No matter how you cut it, the Customer Information System (CIS) represents a utility's largest computer asset. It eats up the most disk space. It contains the most programs and lines of code. It handles the largest volume of business, whether measured in transactions or dollars.
Billing lies at the core of the CIS. It's the most complex area. But once bills go out to customers, the CIS must manage accounts receivable and the collection process, not to mention financial control and reporting. Add in new order processing, customer identification, credit checks, service orders, work com mitments, turn-on and shutoff, contract history, and customer complaints, and you realize that the CIS performs thousands of jobs each day. You understand why even the most hard-nosed utility exec begins to get a little nervous about the risks when talk turns to upgrades or wholesale replacement of the CIS.
In fact, the cost of a full CIS replacement for a utility serving fewer than a million customers generally runs from $10 million on up. While some have done it for less, the "on up" side of the range can top $100 million for larger utilities. And as if development costs weren't already high enough, the full life-cycle cost of a new CIS will certainly run every utility company at least many millions of dollars.
Yes, the risks are big. But so are the rewards. With competition accelerating, CIS upgrades can prove beneficial and practical, even to the point of moving the CIS off the mainframe environment. Research indicates that this move can save as much as 40 percent of life-cycle costs. To date, only a handful of utilities have actually initiated projects to move the CIS off the mainframe. Nevertheless, when the dreaded date arrives (em January 1, 2000 (em some existing systems may stop working completely as existing date-driven computer logic fails to cross the century boundary. Many utility companies will be scrambling with mandated or business-driven CIS changes as time draws down to the start of the next millennium. But if replacing a CIS is so expensive and fraught with risk, why so much interest now?
Replacing the Old System
Even assuming no apparent problems with your current CIS (em it's not about to die (em many dangers still lie ahead. Through the years, the old system may have been modified or reconfigured thousands of times by hundreds of different people, many of whom are no longer with the company. Documentation is probably poor or lacking entirely. Even a small change in one area may cause another to crash.
And most old CIS systems are account- rather than customer-focused. A billing account may contain financial information only about one of many different locations where the customer operates. Conversely, a relational database scheme, easy to achieve with modern CIS, enables utilities to acquire and analyze customer consumption and energy needs. A modern CIS can track and assist customers by providing companies with a full online view of prior contacts (em easily accommodating customers who maintain multiple account relationships or multiple metering locations.
Prepackaged CIS computer software purchased from a commercial source or another utility can be tested, interfaced, and converted. The package can be installed "as is." You adopt certain functions and processes, and revise other procedures within your company to fit the new package. At the other end of the spectrum, you can modify the package to meet the specific needs of your company before testing and conversion. These options affect cost, depending on how well all the pieces fit. In practice though, it can prove difficult to gauge the "fit" before choosing the system. Being wrong can have major consequences.
Building a new custom-designed CIS to fit company needs is almost always the slowest and most costly alternative. Custom design calls for important decisions up front. Should we change all at once, piece by piece, or function by function? Which hardware platform? Do we run on a mainframe (already proven) or convert to "client/server" (unproven) technology?
If you want to move off the mainframe but retain as much as you can of your old system and codes, you can simply "re-platform" or "re-host" your existing CIS. This approach usually combines a single, heavy-duty computer with a UNIX operating system. Or, you can re-design your CIS from the ground up using parallel server processing technology.
Given past experience in the utility industry, a stand-alone CIS mainframe fully configured for a large utility will probably cost about $10 million. That figure might buy 200-250 MIPS (millions of instructions per second) and 1,000 gigabytes (GB) of disk storage (one gigabyte equals one billion characters). To buy 4,000 MIPS and 1,000 GB with fully configured software in a client/server environment might run as low as $1 million dollars (em a 10-to-1 advantage.
Software licenses in today's mainframe world are significant. For example, a utility can expect to pay somewhere around $3 million per year in system software license fees. Hardware maintenance may run about 8 percent of the purchase price annually. For the hypothetical mainframe proposed above, this would mean $800,000 a year over the life of the system. However, in a nonmainframe environment, a plan to gradually renew hardware by replacing the most outdated components with modern versions would seem prudent. For example, a utility might plan to replace the whole system every five years, maintaining the newest technologies, at a cost of about $200,000 each year.
But the greatest advantage in moving off the mainframe lies in human resources. Yes, workstations cost money. But whenever open, modular, downsized client/ server technologies are introduced, productivity climbs. Energy and enthusiasm start to rise. Today's information-processing professionals no longer want to be mired in mainframe-based systems. With new challenges, new things to learn, plus systems that look good and feel good to users, you have the main ingredients needed to build job satisfaction.
For many years and at many companies, CIS conversions have meant rapid "Big Bang" conversions. Taking a single long weekend to convert the entire CIS usually involves the least cost, the fewest risks. But what if there isn't a weekend long enough to convert all of a utility's data? Then an evolutionary conversion makes sense. This strategy offers three primary options: functional, geographic, or customer-segmented.
A geographic approach involves building a full-function CIS and rolling it out to users by geographic area. This option may reduce risk, but it won't speed up conversion, since the whole new system must be built before use. Functional conversions also fall short, due to complications from redundant data. During the transition period, "dual everything" is the problem: dual hardware and maintenance to keep both systems going, dual operations staff, dual skill sets (em not to mention headaches in synchronization and control.
The customer approach offers the most promise. For example, the utility might convert the CIS first for noncore customers, those most at risk for bypass or fuel-switching. Nevertheless, like functional conversions, a customer-segment approach will create redundant data.
As with all aspects of CIS conversion, each utility must set its own path, then work toward a solution that will best position the firm for competitive advantage. t
Melvin Schick is a partner in Anderson Consulting, specializing in the utility industry and high technology. Mr. Schick has an MBA from Tulane University and a BA in Mathematics from Ripon College.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.