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May 1, 2004
For CIS Selection, Focus on the Basics, Public Power Magazine, May-June 2004
| For More Information |
Tim Blodgett
Hometown Connections
303-526-4515
tblodgett@hometownconnections.com
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Better Customer Service, Employee Morale, Vendor Stability
Icy stares from around the conference room table—that’s a common reaction when someone suggests it’s time to replace the billing and customer information system. Even when the old system is untenable, concerns will surface about software glitches, about vendors who “just don’t get it,” or of changing the way “we’ve always done things.” Plenty of public power officials have had tough experiences or heard horror stories from others. But the municipal utility CIS market is at a new and exciting stage. If utility managers take advantage of the latest software applications, involve employees in the planning and implementation process, and select vendors with staying power, the CIS switch will be successful.
To understand the options and opportunities in today’s market, public power utilities should consider the evolution of the municipal utility billing industry over the last 10 to 15 years. Prior to 1990, the process for generating a utility bill depended on mainframe systems run by IT staff. These systems were not viewed as tied to customer service. They were not linked to databases capable of massaging or manipulating the data for analysis. The bills contained barebones information only. Utilities depended on a small number of utility employees who handled internal programming. And utilities remained loyal to vendors for long periods of time, due to a dependence on their unique skills and expertise.
In the 1990s, decisions about billing systems were platform driven. Utilities chose primarily between AS400 and UNIX platforms. As computer technology and applications evolved, companies began to see the monthly bill as a marketing vehicle requiring links to detailed customer data.
By the late 1990s, it appeared certain that the electric utility industry would be deregulated and customers would be given a choice of suppliers. Winning customers would depend on delivering account information to the desktops of customer service representatives. Utilities would achieve customer loyalty by selling a bundle of services (i.e., energy, home warranties, home security, telecommunications, Internet and cable TV) to be paid on a single bill. A new level of marketing sophistication would require a nimble and comprehensive customer information system.
In addition, as the year 2000 approached and all industries grew worried about Y2K calamities, a crisis atmosphere developed. The rush was on to find a vendor able to deliver a sophisticated, Y2K compliant system before January 1, 2000. Utilities felt compelled to upgrade their systems or install entirely new systems quickly. Many vendors were overextended and earned ill will among public power managers and their staffs.
Today, deregulation is on the backburner and Y2K is a memory. At the same time, the predominance of Java technology means the days of choosing between AS400 and UNIX platforms are over. Java technology is a portfolio of products that are based on the power of networks and the idea that the same software should run on many different kinds of systems and devices. Because technology and deadlines are not driving CIS decisions, CIS in public power is going back to basics. Managers are focused on generating bills and collecting payments efficiently. They’re looking to control costs by depreciating existing systems. And, as in all industry’s today, customer care is king. And customer care is enhanced when advances in information systems are put to work.
Following the challenges of Y2K, utilities are more reluctant to go through the painful process of changing systems. As a result, many vendors have either gone out of business or been acquired by others. This consolidation means the pool of vendors is growing smaller.
Despite the reluctance to change billing and information systems, customer demands and other business realities often make it a necessity. Why implement a new system? The current generation of software applications can make utility billing faster and more accurate. Improved systems enable utilities to improve productivity when staffing levels are frozen or reduced. The utility’s current software provider may be in poor fiscal shape, supporting outdated products or badly serving the utility staff. The utility may be running its billing system on hardware that has grown obsolete and unsupportable.
A successful CIS project, from the selection of the vendor through implementation, depends on avoiding knee-jerk reactions or quick decisions. It’s far better to anticipate and plan for system changes than be blind sided by obstacles or crises.
Organization should change business processes rather than require software vendors to write custom applications because “that’s the way we’ve always done it.” Today’s predominant vendors understand municipal utility billing and have developed procedures and practices that will work well for most public power systems, of all sizes. Custom software is expensive.
Understanding the human element to any CIS project is vital. People comfortable with current software and procedures are naturally apprehensive about changes. But their reluctance can threaten the project. Business school professors, retired CEOs and a myriad of consultants write book after book about convincing employees change is a good thing, something to be supported. The best approach is to involve the people who will be impacted in the decision process from day one. If they feel a change is being driven from the top down without their input, staff members will be even more reluctant to accept the changes and doom the project to failure.
In addition to involving the staff in the process, avoid letting vendors or utility officials over promise what the new system will do. Anyone can grow excited during a brainstorming session and write up a new system wish list. But they should not expect a wish list to be a list of deliverables. They’ll be disappointed when it becomes clear down the road that something won’t be included. That disappointment can increase tension and resistance.
Consultants and systems integrators can play a valuable role during the vendor selection process and the implementation of a new system. Their expertise and independence can form an effective bridge between the utility staff and the vendor.
The crisis, deadline-driven atmosphere of the Y2K era is over. When selecting a vendor, it’s imperative to take the time needed to determine if the firm has a strong long-term outlook. Experience and reputation count. Does the company have long-time customers and a long list of references? Ask for the details of the implementation strategy. How will the company support the system and the utility staff after the implementation? Do they maintain user groups on a regional or national level? Obtain as much corporate financial information as possible, to ensure the company has staying power. What are their software development plans for the next 5 to 10 years? What percentage of their profits do they invest in product development?
The following is a top ten list of why CIS Implementations fail:
10. System sophistication. The new system either lacks the features and functions required or is over designed, too complex.
9. Unrealistic solution scope, expectations, timeframe.
8. Project scope changes midstream; utility requests too much software customization.
7. Poor communication between vendor and utility.
6. Project sabotage by employees resistant to system change.
5. Lack of due diligence during the vendor selection process.
4. Lack of utility “gap analysis,” the study of the differences between the old and new information system or application and then developing a plan for bridging the gap.
3. Poor data conversion.
2. Poor employee training.
1. Utility employees unwilling to change, adapt to new system.
To avoid these pitfalls, public power systems should organize their customer information system changeovers around several basic principles. Utilities should pursue a vendor most likely to be in business and able to support its software over the long term. It costs too much money and too much staff effort to risk making the wrong choice. Lack of due diligence and planning on the front end will result in problems on the back end.
Organization buy-in at all levels, at all stages of the project, is critical. Involve those who will use the system from day one. Set realistic goals and timetables, in order to avoid discouraging the project team members. Naysayers will poison the project atmosphere. They may decline to share important information with the vendor or with utility superiors, throwing the implementation schedule off track. The key is to pay careful attention to the willingness and ability of team members to adapt to the new system. Mangers should consider reassigning those who cannot make the necessary adjustments, either in attitude or skill sets.
When it comes to communication among project team members and with vendor employees, there’s no such thing as too much. Utility officials should build into the project plan clear and required procedures for creating and reviewing progress reports.
Managers and staff should plan on matching their business practices to those of off-the-shelf software applications. Customized applications are too costly to purchase and support.
Many projects falter at the data conversion process because the data being converted is not properly scrubbed in advance. Inconsistent data entry practices, abbreviations, spelling errors, etc., must be addressed before the conversion. Software programs to assist with this process abound.
Bigger and more expensive software solutions are not necessarily better. Meeting customer expectations in such areas as accuracy, responsiveness and convenience should drive the project, not technology, regulation or staff preference.
As the public power community looks to the next ten years in CIS, the focus will be on the financial stability of vendors, on the details of project management, on solutions that are technology and platform independent, and on off-the-shelf software that balances functionality with ease of use. Operational efficiency and return on investment will be primary decision drivers. Automation of field activities (metering, service orders, work management) will also push the demand for new information systems. More utilities will discover that outsourcing CIS to trusted partners such as joint action agencies is a viable alternative. And the biggest driver of all will remain the desire to improve customer service.
Yet, there’s no getting around one very important fact. Despite better performance by today’s vendors and the growing number of well-designed applications, selecting and installing a new customer information system can be an excruciating process. What lies at the core of every commercial enterprise may never be easy to change. But when a municipal utility focuses on the needs of its customers and its staff, the payoff will far exceed the costs.
Written by Timothy L. Blodgett. Mr. Blodgett is president and chief executive officer of Hometown Connections. A utility services subsidiary of the American Public Power Association, Hometown Connections markets the customer information software applications from Harris Computer Systems.
View this Web site for more information.
• Harris Computer Systems
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