By Bill Lemon
For many leading utilities, the top 1 percent of customers-their key accounts-are responsible for as much as 40 percent to 60 percent of their energy sales. For obvious reasons, these key accounts are critically important to a utility’s core business. High-consumption, high-revenue customers provide a valuable base load, contributing to a utility’s bulk buying power and cash flow.
There are several strategic advantages to implementing the latest billing and customer care technology in key accounts. On one hand, customers want more choices in rates and services and greater control over energy costs in a wildly fluctuating market. On the other hand, utilities need to pass on fluctuating price signals to their customers, reduce operating costs, and develop new marketable services to increase their bottom line. The common need on both sides is “more information” and more efficient ways to manage that information. A critical information gap must be bridged. The easiest, most feasible, most effective area this bridge building can occur is within utilities’ key accounts.
New customer information system (CIS) technology makes it possible to provide faster, more accurate billing to high-end customers. Leveraging this new technology also opens opportunities for a utility to assume the role of value-added strategic partner with its key accounts, growing revenue through the sale of enhanced, information-based services.
New Demands, New Opportunities
Issues of accuracy often arise in a manual billing system, prolonging the time between the meter and the bank.
As U.S. utilities face deregulation and the sobering lessons of California’s energy crisis, they are seeking new solutions in emerging technologies, such as real-time pricing information and sophisticated billing and customer care systems. In all retail businesses, extending special care and developing new services for the biggest customers is a key to increasing revenue and promoting growth. It makes good business sense for utilities to provide the benefits of new CIS technologies to their key accounts.
High-consumption end users require more information and more options to manage their loads and energy costs than do mass market accounts. The time has come for utilities to move from the outdated role of a fixed-rate supplier to a strategic partner that provides:
- Timely and accurate billing. Creating a bill that is correct and generated quickly is essential to both customer satisfaction and a utility’s cash flow.
- Market price signals. By passing on market price signals, a utility moves from the role of a fixed-rate supplier to a strategic partner that provides valuable information critical to a business’ success.
- The opportunity to purchase power at varied rates. As key accounts learn more about market fluctuations, they will develop more sophisticated usage strategies and begin to demand varied rates. By letting key accounts buy power at varied rates, a utility can build a pricing system that passes on increases it traditionally has been forced to absorb.
- In-depth usage information. The utility is an energy expert with a warehouse of valuable data and knowledge about energy use. By sharing this usage information, the utility can help its high-consumption end users understand how their energy resources are deployed. Eventually, the key account values information from the utility as much as it values the energy it purchases.
- Energy analysis services. The more data the key account gets, the more it will value the utility’s ability to analyze that data. Again, the utility assumes the role of “energy expert” by providing analysis of usage patterns and trends.
- Energy management consulting and systems. The ultimate role as strategic partner is filled by the utility that goes beyond mere analysis and becomes an adviser in how a high-consumption user might better deploy its energy resources.
Few, if any, leading utilities commonly provide all or even most of the above services. And yet, this is exactly what energy consumers want. Quite simply, utilities are being mandated to provide information-based services such as those listed above. For example, California State Senator Steve Peace (D-El Cajon) recently authored legislation that calls for pilot programs to test new CIS technology options. In the bill (SB 1388), he calls for new information-based services:
“As rates become unfrozen, consumers who want to keep their bills low have an incentive to use their electricity at the least expensive times of the day-if they can easily figure out the price of electricity at a given time and if they are charged a price which varies by time of day. The author believes this consumer reactionellipse is an important component of electricity system reliability and of a well-functioning market.”
Considerable opportunity exists for the utility that can successfully leverage emerging CIS technologies to capture, manage and provide information to the customer.
Spreadsheets and Sneakernets
Key accounts require special handling. They are high-volume, high-revenue customers with complex metering processes and varied-rate billing based on time-correlated buckets. In most cases, this means setting up a separate system, outside the mass market billing processes. Often, this system involves manual processes, spreadsheets and much footwork, or a “sneakernet.”
In such a system, bills can take days or even weeks to produce. This is significant when you consider these bills may represent as much as 40 percent to 60 percent of the utility’s income in a given period. Issues of accuracy and repeatability often arise in a manual system, which may prolong the time between the meter and the bank. It is sometimes impossible to reproduce the same results with manual processes. Also, manual systems are subject to breakdown as a result of employee turnover.
Utilities using spreadsheets and sneakernets to service their key accounts face a dilemma. Customers with intensive usage profiles demand more information and more choices as they grow and restructure their operations. Special complex billing and customer care requests are increasing as well. Unfortunately, most manual systems cannot accommodate these demands; neither can a legacy CIS, the one tool that might provide a utility with some automated efficiencies. Most CIS’s now in use lack the flexibility, power and end-to-end functionality needed to manage a key account. Even if this weren’t the case, high-end customers want their needs met now, and may not be willing to wait while a utility overhauls its entire CIS.
Clearly, what is needed is a smaller configuration designed for key accounts that takes the end-to-end functionality of a CIS and combines it with the complex calculation capabilities of a single-purpose billing engine.
A Key Accounts Configuration
A billing and customer care configuration designed specifically for key accounts can bring high-revenue accounts up to the same automated levels of billing used for mass market customers. The elimination of confusing, hard-to-maintain spreadsheets means more accurate billing. The “sneakernet” walks out the door, because automation is much faster. The time from the meter to the bank account shortens dramatically, making a huge impact on a utility’s cash flow and bulk purchasing power.
Customer care also improves, as key account managers gain ready access to billing data, bringing new credibility to billing and more quickly resolving issues that may delay payment.
To achieve all this, a specialized “key accounts” configuration ideally should provide the following:
- Quick, easy account viewing and navigation. Billing analysts must be able to access key account information easily. The results are higher customer and employee satisfaction as well as speedier issue resolution and a better payment cycle.
- Familiar Microsoft-based user interface standards. Hand-in-hand with easy access is the requirement for an intuitive user interface. By basing the interface on well-known standards, the utility will minimize training requirements and maximize productivity.
- Capability to treat multiple accounts of a single-customer as one “virtual account.” While the business rules, locations, etc. of multiple accounts for a single large customer may be vitally important to the utility, the high-consumption end user often views itself as a single account and expects billing and customer care to reflect that. Complex, multiple bills on different cycles can cost consumers more to process.
- A “relationship” tree that shows products, premises payments, etc. The point here is to track energy delivery and commodities as separate receivables, allowing reporting on revenue and collections. Since products can be defined on the basis of supplier, the system also can track revenue and receivables by supplier.
- A subject table of contents that shows all related files. Key accounts have complex information requirements. The better the access to all related files for that account, the faster the utility can give its most important customers the answers they need.
- A pre-configured gateway to complementary applications offering value-added products and services. As a utility grows from a supplier to a strategic partner in key accounts, the capability to provide timely, sound information about new products and services that may benefit the end user is vitally important. Providing this information to the trusted points of contact, rather than a “blind” sales team, will allow the modern utility to develop new ways to better serve its customers and improve its bottom line.
In addition, this tool should be easy to learn and standardized so accounts are not affected by employee turnover. The use of such a tool would not only bring new cost-saving efficiencies to the billing department, but the flexibility it provides would make it easier to comply with future regulatory requests.
The increased calculating power of a key accounts configuration over a legacy CIS would support creative pricing options, which would be much appreciated by high-consumption end users. As well, it would become possible to develop and offer new information-based services to high-value customers. The support of transparent energy pricing structures creates an environment in which customers have the tools and knowledge to become well-informed, price-conscious energy users.
More significantly, an environment is created in which usage and market information become highly valued, which opens the door for the 21st century utility to provide unparalleled new services and value to its key accounts.
Up to now, the benefits discussed would apply in any situation involving the use of new, effective technology, whether it’s a global installation or just for key accounts. It’s in the implementation area that we see strategic advantages for key accounts.
To understand why implementing a key accounts billing and customer care system has unique and compelling strategic advantages, it is necessary to take a brief look at the three elements of such system implementation: configuration, data conversion and interfacing.
Configuration refers to the business rules, rates and guidelines under which a utility’s billing and customer care system operates. When utilities were straight-rate energy sellers, it was feasible to handle all this manually in a spreadsheet hand-coded into a special billing engine. But such systems are capable of accommodating only a limited amount of business rules and are slow to modify. Multiple rates, real-time pricing and billing can tax a manual system to its limits, while an automated system can easily handle this and much more. The more rules a system can handle, the more options a utility can create for its customers. Lastly, the speed to change rules may be even more important than the number of rules a configuration will allow. A system that can be set up and altered by business analysts instead of programmers allows a utility to rapidly meet changing customer needs.
Data conversion refers to the conversion of account records from the old system to the new key accounts configuration. How much data will be converted and how far back a utility wants to go is a decision that is entirely up to them. In implementing the data conversion aspect of a key accounts billing and customer configuration, a utility is completely in control. The special nature of key accounts suggests that the utility will know exactly how much data should be converted. Also, there is no time limit on conversion.
Interfacing deals with the other peripheral IT systems with which the billing and customer care system will need to communicate. In a mass-market system, there are potentially dozens of areas that will need to be interfaced. Because key accounts management is often separated from other aspects of customer service operations, there are very few areas that will require interfacing. This makes it much easier, cheaper and faster to install a special key accounts billing and customer care configuration.
The rapid increase in new rates and billing needs presents a golden opportunity for utilities to become value-added strategic partners for their high-revenue customers. The technology now exists to move from manual, labor-intensive processes or customer care-limited billing engines to systems that fully and completely handle all aspects of utility key accounts. With this technology, the utility can bill faster, cheaper and more accurately. Faster billing means improved cash flow for invoices that account for major portions of a utility’s revenue. Because of the special nature of key accounts management, there are several strategic advantages in implementing such a system that make it a winning proposition. Perhaps most significantly, with more powerful information management tools at hand, a utility can improve its operating efficiencies in the near term and increase its bottom line by offering new information-based services and by becoming a value-added strategic partner to its key accounts.
Bill Lemon is the senior product marketing manager at ConneXt. His responsibilities include identifying key features utilities need to manage customer care and billing. Before coming to ConneXt, Lemon worked for 15 years at Pacific Gas and Electric Co., where he focused on metering and billing technologies. Lemon served as Chairman of the Automated Meter Reading Association Program Committee from 1997-98. Lemon holds a bachelor’s degree in Mechanical Engineering and a master’s degree in Engineering Management, both from Stanford University.