Utility Data in the Cloud

Utility Data

by Jim Buckley, TransCentra

Regardless of the size or scope or industry, businesses have a renewed interest in optimal efficiency at minimal expense. Some of this desire originates from building consumer expectations for immediacy and convenience of service, the rest from an operational need to avoid being in the red and, if possible, profit in an economy that is slowly regaining its foothold.

The utility sector is no exception. Ongoing plant retirements, modest sales, renewable energy integration and changing business strategies were major 2013 trends and are expected to affect the industry’s performance this year. As with other verticals, utilities have adopted technologies that assist in creating automation and consistency in response. Cloud solutions, specifically Software as a Service (SaaS), have gained the most mentions, and for good reason. This approach affords the opportunity to centralize software and associated data to be hosted in the cloud, meaning electric companies can outsource physical hardware plus the resources required to maintain and support software infrastructure to the SaaS provider.

Many electric companies are hesitant because they do not know where to start in applying an SaaS model; however, their billing and payments processes present the ideal opportunity to leverage these solutions for a true, businesswide impact. Billing and payments are primary business functions where noticeable return on investment can be expected from updated SaaS technology. Although instituting any major change requires an upfront investment, utilities will get a clear and almost immediate value. Consider several factors that contribute to the need for change in how many utilities operate:

  1. Technology support. Utilities that manage billing and payments processing in-house are being forced to look at basic technology options. As of April 8, Windows is no longer supporting Windows XP, meaning technical support and security updates are done for this operating system. Since the announcement, Windows has been encouraging XP users to migrate to a more modern system to benefit from better security, broader device compatibility for mobile initiatives, higher user productivity and lower cost of ownership. Upgrading or converting to alternative systems is imminent. Although an organization might be convinced of its ability to continue running even short term without the support, doing so will leave any machines that are running XP more susceptible to malware. If a company moves to an SaaS solution, the technology provider is responsible for maintaining awareness and then pushing out any necessary updates.
  2. Payments behavior. Consumers have been changing the way they transact for years with one another and the companies they frequent. During recent years there has been a significant decline in paper payments and billing. And no one—not even the keenest financial experts—can predict when and how emerging payments channels such as online and mobile options will take off en masse. Retail and commerce likely were the first to feel the impact, but churches, hospitals and nonprofits are having drastically reduced check volumes, considering how most consumers prefer to receive and pay bills these days: not in person or by physical check. Paper check usage has waned in recent years but will continue to have a presence near term. Declining volumes leave utilities constantly re-evaluating the operating expenditures when compared with processing costs. An SaaS model is scalable and enables the addition of new channels and an ease to manage fluctuating volumes. It offers long-term cost advantages by simplifying and consolidating both inbound and outbound billing infrastructures.
  3. QC measures. Quality control is a big undertaking for any organization. In this industry, prepping remittances and getting them processed to the requirement of that utility is time-consuming. The software infrastructure and support of SaaS makes sense for utilities because it offers control over quality and costs without the capital expenditures and ongoing expense to support the application. When using SaaS, the utility still needs to hire processing staff, but not information technology support. Keeping its own staff and managing the processing allows control over product quality while reducing infrastructure costs. SaaS adds a new dimension to service and risk management in sustaining R&D dollars and specialized expertise.
  4. Compliance burden. Some experts suggest that compliance is utilities’ largest concern. The tightening of regulations on utilities was echoed in the Ernst & Young report “Business Pulse: Exploring the dual perspectives of the top 10 risks and opportunities in 2013 and beyond,” which addresses more significant risks and the opportunities they encounter. It states that executives interviewed find increasing challenges with the rate of change in compliance criteria. A utility that automates billing and payments functions is naturally streamlining its marketing, plus regulatory and compliance communication. Energy providers that innovate their billing and payments methods—opening up new conveniences and access to customers—will see the fruit of that investment beyond tangible ways.

Until recently, utilities were limited to processing their remittances in-house or to completely outsourcing the function. An SaaS infrastructure opens new doors to give utilities the best of both. For any organization that processes more than 6 million items annually, an SaaS platform has an extremely relevant business case. Utilities maintain serious needs for large capital investments and extended plans despite the uncertainties associated with this industry surrounding policy, commodity market demand and general economic conditions. As this industry undergoes transformation, it must adapt to stakeholder needs, at the core of which you have consumers who interact with you most naturally and most frequently through billing and payments.

As a side benefit—and a significant one for utilities—leveraging cloud-based technology to deploy such a solution will grant them the ability to generate strong, actionable data. By gaining unique data and insight on their customers based on information gathered through the billing and payments cycle, utilities have the opportunity to make internal adjustments that improve customer service and satisfaction.

When it comes to options for invoicing and receiving payment, a multichannel offering that processes paper checks and electronic payments in a single, efficient feed provides outstanding configurability, operational efficiency and cost savings from consolidating processing. Although these factors seemingly do not contribute to the billing and payments process, they will be improved through a modernized billing and payments system. Utilities should see this investment as an enterprisewide improvement, not just the enhancement of one function.

Jim Buckley is an account executive at TransCentra, a Norcross, Ga.,-based provider of billing and payment software and services.

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