Recently UtiliPoint® International completed a detailed survey of electric, gas, and water utilities as well as energy retailers in the United Kingdom (U.K.) and Ireland focused on providing customer care to their respective customers. The U.K. and Ireland differ from the North American market in that both countries are deregulated, although they could qualify as two states geography and population-wise. The European Union (EU) mandates full choice by 2007 but both countries are already open, with Ireland opening the remainder of its gas market just yesterday.

The U.K./Irish CIS Market
The survey was directed to managers or directors of billing, customer service, or information technology at electric, gas, and water utilities as well as energy retailers located in the U.K. and Ireland.

At the heart of every utility is the customer information system (CIS). The CIS stores valuable customer data and information in order to serve that customer and ultimately provide data to the billing system. The system complexities increase in a deregulated market as more interaction is required with other systems, markets, and market participants. According to the UtiliPoint® survey, no single CIS provider had a significant market share in either country. Legacy/in-house solutions were cited by 54.5 percent of respondents. Legacy systems tended to be more prevalent at larger energy companies than they did for smaller ones. Seventy-two percent of companies with more than one million customers had legacy or in-house solutions, whereas 46 percent of utilities with fewer than one million customers had legacy or in-house solutions.

Electric and gas utilities were the company types that were most associated with having legacy or in-house systems with 80 percent, and water utilities were least associated with these systems with 42 percent market saturation.

The prevalence of legacy systems presents an opportunity for CIS vendors. However, the vendors must prove return on investment (ROI) or problem-solving capabilities such as the ability to interact in an open market.

The CIS systems in the United Kingdom and Ireland are getting younger. Over half of all respondents indicated that their current CIS had been installed since 2002.

Smaller utilities seem to be driving this trend of newer systems. Over 60 percent of utilities that serve fewer than one million customers indicated that they had purchased their CIS since 2002, while only 40 percent of utilities that serve over 1 million customers had done so.

When this data is examined by company type it reveals that this trend of newer systems has been principally driven by energy retailers and water utilities.

Why Replace the CIS?
According to survey respondents, the leading determining factors in selecting the current CIS at utilities are by far ease of use and functionality.

Looking at the determining factors by number of customers served shows a large indirect correlation between the number of customers served by a utility and several other factors that include advanced product features, ease of use, Web-enablement, and regulatory requirements.

For smaller companies (those that serve fewer than 1 million customers), ease of use was the most important factor and legacy replacement was the least important. Legacy replacement's rating is not surprising given that, as demonstrated earlier, these systems are not as prevalent at smaller companies as they are at larger companies.

For larger companies (those that serve over 1 million customers), functionality was the most important factor and advanced product features was the least important factor.

Looking at the determining factors by company type demonstrates that electric and gas utilities closely track water utilities with regards to these determining factors. Only on the factors of price, rapid deployment, and the ability to integrate did they differ substantially.

The most significant differences occurred between energy retailers and the other company types, especially on the issues of ability to integrate and legacy replacements.

According to survey respondents, the leading determining factors that will be examined in selecting the next CIS are by far the ability to integrate with existing technologies, ease of use, and functionality. Looking at the determining factors of a new CIS by company type identifies a number of differences. Energy retailers, for example, are much more likely to place more importance on advanced product features and legacy replacement than the other company types.

Additionally, electric and gas utilities were much more likely to place less importance on price and ease of use than the other company types.

Is Outsourcing an Option?
Over 54 percent of respondents indicated that they have outsourced a customer care function.

Respondents were specifically asked about nine separate outsourcing functions. The data center was the most outsourced customer care function, with over 22 percent of respondents outsourcing this function. Finance and accounting was the least cited customer care function, with none of the survey respondents indicating that they were outsourcing this function.

The outsourcing of data centers seems to be especially correlated with the number of customers. Data centers were being outsourced by 29 percent of larger companies. At the same time none of the larger companies were outsourcing human resources, full customer management, or credit and debt management.

For smaller companies the functions most cited as being outsourced were credit and debt management, data centers, and I/T departments. None of the smaller companies were outsourcing desktop computers.

Conclusion
So what does it all mean? Obviously the deregulation of the electric and gas commodity industries in the U.K. and Ireland are driving utilities to replace or outsource their CIS. New functionality and the ability to integrate to other systems required in an open market dictate that changes occur. Water utilities are not exempt as they are actually replacing the CIS with either a license or an outsourcing option faster than their electric and gas counterparts due to cost pressures.

The survey, along with the many conversations that UtiliPoint® has had with both utilities and vendors in the marketplace, indicates that the CIS marketplace is improving and that the market continues to change at a very rapid pace. Look for this year to be a deciding one for many CIS vendors and service providers in the area of U.K./Irish utility and energy customer care.

---