Why Outsource the CIS?

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Anthony Haines is president of Enlogix Inc. With offices in the U.S. and Canada, Enlogix is an industry outsourcer of customer information systems, providing billing services to 14 clients and more than 3 million consumers.

Anthony Haines, president of Enlogix Inc., recently spoke with Utility Automation about the importance of having healthy customer systems in an uncertain time for utilities, and about the benefits-and potential dangers-of outsourcing a CIS.

Utility Automation: Has the move toward deregulation affected the importance of keeping an up-to-date customer information system in place?

Haines: What does deregulation mean? It means customers have choices. From the utility perspective, the importance of customer loyalty and of having a system that can respond to the changing requirements of the deregulating market is critical. If you look at cases where companies were ready for deregulation, they maintained their market position. Where their systems were aging and inflexible, they lost significant market share.

We point to the telecommunications sector as an example where deregulation swept through, and companies stepped back and said what are we good at, what are our core competencies, and what are those things we need to have as enablers but don’t necessarily need to own. In that sector, things like billing and customer care became, generally, outsourced. We believe the energy sector will follow a similar path.

UA: What are the main benefits to outsourcing a customer information system, as opposed to licensing a system?

Haines: From an overall strategic perspective, outsourcing allows you to focus more on your core competencies. On the financial side, there’s clearly an opportunity to reduce costs. You get to avoid a gigantic capital investment. Some of the experts out there forecast $50 per customer as something you should expect to pay to buy a license and implement a system. If you get up around a million customers, you’re talking about a significant investment. There are a lot of projects out there that have gone way over $50 (per customer). When you outsource, you get to avoid all of that. You get a price back that’s predictable, fixed and understood.

We find with mid-sized customers, often they don’t have the IT staffing to really bring on a major project like implementing a new system. It costs a lot for utilities to keep those kinds of skills on the bench. Through outsourcing, they can bring their technology up-to-date and have it maintained for them.

UA: On the flipside, what are some of the potential drawbacks to outsourcing a CIS?

Haines: It’s a young market. There have been players that have come and gone. You need to make sure you saddle yourself on the right horse. You need to make sure you’ve tied yourself to someone who has a proven track record and a defined methodology to implementing their system.

UA: If a utility does decide to outsource its CIS, what can it do to avoid a bad outsourcing experience?

Haines: You have to be comfortable with not just what the system does today, but also where the product is going, because the technology will always be evolving.

You need to be a good customer, too. You have to really understand what your expectations are. If you don’t have some kind of report card, how do you know whether you’re doing well or not? You really need to use service level agreements as a way of making sure everyone understands expectations. We review our service level agreements with our customers every day. When we consistently do better than the targets, that makes for greater customer satisfaction.

UA: Do you see more utilities moving toward using the application service provider (ASP) model as a way to implement new customer information systems?

Haines: Absolutely. In the last year to year and a half we had expected to see 1-in-4 looking at ASP as a legitimate choice. We are seeing well over double that. Utilities are looking at it as a real alternative and as a means to free up resources and focus more on their core competencies.

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