Article Post

The Utility Software Minefield: Why Horizontal Software So Often Can’t Deliver Utility-Specific Value

Evaluating available software platforms and deciding which vendor to go with is often more difficult than imagined. Companies, including utilities, are often tempted to leverage large, generic (i.e., “horizontal”) software platforms to solve industry-specific challenges. Not only is there increased pressure from IT to consolidate platforms, but it can also appear easier to go deeper with one system rather than signing a whole new contract.

Welcome to the Minefield

Unfortunately, trying to customize horizontal software, which is intended for use by a broad list of industries and audiences, for the needs of unique industries has a rich history of going horribly wrong. It can be a minefield where any misstep can mean millions of extra dollars, years of frustration, and even worse functionality than before the project started.

And since many of these horizontal solutions come together from a patchwork of acquisitions, companies can sometimes end up with a heavy and unwieldy mash-up of features and technologies not tuned to their highly-specific vertical needs. Added to this the implementation risk is correspondingly high–especially when the customer has highly specific structural or industry needs.

While the utility industry is quite unique in its needs and requirements, companies in other industries have also experienced similar challenges around trying to use horizontal solutions to address the unique, vertical needs of their particular company or industry. A few (masked) examples:

  • A life sciences materials company filed a lawsuit after a horizontal ERP solution–which was claimed to be well-suited to the company’s industry-specific needs–ended up being "woefully unsuited" to its business and the implementation brought its operations to "a near standstill.”
  • A large horizontal CRM provider couldn’t meet an e-commerce company’s critical business implementation deadline, even when the customer agreed to double the implementation fee.
  • A major cosmetics company purchased a horizontal billing and customer service platform to enable mobile ordering for their home representative-based sales force. After more than 4 years they ended up pulling the plug and writing down the estimated $100M+ in software development costs. The reason? As the company’s CEO put it, “... the degree of impact or change in the daily processes to [their home-based representatives] was significant. This resulted in a steep drop in the active representative count." In other words, a workflow solution not well aligned to the real-life and specific needs of those users was actually causing people to quit.

And the list could go on about projects gone sideways. While these are all different industries, many of the same types of vertical challenges are applicable to utilities.

When Horizontal Works

It is important to note that  horizontal applications have their place in any technology stack, serving broad, cross-industry, role-based needs. They are best utilized when there is little differentiation for the solution across different verticals, and the solution is proven across industries. Some examples of type of solutions that fit this description include:

  • Call center software manages inbound, outbound, and multi-channel customer support.  Most solutions today provide a web-based interface for Customer Service Representatives, IVR with speech recognition, call-monitoring, automatic call distribution, and more.
  • ERP, also known as Enterprise Resource Planning, software automates back-office functions related to human resources, purchasing, finance, accounting, inventory management, and more.
  • Customer relationship management (CRM) software enables companies to manage their customer interactions, providing account information, sales opportunities, service issues, and campaign participation.
  • Marketing automation systems tie into a CRM to help marketers plan, execute, and measure marketing campaigns in digital channels (note that these marketing automation systems are becoming distinct from ‘Marketing Clouds’, the challenges of which for utilities we’ll discuss in more depth below).

In all of these examples, each company will likely need to customize certain things like data fields, etc. according to their industry and own needs, but the core functionality remains consistent across implementations.

When Good Horizontals Go Bad

So there are some good reasons and industries in which to leverage and deploy powerful horizontal call center, billing or marketing applications. But when is a horizontal solution a bad idea?

In ZDNet’s 2016 SaaS Trends column, editor Charles McClellan said, “However, one size of enterprise software doesn't necessarily fit all potential customers. If you're a healthcare provider, for example, you may want to deploy cloud services tailored for your particular line of business. And when it comes to mission-critical functionality, you're going to require a specialist SaaS vendor with deep expertise in your field … That's why 'vertical' SaaS applications are increasingly addressing the key business issues for particular markets––a sector also known as the Industry Cloud.”

The three minefield examples of failed horizontal deployments described above have something in common: highly specialized, vertical needs for data input, functions, output, analytics or even KPI measurement.  And utilities are a perfect case of this challenge.

For example, horizontal marketing automation tools are very good at facilitating customer campaign design, delivery, execution and tracking. However, more and more marketing automation solutions from companies like Salesforce, Adobe, Oracle, SAP, and sometimes even website content management systems, have now been expanding into broader ‘Marketing Clouds’, which also serve to look at past customer purchase history, browsing patterns and even demographics to then make recommendations about what products the customer should buy. However, these systems have all been expressly designed and optimized with consumer e-commerce, not an energy utility’s, needs in mind.

For utilities considering how to enable digital personalization for their customers, using a customer’s web browsing habits to inform a product recommendation is very different than the complex mix of energy use, billing, premise, weather, demographic, DSM and regulatory considerations/data that a utility must consider about every customer. According to Econsultancy, “Chasing ever more personal interactions [with marketing automation] could be futile because users can only be differentiated by what information you have about them, and how much confidence you have in that data.” In other words, these systems don’t inherently connect the data needed to create and send out personalized messages to utility customers, still leaving companies with the need to find another solution to do this.

Is a large horizontal provider telling you that such utility-specific customizations are no problem? Maybe, but it could likely take many extra years plus millions of dollars to even roll the dice and find out (and refer to the minefield, above, to see what can go wrong).

Successfully Navigating the Minefield

So if it’s not a good idea to force customization of a horizontal software to do vertical-duty, what’s the answer for utilities? Quite simply, you use both types to address the full range of your needs.

Important horizontal solutions for a utility might include CIS for meter-to-cash management, CCS for call center infrastructure, CRM for customer sales history, and marketing automation for campaigns and communicating with customers via various channels. Meanwhile, focused vertical solutions should be deployed to deliver utility customer journey mapping, utility-specific data modeling/integration for energy use analytics, customer-profile vs. premise-profile analytics, next best action and message prioritization, and more.

For example, a horizontal marketing automation/cloud tool is highly useful for executing on email customer campaigns, tracking and reporting responses, managing and optimizing websites, and other marketing role needs. But such a tool simply can’t be relied upon to produce and replicate accurate analytics and recommendations on what the right rate plan, usage alert threshold, or billing assistance offer should be for each customer. These types of insights and analytics require data from both current and historical premise, customer, usage and billing data across multiple utility systems to accurately personalize regulatory, billing, safety and turn on/off needs and customer interactions. This is precisely when a vertical solution is needed.

And horizontal solutions often times create more disparate data streams rather than pull data together, creating a mess of data in completely different locations that utilities have to sort through. Using a data-object model developed to be specific to the needs vertical solutions can combine and derive insights from all sources within a utility.

Fortunately, modern vertical and horizontal software solutions should have little difficulty in sharing all the necessary data to integrate, since best-practices in modern software development and industry trends around data architecture both support the ability to create lightweight, yet robust data and platform integrations. For example, EnergySavvy’s own Utility Customer Experience system was purpose-built to pull together data from disparate horizontal and vertical utility data sources and provide a single view of the customer; run sophisticated energy and personalization analytics developed specifically to address utility needs and use-cases; and then integrate these insights and next-best-actions directly back into those horizontal system platforms.

The horizontal software minefield can be avoided. By combining horizontal and vertical solutions, utilities can get the best of both worlds, optimize their systems, and in the end, better serve their customers.

Discussions

No discussions yet. Start a discussion below.