Customer Information Systems Change Roles in the 21st Century
By John Gregg, SCT Utility Systems
As the ground rules for utility industry deregulation are being laid out in the late 1990s, uncertainty and fear, as well as opportunity accompany them. The conditions for a competitive deregulated environment are distinct in every region of the country and abroad.
Few know what the future holds. What is certain, however, is that utilities must be prepared to resemble a true retail model as deregulation plays itself out. Consequently, the customer information system (CIS) of the next century will need the necessary weapons in its arsenal to respond accordingly.
The Birth of CIS
The 1960s could be considered the real beginning of CIS in the utility business. This was the time when technology reached a point that the automation of manual processes became a desirable option. Utilities began to use computers to calculate and print bills during this time. The advent of IBM 360 architecture and more cost effective DASD paved the way to on-line processes and the ability to process bills more rapidly.
The next step was the automation of the entire customer file maintenance process. Along with this came transaction process automation. Some utilities developed on-line systems that generated service orders. Printers were located in key areas away from the data center to print these orders on-line rather than in batch processes at night. Cash processing was automated and the cycle between billing and payment receipt including final notices was automated. These changes improved cash flow and began to make it easy to maintain historical data, which would prove beneficial in rate cases, rate/block analysis, etc. In addition, on-line capabilities and manual process automation improved customer service.
While these advancements were all significant, the flat-file legacy systems that many utilities continue to rely on today are outdated and often unable to handle all the dynamics facing the changing industry landscape. The systems that were developed in the `60s, `70s and `80s are primarily customer billing systems. Credit access enhancements have been added over the years, but the legacy systems built 25 to 30 years ago are typically accounting-based.
The New Market
In 1988 the natural gas business began unbundling when the Federal Energy Regulatory Commission (FERC) issued Order 636. This was soon followed by the 1992 Energy Policy Act. These events set the stage for deregulation of the electric utility industry as we know it. Today, some utilities are merging, reasoning that strength means size. The movement to create energy service providers (ESPs) to focus on the sale of energy and other commodities to the open market is well under way.
For utilities, the vision to sell products and services such as appliances and appliance maintenance, cable television, telephone and Internet service “beyond the meter” and bill for these added items on a single bill is very much alive. The days of the “asset based utility,” which invested money in power plants and infrastructure and benefited from captured audiences, are soon ending. The new utility company must be an aggressive marketer. As deregulation continues, energy margins will decrease and other sources of revenue must be found to meet shareholders` needs.
Utilities need to find ways to pay for stranded investments if they lose customers as a result of deregulation. Utility service providers entering the next millennium must bundle products and services to ensure profits. The utility industry is heading in a direction similar to that of the telecommunications industry. The break-up of “Ma Bell” necessitated inventive ways to offer additional services. Features such as “call waiting” or “caller ID” were borne out of this environment, as competition drove down long-distance rates. So too, must utilities be able to provide extra products and services to their customers to ensure healthy margins. The entire country–rather than a state or region–will be a target for aggressive utilities. The key differentiator in the markets served by utilities will be exceptional customer service.
Tomorrow`s Customer Management System
As product price becomes an issue, superior customer service becomes more important. Consumers may be willing to pay a higher price if customer service is exceptional. For example, utilities must be able to schedule appointments with their customers, quickly identify service interruptions and take corrective action in a timely manner. To accomplish these types of tasks, information must be distributed to the front line employees who interface with customers. This information must be in a form that gives employees the opportunity to make educated decisions. The customer database as well as processing power must be distributed closer to the front line employee to enhance performance and reliability, and provide flexibility.
The customer service representative (CSR) in this environment has a more focal role. In a competitive and deregulated atmosphere, the CSR`s role changes from one of merely handling complaints and dispensing information, to a sales-intensive position. As the first line of contact for the customer, the CSR will make the difference between developing a deeper relationship with the customer through the addition of new services or losing that customer to a competitor. The success or failure of traditional and emerging utilities will depend largely on the quality of its customer-management programs. The CSR will become more market savvy and utilities will need to recognize his or her importance by offering additional training and education. The CIS deployed by utilities must provide multiple views while offering service representatives quick and easy access to information.
To support their marketing programs, utilities must also be able to bill for thousands of different rates. The utility marketing department may offer a new rate that may need to be adjusted instantaneously. By contrast, legacy systems may require several hundred hours to make necessary rate adjustments. A rules-based, core infrastructure that can be easily modified is necessary. The CSR must be able to make easy adjustments without reprogramming the system.
Older systems also lack the relational databases, and other tools to develop, manage and target specific accounts. One major frustration many utility managers face is the inability to build information about their customers. The most sophisticated marketing department in the world will fail if it can`t gather the appropriate information.
A system to support the deregulated market must be a customer management system that will capture critical demographics. In addition tomorrow`s CIS must be able to segment markets, differentiate residential from commercial customers and decide to which customers it should aggressively sell. In a deregulated environment, the opportunities can best be developed through effective marketing programs that build from the existing customer base. The CIS should supplement the existing customer database with additional information geared toward highlighting expanded business opportunities. It must be able to classify customers by any combination of existing or user-defined attributes for effective target marketing. CSRs must have quick access to information and input screens needed for immediate customer enrollment and service order generation.
Traditional utilities, like their emerging ESP counterparts, must also be more conscientious about attracting the customers they don`t have. The three-field account-based systems of the past tied the customer into his or her account information and the premises. Closed accounts were deleted from the system. Unlike its predecessors, the new CIS must be able to maintain that account history, allowing the customer to be recaptured. The CIS must also be sophisticated enough to continually treat customers as prospects who are candidates for additional services.
In changing times, the utility must consider tomorrow`s prospect. The future market is the young consumer who depends on the Internet in daily life. A majority of the strategic purchasing decisions that are going to be transacted in the future will be made at home in quiet reflection, and enabled by a web browser.
Progressive utilities realize that the World Wide Web provides an extra opportunity for them to communicate with their customers and improve both service and customer relations. In addition, as utilities become more competitive, offering web access reduces the necessary amount of human intervention in establishing superior customer relations. The web subsystem of a CIS should provide the necessary tools for web application administration. In addition to providing account information, utility provided web applications need to provide technology-enabled relationship management, offering customers the flexibility to make one-time or recurring payments over the net, as well as select additional products and services.
Finally, the future CIS must be a flexible product-based entity. A product-based system can be implemented faster, and costs less to install and own. Today`s utilities cannot afford to take three to five years to implement a customer management system. Furthermore, a product-based CIS system does not become antiquated after a couple years. Deregulation has taken the entire industry by storm and the future is uncertain. The 21st century`s ideal CIS needs to make upgrades and enhancements available to allow for the sweeping restructuring which has affected everyone, otherwise it too, will be outdated. As customer service becomes the decisive factor in their success, utilities must be able to enhance their systems based on their customers` input and demands.
John Gregg is SCT Utility Systems` marketing vice president. He has 24 years of experience in the utility industry in both marketing and information technology.
Today`s CIS must provide multiple views while offering service representatives quick and easy access to information.