The next decade will bring serious disruption to the utility industry. But with cooperation from regulators and legislators, utility companies will be able to shift their business models to...
CIS: The new Profit Machine
easier to count, but experts say that non-monetary dividends are just as important. A good CIS system also helps cut down on regulatory scrutiny, as happy customers help make for happy regulators.
Jerrier gets to the heart of the matter. "The benefits of outsourcing we see are 30 to 40 percent reductions in ongoing transactional costs in relative dollars and cents," he estimates. He adds that analysts are predicting an uptick in outsourcing from smaller utilities to larger utilities.
But he believes the bigger benefit comes from the more non-quantifiable side-from the qualitative improvements. For example, by upgrading a utility's billing system or partnering with a respected outsourcer, the result is stabilization of the billing system at the core. The trickle-down effect of that is correct bills that go out on time and fewer customers calling to complain. "The calls that do come in are generally revenue-generating calls," Jerrier observes, "not 'Why are my bills so high or wrong?' Instead, it's, 'Hey, I want to buy something else from you.'"
Less scrutiny by state regulators is another positive. Jerrier points to one of Alliance Data System's clients, a larger, deregulated Texas utility that experienced about a 75 percent reduction in the number of complaints to the PUC in the time his company took over their call center. Another example-a deregulated gas provider in Georgia-dropped from more than 300 complaints to the PUC per month to only 28 last January.
"A huge qualitative impact is obtained just by upgrading the core of CIS, because the CIS is the engine that drives the [customer's behavior]," Jerrier says. But some things a utility never will be able to control, such as commodity price fluctuations. "What utilities need to be looking for is a company that can guarantee the bill will go out on time, the bill is correct, the payment will be processed in a timely manner, and the phone will be answered when somebody calls," he emphasizes.
SAP's Gary Johnston, U.S. director of solutions, says his company has seen "dramatic reductions in the interface costs from the best-of-breed solutions, where you move from multiple pieces to one solution." Johnston also touts less regulatory scrutiny. He says such systems can allow the ability to provide better reporting for regulatory requirements by having all the data in one system versus going out and pulling out data from multiple systems into a report and then massaging that report for regulators.
Johnston also found efficiencies where some of the newer CIS applications eliminated a number of third-party requirements existing in the smaller applications. That means pulling data specifically from meter-reading equipment directly into an application, instead of having to go through another third-party application for aggregation and checking of the data. The benefits are elimination of some of the application cost, the maintenance cost, and the interface cost.
Excelergy's Craven says the first CIS benefit is process efficiency-the ability to do the job with less people or to maximize those people. Other examples include the ability to satisfy customer requirements, for example in a single call, and the