Lucent Technologies Billing and Customer Care unit.
Utilizing 3G mobile communications technology will provide many new opportunities for utilities, especially in the billing and customer care sector. This will enable them to retain existing customers and offer benefits to ensnare new ones.
The energy and utilities industry is in the midst of enormous change. Deregulation and the introduction of new types of competitors, customers, and ownership structures threaten to overwhelm traditional utilities. To survive and flourish, companies must understand their positioning in the emerging structure and develop dynamic strategies for sustainable competitive advantage.
New information technology represents a lifeline for utilities. However, it means dramatically changing how a utility runs its enterprise: how it engages with customers, conducts business, values assets, operates its supply chain, and deploys new services.
Companies have to redefine a complete architecture for change, enabling them to implement new ideas quickly to address new challenges and swiftly change systems and processes whenever necessary.
As the European marketplace deregulates, a new threat is emerging in the retail/supply side of the utility market place. Outside entrants who are either new start-ups or current companies with large customer bases and strong brand names, are looking to reap rewards from entering the utilities market.
This trend is made significantly easier by the availability of technology and new IT and communications tools and means that it is even more important for current incumbents to retain their customers.
New IT and communications tools are the only way to increase market share and profitability, streamline business and manage the asset base for greater efficiencies and increased return on investment.
Increasing profit and market share
In order to establish and maintain a competitive advantage in the utilities marketplace, companies must recognize the importance of their current customer base. With deregulation and competition, current utilities are facing the prospect of customer switching. New entrants in the market are likely to be interested in high value customers. Recognizing who the high value customers are and retaining them is going to be key. As with most industries, utilities suffer from the 80/20 rule – establishing which 20 per cent of the customer base are bringing in 80 per cent of profits is strategically important.
Customers in all industries are no longer happy to accept second rate service and high prices. There has been a significant switch between the power of the corporation to the power of the customer. Utilities have perhaps been one of the slowest industries to feel the effects of this shift, but the rapid deregulation and increased competition brought about by European Commission legislation is having dramatic effects on the industry.
Up to now, the main link between energy companies and their customers (more often subscribers rather than customers) has been the invoice sent every two, three or six months. The key message given to the customer is, “You have to pay X-amount within the coming ten days”.
Energy companies have to gather customer data from a number of disparate information sources to:
- Provide one single view of the customer
- Have a 360-degree view of their customer, including all information held in back office financial systems, customer service records and in all other areas of customer interaction
- Analyse the cost to serve per individual customer, including all costs within the supply chain
- Identify their most profitable and unprofitable customers.
In order to increase market share and profitability, utilities must seek to retain their most profitable customers, look at ways to increase the profitability of others, and attract new customers who are likely to be profitable.
Ideas and campaigns can be tested and managed through new IT and communications tools like outbound calling the customers on their mobile phone or sending emails. With the deployment of 2.5G and 3G networks, the capabilities to contact customers and propose new products and offers will grow exponentially. The image capabilities will offer new avenues for direct marketing, for example, customer self care from their mobile phone.
With these capabilities, instant responses and tests, the marketing department can make dynamic changes to campaigns in a matter of hours rather than days or weeks. In the new market environment, energy companies are likely to want to expand their offering through strategic partnerships and offer bundled product portfolios with discount schemes appropriate to the number of products or services purchased. 3G network capabilities will certainly be one of the key additional offerings – by capitalizing on the key asset: the customer base.
It is not enough to provide competitive offerings if delivery and service levels are below expectations. It is now possible to seamlessly link engineers with call centre agents and even with customers directly through the use of the new IT and communications infrastructure. With 2.5G and 3G networks in place, the interface between engineers and call centre agents or customers will be more efficient, more user friendly and will save money by optimizing workforce movements and workload.
Some utilities have implemented such tools to improve customer service while reducing costs. For example, some utilities already using 2G capabilities have been able to reduce the number of field engineers by almost ten per cent by working with new communications tools.
As the marketplace becomes more dynamic and utility companies seek to establish themselves on a global scale, the need to capture market activity becomes essential. Analysing the behaviour of their own customer base and making decisions in a reduced time frame will make the difference between success and failure. In order to achieve these goals, the free flow of information, both internal and external, needs to be closely allied with a comprehensive management-information and business-intelligence strategy.
Expanding to new markets
Utilities with global ambitions are increasingly adopting acquisition strategies. Managing a variety of companies with disparate back office and front office systems, while maintaining true visibility of performance enterprise-wide is a real concern. Most utilities have monolithic system structures which lack flexibility. Addressing today’s changing markets requires high levels of flexibility along with the ability to co-ordinate management of activities across the enterprise.
Utilities should also target the new area of 3G networks. Some utilities are already positioning themselves to become operators in this area – this is a part of the new market which is available to utilities and energy companies by capitalizing on their large “captive” customer base.
Upgraded communication tools can improve services while reducing costs
The multi-service offering is critical for the growth of these companies, and new technology offerings are key to improving revenue streams and margins which have been eroded by competition.
Streamline your business
The challenge of entering a competitive marketplace is that utilities now start to expose themselves to world-class organizations that have past experience in managing corporate growth through technology innovation.
Another angle of the use of the new IT and communications tools is in the internal processes and the gains in productivity and employee satisfaction. This allows the company to have a streamlined, reactive, customer oriented operation.
Any organization with a large number of customers or employees can benefit from new technology applications. Utilities traditionally fit both these criteria. These applications benefit transactions between: customers, suppliers and employees.
With the new IT and communications infrastructure, enterprise-wide customers, employees and suppliers can directly transact with the organization based on the same set of information.
Available multi-channel platforms enable transactions through a variety of mediums: interactive TV, wireless technology (existing and future: 2.5G and 3G) as well as more traditional mediums like PCs and PDAs.
Management can make enterprise-wide changes to business process flows facilitated through new technology. These can be rapidly represented as changes on new communications mediums, cutting long and costly reengineering projects. Due to the user friendly interfaces and tools, customers, suppliers and employees feel in control of their relationship with the enterprise and satisfaction increases.
The use of these tools reduces the need for administrative functions throughout the enterprise and frees staff up to carry out value added activities.
For all businesses looking to maintain or gain market share, keeping prices low is key and utilizing technology offers significant cost reduction opportunities. For this reason, utility companies are consciously seeking to:
- Reach new customers and communicate in a relevant and appropriate manner and meet individuals needs through new mediums such as new wireless capabilities portals
- Retain current customers by offering value added services pertinent to their individual needs through on-line third party alliances. This might include multi-services offers including energy but also wireless services (2.5G and 3G)
- Improve service by utilizing mobile technologies
- Understand and manage their organizations better by integrating systems and utilizing multi-dimensional reporting tools
- Manage their workforces in a more efficient manner through self-service and employee access tools
- Leverage efficiencies offered by on-line communities and corporate networks in the areas of procurement.
All industries, to a greater or lesser extent, are feeling the effects of the new IT and communications tools. However, in an increasingly competitive market it will be those companies who take full advantage of new technologies who will profit from them.