Whither CRM/CIS?

If there can be any doubt that customer relationship management and 
customer information systems (CRM/CIS) are a fact of 21st century life, there 
also should be little doubt of their increasing importance in a competitive, 
deregulated energy industry.

It is no longer a case of where, but when, according to the state and pace of deregulation, more advanced in the UK and New Zealand, for example, less so in the US and Germany, and hardly at all in the developing world.

As Ron Sewell, founder and MD of the Atlanta-based utility billing company UtiliRead, recently acquired by Viterra Energy Services, puts it, “the leading edge of CRM/CIS is directed at keeping the customer.” And the reason is straightforward – the cost of customer acquisition, which has spiralled up: “We’ve seen cases of customers costing $50 being ‘sold’ for upwards of $200. This is hefty, so there is a need to retain customers.”

The way of doing this, he says, is with more personal interaction with the customer: “We need to find every way of ‘touching’ the customer, to ensure he or she gets the service they need.” Accordingly this will find expression in new tools incorporating typical call-centre functions, with the Internet playing a central role, not only for making payments but also for accessing information such as energy usage and payment histories, as well as other services, possibly – and probably – even unrelated to the business of the utility.

The Internet is also cited as one of the major trends in CRM/CIS by Anja Brunner, CRM Project Manager for Utilities with SAP, not least because of its cost savings: transactions are cheaper than a call-centre and it can provide 24-hour-a-day, 7-day-a-week service. The trend is towards customer self-service she says, and to support this among the latest CRM features that SAP has developed are “call-me-back”, where a customer can request a call centre to contact them, and “co-browsing”, enabling the customer and call-centre to view identical screens.

This increasing IT usage comes with penalty and another trend in the coming years is the need for increasing integration of systems right across the utility, says Brunner. “The call centre at the front-end must be fully integrated with the billing and analytical functions at the back-end, and processes must work right across the business,” she says, adding that while being easy to say, this is often difficult to realise in practice.

Yet another trend is on the analytical side of the business, which is going to become increasingly more important in the future for measuring the success of the utility and customer satisfaction and providing a base for future strategic planning, Brunner says. Possibilities, particularly for the big energy customers such as industry, will be to combine CRM with energy data management to bring the buying and selling of energy down to periods as short as a quarter-hour, amounting in effect to real-time pricing and metering. “It is rather complex and requires a lot of data storage, but these are the sorts of thing utilities will be doing in the future,” Brunner believes.

Kevin Monagle, vice-president of strategic marketing with software product and technology provider Excelergy Corporation, cites a similar trend, saying the biggest one in CIS is reorienting the utility from an inward-looking, vertically-integrated organisation to one realigned on business lines and new processes, and that information and the means to transfer it rapidly into competitive advantage is the key to success in this increasingly competitive environment. This is being recognised gradually and utilities are “entering a phase of technology adoption”, he says, with information systems being either modified or upgraded (the majority choosing the former). However, he advises caution in “sorting out the fact from the fiction” in terms of the claims made by the vendors of these systems.

He says also that the trend is away from a single system that “does everything” to one composed of components that function extremely well and can be switched in and out, as this is simpler, quicker, more cost-efficient and of lower-risk. Products that Excelergy has been focusing on, for example, include the secure sharing of customer information with other mission-critical data on a real-time basis and the optimisation of forecasting, scheduling, trading, settlement and billing functions.

Monagle says there will need also to be more information sharing, and for example network operations are typically “a gap in the information structure.” With network losses often approaching 10%, even a 1% improvement can result in a payback of large sums of money, possibly several millions, he comments.

Sewell of UtiliRead says that as utilities increasingly focus on their core business of energy supply to remain competitive, the small and medium-size ones in particular will outsource “back-office” activities such as billing, and there will be an increasing role for companies such as his, or other Application Service Providers (ASPs) – and which are contracted through a Service Level Agreement to provide certain services to an agreed quality standard. Indeed he says some projections indicate a more than 1,000% growth in the ASP model in the next five years.

With technology changing rapidly the ASPs are able to remain abreast of it and systems are being updated constantly, virtually on a daily basis, he says, adding that they thus need to be modular to have the necessary degree of flexibility. In the future they will also become increasingly web/browser-based for speed, accessibility and functionality such as seamless e-commerce and business-to-business portals, with the use of XML as a data transfer protocol.

Sewell predicts that within five years, in some markets at least it will be possible to order energy, like the stock markets, from virtually anywhere in the world. However the downside of this, he notes, is that it will be even more convenient for customers to change their supplier, putting additional pressure on the supplier to provide a quality service.

Thus it all comes back to the fact, he says, that “the real challenge is to keep the customer.”

CIS/CRM in the US surveyed

Utility attitudes and buying practices regarding their core billing systems have altered dramatically over the past 5 to 10 years of deregulation in the USA. Less than a decade ago the vast majority of large utilities were building their own CISs – large, expensive and disruptive projects, usually in association with one of the big consulting firms such as Andersen or Price-Waterhouse, whereas currently fewer than a third of utilities use in-house systems with most being bought off-the-shelf from a growing number of specialty companies or being evolved from earlier installations. Moreover these new systems include advanced technologies such as XML and Corba to add new functionalities, including CRM, web presentment and other customer-facing capabilities.

This was found by Warren B Causey in his second 2001 Energy CIS/CRM Report, based on a survey of 103 utilities in the US*.

Also fewer than 50% of the larger utilities in the US were found to have any kind of CRM system, and of those that do the majority are recently installed CISs with CRM functions built-in, with stand-alone CRMs, which are being installed, relatively scarce so far.

The main conclusions of the Report, based on the survey as well as other research are:

  • as an industry, utilities are in the midst of fourth- generation (client server) rollout;
  • however, fourth-generation CIS is already nearly obsolete, giving way to widely distributed technology, E-Systems;
  • XML will replace HTML and EDS for communicating large documents and information;
  • widely dispersed customer bases and CRM requirements will require Integrated/Interactive Customer Systems distributed at many different sites, in-house and outsourced; and
  • new emphasis on supply has positive IT possibilities, notwithstanding the negative implications of the California meltdown.

While some utilities are remaining on the sidelines with regard to major CIS/CRM investments, virtually all are moving to integrate and upgrade their legacy systems to enable them to compete until the market stabilises and the future becomes more clear, states the Report.

The Report also contains information on CIS/CRM installations as well as comprehensive details on CIS and CRM vendors and the technical features of their systems.

*The 2001 CIS/CRM Energy Report is available from Warren B Causey Ltd, www.wbcausey.com