E-Commerce Strategy: An Essential Element in World Class Utility Operations

E-Commerce Strategy: An Essential Element in World Class Utility Operations

By Mark Johnson, Metzler & Associates

Thanks to growing acceptance of the Internet, customer care is evolving at a fast pace. With 10 percent of Americans buying goods or services via electronic commerce today–a number that is expected to grow significantly–E-Commerce is a strategy that commands serious attention. As the largest consumer-serving industry, utilities have a number of incentives to implement E-Commerce, including customer demand, the growing importance of customer service in a deregulated environment and new technical capabilities, as well as the cost savings and efficiencies E-Commerce offers.

However, implementing E-Commerce requires developing an enterprise-wide strategy that maximizes value to the entire organization. Thus, the process of developing an E-Commerce strategy is critical. It must address the organization`s future vision and its current state, and thoughtfully define how to get from here to there.

Why E-Commerce?

The benefits of E-Commerce are significant and widespread. Many are based on the convergence of Internet technology with customer interactivity. For example, databases have been elevated to knowledge-bases, offering online self-help, interactive content, heightened communication and eventually, a community centered around the utility`s product offerings and added-value services.

When customers, suppliers and employees visit a web site, they want information that resides in a legacy data system. Of course, these ancient mainframe computer systems contain all the account balances, consumption details and customer information. Providing access to this information via E-Commerce results in fast and instant customer care, helping develop long-term loyalty. It also improves relationships with suppliers and employees.

While E-Commerce builds relationships, it also provides significant additional benefits throughout the organization. For example, linking online users to live transaction-processing systems reduces the time and costs associated with typical person-to-person customer service and improved productivity.

E-Commerce also typically appeals to a utility`s IT groups, primarily because it leverages existing code and skills, and provides portability that reduces the total technology cost. It`s helpful to consider that the logic rules underlying the COBOL code on legacy systems are the same drivers for E-Commerce.

Furthermore, E-Commerce offers flexibility in linking the average seven legacy system applications with cross-application communications. For example, an E-Commerce system could include a messaging capability that moves nimbly between mainframe legacy applications to access the specific data required to respond to a particular request. This fairly new capability means that utilities` E-Commerce systems can incorporate the software, database systems and hardware on which they`ve relied for years.

With wide-ranging benefits and the portability of existing code and hardware, E-Commerce empowers IT personnel to think as strategically as a CEO and deliver savings that will delight a CFO. It essentially transforms the “glasshouse” into the front office.

Which E-Commerce Applications?

The phrase “E-Commerce” refers to a wide range of applications, from buying a book on the Net to online inventory replenishment to trading power. Since each requires integrating different sources and interfaces, it is important to carefully identify the areas that will deliver the most benefit (and thus, should be implemented first) and carefully prioritize others.

For example, the most popular customer care applications for utilities today are historical consumption information, engineering questions and answers, and bill payment. For historical consumption, integrating the web interface with middleware to the legacy data sources is required. In the case of engineering questions and answers, E-Commerce requires enabling a search engine to retrieve answers from a knowledge-base.

Similarly, there are numerous options for bill payment, including offering E-bill options (which is currently available from many utilities, including Consumers Energy, American Electric Power, Florida Power & Light Co., Columbia Gas of Ohio, GPU Energy and Pacific Gas & Electric) or secure electronic commerce. The Secure Electronic Transaction Organization has tested and approved over a dozen different vendors. Constant changes in standards, approved vendors and evolving technologies contribute to the need for a careful planning approach to E-Commerce implementation.

To the user, E-Commerce applications such as these and others appear completely web-based; however, there are a wide variety of software systems and hardware behind the web site. Dell Computer`s web site is an excellent illustration. It appears to be entirely web-based, but actually includes five different information systems–order processing, inventory management, product configuration, manufacturing resource planning and credit authorization. These are housed on a variety of minicomputers, mainframes, and UNIX and NT servers.

The “Wrong” Questions

Utilities often start E-Commerce activities by asking questions that focus on tactical concerns such as:

How do I upgrade my web site to the “best practices?”

How do I turn our web site into a true knowledge system?

How do I create and sustain customer care and commerce over the web?

How do I integrate my IT infrastructure with all of my different platforms?

How can I share data across all of my various applications?

How do I integrate electronic communications with my extended workforce and customers?

These are not bad questions, they`re simply the wrong questions. The reality is that the potential competitive and operational benefits associated with E-Commerce are based on developing a strategy that delivers maximum value to the whole enterprise. Thus, starting with tactical concerns is putting the cart before the horse. The process of creating an E-Commerce strategy will provide ample opportunity to answer these questions–within the context of a larger strategic vision that has the potential to deliver significant benefits.

Building the Strategy

Once a utility is committed to achieving the advantages of E-Commerce and understands the importance of strategy, it`s time to actually develop a strategy that addresses its specific needs and priorities. Many utilities choose to work with an outside consultant at this point in the process to incorporate expertise and ensure a consistent focus on the project. The planning process has four main objectives: articulating the desired future state of the utility`s E-Commerce services; identifying the utility`s E-Commerce challenges and opportunities; developing a transition plan from its current state to its desired future E-Commerce state; and developing a self-supporting and ongoing E-Commerce business.

These objectives can usually be accomplished through a seven-step work plan:

Step 1: Develop a Detailed Project Plan. Detail all key E-Commerce project information, including schedule, goals, objectives, participants, scope and deliverables. Time, people and resource dedication is important here.

Step 2: Define the Future E-Commerce State. Identify the utility`s E-Commerce focus, capabilities, performance expectations, functionality and critical success factors. This step develops the organization`s vision, goals, objectives and expectations of performance and functional capabilities.

Step 3: Establish Business Performance Metrics. Establish the organizational performance metrics of the E-Commerce project through the situation assessment.

Typical outcomes include expected performance, best practice comparisons and performance gap analysis.

Step 4: Weigh Strategic Options. Strategic options are opportunities that are attractive for E-Commerce applications. This step also includes creating expectations of performance, associated risks and requirements for implementation.

Step 5: Identify Transitional Alignment Issues. Identify current and anticipated transitional issues associated with the E-Commerce implementation. The deliverable for this step is identifying the issues, anticipated impact and contingency response.

Step 6: Develop an Implementation Plan. Develop an E-Commerce application implementation plan to achieve the goals and objectives outlined in the previous steps. All technical requirements should be carefully explored and evaluated, including all custom and packaged software and hardware solutions. Communicating with all involved parties is also a critical element of the implementation plan.

Step 7: Implement the E-Commerce Application. Implementation includes being on-site to install, customize and configure the chosen E-Commerce package into the utility`s business environment. The specific steps include project management, installation planning, software and hardware installation, software configuration, installation record and basic skills instruction.

Delivering Long-Term Dividends

Developing the E-Commerce strategy is an intensive process, yet the investment pays long-term dividends by codifying the strategy and translating it into actionable plans. Plus, the resulting strategy provides a context for considering each and every potential application as your E-Commerce program matures. In addition, having a strong technical foundation and business case in place will enable you to roll-out more E-Commerce applications more quickly.

Most importantly, a well-considered, carefully developed E-Commerce strategy that maximizes organization-wide value has the potential to deliver a wide spectrum of benefits: a quantum leap in customer care that develops loyal relationships; significant cost savings; and operational efficiency.

Author Bio

Mark Johnson heads up the E-Commerce practice with Metzler & Associates. His consulting expertise includes E-Commerce and E-Business strategy; web access to legacy systems; and integration/implementation of Intranets, Internets and Extranets. Johnson has created and launched many businesses online and focuses on energy and utility industries. Johnson can be reached at 847/945-0001 ext. 2893.

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