The City replaced 100 legacy systems with an enterprise solution, and merged six major databases — including the old Customer Information System, the HR application, Financials, Permitting, and Tax & Licensing. The new endto- end functionality has enabled the City to also streamline its business processes, reducing individual processes from 650 to only 350 in total. For example, the City used to have three or four different ways to create a purchase order, varying by division; today, they have only one.
The City is also planning to promote customer self-services more consistently. As customers gain direct access to their accounts, they will increasingly be able to do more of the work that customer service representatives did, like pay bills, view account information, and answer their own questions about City services. Customers will also be able to choose their payment due dates, combine bills for multiple properties, and have all metered services appear on one bill. This will help the City of Tacoma achieve significant savings on it customer services, while providing its customers the flexibility and the accessibility they demand today.
Customer Self-Service Systems Open New Business Opportunities
Today’s customer is increasingly accustomed to carrying out transactions electronically, from paying bills via the Internet to accessing 24-hour online support and a host of other interactive online services. They therefore expect the same flexibility when communicating with their utilities provider. At the same time, customers are more cost-conscious, seeking greater transparency as to what value they are getting for their money.
Customer self-service is a compelling strategy to increase the speed and effectiveness of after-sales maintenance and repair services. When implemented the right way, such solutions have the potential of yielding significant benefits in the form of reduced service costs and improved productivity. Though industry observers consider a 30 percent deflection of calls to self-service channels as adequate, the rate should and could be closer to 80 percent to maximize the business benefits and cost savings. It is therefore essential that utilities continue to encourage customers to use the self-service channels.
In order to meet the demands of this growing customer segment, utility companies must ensure that systems are in place to deliver highly automated and accurate data transfer, easy navigation, 24x7 availability and convenience.
With effective software solutions in place, utilities can significantly reduce customer service costs, improve customer service, and allow customer service representatives to spend more time pursuing new revenue-generating business opportunities through consulting and telesales.
Advanced Call Center Management at OG&E
Oklahoma Gas and Electric (OG&E), the largest power company in Oklahoma with approximately 720,000 customers, was looking for an advanced and integrated call center solution to handle the daily volume of around 12,000 calls more cost-effectively. In order to raise the number of calls completed in selfservice, reduce call handling times and manage volume peaks in-house while saving outsourcing expenses, OG&E selected a speech-based call management solution which would integrate seamlessly with its existing enterprise resource planning environment. Built on top of a telephony infrastructure, the speech-based application has considerably enhanced self-service capabilities, offering an effective and easy-to-use interface for a higher rate of automated call completion. Furthermore, the integration of the telephony framework with the enterprise solution has enabled relevant customer information to be readily available to customer service representatives when the call is received. Customers no longer have to repeat their account number to the customer service representative, which improves both efficiency and the overall user experience.
Today, all customer service calls to OG&E are initially handled by the self-service telephone application, raising the rate of automated customer handling from 5% to 45% of total calls received. Customer services like outage reporting, account balancing, installment plans, payment office location or transfer and routing to other services are also supported by the new solution.
Reaping the Benefits of Integrated Customer Service
Utility companies are increasingly benefiting from new, advanced technologies which are transforming the dynamics of time-to-market and global distribution, enabling them to:
- Gain market insight by understanding market and customer preferences, behavior, and service needs
- Change their views of customers from rate payers to customers for life
- Gain customer insight by targeting customers with services they want at the prices they demand
- Achieve consistent, multi-channel customer interactions by ensuring that customers’ experiences are the same no matter which channel they use
- Attain cost leadership by cutting costs and maximizing regulatory incentives (where applicable)
- Take proactive measures on key market and customer — initiatives to gain a competitive edge.
Utility companies are aggressively implementing new ideas to achieve their operational objectives, and CRM is emerging as the most useful enabler of this transformation.
About the Author
In his role as utilities principal for SAP America, Jim Menton is responsible for advising sales, marketing and development staff on marketplace trends to support the company’s U.S. utilities initiatives. Jim brings 24 years of hands-on expertise in all aspects of the energy industry, including both supply-side and demand-side expertise, energy management, commodity procurement, utility operations, strategic marketing/sales, consulting and software development. Jim also participates at the national level delivering thought leadership and promoting industry best practices.
