By Roger Bliesner, CIS product manager, Innoprise Software Inc.
March 7, 2005
The simple life
Not all that long ago, utility billing was a much simpler process. Meters were read and bills sent out based on a flat rate times consumption. Billing was so simple, in fact, that many rural cooperatives relied on an honor system for meter reading, whereby each member read his or her own meter on the first of the month and remitted payment based on these readings. A few coops still use an honor system, but even utilities whose billing processes are reminiscent of a much simpler time are faced with an increasingly complex world when it comes to billing, customer service and revenue management.
Out with the old
Until recently, utilities concentrated their personnel and financial resources in two key areas. One was constructing, operating and maintaining the infrastructure needed to deliver energy to the end consumer. Two was creating and managing a continuing revenue stream, which revolved around meter reading, bill generation, payment processing, dispute resolution and exceptions management, and collection of past due amounts.
The customer information systems (CIS) developed to support these transactional needs focused on the associated business processes, with little thought given to the customers served by these processes. Systems were designed and customized to support a rigid set of utility-specific business rules. Unlike software designed for unregulated industries, utility customer information systems were conceived as permanent solutions for billing a guaranteed customer base for measured amounts of electricity at a uniform rate. Because the customer base and billing structure were viewed as unchanging, the resulting file structures of CIS solutions developed a decade or more ago were rigid by their very nature and not readily adaptable to change.
A new business dynamic
As we all know, the 1980s marked a slow evolution from an inwardly-focused view of utility business management to a more outward-looking, customer-centric approach. The 1990s hinted at more dramatic change, and the new decade is characterized by a time of use billing, variable rate structures, demand-side management, load forecasting, settlement, open market reform, increased customer service demands, the prospect of competition, and a drive to cut maintenance and operations costs while ensuring reliability.
In addition, Sarbanes Oxley and similar regulations globally are forcing utilities to be more open and timely in their external reporting, creating a strong need for business processes and tools aimed at maximizing core operational efficiency to reduce costs and increase transparency for internal and external audit requirements. All of these factors require an unprecedented ability to access current, accurate and detailed information from throughout the enterprise.
Overcoming fear, uncertainty and doubt
There is no question that utilities are finding it increasingly difficult to respond to modern business needs and customer demands using CIS technology designed for an environment that no longer exists. Because of the inherently closed architecture of legacy CIS, it is typically cost prohibitive, and sometimes even impossible, to modify and customize these platforms to increase their transparency.
While for many years, legacy CIS solutions have continued to evolve through ongoing, ad hoc modifications, the rigid nature of these systems is incompatible with the collaborative, analytic functionality needed to respond to the demands of today’s Web-savvy customers and business partners, and the convoluted rate structures and reporting requirements of the modern world.
In spite of the strong business drivers for replacing legacy CIS solutions with new technology, some 30-40% of today’s utilities are still running their businesses using legacy applications, and many only modify these systems with custom development only when mandated by regulatory boards. Why is this?
Historically, it’s taken an average of 1-5 years to implement a CIS, which had a life span of 5-15 years. Hard benefits were difficult to quantify, and soft benefits derived from enhanced business functionality, more robust reporting and financial controls are difficult to quantify. The fear factor also weighs heavily on many CIS decision makers seeking faster, lower-cost, lower-risk implementation options.
In with the new
Fortunately, technology is dramatically changing the business proposition of replacing legacy solutions with new technology, making CIS deployment much less painful and much easier to cost-justify. In fact, the costs of deploying new technology has fallen from an average cost of $50 per meter just a few years ago to a much more attractive $10-$15 per meter today, and cost-benefit studies often show that the cost of purchasing new technology can often be less than just the annual maintenance costs for older legacy-based solutions.
There are some key trends that underlie the success of modern approaches to CIS. Not surprisingly, many of the trends leverage the transformational possibilities enabled by the Internet and the resulting Web-based technologies that have been developed in the last few years.
One criterion for success in the Internet age is that new CIS systems are not only Web-enabled, but also Internet-native, that is, built entirely on standard Internet technologies. The implementation speed, performance, flexibility, scalability and ROI of Internet-native solutions are dramatically better than older technologies that have simply been modified so that they appear to be Internet-based, but in reality consist of old technology with a new face in the form of a Web interface.
Internet integration architectures embracing extensible markup language (XML), service-oriented architectures (SOA), web services and advances in wireless technology are taking CIS to the next level of flexibility, functionality, ease-of-use and affordability.
Application and enterprise integration
Because XML is an emerging standard Internet protocol for data exchange, it greatly reduces the cost of seamlessly integrating to other third-party applications and legacy systems residing on a variety of operating systems and application platforms.
As building blocks that connect to each other over the Internet, web services allow programs written in different programming languages and on different platforms to communicate and share data through protocols like XML, making it much easier to access customer information as well as other data within and outside the enterprise.
Today’s web-based architectural backbones offer powerful cross-functional capabilities that enable a wide variety of applications across the full spectrum of customer interaction to access the same data set using numerous available touch points, including phone, kiosk, computer or wireless device.
Customer intelligence is dramatically enhanced and integration with other applications is simplified. For example, integration with work management, field automation, outage management, human resource management and document management systems can dramatically streamline work flows and optimize utilization of personnel resources.
Simple tools, complex reports
Such a flexible, scalable architecture also makes it much easier and faster to add new services, products and rate structures as business needs and regulatory demands change. Once enterprise information is readily available through industry-standard Internet protocols, it can then be accessed using common desktop applications like Microsoft Office. This means that instead of requiring IT staff to develop a new report, data can be easily extracted by virtually anyone from the CIS using Word or Excel to create even the most complex ad hoc reports in support of rate hearings, analysis and budgeting requirements.
Business intelligence and customer analytics
Because data access is so much simpler with today’s technology, the use of business intelligence, data warehousing and customer analytics is also growing dramatically alongside the industry’s need to analyze the data captured through transactions with their customers as a means to make more intelligent business decisions.
Utilities need to collect a broad set of information to help reduce their cost of servicing existing customers and to identify opportunities to market and sell new products and services. Business intelligence tools enable utilities to combine data that already exists within the company with information available from other internal and external sources so that this data can be mined and analyzed to support more informed decision-making.
Combining an SOA and new business process management standards with customer analytics and real-time intelligence is enabling many forward-thinking utilities to achieve new strategic advantages. One area where business intelligence adds value is automating the collection process. Unique bill collection rules can be setup initially to run automatically, managing collections, processing fees and triggering late payment notices electronically or by mail.
Data, data everywhere
Along with the evolution of Internet technologies, big advances have also been made in wireless technology, bringing utilities closer to a ubiquitous computing environment of fully connected devices, with inexpensive wireless networks everywhere. For utilities, this means the extension of customer information management applications into the field via wireless networks and handheld devices, which are making it possible to connect users such as field-sales reps, field-service agents and traveling executives. New technologies use wireless peer-to-peer communications to enable real-time data exchange not only between the corporate customer information system and personnel in the field, but also among any connected devices on the network, ranging from cell phones and wireless PDAs to PCs and servers.
Perhaps more than any other factor, the Internet has brought about a fundamental shift in the way business is conducted at every level. Creating an open marketplace for business transactions, and offering tremendous opportunities to improve and enhance customer relationships, modern CIS technology is enabling utilities to transform the way they do business. The ability to integrate applications across departments, successfully launch new products, use wireless technology to deliver back office CIS to any location, automate manual processes and deliver a blended, self-service customer delivery model are becoming every-day realities for utilities doing business in today’s world. Legacy CIS systems that produce thousands of pieces of paper, yet leave customers waiting in line or on the telephone line, are rapidly becoming a way of the past as advanced technologies open new doors for effective customer and revenue enhancement.
About Roger Bliesner
Roger Bliesner is CIS Product Manager for Innoprise Software Inc. He has more than 10 years of experience with Customer Information and Utility Billing systems, including project management, support, training, programming and data conversions. Bliesner holds a degree from the University of Oregon and has continued his education in the areas of programming and software engineering.