Web allows new entrants to Ocherry pick? prime customers

While less than 5 percent of all utility business will be conducted via e-commerce in 1999, 30 percent of customer service and retail bill payment will be done over the Web by 2004, according to META Group Inc. survey results. Survey respondents also noted that 20 percent of their purchasing and power supply will be Web-based in the same time frame.

Respondents also indicated that, over the next five years, most energy utilities expect their customer information systems and marketing systems to be strategic IT assets, while their billing and metering systems will only have operational value.

According to CD Hobbs, vice president and director for META Group`s Energy Information Strategies (EIS) service, “These results underscore our belief that selective outsourcing of metering and billing will increase dramatically during the next five years. In the same time frame, we expect energy utilities to make significant investments in technologies that support customer acquisition and retention.”

Web customers are a very desirable market segment for energy utilities, said Tom LaBerge, senior program director for META Group`s EIS service. “Almost all companies can lower transaction costs with the Web. Incumbents can use it to retain customers, and new entrants can use it to `cherry pick` the Web market.”

A related META Group evaluation of nearly 400 energy utility Web sites showed most energy utilities currently offer little or no customer interactivity via the Web. Those few companies who have implemented Web-based customer interaction are generally disappointed with the level of use by their customers. META Group predicts that the lag between Web usage in the energy utility industry and other customer service industries will close as the energy industry becomes more competitive.

The lack of interactivity and low level of usage are typical of a first foray into e-commerce and will likely improve dramatically as utilities learn to use the Web as a business channel. Participants in the strategy survey, conducted at META Group`s annual EIS conference, included over 100 energy utility representatives from North America, Europe and the Pacific Rim. Sixty percent of the respondents represented electric utilities, 19 percent represented combined electric/gas utilities and 5 percent represented gas utilities. The remainder of respondents represented generation companies, energy service companies, and various IT product or service vendors.

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