Reengineering Customer Service: A Key To Competitive Advantage and Value-Added DSM Delivery in the

Reengineering Customer Service: A Key To Competitive Advantage and Value-Added DSM Delivery in the Future

By Steven Maslak, Applied Energy Group Inc.

Electric and gas utilities have historically considered themselves to be suppliers of a product, rather than providers of a service. Electric and gas services that were provided were limited to emergency and repair types of support. Traditional thinking dictated that demand-side management (DSM) must be provided through a significant incentive-based mechanism. What all of this meant was that the utility was focused inwardly on itself. That era was characterized by three conditions:

1. Customers did not have a choice among suppliers.

2. The relationship between the utility and the customer was commodity or price-based, with any communications that were conducted being based primarily on billing and reactive issues (service hook-ups, repairs).

3. A general sense existed that all utility DSM successes had to be bought through rebates and incentives.

With the prospect of competition, the focus of the utility has begun to change to one that centers on the customer. As we know, the customer wants more and more and for this service to be provided inexpensively and with total reliability. Unfortunately, the customer`s expectations for the utility and the utility`s perception of its role are often seriously out of alignment. Correcting this misalignment in a way that profits the customer and the utility may be the key to success, and even survival.

Progressive utilities are beginning to realize that their future success is inextricably linked to their customers` success. Likewise, the utility must partner with its customers from a far broader perspective than just selling electric and gas. Forms of service heretofore unheard of in the utility world will have to be considered. The goal will be to establish a closer bond with the customer through the expansion of existing services in ways that are truly value-added. Taking on the role of overall energy expert for the customer, providing strategic DSM services and supplying full service implementation are but a few manifestations of the customer focus that tomorrow`s successful utility will have to exhibit. Revenue increases will flow from customer business success and its associated load growth, and from participation in other non-regulated, non-typical service offerings.

All of this sounds good, but what is really being called for is grass-roots culture change: the kind of change that asks you to conduct your business in a completely different fashion tomorrow than you did yesterday. It is one thing to profess such a lofty ideal, but something quite different to actually make it happen, simply because the organization or group doesn`t exist within most utilities today that can provide all of these new, innovative, value-added services. The answer will lie in the ability of the utility to focus its attention on the customer through each customer contact that occurs. Traditional boundaries between departments will have to be dismantled, like so many other paradigms, in order to cost effectively bring the entire range of utility service offerings to the customer.

The challenge will be how to move from today`s rigid, procedure-based customer service structure to tomorrow`s dynamic, process-based and service-driven culture. The key is focused reengineering. Certainly each of us has heard the term “reengineering.” It is common jargon in industry today and comes in a number of shapes and colors. reengineering is viewed by its creators as, “… the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.”

Traditional regulatory-agency-mandated DSM, applied in a scattergun approach, becomes counterintuitive in a competitive environment, when not all players are required to provide it. Strategic DSM, on the other hand, or DSM that is both targeted and “specific” in its application is cost-effective and affords an opportunity for the utility to partner with its most important customers in a way that sustains the relationship as competitive forces grow.

With this introduction in mind, let`s explore how reengineering works in the service environment. Remember that classic reengineering looks at the whole company and all of its functional areas, and attempts to totally reconstitute it. reengineering, on the other hand, is imagination-centered. It doesn`t ask how you do it. It asks why you do it: “Why do we do it at all?” It is the difference between effecting real change and just tweaking. Comprehensive, corporate-wide reengineering, as advocated by its conceptual designers, is probably best suited to companies who:

are able to implement radical change throughout the organization without severely damaging it;

can afford the commitment of “the best and the brightest” manpower resources from throughout the organization for the extended period of time required to undertake such a major effort; and

are able to gain the acceptance of the concept and the newly re-engineered processes from the balance of the organization not involved in the effort.

This may be too much to ask of the average company. Most companies may be incapable or unwilling to risk the level of commitment to a corporate-wide, full-scale, reengineering project. Contrary to the beliefs of some of its larger practitioners, while reengineering as it was originally developed may not be for everyone, its basic precepts are for everyone, and, when applied in a focused, highly targeted fashion, can produce significantly improved profitability and outstanding customer service.

So how does a company go about undertaking the reengineering of its customer service function and what does this have to do with DSM? Here are the practical considerations. First, senior management needs to recognize that with relatively few tools available with which the utility can compete, value-added customer service surfaces as a powerful force in the marketplace. Not only can a utility offer whole menus of services to its customers that competitive generation-only sources cannot, but it can incorporate strategically designed, segment-targeted DSM programs whose goals are to lower energy use and, thus, reduce the cost of energy for those customers most important to the utility and likely the region as well.

Armed with that recognition, a reengineering team needs to be convened, a team comprised of high-potential movers and shakers who aren`t afraid of change. This team will be charged with the responsibility for literally building an entirely new group of processes, rather than procedures, that will belong to and be owned by the customer service organization. It is recognized, one could argue, that the customer is touched by many organizations and thus anything less than full-scale reengineering misses part of the target. However, remember that at least initially, we want to expend all our energies on changing the organization with the largest interface with all customer segments. We want to refocus the organization that can exercise the greatest positive force in the interrelationship the company has with its customers, but who also can do the greatest damage to positive customer perception.

Establishing customer service reengineering goals reflective of the company`s overall mission comes next. At a minimum, the philosophy reflected in these goals should include:

refocusing the service organization outwardly on the customer rather than inwardly on long-standing and perhaps outdated procedures;

taking all steps possible to lower the cost of energy while increasing its inherent value to the customer. In other words, helping the customer to employ all forms of energy in the most efficient and cost-effective manner;

assessing and then realigning the objectives of the service organization with the objectives the customer believes and perceives it should have;

restructuring DSM into two components, one of which will provide strategic DSM to key customers, while the second will focus on generic, non-rebate-based efficiency support; and

assuring that the service organization offers the kind of value-added service and responses to customer needs that truly distance it from the service that could be offered by the competition.

The actual work of the reengineering team should initially be directed at those processes that aren`t working well or are destructive to good service. Processes are collections of activities that incorporate a number of procedures or functions, that individually may be working as expected, but collectively, from the customer`s viewpoint, are unacceptable. To differentiate between a procedure and a process, taking a customer`s application for service is a procedure, while the collection of activities from the customer`s first contact with the company to receipt of the first bill is best described as a process. Examining processes forces a global view of how the company relates to its customers, and why it does the kinds of things it does.

Once the troubled processes have been identified–and I realize that I am providing only cursory treatment of a critically important step–the team proceeds to develop a process map. The map is a description, graphic or otherwise, of all the activities and interrelationships that occur during the process. What is important is the concept that mapping necessitates a complete understanding of all of the independent actions that comprise the process. That, in this case, is all that the customer sees. Process mapping makes you examine the process from the customer`s rather than the company`s perspective.

The actual design of the new process is the step that takes the nerve and forces people to seek ways to do things more efficiently for the customer. It is where imagination takes over and where reactionary or paradigm-driven behavior must exit. Process redesign is the point where the team has to stretch its capabilities in streamlining the way customers are served. It is precisely here that marks the turning point for utilities that want to be different from other utilities as well as from other pure generation suppliers. Process redesign starts with a clean slate and has to presuppose that you have just opened your doors for business for the first time. As the team proceeds from the initial point of departure, it must attempt to minimize the number of handoffs from one organization to another within the company and the number of controls that are imposed upon the process steps, many of which are typically needless in an empowered, customer-focused environment.

There are a few pitfalls that can trap a reengineering effort and process redesign phase of which one must be aware. One pitfall of classic reengineering techniques is that they may lead a company to become overly focused on financial returns. The philosophy should be to foster a balanced approach between cost reduction goals and improved customer service. By doing so, buy-in from all stakeholders is encouraged and facilitated. Note that reengineering the customer service function first has a hidden benefit in that it enables that organization to “lead by example,” and actually becomes the role model for a well-timed, strategically paced reengineering of other organizations in the company, in a manner that allows the company to avoid the culture shock that plagues many whole-company projects.

It is in the design phase that the real role of DSM as a competitive tool becomes apparent. Once one recognizes that strategically implemented DSM helps customers prosper, and ultimately enables growth that will translate to increased load, it is reengineering that will help solve the problem of how one maintains and enhances DSM opportunities and relationships with targeted customer segments while attempting to reduce non-competitive DSM subsidies. reengineering forces the company to research and identify customer needs. Simul-taneously, it leads one to identify all stakeholders in the process. This includes the utility, its trade allies, contractors, financial institutions, etc. Remapping the DSM process then becomes a matter of defining the relationship of all of these stakeholders to the process.

In short, reengineering DSM results in a “protocol” focusing on customer needs and success requirements rather than on some preconceived generic program mix that may not in any way solve the needs of the customer. Re-engineered DSM “takes the leap” with aggressive, proactive programs including financing, technical process assistance, efficiency-focused technology procurement, direct sales of energy services and market transformation strategies.

Re-engineered DSM, like the streamlining of other processes owned by the customer service organizations, takes creativity and an ability to think-out-of-the-box. Most of all, it requires that the team take a long, hard look at DSM from the customer`s viewpoint. In its re-engineered form, DSM:

focuses limited resources on “at-risk” customers;

focuses on “attraction” packages for new customers who will provide significant economic impact to the region;

helps achieve integrated resource planning requirements most cost effectively;

becomes energy efficient solutions on both sides of the meter; and

causes the utility to identify those growth industries that will have the largest impact on the company and the regional economy and then to put its resources there.

We believe that integral to this process is the design and incorporation of DSM programs and strategies that help protect the environment and help customers simultaneously reduce costs, but this form of DSM must be in a highly controlled and targeted fashion. DSM, when strategically re-engineered, can help a utility forge a bond with each class of customer that not only serves to attract or retain customers, but will also competitively strengthen the utility. DSM becomes a tool of competition rather than unwanted expense, when a utility can selectively offer it to customer segments. DSM, when strategically re-engineered, and an overall service philosophy that is totally customer driven may well be the most important tools that the utility can employ in its battle to win new customers and protect itself from the loss of existing customers.

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