IssueAlert Emerging Technologies ~ June, 2004

Selecting a new customer care system is an arduous task. You have to define your needs and communicate them through a RFP. You have to then match your needs against the functionality and technology of each vendor's product. You have to compare prices, and make sure that each vendor's prices are complete, and that one or more of the vendors are not low-balling you or have not included prices for essential elements of the system. You have to call and/or visit the vendor's established clients who are using the system to ensure that it works as stated and demonstrated, and determine the extent of each client's satisfaction with the system. Finally you are able to select the system, execute the contracts and begin the implementation process.

It is important to remember, however, that you are buying more than just the system. You are buying a relationship with the vendor. It surprises me how many times we hear of utilities and municipalities who go through the procurement process and select a CIS without considering their long-term relationship with the vendor. If you choose a system which is installed by a third party or system integrator, you could actually be purchasing a relationship with two different parties.

There is an old saying which goes: “beauty is only skin deep”. This, of course, is not always true, but it can be said about some CIS vendors and their products. A good sales team can do a lot to influence the sale of their product. They can build rapport with the utility team to the point where the utility is eagerly anticipating working through the implementation and subsequent go-live period with the vendor. However, as soon as the contract is signed, typically the sales team transitions out of the relationship and the utility now has to deal with a whole new implementation team. Then, after go-live, the implementation department transitions out and the utility is turned over to the vendor's customer support organization. There is nothing wrong with this process, and in fact many times it can be very beneficial for both the utility and the vendor. But it is important to “look under the hood” during the procurement process and really understand that what looks great initially may be slightly different as time goes by.

One of the things that TMG Consulting tries to stress during the selection process is for the utility to attempt to determine how the vendor's existing clients would rate the vendor's transitional process, the implementation staff, the customer care organization and all other aspects of the long-term relationship between them and the vendor. Many times these additional drilling questions have made a difference in which vendor has been selected. After all, if the vendor doesn't take care of its existing customers, what makes you think that the vendor would take better care of you?

The opposite can certainly be true as well. The Kansas City Board of Public Utilities has had an extremely positive relationship with their CIS vendor. The “looking under the hood” was a factor in their selection. Interestingly, this utility was more pleased and has a much better relationship with the implementation team and the customer support organization than it did with the sales team. They have been live on the new system for over a year, and the vendor has always been there to help them when they needed it. This vendor has gone over and above what this utility expected in terms of its long-term relationship.

Other utilities have not faired as well. When a utility is looking to replace a system that is only a few years old, most of the time we find that this is either due to either a poor implementation or to vendor support issues. It is rare that this is due to a functionality issue, unless of course the utility is requiring new functionality and the vendor is either unable or unwilling to accommodate the utility. We recently assisted a utility that was looking to replace their system that was installed in 1999. The primary reason they needed a new system was the lack of vendor support and the vendor's inability to add new functionality. They also had some concerns with the technology of their current system. Another utility issued an RFP for a new system after becoming fed up with the vendor's unresponsiveness to their support issues. Both of these utilities specifically excluded their current vendors from their RFP process. Another utility had very similar support issues with their vendor, but decided to include their vendor in their RFP process. Interestingly, they chose their current vendor and decided to upgrade to the vendor's current version. They are now attempting to rebuild their relationship with the vendor.

Another related aspect of the ongoing relationship with your vendor has to do with the annual maintenance fees charged by all vendors. Typically, for a licensed product that the utility maintains, vendors charge in the neighborhood of 20 percent of the license fees each year. And, this fee can escalate anywhere from 2 percent to 7 percent per year. But, there can be big differences between vendors as to what all is included and what the utility gets for this annual fee. Are software releases including upgrades to new version included, or is the fee just for a designated number of hours of telephone support? Does the fee cover any onsite assistance, or things like registration at the vendor's annual users' conference? Does the vendor provide any system monitoring as a part of this service, or is this all over and above the 20% annual fee? It is important that you understand what is included and what is not included in this fee before the contracts are signed. The lack of understanding or communication on this can lead to a very negative relationship between the utility and the vendor. One utility felt that they were getting very little from the vendor for the price they were paying for their annual maintenance. Therefore, they dropped the ongoing support agreement and have contracted with a third party to support their system, make modifications, etc. So far this is working well for them, but time will tell.

An investment in a new customer system should last a utility for five to seven or more years. Therefore, don't just pick the system with the best bells and whistles, but think also about tomorrow. Add the strategic element and make sure that you can live with the vendor, its implementation team and support staff, and the financial aspects of the ongoing relationship.

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.

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