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CRM and Outsourcing: Inventing the Modern Utility

Developments in IT, outsourcing, customer information and customer relationship systems are challenging long-held notions on essential operations.

Fortnightly Magazine - May 2006

utilities operational intelligence across those applications and identifying costs that can be eliminated.

But whether to outsource the IT, the IT support, or both is a difficult question. Tom Turco, principal and SAP Utilities Practice Leader, Deloitte Consulting LLP, sees it as really an aging workforce question.

“If Joe retires next year, he is the only person that knows how to support the legacy system that was implemented back in the early 1970s. If he leaves, there may be no one else that can provide support because people with the skills to support these outdated technologies are retiring.”

Changes

Utilities have changed their CIS systems over the year for various reasons. In the late 1990s, many utilities changed to modern CIS systems because of Y2K. Others replaced CIS soon thereafter because of electric competition.

Today, with competition on the back burner in many states, utilities and their regulators are more focused on business efficiencies and customer service issues, Turco says. Utilities are getting pressure from customers to reduce the overall cost to service customers while at the same time raise their level of service to match those of other service providers (telcos, financial organizations, cable, etc.).

“So, it’s driving utilities to say that they have to improve customer service ... even though most [utilities] are not at risk of losing the customer."

Adrienne Chambers, vice president, Acceptance, at MasterCard International, confirms this. She has seen an increase in the number of utilities adopting credit-card payment to match services offered by telcos and banks. Moreover, she says, “With J.D. Power becoming more of a focus for the utility industry in terms of customer satisfaction numbers, we think that cards help them achieve that. We know that research by Edgar, Dunn & Co. shows that 3 out of 4 calls in to the utility call centers deal with accounts, or billing or payments issues,” Chambers states.

Expanding the bill-payment options can help attract customers to using the Internet to pay, leading to a huge cost savings for the utility, but Chambers estimates that only about 5 percent of utilities have adopted direct credit card or debit card acceptance for bill payment, to date.

Still, there is a steady movement by utilities to have an online presence. SAP’s Henry Bailey, says, “I think [utilities] want to move more and more [toward] working online with the customer. Today, [maybe] 20 percent of transactions are done through the Web. In the future, I think the utilities will want to double if not triple that percentage number,” he says.

The cost savings are incredibly compelling. A number of studies have found that Web interaction per transaction is about $1-$2. Voice recognition systems that satisfy the customers’ need without contacting an agent run $5 to $6. At the call center, some estimates range from $10 to $15 dollars per transaction.

“You can see that the utilities and the outsourcers know these are very high numbers for call-center transactions,” Bailey says. “They are putting together service-level agreements that will try to reduce those per-transaction times and costs. I think technology