IssueAlert Emerging Technologies ~ November, 2003

I remember watching the show “Fear Factor” once and thinking out loud that the contestants must be crazy to be doing what they were, but my wife corrected me saying that they were just trying to live life to the fullest.

Is there a correlation here between those contestants and all of us when we are considering a new Customer Information System (CIS)? Are we content to only considering the established CIS solutions, or are we willing to subject ourselves to a slightly greater risk and possibly reap the greater rewards. Are you and your company open to considering something outside of the norm with the potential to really “bring home the money”? Is fear a factor for you?

When TMG Consulting is assisting a utility in preparing the RFP for a new CIS, the discussion eventually comes around to the minimum requirements. This set of requirements is arrived at following an extensive needs assessment which includes business practices, functionality requirements, technology strategy, environmental and market drivers, and other considerations. The minimum requirements should be just that—the absolute minimums that a CIS product solution and its implementers must have to be considered for the utility. This process, and the communication of these minimums, is valuable both for the utility, in that it sets the basis for the entire evaluation team, and for the vendor community, as it saves vendors who may not meet the stated minimums from the time-consuming and costly process of preparing their response. However, even though this is meant to be a limiting factor, it many times proves to be very frustrating to us that some of the emerging CIS solutions, or those that are established in other areas of the world but not yet in North America, are never given proper consideration. Instead, only the North American market leaders are considered over and over again.

Don't get me wrong. I am not advocating that you ignore the North American market leaders, as they are likely market leaders for very good reasons, but I am suggesting that you also consider stepping outside your comfort zone as you may be surprised at what you find. You may discover that your fear of what you perceive to be unknown or unproven solutions may not be justified, and they can provide numerous benefits to you and your company.

What is an emerging or less established system?
First of all, I need to define what I mean by an emerging or less established system. I don't mean a brand new offering from a brand new vendor. While I am not necessarily discounting these, the emerging systems that you may want to consider are those that are established, proven systems, but not necessarily established in North America. These are solutions where the product vendor and/or its implementation partner have an established track record. They have referenceable clients. Their financial stability can be validated. However, they have not yet been able to establish a foothold, or a substantial enough of a foothold in North America. Therefore, it is much more difficult for a utility evaluation team to see the system in production and have extensive discussions with the vendor's clients.

One of the first things we have to get past is what appears at times to be our very conceited opinion that if the vendor is not from this continent, and the product was not developed and supported on this continent, it won't work here. The automobile industry has proven that to be invalid. While I still love my American-made cars, I have to acknowledge that many of the foreign-made ones have features—and cost—that many times outweigh the comfort I have with American-made. And look at the electronics industry. American firms have a very hard time competing with the foreign corporations and their products. There are a few foreign-made CIS solutions which are established here, with offices, support staff and CIS clients. There are other CIS solutions out there that have set up offices and have staff here, and that are now attempting to establish themselves through client sites in North America.

Are you an “Early Adopter”—someone who likes challenges and the rewards they produce? Or, are you and your company's culture more attuned to being followers? Many times I hear utility personnel say that they want to be “leading edge, not bleeding edge”. I support that concept and contend here that considering an emerging CIS solution will not necessarily put you into that bleeding edge category.

Why should you consider these solutions?

Price. One of the first reasons is price. Many foreign automobile makers got us interested in their products and into their showrooms first of all based on price. They either discounted their products substantially, or their costs to produce their products were substantially less than American-made cars. Many times you will find the same situation with emerging CIS solution vendors. They may be willing to discount their systems, practically giving away the system, just to get referenceable sites in North America. Or, they may offer to partner with you, and develop your customizations or modifications at no cost to you. They may be willing to assume the bulk of the financial risk to ensure that you are successful with their solution.

Ongoing service fees may be substantially lower for these solutions as well. Annual maintenance prices are usually a percentage of the license cost. Therefore, the combined savings can be substantial over the life of the product. If you can get a fully-functional system, customized for you, at a substantially lower price, is that worth considering?

Features. We like the way we do business here in North America and many of us are very reluctant to change. But, we are only a small piece of the world's utility market and we need to keep in mind that there may be better ways of doing things. Utilities in other parts of the world may have had other priorities and may have already been affected by other drivers than we have been. One obvious example is competition. There are CIS solutions in production which have addressed these requirements and may have features in their systems which have been in operation for several years already.

Successful Projects. When vendors are being considered, we need to ascertain how successful they have been with their previous implementations. This is a pertinent point that is often by-passed or skirted around. The question is “how many successes has the vendor experienced and how many failures, or how many of their projects have been stopped?” It should not be based on whether it was an implementation within North America. Successful installation and failures is the question. Where it may have been installed should be secondary. Utilities around the world are no less concerned about the quality, functionality and implementation of CIS solutions than any North American utility might be.

The question of “how many projects have been completed on time and within budget”, should also be asked. This is a risk factor that should be thoroughly investigated. It may not seem related to doing business with a foreign-based provider; however, you may find that it may be less risky to do business with a foreign-based provider than it is to do business with a domestic based provider when it comes to project management and overruns.

Quality Product and Implementation Satisfaction. Many times there is an opportunity to establish a real partnership with one of these vendors. If you are willing to be an Early Adopter, you will be a very significant client for that vendor. They must satisfy you if they hope to make additional sales. You could be their primary reference on this continent. We have all seen how companies across all industries tend to treat their largest customers better than they do their smaller ones. Think about how well you would probably be treated if you were a vendor's only customer in North America, or one of just a few customers. In addition to outstanding customer service and support, your utility would really be in the driver's seat when it comes to influencing the design of new product features.

Technology. I have been told many times by vendors how difficult it is to move into North America. The vendors who are attempting this feat are doing so because they feel that their solution provides a clear advantage or alternative to those that are already here. Many times that advantage is the technology. Many of these systems have been developed fairly recently from the ground up using the latest development technology. Some of these solutions were developed for today's market—to meet the changing needs of this evolving industry. This is one advantage from which old solutions can never benefit, with their aging architecture and development platforms. New CIS solutions have a much longer life ahead of them than their older, mostly outdated counterparts. New technology is designed to meet the challenges of new problems—if the old technology worked, there would be no need for new technology!

Timing. If time is a consideration for you and you foresee major work associated with modifications or interfaces, consider the fact that many of these emerging companies have development centers throughout the world. Development issues can be "handed off" from the North American development center to offshore development centers where work can continue literally "around the clock". This is a real advantage when the issues may be time critical in nature.

Likewise, if disaster recovery is a concern these providers can help in the development of a disaster recovery plan that would include a backup in an offshore location.

Financial Stability. Every utility must make sure that the CIS vendor it selects is a financially stable company, whether North American or foreign. This should be thoroughly investigated. In the end, utilities may find that there are indeed stable foreign-based providers, and in better financial condition than their North American counterparts. Some of these foreign-based CIS providers are companies backed by huge, financially stable utilities doing business in other countries. Thus, if risk is a concern, these may be the CIS vendors that have the financial backing to mitigate that risk. They may have a long history of successful operations.

What is the Bottom Line?

“It is time for a new generation of leadership, to cope with new problems and new opportunities”—John F. Kennedy, July 4, 1960.

Although this was first said over 40 years ago, it is still true today and is applicable in every industry from software development to car manufacturing. So why are CIS purchasers so reluctant to buy “new” technology solutions? It is surprising when you consider all the possible advantages of buying a CIS from an emerging vendor.

There is no logical reason why utilities should not receive the best-of-class from the world-wide pool of solutions rather than limiting themselves to the best solution in their local marketplace.

The bottom line is that CIS solutions from these emerging vendors may be better able to meet the new challenges experienced by this evolving industry. They may have the most attractive prices and terms, proven implementation strategies, and successful clients. These companies may try harder to win your business and keep you happier than ever before.

Are the rewards worth it? Is fear a factor for you?

Gary Weseloh is a Vice President and Senior Consultant with TMG Consulting. He has over 30 years of utility experience, including the management of customer systems (CIS, meter reading, remittance processing, complex billing) at a large combination utility, consulting on mobile computing/field work automation, and extensive selection, evaluation and installation oversight projects with TMG Consulting. He can be reached at garyw@tmgconsulting.com.

UtiliPoint's Emerging Technologies IssueAlert articles are compiled based on the independent analysis of UtiliPoint consultants, researchers, and analysts. The opinions expressed in UtiliPoint's Emerging Technologies IssueAlert articles are not intended to predict financial performance of companies discussed, or to be the basis for investment decisions of any kind. UtiliPoint's sole purpose in publishing its Emerging Technologies IssueAlert articles is to offer an independent perspective regarding the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy issues.

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