Today, utility companies are concerned with growing their markets and controlling and reducing operating costs. They also face major challenges like: 1) dealing effectively with declining infrastructure and an aging workforce, 2) environmental impacts, and 3) rising customer service expectations.

They are being pushed to re-think their operations entirely: How they can increase efficiencies, grow revenues and satisfy customer demands? The innovative organizations recognize that this means introducing new business practices that offer dramatically improved operational data, greater customer-focused services and more flexible offerings. These are the keys to growing market share in unregulated utility markets and maintaining customer loyalty in regulated ones.

Upgrading Customer Information Systems
To keep pace with increasing change and the desire by customers for a wider array of interactive services, leading utilities recognize that upgrading their Customer Information Systems (CIS) are a key part of the solution. Not only will upgrades address the utilities’ needs for more efficient client communications, but these changes also will enable utilities to meet the needs of today’s more tech-savvy customers, while streamlining the utility’s back office processes.

One of the main challenges facing today’s utilities is outmoded CIS systems based on old technologies, such as those supported by mainframe/COBOL systems. These systems were designed – often more than 20 years ago – to support a more traditional and often more costly approach to customer service. These older technologies are out of step with the increasing need for innovative, responsive customer service and a variety of billing alternatives. Furthermore, they cannot support such innovations as interval billing and meter data management (MDM) integration.

In addition, utility industry executives are also predicting they will have to write off an average three percent of revenues due to unpaid bills during the current recession. By utilizing current CIS programs and technology, utility companies will have more advantages in capturing fees and recovering unpaid bills.

Aside from being tied to outdated technology systems, utilities are also saddled with other challenges such as an older workforce and an equally aging infrastructure. A growing number of senior-level workers are leaving the utility workforce, taking with them into retirement significant knowledge of current systems and operations.

As these original computer programmers retire, utilities find themselves stretched to hire and cost-effectively train replacement workers who can support existing technology applications. Replacing a retiring workforce with employees who already have industry know­ledge is itself difficult, but the new generation of tech-savvy workers also has higher expectations for the software and solutions with which it expects to work each day. What’s more, older infrastructures can fail – and with replacement costs rising – a utility’s reliability can be negatively impacted.

Because of current antiquated systems, many utilities aren’t able to fully integrate customer activities and processes throughout their organizations. With silos of activities occurring, workers are forced to create manual workarounds that cobble the processes together. Multiple departments that need access to the same information cannot obtain it as efficiently as they could with newer CIS technology.

New CIS technologies can loop all departments together, a system that benefits the internal operations as well as the customer. For example, with the right technology, if a developer wants to have a temporary power pole installed to support a housing project in a new subdivision, the initial online request goes to the business unit that will actually perform the installation. It also is shared with customer service and the accounting department that will bill for the work.

As a result, there is a seamless flow of real-time data across relevant departments within the utility, eliminating the need to batch-process information. For the developer, a well-integrated CIS technology system at the utility makes it easier to order and track the progress of the installation and then pay its subsequent bill once the job is complete.

Environmental Impacts
A second significant challenge for today’s evolving utility of the future is the growing concern over climate change.

As the political and environmental debate continues to unfold, utilities are being pressured to reduce carbon emissions, while being simultaneously threatened with increasing regulations. They face developing and implementing a business model based on conservation, while seeking alternative sources of energy. Adding to this complex mandate are those who ask for alternative energy sources, yet lead the NIMBY (not in my back yard) hue and cry when wind, solar or nuclear infrastructure is proposed.

However, we see an investment in renewed generation technology, particularly solar, wind and nuclear, as having a huge impact on all facets of utility operations – knowledge, resource requirements, costs and processes. President Obama’s plan currently calls for not only increased reliance on renewable energy sources, but also reducing demand for electricity(and the attendant environmental impact) by 15 percent from projected levels by 2020.

Utilities that can demonstrate their own efficiency, while helping their customers reduce their personal impact and take control of their interactions with their utility company, are the ones that will thrive in years to come.

Interaction by Customers – On Their Own Time
The third significant challenge facing utilities is that today’s customers want to interact with their providers according to their own schedules. It may not always be convenient to wait to speak with a customer service representative during traditional business hours. Instead, many customers want to jump online when they have the time and handle routine transactions, such as updating billing records, monitoring electricity usage and viewing and paying bills electronically.

CIS technology can be a boon to customer service, especially when it provides immediate information concerning outages and restoration management. Customers are eager to know when their service will be restored, and they like being able to initiate service orders – such as a new residence connect or disconnect – by themselves and online.

Utilities look to new technology for improvement in such areas as credit, collections, reporting systems and overall better business intelligence through analysis of new data they were previously unable to obtain.

New CIS technology also gives utilities the ability to offer innovative usage pricing programs. Pricing can be designed to lure customers into shifting – when possible – the bulk of their electricity consumption to off-peak, less-costly times of day. Both the utility and their customers benefit from such a system; that is, customers get a price break for cooperating, while utilities get a better grasp of anticipated loads to prevent overwhelming the grid during peak demand periods.

Interval billing technology is one CIS tool that enables such usage-pricing programs by monitoring electricity consumption in very small intervals, such as 15-minute segments. Previously, legacy meters could only measure overall electricity consumption and had to be read manually “in person.” The new technology supports electronically read meters that capture electricity usage in real time in small, useful bites. Interval billing technology has been in place in the commercial market for some time, but is only now entering the consumer market.

This smart metering technology, coupled with smart grid technology, also enables utilities to remotely turn meters on and off instead of “in person.” Not only is the new system faster and more efficient for both sides, but it also offers a more
cost-effective way to operate.

PUCs Encouraging More CIS
The nation’s utilities are moving cautiously ahead with the deployment of smart metering technology in the consumer market, such as AMR (Automatic Meter Reading) to collect data for billing and analysis. In order to capitalize on AMR, utilities must have an AMI (Advanced Metering Infrastructure) to collect, measure and analyze energy usage based on the data collected by the AMR devices.

Public Utility Commissions, which regulate electrical utilities, have begun encouraging utilities to adopt more modern CIS technologies in order to save energy, cut costs and increase customer satisfaction.

At present, municipal utilities are more actively adopting CIS technologies because these utilities tend to be smaller and the impact on their rate case going before the PUC is smaller. They are better positioned to pass along new technology/equipment costs to their customers.

On the other hand, investor-owned utilities (IOUs) tend to trend slower when investing in new CIS technologies if they cannot easily recover these costs from ratepayers. Utility commissions are less likely to offer IOUs the same type of relief in order to offset these technology investment costs.

CIS Can Help Improve Shared Services
To achieve the most effective operation, utility leaders should explore CIS technology options for assistance in knowledge management, talent management and back office needs. CIS technologies can help integrate all utility systems for improved shared service offerings. Moreover, the new technology can help facilitate business process outsourcing, such as call centers or engineering, and better integrate these back-office services throughout the entire organization. With improved systems, utilities can perform advanced budgeting and perfor­mance manage­ment. These advanced functions will allow them to do a better job of determining what needs to be done and how to best allocate the appropriate budgets to support these activities.

Utility leaders should realize that it is not just new software they are seeking. They should consider the quest for new technology as a key part of doing business in new and improved ways.

In their search for more modern, efficient ways of operating, utility leaders should seek an established service provider for assistance with a project of this magnitude. Considered providers should have 1) extensive experience with a wide variety of CIS applications; 2) significant public sector and energy practice expertise; 3) knowledge of both municipal and investor owned utility segments; 4) demonstrated examples of delivering complex, high-quality, on-time transformation projects; and 5) a good “cultural fit” with the utility organization.

It takes more than just knowledge of new technology systems; a good service provider is one that challenges a utility to re-think the way it is operating. For example, the utility’s business processes should be mapped against the new systems’ functionality. One of the goals should be to make as few software modifications as possible in order to accommodate necessary business processes. This analysis is an opportunity to take advantage of best practices, and utilities should be bold enough to consider doing business in new ways.

It is also critical that any new technologies integrate well with a utility’s existing systems and processes. New technology solutions are most effective when they are designed and implemented to address current requirements and to accommodate business needs that will arise in the future.

Not every utility is quite ready to become a utility of the future. Readiness requires a significant commitment and considerable effort. Still, it is encouraging that so many utility leaders are eagerly exploring new technologies and the positive impact they could have on their operations. Not only will these new technologies improve efficiencies, streamline operations and help contain costs, but they also will help attract and maintain a loyal customer base that demands the future now.

About the Author
As managing director responsible for BearingPoint’s North American Utilities CIS Practice, Phil Daniele has more than 25 years of experience successfully leading CIS projects for municipal and investor-owned utilities. His extensive expertise includes proposal development and evaluation; project management; defining system requirements; design specifications; software package implementation; program coding and testing; and quality assurance.