EET&D: Chris, I understand that you’ve fairly recently taken the helm of First Data Utilities. Maybe you could start by sharing some of your impressions about customer service markets and where you see FDU heading under your leadership and guidance.

Warrington: When I took the lead at First Data Utilities, I immediately set about the task of reinventing CIS for utilities. One of the most significant issues we identified is that utilities continue to suffer from the traditional model of installing an expensive, complex, large monolithic CIS application and either to manage an aging legacy system or embarking on expensive and risky upgrades every few years – a model that has not dramatically changed in the last 10 years. Among my first official acts in this new role was the initiation of a product strategy team, headed by Fiona Taylor, whose primary goal it was to change the balance of that equation.

On the back of our latest release, PeaceX CIS, we will continue to invest heavily into innovation and development of our CIS and constantly strive to find new ways to reinvent CIS for utilities. Fundamentally, First Data Utilities is about changing the traditional view of the CIS, providing an option to the way customer information systems are deployed and maintained and thereby reducing the cost to serve.

EET&D: The CIS market seems to be on the move again lately, yet the level of project activity – especially among large utility enterprises – has remained relatively flat over the past few years. Is there anything on the horizon that you see changing the status quo?

Warrington: With investments in Smart Grid Initiatives and Advanced Metering Infrastructure projects growing steadily year-over-year, utilities are on the verge of perhaps the most significant business change in decades. To further complicate matters, utilities face the simultaneous challenges of inflexible legacy CIS systems compounded by an aging workforce.

Moreover, while modern CIS software products offer significant advantages over previous generations of software technology, CIS replacement and upgrade costs remain as high as ever. This high cost has proven to be a major barrier for developing sound business cases, particularly when capital expenditure is competing with other critical grid-centric investments. However, we see some major trends that have converged to offer utilities a new solution that will help to readdress CIS the cost/value equation.

EET&D: You can probably easily guess my next question: What are some of the trends that are driving this resurgence?

Warrington: Clearly there are a lot of forces in play, and there will be more as utilities move forward with reinventing themselves in a drastically different business and market environment than was the case only a few years ago. But, since we can’t possibly cover all of the forces at work in this complex market, I’d like to briefly address some specific trends that we feel are particularly significant from a customer service and information technology perspective.

EET&D: It sounds like we’re about to cover quite a lot of ground, so let’s take them one at a time. Then perhaps Fiona can chime in on some of the more technological dimensions since I understand that she has been at the helm of your development response.

Warrington: Okay, but first we need to briefly discuss the risk issues. Vintage CIS systems are inherently risky because they usually rely on inflexible, inefficient technology that often proves difficult to manage and maintain when it comes to things like interfaces, new products and new applications. Some utilities address these requirements by commissioning additional customizations to their existing systems; however, this just further complicates maintenance and upgrades as utilities are driven further and further into a custom solution.

Naturally, the cost of maintaining significant customization and outdated code also increases as the technology ages, and the retirement of specialist programmers and support employees for legacy applications further increases the risk of managing these complex systems. A strategy employed by some utilities involves adding bolt-on products to the legacy platform. This addresses a short-term need but further adds to the already complex web of point-to-point and custom integration.

EET&D: So, isn’t this the ultimate justification for replacement?

Warrington: While at first it might seem like the business case for replacement would be clear, there is still a significant barrier that utilities need to overcome, which involves the proper estimation of upgrade implementation costs. As both hardware and CIS software costs have declined substantially over the past decade, implementation costs have not. Keep in mind that implementation relates not just to the initial installation but also to each subsequent upgrade. This means that unless carefully managed, upgrades can prove to be just as costly, risky and time consuming as an entirely new implementation.

EET&D: Assuming that utilities eventually adopt that approach – that is, the beneficial outcome of making a significant investment in new technology – how will they justify the huge up front cost?

Warrington: To address the challenge of justifying the expense associated with a traditional CIS implementation, utilities can take advantage of the convergence of four major trends: User Interface Advances, Business Process Optimization, Componentization and Service-orientation. Fiona, why don’t you go ahead and take this first one?

Taylor: First, it’s important to understand that software usability for a utility CIS perspective is the ease with which front line customer service representatives and back office billing and collections personnel can access, comprehend and enter information on their computer screens. Beyond aesthetics, the benefits of employing software usability engineering include faster training, higher productivity, enhanced error prevention and detection, and improved customer satisfaction – all of which contribute to a utility’s bottom line through operational cost savings.

While these benefits might drive the motivation to replace a legacy CIS, even a well designed user interface can require significant redevelopment as utility business processes change. By separating out the optimized user experience from business logic layers via service-oriented architecture (SOA), the user interface can be oriented according to user experience and business process.

This separation allows utilities more powerful user-driven configurability and dynamic screens that minimize the need for code changes when generating an updated user interface. This service orientation also provides for a composite approach, enabling a single user interface to more easily incorporate services from multiple applications while further expanding and enhancing the value of the CIS across the enterprise.

EET&D: During our initial discussions in San Antonio we talked about the importance of re-tooling business processes as an important step toward improving the operational efficiency of the utility. Perhaps you could share some examples of specific steps utilities can take to realize those improvements with our readers…

Warrington: Given that a leading cause of CIS project failure is significant modification and customizations, standardized business processes and preconfigured environments are designed to minimize customization to reduce the cost, risk and time of software implementation and operation. This not only reduces the initial replacement barrier, but also addresses subsequent upgrades.

In answer to your question, business process standardization also offers ongoing benefits. Best practice processes are designed to maximize the potential of CIS automation and functionality, which leads to improved efficiency and ultimately, cost savings. Moreover, by standardizing processes that are common across utilities, resources can be focused on improving and developing business processes that truly differentiate.

These benefits of business process standardization are further enhanced through the use of SOA technologies and methods. Separating the business process layer from other application layers facilitates the user configuration of a CIS with a business process focus, rather than focusing solely on functional capabilities.

Although companies in every industry believe that what they do is unique, there are core similarities. Adopting standardized business processes provides major benefits at virtually all operational stages and processes.

EET&D: Before we tackle “componentization” perhaps you should define exactly what you mean by that term.

Taylor: CIS systems have been marketed as being “componentized” for some time. These so called components were primarily conceptual delineations for breaking down the broad application footprint of a CIS into individual functional modules. Some may also refer to it as modularity, but underneath the hood, the CIS was still a monolithic ‘black box’ that required significant effort, cost and time to replace and upgrade.

Service-oriented componentization at both the business and architecture level spells the end of the large, disruptive upgrades and replacements. Instead, modern CIS architecture allows utilities to take advantage of more frequent and less-disruptive component-based improvements and upgrades. This strategy also allows options for phased conversion of legacy systems, reducing the business risk associated with legacy system replacement.

EET&D: We hear the term SOA quite a bit these days, especially in the context of CIS. What do you see as the role of SOA in next-generation CIS designs?

Taylor: While the benefits of utilizing Service-Oriented Architecture (SOA) and ‘web-wrappers’ as a way to improve integration have been well publicized, the true benefits of SOA are still not fully understood. Perhaps the single biggest driver towards SOA has been its possibilities for integration.

While the ‘web-wrapper’ strategies of many CIS applications have been successful, a CIS fully re-architected using SOA will allow utilities to maximize the value of enterprise-wide IT systems through interoperability that leverages valuable functionality across many applications. This means that in addition to improved integration, other enterprise software incorporating SOA or web services will be able to call functionality from the CIS as required, and vice-versa; thus, improving the value of CIS across the enterprise.

EET&D: What does all of this say about your ongoing role in the marketplace? Should we be expecting more big moves like the Peace acquisition?

Warrington: Peace has always been, and will continue to be, a trendsetter. For example, we are widely credited as being the first to pioneer the browser user interface for utility CIS. With PeaceX, Peace is once again delivering innovation. This latest version is designed to take advantage of Service-Oriented Architecture, User Interface re-engineering and optimized business processes.

Taylor: From a technology perspective, we employ leading new technologies such as Google Web Toolkit, Java Server Faces and AJAX, to deploy the best user experience possible for large-scale, browser-based systems. Users will also be able to take advantage of the First Data Utilities Optimized Business Process suite. These business processes are driven by market driven requirements based on twenty years of utility experience. They have been reviewed by leading utilities and industry experts, and optimized at a functional level for the CIS. The business process suite reduces the cost, risk and time of CIS replacement, and improves ongoing efficiency.

The convergence of these trends enables utilities to readdress the business case for CIS replacement within any of three deployment models: licensed for installation at a utility’s own facility; deployed using managed services, which allows utility IT teams to focus on issues other than the day-to-day management of the CIS; or in the service-with-software outsourcing model which includes implementation, application management, and regular upgrades for a predictable cost.

EET&D: Fiona, Chris; thank you both for sharing your time and insights with our readers. It will certainly be interesting to see which of these models – if any – becomes the CIS platform of choice in the years ahead. With so many changes going on in the industry from both a staffing and operational standpoint, it will be hard to predict, but you seem to have all the bases covered, whatever turns the market might take.