Anyone wondering what the utility of the future will look like need search no further than US-based Cinergy Corp. Among the USA’s largest diversified energy companies, Cinergy serves 1.4 million electric and 478 000 gas customers in Ohio, Indiana and Kentucky.
Even more impressive than Cinergy’s size is the vision of its leadership. Faced with combining the operations of recently merged companies and preparing for a deregulated market in the digital age, they were among the first to recognize the need to reinvent their business model and processes to compete successfully in coming years. When it was time, they turned to Convergent Group for help.
With offices in Europe, Asia, the USA and Australia, Convergent Group has performed more than 2500 information technology assignments in its 15-year history. The company is focusing on business transformation via processes, methodologies and supporting technologies that help utilities transform themselves into digital enterprises. Convergent Group’s Digital Utility is at the core of Cinergy’s transformation into a utility company with an e-vision.
A strategic framework for transforming to a digital enterprise, the Digital Utility has many advantages. Processes, methodologies and technologies to integrate back office enterprise resource planning (ERP) functions, front office customer relationship management, and core energy delivery solutions are all included.
Where to start?
Convergent Group’s first step with Cinergy Corp. was to integrate the utility’s energy delivery systems. Greg Ficke, vice president and chief information officer of energy delivery for Cinergy, describes his company’s situation three years ago. “In 1997 we had just undergone the merger between Public Service of Indiana and Cincinnati Gas and Electric,” Ficke says. “The energy business delivery unit had about 45 different systems that we used to plan and design, build and operate, and maintain our business. Many were duplicative between gas and electric and the two different companies.”
Through the initiative, called the Energy Delivery Systems Integration Programme (EDSIP), and with Convergent Group’s help, the company has reduced the number of systems from 45 to five systems. This allows Cinergy to do all its work from “start to finish”. As a result, the company projects savings through 2001 of slightly more than $12 million. EDSIP includes a geographic information system, a work management system, a resource allocation/computer aided dispatch system, a trouble call/outage management system, and an energy delivery asset system.
In addition to cost savings and efficiency, there are other benefits to the EDSIP initiative.
Before implementing the changes, Cinergy had numerous jobs that were limited in scope, forcing employees to do only one thing, day in and day out. By integrating the systems, Cinergy’s employees now perform a number of different tasks, which increases job responsibility and thus their pay.
For example, Ficke says, consider what happens when a customer requests a new service. “With some 40 systems in the past, somebody would take that request and pass on the order to somebody else, who would document what design work needed to be done,” he says.
“That person would pass that on to somebody else, who would order the materials and then pass it on to somebody else to schedule the work. Since we’ve integrated all those systems together, the person who takes the order can initiate the design, order the materials, schedule the work, and on the back end send out an invoice for that work.”
As a result, Ficke says, employees have a “bigger picture of what goes on in the company, which I think they like”.
The integration of systems allows Cinergy to communicate information more easily and to make information available to more people. This means that more people can be of assistance to the customer.
“For example,” states Ficke, “we didn’t want to get into a situation where we have separate mapping systems for our planners and our operations people and our gas people and so on. Every time something changed, we would have five different systems to update. Now we only update the system once and everybody shares the same information.”
Cinergy has rolled out some of the systems for its regulated energy delivery business unit, and will roll out others late this year and early next year, allowing the company to provide exceptional customer service – the key to success in a competitive environment.
“Our goal is to allow people to focus on their jobs – and not focus on the tools they use to do their jobs,” says Ficke. “When you walk in a room and flip a light switch, the light comes on. You don’t have to stop and think about the systems that make the light work. That’s the way it should be with information systems and software tools. They should just work – so people can be as productive as possible in their jobs.”
A digital enterprise
Nearing completion of the EDSIP integration, Cinergy is now working with Convergent Group to plan and deploy a digital Internet vision to transform the corporation into a digital enterprise.
Cinergy’s vision is for a customer to be able to call in with a service request and have it transacted on-line without a human hand touching it or a human eye looking at it.
Combining Cinergy’s core energy delivery operations with both front and back office functions such as accounting and customer relationship management is the overall objective, with a goal of enabling friction-free access to mission critical information across the whole enterprise. The next step, adding sophisticated web-based tools, will extend that access to customers, partners and suppliers over the Internet – thereby enabling Cinergy to transact business on-line, in real time.
This e-business initiative will result in a system architecture and web infrastructure to support rapid deployment of web-based applications with a high return on investment. These include self application and scheduling of services, on-line processing of land development site plans and new service scheduling, and customer choice energy decision tools such as real-time access to energy usage, load profile and bill estimation, and online energy purchase transactions.
The Digital Utility system architecture also supports extended Customer Relationship Management (CRM) functionality and web enablement for Cinergy’s call centres, providing a blended media contact environment supporting the management and integration of voice and Internet-based communications channels with customers.
A web-enabled environment
The EDSIP initiative has focused on Cinergy’s internal processes. Cinergy’s second phase is to web-enable a number of the capabilities that are already in place. First, Cinergy plans to allow customers to deal with the company over the Internet to do things such as make service requests, handle meter reads, get answers to questions, and interface with energy choices in Ohio, USA, to name a few.
The major components on Cinergy’s newly integrated energy delivery system, which has been built using Convergent Group’s Digital Utility architecture, are the following:
Contact centre: Convergent Group is providing “e-customer service” for Cinergy’s call centre. Instead of a call centre just handling calls, it can now interact with customers in the ways that the customer wants to interact – i.e., by phone, Internet, or e-mail. The customer service representatives (CSRs) can handle different kinds of calls simultaneously, while also responding and managing contacts in ways that were previously not possible. That obviously improves avenues of communication between the customer and the company. And it also benefits the utility in terms of cost savings, because it is moving customers through the lowest cost channel faster.
Back-end automation: Convergent Group is also integrating several applications “on the back end”. This will eliminate the need for human involvement. Take meter readings as an example.
Many utilities, including Cinergy, allow customers to enter their meter readings over their web site. After that point, though, it’s all manual on the back end. The customer sends in meter information by e-mail, and when the Cinergy CSR is available to do so, he or she responds with an e-mail. Then the CSR has to do everything else – verify the account number and the meter number, check the validity of the meter reading, make sure it looks reasonable, and so forth.
One of the applications that Convergent is putting in place will entirely automate that whole process, so that no CSR will have to intervene at all.
Self-application and scheduling of service: Customers can apply and schedule simple things like turn-ons and turn-offs, but they also can request new product and service options. In addition, they can receive verification on the status of their request at certain milestones.
This has caused Cinergy to rethink the way they schedule work. Utilities are typically driven by work-force constraints, not by customer demands. One of the things utilities typically do not think about when they say, “We want to give customers more Internet capability”, is how it will impact their business culture and business processes. Today, utilities are often union-driven, with limits on where they can travel. As companies push out and extend processes outside of their own business to customers, business partners and constituents, they dramatically change the way they interact and carry on their work.
“In that case it really impacts how work is scheduled as they try to move more closely to customer-focused, customer demand-based scheduling,” says Jennifer Krabbenhoeft, vice president at Convergent Group.
Developer empowerment tools: Noting that utilities have worked with subdivision developers for years, Krabbenhoeft says, “Typically, there isn’t a real good friction-free relationship between the two sides.” This application gives developers and engineering contractors the ability to do preliminary design work and submit site plans directly to the utility. It’s a win-win on both sides, because it allows things to happen faster for developers, empowering and enabling them to get a faster response from the utility.
Energy reliability information tools: This application includes outage reporting, outage status, post-outage follow-up information, and power quality reporting and resolution, information especially useful for businesses and larger customers. It provides a graphic display of what is happening in the area so that the utility can submit requests about power quality issues and schedule follow-ups.
Transforming the business
“E-business transformation is not just the development and implementation of e-business applications that improve customer service and develop new avenues of revenue generation. It’s also about the implementation of the applications that can dramatically change the way utilities do business,” says Krabbenhoeft.
Convergent Group believes the e-business transformation approach is revolutionary. Instead of thinking of deregulation as a threat, this approach says, “Let’s give customers better information to make decisions in a deregulated energy choice environment.”
By developing a tighter relationship with their customers, companies occasionally may lose some business on the commodity side, but they will be setting up a platform to sell higher-value, higher-margin services in the future.
Utilities need an integrated IT architecture and an integrated business process architecture. This was provided by the EDSIP work with Convergent Group that began three years ago. The ability to automate and actually extend processes out to customers is enabled by the integration of those systems – as well as the changes and integration of the business processes around them.
Two other components of the Digital Utility architecture that can be used to build a digital enterprise are:
Energy portal: Through the energy portal, customers can make decisions, and opportunities are therefore opened up to develop business partnerships, which in turn help to develop other on-line businesses. “That could be anything from integrating essential services to doing joint ventures with e-business partners in the energy environment,” Convergent Group says.
They recognize that the energy portal is focused “more on the retail and entrepreneurial side of things”, although it provides customer choice energy decision tools for all customers, whether they are residential, commercial, or industrial.
Branded Internet: Convergent Group states that “utilities are in the enviable position of having substantial brand recognition, at least within their geographic areas”. The challenge, however, is to “leverage that brand recognition into increased revenues and profits in the new economy”. In other words, utilities can add value by creating stronger personalized relationships with every customer and by cross-selling services that are tangential to their core business.
“It’s my view that the centre of the Digital Utility is a common enterprise portal that provides relevant and personalized information to either internal users or our end customers,” commented James Rodgers, Cinergy CEO. “Let me say it another way. This is what the Internet and the web are all about. The goal is to put more power and more decision-making into the hands of our customers and employees.”
Figure 1. The move to a web-enabled environment will help Cinergy handle customer requests over the Internet
Figure 2. Cinergy has re-thought the way it schedules work; customer demands now play a large role