Developments in IT, outsourcing, customer information and customer relationship systems are challenging long-held notions on essential operations.
Richard Stavros is Fortnightly's Executive Editor.
What are not core operations of a utility? It’s a question that has little precedent in an industry that largely has been vertically integrated for most of its history. Even with the forced unbundling between the wires and generation in states that decided to deregulate, a good many of U.S. utilities continue to operate generation, transmission, and distribution, as well as print their own bills and call on their own customers. In short, many utilities still do it all.
The effectiveness of this approach increasingly is called in to question. New technologies and outsourcing services appear to offer utilities greater efficiencies, lower costs, and greater quality contact with customers, while preserving significant control, in many cases. Could the outsourcing wave that started in manufacturing, banking, and airlines be catching up with utilities?
A defining moment in the evolution of the industry came when TXU and NiSource announced plans to outsource an extraordinary number of systems and operations to Capgemini and IBM, respectively. Capgemini agreed it would provide information technology, call center, billing, human resources, supply chain and accounts payable, and finance and accounting services to TXU. IBM would handle similar support functions for NiSource. It was hoped that the deals would provide TXU and NiSource with millions in savings.