Do utilities love customers enough to spend?
- September 19, 2013
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In the quest to offer better customer service and improved customer-facing services, utilities big and small are rushing to replace vastly outdated customer information systems (CIS) and customer relationship management (CRM) platforms.
Although the process to upgrade these systems represents a daunting task for most utilities, recent research indicates that more than three-quarters are making upgrades. Forty-percent of utilities plan to add major new functionality to their existing CIS/CRM platforms, while another 37 percent plan to replace their entire systems.
The research conducted by Marlborough, Mass.-based Bridge Energy Group reveals that most utilities recognize the need to provide customers with greater options when it comes to communicating about outages, rate changes and billing issues. However, the study says that only 9 percent of utilities have a complete and integrated view of each customer in order to deliver on those customer expectations.
“Successfully engaging utility customers will require a well thought out strategy and the right technical foundation to support this transformation well into the future,” said Colum Lundt, founder of Bridge Energy Group.
An indication of the expected growth in CIS/CRM systems was provided by a study conducted by Pike Research that calls for spending on electric utility billing and customer information systems (CIS) software and services to nearly double over the next five years. The sector is expected to grow from $2.3 billion in 2011 to $4 billion by 2017.
Wide deployment of smart meters and AMI systems is driving the rapid change in CIS systems that allow utilities to interact with customers by providing new consumer services and new insight into customer usage and behavior.
“Large U.S. investor-owned utilities looking to develop new revenue streams, European energy retailers working in a deregulated market, and utilities in the developing world seeking to improve revenue collection and energy auditing are all taking a new look at their requirements for billing and CIS," said Eric Woods, research director at Pike Research. “This shift requires utilities to master the product development, marketing, and customer relationship skills to ensure competitive success. In turn, the billing and CIS systems underpinning these business processes will have to step up to the challenge.”
Industries such as banking, transportation, insurance, and telecommunications have upgraded customer-facing technologies over the past several years, but utilities face challenges far greater than any prior adopters. For starters, many legacy systems are simply not suited for emerging smart grid systems. Utilities also must be prepared to pull the plug on legacy systems as they make their new systems live.
“These transformations are not easy,” said Juliet Shavit, CEO of SmartMark, a consultancy that guides utilities on customer interaction strategies. “To replace your CIS you need to be able to shut it down at some point. You have to be able to migrate while still using the legacy system and that is not an easy challenge and is probably one of the biggest reasons why utilities with millions of customers are so cautious about replacing these systems.”
Many of the utilities in the midst of re-vamping or replacing their legacy CIS and CRM systems are considering entirely new ways to deploy, including major changes in ownership of CRM programs. Shavit says that the task of replacing CIM/CRM systems is now falling into the hands of major C-level titles as opposed to IT professionals.
“It’s interesting because traditionally a lot of investment in these systems been IT driven,” she said. “But because in the increased emphasis on improved customer relations, folks like a VP of customer care or a senior VP of customer communications are more involved not only in the decision to purchase those systems, but some are even gaining ownership for those budgets and helping to dictate IT requirements.”
Several factors are driving the push to adopt new CIS/CRM solutions. For starters, the smart grid and AMI systems installed by so many utilities over the past several years cannot be fully functional or deliver an optimum return on investment without strong customer engagement to encourage participation in new rate and energy conservation programs.
In addition, revenue assurance and improving the customer experience are forefront on the minds of utility executives.
“Making sure there is no lost revenue in the old legacy systems is a really big economic motivator, and customer experience is the other big motivator,” said Shavit. “These systems allow customer service reps (CSRs) to do more over the phone and to be more engaged with the customer. CSRs can look at data usage and resolve issues over the phone, which is a big motivator for utilities.”
In addition, CIS/CRM systems can help to bring utilities into the modern era of customer communications, such as text alerts and email alerts. Utilities recognize the need to accommodate customer preferences for communicating about new pricing programs and utility news.
“Everyone wants text alerts,” said Shavit. “Nobody wants snail mail anymore. Utilities are catching up quickly. Customer experience management is becoming the new buzzword in their effort to evolve IT systems to more customer-facing systems. For utilities, they absolutely want to improve the customer experience on a number of levels.”
John R. Johnson is a Boston-based freelance writer specializing in utility best practices, energy and technology topics.