The 27th annual CIS Conference continued in Nashville on Monday with a full day of vendor and utility sessions on customer care in the utility industry. After listening to the presentations and speaking with attendees at the conference, a key theme emerged: In almost every utility today in North America there is a "return to the basics" strategy. With the advent of re-regulation in North America, utilities are increasingly focused on efforts to satisfy their customer base. To accomplish this, utilities are concentrating on four major areas:

• Reliability of Service: Utilities are attempting to improve their level of service by adding new technologies, addressing aging facilities, expanding tree-trimming efforts, and expanding capacity.
• Customer Contact Centers: Utilities are endeavoring to make sure that all customer queries are handled in a timely and knowledgeable manner.
• New Products & Services: Utilities are offering new products and services in an attempt to Increase customer satisfaction.
• Stable Prices: As fuel costs fluctuate, utilities are seeking to maintain a stable price.

In yesterday's IssueAlert, Christopher Perdue provided an analysis of what the utilities are saying at the CIS conference in relation to recent survey data on customer care in North American utilities. Today, I would like to focus on what the various vendors are saying in relation to current market conditions in the utility industry.

UtiliPoint International recently interviewed 26 customer care executives for the CIS Conference on several factors, ranging from what utilities are requesting most to what the future holds for customer care technology vendors. To obtain a complimentary copy of UtiliPoint's Customer Care interviews in their entirety, visit: www.utilipoint.com/rci/specialreports.asp.

Outsourcers of Customer Care Services Speak
When asked, "What has been most surprising to you during the past year in this marketplace? " providers of outsourced customer care responded in a variety of ways. Michael Juliano, Senior Vice President of Technology & Professional Services for Alliance Data Systems replied, "The thing that most surprises us about this marketplace is how a few of the more notorious industry issues have caused some significant collateral damage to some very good utilities. The opportunity for Alliance is to turn this unfortunate situation into a win for all parties, as these good companies are now being forced to look at how to improve productivity, gain operational efficiency and produce better bottom line results. Over the past four years, we've demonstrated our ability to deliver in these areas." Alliance Data Systems is a single source provider of outsourced billing and customer care solutions to the regulated, transitioning and deregulated energy industry, serving millions of utility customers. Alliance manages outsourced billing and customer care business processes for utilities.

"I am continually surprised at how many utilities I meet that permit large tolerances in their collections activities," said Michael Gardner, President of Cayenta, Inc. "So much attention is being put into developing systems that give a good visual profile of a customer, provide excellent customer relationship management, and empower utilities to automatically trigger aggressive collection streams, yet so few seem to do it. We have been working closely with our customers to understand their intentions when it comes to revenue recovery. In our experience, many of them are being equipped with the right tools to make changes to their collections and customer management practices, but often they are unsure as to how to enact these practices. Information is only powerful when it is acted upon, and it surprises me that more organizations have not stepped up and recognized that creating and implementing the tools is only one part of their job-they have to show utilities how to use these tools, and measure the effectiveness of them." Cayenta provides customer care software directly to multi-commodity utilities in the municipal, cooperative, and investor-owned sectors but also provides it in an outsource model as well.

"The most surprising aspect of the current marketplace is the willingness of some major players in the energy industry to reconsider their outsourcing strategies," said Dwight Willett, President and Chief Executive Officer of Accenture/CustomerWorks, Inc. "This has taken the form of both reassessing what their own core competencies truly are, and of reevaluating current outsourcing relationships not just for price, but overall value. This is an encouraging sign, as it demonstrates a true commitment to not only shareholder value, but to the strategic focus that will allow good customer care decisions to contribute to corporate growth for years to come."

Accenture/CustomerWorks is a business process outsourcer performing services for several Canadian utilities, including BC Gas, BC Hydro and recently announced Enmax.

"The past year has been a difficult financial time in the IT industry, utilities and the economy in general," said Paul Kluba, Chief Operating Officer for Daffron & Associates. "We are seeing many utilities put buying decisions on hold. As a rule, utilities are a fairly conservative group, but we have been able to add new customers and continue to add new functionality for our existing customers. I am also surprised that legislation toward deregulation is still on hold for many areas of the country. This has been somewhat consistent with the economy and the uncertainty with the war, but I originally felt that electric deregulation across the U.S. would come at a faster pace. Also surprising in regards to deregulated markets is the legislation and political pressures for enactment of changes after the market was open. Some areas have taken a step backward by putting caps on pricing." Daffron & Associates provides customer care solutions to116 electric cooperatives, 37 municipalities and 7 IOUs, with an e-bill option being provided via an outsource model.

"As I sit back and reflect upon the past few years or so, it is simply amazing where we were, and where we are," said David Steele, Vice President of Business Development for First Contact, Inc. "I can remember all of us chasing UtiliCorp under Richard Green's leadership in the early days of deregulation. They appeared to have the model for the future, which was the 1 million plus customer utility that also provided an array of consumer products and applied technology to all of their business processes. Then we followed Enron. And it turned out, none of those models proved viable in the long-term. Now what we are hearing is 'back to core, cost containment, and focus on the customer.' Ironically, this is the basic form of monopolistic structure. It is back to why monopolies developed in the first place - to Provide one investment in public infrastructure, reducing the costs to all while providing the basic services of safe, reliable and low cost energy distribution. This model was furthermore supported by an overriding philosophy of a public obligation to serve. To insure the appropriate level of service and pricing occurred, oversight was established in the form of public utility commissions who act as the watchdogs on behalf of consumers. Now, when you think of that, it certainly looks like we are right back to the basics doesn't it?" First Contact is a customer relationship/customer contact outsourcing firm that is part of IntelliRisk Management Corporation headquartered in Columbus, Ohio.

"What is most surprising tome has been the quick comeback of retail marketing in certain areas," said Carl Kloecker, Executive Vice President of NirvanaSoft. "Energy companies who have extensive experience in wholesale markets are doing well serving large customers in deregulated markets, especially in the Northeast and Mid-Atlantic States. Retail marketing strategies are appearing on a regular basis from companies who survived the shake out, have the credit rating and want to be in the business. A good example is Dominion Virginia Power's proposal to Reduce the extra wires charge recently." Nirvanasoft provides software to enable complex billing and provides it as an outsourced option via the Energy Services Group.

"With the economy pressuring businesses to Reduce costs, we are somewhat surprised that many utilities are still reluctant to make changes—i.e., outsourcing—in how they use their capital and resources," said Jamie Biddle, CEO of Orcom. "Outsourcing typically reduces the total cost of ownership for a utility billing and CIS solution by up to30 percent and preserves their capital budget. Outsourcing also avoids disruptions to a utility's business. In comparing our outsourced solution to a licensed software purchase, implementation risk must be factored in. According to an October 2001 Wall Street Journal article, roughly 38 percent of utility CIS implementations fail. Even successful implementations are distracting to an organization, consuming the attention of a utility's most knowledgeable and experienced staff. The longer the implementation takes, the more likely the staff will lose focus or the project will fail. Outsourced solutions tend to implement very quickly, typically in less than half the time required to implement a licensed software based system, because the IT infrastructure is already in place and the base software is also installed and tested. Thus, the major focus in outsourcing is placed on software configuration, training and testing. This not only speeds things up by eliminating many of the up-front decision making tasks that licensed software projects entail, but also results in a better outcome." Orcom provides outsourced customer care to utilities in North America.

"With our organization the focus currently is on deregulation and legislation tied to deregulation, said Dana Holmes, Director of Marketing & Sales for Viterra Energy Services. "We feel that one of the important next steps in opening markets is the unbundling of the meter device, and both Texas and Virginia recently passed on moving the metering issue forward." Viterra Energy Services provides outsourced customer care including sub-metering expertise to the utility and energy service provider industry.

In concluding, the vendors at the CIS Conference this year report an increased level of interest in new customer care systems ranging from CIS/CRM to call center applications. Interest from the utilities also varies between licensed products and outsourced services. What surprises the vendors about the energy industry varies also, but is generally related to a specific service that they offer. Expect to see more alignment between the utilities' needs and the vendors who provide the software, technology, and services to meet those needs as the utility industry redefines itself over the next few years.