IssueAlert Emerging Technologies ~ May, 2004

The 28th Annual CIS Conference continued in Miami on Wednesday with a full day of vendor and utility sessions on customer care in the utility industry. The conference has afforded an opportunity to speak to a number of vendors, and to get their view of customer care technology, and its usage in the utility industry.

In addition to these conversations, UtiliPoint recently interviewed over two dozen 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.

Customer Care Services Speak
One of the more interesting items covered by UtiliPoint's interviews and conversations has been on the subject of technology. When asked, "Is there a technology shift coming in the CIS market?" providers of customer care solutions responded in a variety of ways. Darren Stoddard, vice president of Strategic Alliances & Marketing at AMX International replied, “CIS vendors are going to have to provide customers with a more flexible architecture that allows them to adopt modules or components as needed. Prospects today aren't buying complete replacement systems. They want to maximize on their current information technology investments, and buy in bits and pieces that will bring in an immediate return on investment. Many of the current CIS vendors' architectures are not capable of adapting to a modular or component-driven model without a huge investment and time to market. The days of huge 'all or nothing' CIS replacements are over. Additionally, Web-based applications will continue to make great strides in the market place as the standard platform of the future.”

“Systems integration remains a great challenge for utilities, and this is where I see the greatest technology shift occurring,” said Michael Gardner, president of Cayenta, Inc. “The continuing trend towards application programming interfaces (APIs) and Web services is one of the most critical in our industry. The recognition that systems must be open to easy integration with other systems to have any sustainable value is a reality that is going to set in on a few organizations more quickly, and more catastrophically, than others. With the fierce battle still in full force between the Microsoft and Java technology sets, APIs and Web services permit these to coexist without having to wait until a victor has been declared. It is the adoption of these technologies that allows the integration of other systems and components that ultimately extend the value of CIS systems within an organization. No system can afford to be an island unto itself, and no organization can truly afford the long-term cost of investment into isolated environments.”

“There definitely is a shift occurring,” said Stan Royal, chief executive officer at Conversant. “Historically, advances in software technology come in waves that crest every five to 10 years. The frequency of new waves is rapidly increasing and shortening the duration of older technologies. This means that unless a vendor has a flexible architecture, their solutions are quickly outdated. For example, client technology has evolved from green screens, to fat clients, to browser clients and now to rich or smart clients. The thin browser clients were in a way an aberration of the dot-com era where content-oriented delivery was emphasized over user interactivity. Only recently have developers realized that richer user interfaces are needed to provide maximum user productivity. Smart clients are evolving past the thin client paradigm to achieve new levels of usability. Open source software is also a completely radical shift in how software is developed and used. Vendors can capitalize on this phenomenon by incorporating open source components in their systems thereby increasing quality, interoperability and reducing development costs. Java applications are leading the open source movement. If you look at public sources like www.apache.org or www.sourceforge.net, you quickly realize that Java-based open source systems are here to stay and are revolutionizing the industry.”

“Yes, we believe that there is a major technology shift coming to the CIS market,” said Jeff Bender, president of Harris Computer Systems. “Customers are demanding more and more flexibility and interoperability between and amongst their mission critical and adjunct systems. This will require that CIS vendors revisit their proprietary technologies and create interfaces and connectivity to allow data to transfer both into and out of the CIS seamlessly. Customers are no longer willing to pay for high priced interfaces to systems that are expensive and difficult to maintain. They are requiring CIS vendors to create APIs and Web services that provide the information links required for systems to co-exist and maximize efficiencies as a whole. We believe that from a development perspective there are only two viable development platforms—Java and .Net. We believe that, over time, all CIS vendors will have to move to one of these platforms or face an increasingly difficult time in the new name sales market. Customers are extremely hesitant to make significant investments in proprietary technologies in the face of today's rapidly changing technology environment.”

“Yes, there is—today,” said Carl Kloecker, executive vice president at NirvanaSoft. “Technical and application architectures are quickly changing in the CIS market. The current movement towards both .NET and J2EE based standards is a strategic development. Customers are becoming sophisticated after many expensive experiences and are dictating standards to suppliers rather than the other way around which is today's reality. There are new object centered and componentized application structures coming on line. There are still software products out there that have not undergone any radical changes in the last two or three years—and in some cases, last 10 years. The users of those systems are realizing very fast that those systems can present significant barriers to market entry—in being able to offer a wide portfolio of complex products to customers, or the speed of market entry. We have seen recent examples where we have been approached by several marketers because the systems they are using cannot handle the complex tariff-based discount products being offered in New York and New Jersey.”

“Paul Grey, Peace's CTO, foresees a disruptive technology shift emerging that will revolutionize the utility CIS world—composite applications,” said Brian Peace, founder of Peace Software. “Composite application architecture is an innovative new way of developing and integrating enterprise application software products. It is one where the user interface (UI) is de-coupled from the business logic functionality and data, enabling the UI to be dynamically assembled from functional elements in a highly configurable and extensible manner using Web services and associated technologies. Ultimately utilities might potentially run their business processes with applications accessed through a single configurable, extensible UI, promising previously unachievable user productivity benefits and lower implementation costs through fewer requirements for software modifications. It's what analysts are already calling the Nirvana of CIS.”

“SAP believes the shift is already here,” said James Menton, utilities principal of SAP. “Many of the CIS applications that are still using older technology are losing the ability to retain current customers and obtain new customers. This is due to the fact that it is harder to maintain, interface and build add-on applications with their 'inch wide—inch deep' type solutions. Only vendors that realize how important a scalable and integrated technology platform is to the customer will be able to sustain viability in the marketplace. This capability will truly differentiate the leaders from the rest of the players, in that, technology will play an even more important role as we look to mobile, portal, data warehouse tools and continually evolving development standards to complete the business process requirements of utilities in the future.”

“I would suggest that the shift is more one of architecture—application structure—than it is about a new technology like thin client,” said Harry Debes, president and CEO of SPL WorldGroup. “Of course, we'll accommodate technology advances. But what is more to the point is that CIS vendors will begin to expand product footprints markedly. A vendor will offer a product or products that encompass more of a utility's customer-related needs. At the same time, I think you'll also see vendors offering utilities very specific functionality exactly when they need it, in exactly the configuration they need. Over time, CIS will be seen more as a very large bundle of applications that may be tightly integrated, loosely coupled, or sold separately, according to individual utility needs.”

In conclusion, not only do more than 90 percent of the vendors at the CIS Conference this year see a technology shift occurring in the industry, many think that shift is already in process. Themes regarding this shift mainly focused on two areas. First, there is the issue of integration. Competitive pressures, reporting requirements, and aggressive customer service goals are increasing the degree of integration across the business systems used in a utility. As a result the CIS must be more and more integrated. This is forcing many CIS vendors to adopt newer technologies to reduce integration costs and improve the integration process.

Secondly, utilities are increasingly seeking flexibility in their products. The driver for this seems to be an acknowledgment that there is a need to close the traditional separation between business user and programmer, to make it possible for individuals who understand the utility business to have direct influence over the CIS.

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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