outsourcing allows utilities to cut costs, focus on core business

Anthony R. Chase, ChaseCom L.P.

A multi-billion dollar industry is up for grabs for utilities that can convince consumers and businesses to switch power suppliers.

Of all the current trends impacting outsourcing for the utility industry, the recently enacted “Do Not Call” legislation may be the most important. Utilities need to make the most of each and every consumer contact. They have fewer opportunities because they can no longer randomly call consumers or prospects.

Therefore, the call-center staff needs to be flexible. The personnel must be able to switch from placing an outbound call to suddenly being available to receive an inbound call, and handle both with aplomb. In the past, clients typically had divided the two functions, using one outsourcing group for inbound and another for outbound calls. But, if a call center can quickly turn off the outbound route and turn on the inbound route, all functions will be satisfied and no customer will be turned away.

Outsourcing the customer relationship management function is a necessity for any utility desiring to gain a competitive advantage and market share in this deregulated environment. They must be able to focus their resources and management on their core business while ensuring excellence in customer services at all levels.

Accurate billing, correspondence, revenue management, back-office processing and collections, the help desk, and a human interface for online and after hours customer support should be available to clients and prospects 24 hours a day, 365 days a year.

Outsourcing allows utilities to avoid millions of dollars in outlays to employ, train, manage, and maintain customer relationship management services, supported by expensive in-house IT and service departments. It not only increases a company’s flexibility, but also eliminates up-front capital spending.

Within one year, utilities can achieve a 10 percent to 20 percent savings if they deploy certain core competencies to outsourcers. And, that’s just the labor cost savings. It doesn’t include the savings recognized in upgrading physical capacity and technology.

Utilities typically turn to outsourcers when they reach an operational limit. They may need to increase their physical capacity to handle new customers but are reluctant to spend millions of dollars on more staff, office space, and hardware.

Such investments generally carry little guarantee of profitability and detract from the bottom line.

The road to in-house IT development is littered with numerous, and often costly, fiscal missteps and high-tech mistakes. For instance, one company spent $2 million on technology hardware and software to establish its own call center and began hiring hundreds of people to staff it. After a year of continuous challenges, management abandoned the effort and turned to outsourcing.

Utilities are making the “outsourced customer services discovery,” resulting in an unparalleled two-fold benefit: increased customer satisfaction and reduced overhead.

Utilities naturally may be wary of entrusting their most important asset-their customers-to a third party. Outsourcers are well aware that the two most important assets a company has are its brand and its customers, both of which must be handled with extreme care.

An experienced outsourcer can interface with a utility’s legacy system and manage both existing and potential customer relationships. An outsourced call center can administer both the technology and human resource functions, increasing customer satisfaction and retention at a lower cost.

A good barometer for measuring the success of an outsourcing relationship is the invisibility of the line between the client and the outsourcer. The utility’s customer must not be able to distinguish that they are dealing with a contractor, rather than the utilities’ own in-house employees.

The outsourcer’s sales and marketing associates must be trained to mirror the corporate culture of the company they are serving, answering and generating calls precisely in the same manner that the client would.

Outsourcing will improve a utility’s customer contact services because the outsourcers are motivated to stay abreast of all new product and service offerings to a degree that a utility’s employees might not.

And, utilities further benefit by outsourcing parts of their after-hours support functions. Customers are increasingly more apt to telephone in the evening (when it’s more convenient for them) rather than during normal working hours.

A notable trend in outsourcing is the increased use of outside staff for back office processing, order entry, order provisioning, and data provisioning functions. Outsourcing is particularly useful for these transactional functions. Often, as the result of a merger or acquisition, a company will have two technology platforms that are not linked. A human interface is needed to read the information from point A and type it into point B.

Utilities should be wary of outsourcers who offer a one-size-fits-all package. The outsourcer’s infrastructure should be tailored to reflect the profile of the utility, not the reverse. Each service should entail a technology/training initiative specific to the client’s corporate culture and product focus.

Further, utilities should seek outsourcers who are Six Sigma certified. Six-Sigma uses a data-driven approach and methodology to eliminate the defects in a process, placing a priority on satisfying the customer’s needs above all else.

In the increasingly competitive electric power industry, the winners will be those firms that narrow their definition of core competence and outsource customer contact centers and other non-essential functions.

Chase received a B.A. with honors from Harvard University in 1977, an M.B.A. from Harvard Business School, and a J.D. from Harvard Law School in 1981. He is chairman and CEO of ChaseCom L.P., a provider of cost-effective customer relationship management and technology support for Fortune 100 companies. ChaseCom touches more than 50,000 customers per day. For more information call 713-874-5800 or view www.chasecom.net.

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