IssueAlert Emerging Technologies ~
September, 2003
Trends and Developments
Shaping the CIS Market
By Christopher Perdue, Director, Market Research, UtiliPoint
UtiliPoint International recently interviewed 26 customer care
executives 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, please visit: http://www.utilipoint.com/rci/specialreports.asp.
Today, I would like to focus on what the customer information
system (CIS) vendors are saying in relation to the current trends
and developments that are shaping their market environment.
When asked, "What trends and developments do you see as
key forces shaping your market environment?" CIS providers
responded in a variety of ways. Connor Gray, Vice President
of Solutions Strategy for Indus replied, "We see a real
focus on operational excellence, which forces utilities to look
at the processes that hit or cross the enterprise boundaries.
Another trend that is becoming clear is the need to address
the aging legacy systems, especially those like the Customer/1
CIS. There is a need to replace the technology and functionality
of these older systems, and Indus is on the cusp of that replacement
trend. Indus has just completed helping one operating company
migrate from Customer/1 to our Banner Advantage CIS, and we've
just signed contracts to migrate two more. Our success in this
area seems to be persuading more utilities that it's time to
make the move to a more modern solution."
"Replacing or extending the life of legacy systems continues
to be a trend," said Darin Stoddard, Vice President of
Business Development and Strategic Alliances for AMX International.
"Additionally, more than ever, CIS decision makers are
using a risk/reward equation to filter and prioritize their
IT related investment decisions. For many utilities that we
are speaking to this translates to adding solution components
incrementally vs. in mass. Another trend is a push by utility
executives to gain better performance visibility and analysis.
We believe this is due to the high-pressure of accountability
today on taxes, fees, and the corporate accountability being
placed on companies in North America as a whole."
"We firmly believe that competition will succeed in North
America," said Brian Peace, Chief Executive Officer of
Peace Software. "Competition continues to take significant
strides in Europe and Asia-Pacific and successes abroad will
fuel deregulation activity here in North America. Perhaps more
importantly, the free market principle behind competition—the
competitive motive that drives efficiencies, improved service
and lower prices—is a logical progression for the energy
industry. Like industries before it, the energy industry can
no longer justify monopolies. Consumers are awakening to the
concept of energy choice; they want choice in suppliers, products
and services.
Restructuring may not come to everyone tomorrow, but it will
arrive. Meanwhile, the expectations of regulators, customers,
and shareholders are changing and a new, restructured industry
is swiftly emerging with intense emphasis on improved customer
service, operational efficiencies and cost-savings—in
other words, 'competitive' best practices. So, while deregulation
is taking a back seat as a business driver in North America,
the focus on competitive best practices is still very much alive
and seeping into regulated markets. More and more, we are observing
utilities applying the disciplines and technologies of competitive
markets to realize efficiency and growth benefits in regulated
markets."
"Utilities have been through a lot over the last few years,
and at this point they are really getting back to the basics,"
said Stan Royal, CEO of Conversant, Inc. "They are looking
for technology that will handle their needs today that doesn't
cost a fortune to support. They want software to make things
work smoother. They want flexibility. They want something they
can manage themselves, without having to buy a lot of other
hardware, software or technical support."
"Deregulation is still a factor in the utilities industry,"
said Gary Johnston, Industry Director of Utilities at SAP Public
Services, Inc. "It is not a matter of if, but when deregulation
will be implemented throughout the United States. Other factors
are the globalization of the larger utility companies like Eon,
Centrica, and RWE. These were once global utility companies,
but now their growth has been in many other business ventures.
This will continue in the long term as well. Short term trends
are still focusing on how to use technology and truly become
a more competitive low cost provider."
"The bell has been rung on competition and customer choice
and can't now be unrung," said Chris Hamilos, Chief Executive
Officer at LODESTAR. "European and Asian markets will be
the catalysts for further acceleration of these important forces.
It's also clear that energy providers are highly focused on
sourcing and implementing software solutions that have been
proven to provide a rapid and significant Return on Investment."
"The IT migration towards both the J2EE and .NET standards
is a key development within our mid and large market segments,"
said Jeff Bender, President of Harris Computer Systems. "While
there is significant opinion on which standard is superior,
the reality is that both are likely to dominate rendering most
other platforms to niche status."
"There will continue to be a gradual replacement of systems
in the utility marketplace until the majority of customers are
satisfied they can perform their core tasks in a highly automated
way," said Jeff Blanchard, Vice President of Operations
at Systems and Software. "This trend will fuel growth for
a few more years, but there are strong signs that automation
is moving beyond core tasks. Improvements in these areas will
offer such attractive returns that they will eventually become
the growth engines for the software vendors."
While each executive had a different take on the current trends
in the market, a couple of themes did emerge. First, many of
the CIS vendors commented that utilities were increasingly focused
on operational excellence, and saw this as an opportunity for
their systems. I would have to agree with this assessment. After
unrewarding forays outside of the utility business, such as
energy trading and independent power production, most utilities
are now turning to focusing on their core utility business.
As a result, utilities are quite receptive to solutions that
can help them better serve their core utility business in a
cost effective manner.
Secondly, many of the executives see utilities continuing down
the path towards deregulation, and see a role for their systems
to help make this transition. While there is little doubt that
a new CIS can make the transition to a competitive market less
cumbersome, just how briskly the U.S. will go down this path
remains to be seen.
