Regulatory mandates and the economy are driving many utilities to extend the life of their existing CISs.
by Dan Sullivan, Vertex Business Services
Just as the general malaise in the U.S. economy is forcing consumers to tighten their belts, many utilities also are being driven to curtail major spending. More vigorous rate case scrutiny and vocal consumer constituencies are impacting utilities’ abilities to recoup rising fuel expenses and costly infrastructure investments. One fallout of this dilemma is the ability to replace or upgrade to a new customer information system (CIS). As a result, many public utilities are addressing market-driven needs to avoid the risks associated with replacement in lieu of a cost-sensitive strategy: extending the life of their existing CISs.
New Technology Can be Disruptive, Expensive
The cost of moving to a new CIS can be daunting, especially in a period of constrained revenues. In addition, filling the gaps with a new CIS can be tricky because most legacy systems have been customized over years, have hundreds of interdependencies and are not well-documented. Staff members who developed in-house systems might have retired or left their companies. As a result, replacing highly customized functionality can be expensive. Also, there is a considerable lack of information about the future desires of regulators, legislators and consumers, making the target CIS functionality difficult to define. Without such specifications, it is difficult to determine what is lacking or insufficient in a current CIS, so issuing a request for proposal (RFP) to identify needs is nearly impossible. In many instances, utilities conclude that it makes financial and practical sense to continue leveraging an existing CIS.
Changes brought about by new technology will be significant, said Martin Dunlea of UtiliPoint International in the June 22, 2009, Management Quarterly article “Leveraging the true value of legacy customer information systems.”
“By some estimates, upwards of 43 percent of the project budget can be sunk into business process reengineering and change management,” Dunlea said.
More Than One Way to Revive a Legacy CIS
Companies too cash-strapped and beleaguered to pursue a new CIS don’t have to make do with outdated technology. Several avenues can extend an existing CIS and make it relevant to the current business model:
- Outsource Support. An increasingly common view is that at least some outsourcing is necessary to remain competitive in the current economy. Outsourcing CIS support can reduce costs, freeing dollars to fund enhancements. In addition, this approach can enhance business process effectiveness and solve resource scarcity.
- Install a Web-based Front End. Opportunities exist for streamlining customer service delivery via customer-friendly enhancements that can reduce information technology spending and improve efficiency. Implementing a Web-based, customer-facing front end on an existing CIS provides a way to take advantage of service-oriented architecture, such as Web portals. Old technology can disguise itself in a cloak of new, more efficient functionality.
- Implement Back-office Enhancements. Customer self-service options can reduce costs, improve service quality and increase customer satisfaction without requiring a legacy CIS replacement. Features such as electronic billing and online payments help streamline back-office operations while giving customers greener paperless options. In addition, workflow automation can make back-office staff more efficient and effective, reducing customer response times and minimizing customer inquiries.
- Optimize and Tune Performance. Analyze how your CIS measures up against current standards and the evolving needs driven by new initiatives such as energy efficiency and demand response programs. Look for areas where processing is slow or extra steps impede efficiency. Identify where integration with applications outside the CIS, such as meter data management, outage management, GIS, mobile work force and service order management, will improve performance across the enterprise. A 2007 Chartwell report, “The Chartwell Report on CIS Installations in North America,” concludes, “While a new CIS will do the trick, utilities are also opting for integration services, purchasing standalone products to add functionality in an a la carte manner. The business objective driving the integration of systems is two-fold: improving customer satisfaction and reducing operating costs.” Ted Nolte, president and CEO of Semilla Advisors, said in the report, “Additionally, tighter integration will reduce administrative tasks by passing information via system integration that used to be passed manually between departments and users.”
- Revisit Business Processes. Apply methodologies such as Six Sigma and Lean processes to identify gaps in business processes that may have evolved over years. Then commit to implementing the needed changes your scrutiny reveals.
- Modify the Approach to Enhancements. Evaluate requested enhancements case by case and focus on obtaining the biggest benefit for the lowest expenditure. Correcting minor irritations in an existing CIS can lead to less demand for change. UtiliPoint’s Dunlea wrote, “Utilities who have developed their CIS systems over many years and who have grown to depend implicitly on the customer data it contains may require nothing more than an improved screen display for customer services representatives and a unified view of the customer information.”
- Invest in Call Center Technology. Take advantage of advances in call center technology to add life years to an aging CIS, including instant messaging, work force management, interactive voice response (IVR) and analytics. Customer service representatives will be able to work smarter, and the customer experience will be enhanced through shorter call duration and an increase in first-call resolution.
- Improve Management Information. Ever said that you just can’t get the timely data you need to make fact-based decisions? Use third-party analytics tools outside of the CIS to extract more meaningful data that can be presented in reports or on a management dashboard. We’ve seen moves such as this significantly reduce the strain on an existing CIS and provide opportunities to gain insight into customer behavior, improve customer service and minimize costs.
Energy Provider Stretches its CIS Capabilities
The deregulated marketplace and a high degree of customizing led Georgia-based energy provider SouthStar Energy Services to postpone a CIS upgrade and instead beef up the capabilities of its current Banner CIS platform. SouthStar’s managing director of customer operations, Jeff Howell, said that bringing in a new billing system would bring problems, as well.
“Implementing a new billing system would have been very time-consuming and expensive,” he said. “We decided to capitalize on the customizing already in place and remain on the existing platform.”
SouthStar had invested considerable time building its infrastructure, ending in 2008. The company was ready then to tackle the next requirement: using the CIS to help its sales team acquire and retain customers.
Existing CIS Supports New Customer Discount Program
“We were able to implement customer-specific discounts based on customer profiles,” Howell said. “As a result, our call center’s close rates have improved.”
SouthStar developed the business case for sales-friendly improvements, including determining the cost of new programming and the rollout, and expected outcomes, Howell said. Management also ensured that the call center reps dedicated to acquisition and retention were trained thoroughly.
New Vendor Interfaces Extend CIS Life
SouthStar further enhanced the extensibility of its CIS with the addition of interfaces to other vendors, including bill print and remittance processing providers. The company also instituted a review of its operations, ensuring that all parties sat at the same side of the table to share risks and rewards culminating in an improved alignment with CIS functionality, Howell said.
21st Century Infrastructure Improves Reliability
In the midst of the CIS upgrades, SouthStar’s service provider moved its system hosting to new servers and processors. Realizing a substantial performance improvement allowed SouthStar to focus on strategic directions, rather than tactical issues, Howell said.
He advises companies considering extending a CIS to first make certain the system’s foundation is well-established and positioned according to management’s directives.
“You must also align people with the system to make sure their capabilities are enhanced, as well,” Howell said.
Go Beyond Just Making Do
While the lure of a shiny new system is almost irresistible, your existing CIS might just be an undiscovered, underrated asset. In this era of universal economizing, utilities should take a fresh look at their legacy CISs and resolve to make them work harder. A well-conceived plan and dedication to seeing meaningful changes to completion will give an aging CIS new life, satisfy the public’s appetite for thrift and help your company keep pace with the demands of a volatile marketplace.
Dan Sullivan is managing director of North American Utilities at Vertex Business Services. He has more than 30 years of information technology experience, also having worked for Accenture, Cap Gemini, Ernst & Young and IBM. Reach him at email@example.com.