Building The Digital Utility

The “Digital Utility” is a fully connected digital enterprise – the vision, the road map and the technology tools utilities need to usher in a new era in customer care.

High-voltage, high-pressure change is underway in the energy industry. Mergers and acquisitions continue to reshape the utility landscape as companies jockey for a sustainable competitive advantage. At the same time, the development of an Internet-driven society is a revolution that is fundamentally reshaping the world in which energy professionals live and breath.

David Pitt, President, Convergent Europe Ltd., Surrey, UK
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The impact of globalization and deregulation means continuous re-evaluation of market strategy and shatters any preconceived views of business as usual. Will utilities opt to focus on the retail market, or on large commercial and industrial customers? And once this decision is made, how do their business processes and the IT systems that support them need to change to support the aggressive business plans of the reborn utility?

As utilities worldwide reshape themselves to compete, IT plays an increasingly critical role. In today’s market, IT must provide competitive advantage. It must enable utilities to acquire and retain customers by improving service, providing innovative new offerings and making business transactions quicker and easier. Those utilities most likely to emerge as winners in today’s rapidly evolving digital economy are those who can quickly transform themselves – and their IT infrastructures – into fast-acting, customer-centric e-businesses.

Right here, right now

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“Customer ownership is paramount in today’s world and that means providing benchmark levels of service which ensure happy customers,” said Mark Shirman, Chief Technology Officer for Convergent Group, an e-business integrator with corporate offices in the United Kingdom, the United States and Asia Pacific. “It’s about giving them what they want, and more, when they want it. And in a world where the Internet rules, that means right now – in real time.

“This is the intent of the Digital Utility. The Digital Utility is a fully connected digital enterprise – the vision, the road map and the technology tools utilities need to usher in a new era in customer care – through real-time access to all the information that’s needed to meet customer expectations.”

What if a single service provider could offer residential consumers electricity, communications, cable television, broadband Internet connection, newspaper, and security services through a single point of contact and with just one bill to pay – electronically, of course – and at a price that’s substantially less than purchasing these services through separate entities? What if a utility customer could self-schedule service over the Internet based on his or her time preferences?

When technology enables a Digital Utility that is in synch with creative market planning, this vision is not only possible, but inevitable. “The speed at which e-commerce has come onto the scene has caused the market to evolve unbelievably fast,” said Shirman. “Utilities are jumping into the game, but new players like, and who are not burdened with outdated legacy systems can act more quickly today to capture market share.

If the traditional players are going to stay in the game and continue to own the customer, it is critical that they arm themselves with the mind set, business processes and technology tools to win in the Internet economy because they not only have to compete with one another, but also with a whole new breed of competitor created with the Internet in mind.”

But how do utilities go about laying a solid framework for an e-business-enabled digital enterprise that can thrive in an era where the Internet has changed all the rules? How can an aging IT infrastructure be transformed to cope with business at hyperspeed?

Not just a pretty face

The Digital Utility is designed to bridge the gap between an economy being driven by the Internet and deregulation, and the unique application-specific needs of the utility industry.

As a general rule, the utility industry has jumped onto the Internet bandwagon but has tapped into only a small percentage of the business transformation possibilities that are now attainable. Noted energy market analyst META Group believes that e-business will transform all aspects of the energy industry in the next few years, accelerating market restructuring, redefining business processes, driving down supply chain costs, and providing the catalyst for a new customer-centric focus.

Many energy utilities are currently conducting some form of e-business. However, the full impact of e-business has not yet been felt by the utility industry. While utilities are moving rapidly to deploy e-business applications, current investments are relatively small, according to META Group.

Outside the utility industry, many companies are utilizing the Internet to fundamentally revolutionize customer service and are conducting business in a totally new way. Utilities, in general, are lagging behind the Internet adoption curve but are beginning to adopt a more aggressive, more proactive approach. Today, most utility websites function as public relations tools, with some offering email based customer service, bill presentment and payment and energy management/usage analysis.

According to Chartwell’s recently released “e-Commerce in the Energy Industry” report, that puts utilities into the second of four generations of e-commerce, characterized by cost-cutting initiatives that provide some read-only capabilities to customers but little, if any, interactivity. This will change in the next two years, says META Group, driven by competitive pressures, customer demand and technology advancements.

The next phase, which is the enablement of true e-business activities, brings two-way interaction with customers and requires an electronic business strategy, business processes and IT infrastructure that few utilities currently have in place today. “Utilities own their customers today,” said Shirman, “and they have the opportunity to either retain and strengthen this relationship – or to lose the customer to a competitor. “If utilities can move quickly into the next phase of e-business enablement, the opportunities are tremendous, but they’re going to have to move to the next generation of e-business – to the ability to process transactions from beginning to end and from front office to back office. Companies who think they would be doing e-business by simply building an attractive website are doing little more than putting lipstick on a pig.”

Transforming the enterprise

There are several hurdles that must be leaped in order for utilities to transform themselves into digital enterprises. With relation to IT priorities, utilities often automate the front end of a transaction, only to run into labour-intensive bottlenecks in the back office. Creating a website that allows customers to fill in a form via the Internet is not leveraging the medium if the customer’s request is then printed out and processed using traditional, manual methods. The goal should be to automate all the business functions related to customer transactions.

The key to becoming a digital enterprise is to create a business environment and associated IT architecture whereby business with the customer can be transacted in a friction-free manner over the Internet. This means that the many interrelated steps required to complete a transaction, and the access to the information supporting these steps, occur automatically, with no friction between the various components.

This requires that front office, back office and energy delivery operations be fully integrated, providing the ability to pull together diverse data such as outage, accounting, geographic, materials, crew availability and customer demographic information and match it with e-business tools capable of driving dramatic improvements in and customer service and revenue.

“If you’re going to make effective use of the Internet, the information you need must be instantly available, whether it is from accounting, the back office, customer service or distribution operations,” commented John Ramseur, Convergent Group” s Executive Vice President of Corporate Development. “The Digital Utility must be able to pull all this data together so that it flows seamlessly. This goes way beyond data warehousing,” he noted. “It’s about driving transactions, not just reporting them.”

Historically, front office, back office and energy delivery systems have been automated as stand-alone entities. A key goal of the Digital Utility is to link these operations because without access to real-time information about the utility distribution network, the idea of transforming a utility into an e-business is not achievable. “It is not possible to respond quickly to customer service needs without immediate, digital access to energy delivery information such as the current state of the distribution network and the availability of crews and materials,” commented Ramseur.

Technology is now at a point in its evolution where this vision of a digital enterprise is attainable. Integrated solutions spanning the full spectrum of energy delivery are now available and rapidly deployable, and the silos of individual systems for trouble dispatch, outage management, distribution planning, work management, facility network management and field force automation have thereby been replaced by a comprehensive solution supporting all these operations.

This, in turn, makes it possible to access the information about the distribution network that is critical to the utility’s ability to respond to customer requests. In integrally meshing this access to operational data with IT solutions supporting front and back office operations – and with the power of the Internet and sound solutions for customer relationship management – the Digital Utility has become a reality.

The Net result

What can utilities do when this vision of a Digital Utility is realized that they can’t do now? The possibilities are restricted only by the imagination. Customers can dial in over the Internet and request and review information about outages, including status, graphic area display, emergency contacts, post-outage follow up details, and reliability information.

Property developers can submit development requests at their convenience and have access to the load, demand, and other information necessary to design a requested facility. The developer could create the preliminary design necessary to generate a cost estimate of the requested facilities, submit a digital site plan needed to support the request, and receive the approved cost estimate, facility routing, meter location, etc. – all on-line without a lengthy wait and the need to talk to multiple people.

Customers can request and review energy consumption histories and load profiles on-line, schedule the services they need when they need them, and utilize the Internet for energy management and real-time pricing. In these and many more scenarios, everybody wins. The utility realizes major productivity and cost reduction benefits, plus improved resource balancing, while the customer is happier because the service being provided is better.

“The Digital Utility is all about forging strong customer relationships,” emphasized Ramseur. “The digital enterprise can not only help utilities in their quest to own the customer but it also makes good economic sense. Acquiring a new customer costs more than six times the cost to retain an existing customer.”

History in the making

The Internet is changing history, and within the context of the Digital Utility, it provides much greater information access to a much broader group of people, and it does so in a very efficient manner. Deregulation and the Internet have given the customer power to choose their providers, on-line, with the click of a mouse. Customer care has thus become increasingly critical to a utility’s ongoing viability. Each day heralds new developments aimed at bringing the utility industry into step with the march of e-business. For utilities with a mission of business at hyperspeed, the goal of building a Digital Utility should be high on the list of priorities. “If you think of your customer as an asset,” emphasized Shirman, “it’s the only way to go.”

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