Last year, the Holding Company for Water & Wastewater (HCWW) of Egypt chose Prophecy International’s basis2 for its customer care and billing requirements. Peter Barzen, EVP Sales & Alliances, Prophecy International spoke to H20 on the significance of customer care and billing systems for the water utility business.
In your opinion, what are the business challenges faced by water utilities today?
Peter Barzen
The business challenges in utilities are similar to those in other asset intensive industries, mainly financing of capital projects and cost recovery. At the same time, additional challenges include conservation management, water rationing, infrastructure rebuilds (in the UK), customer centric operations (in North America) and keeping regulators or commissions in check. Each region and country has a differing set of demands; at the same time, water is an essential service so pricing requires sensitivity. Technology is providing new approaches to managing these challenges through the development of predictive models and personalised interactions. While it may not be a specific business challenge, probably, the single most important challenge to any global water utility is the supply of potable water to its customers. Many countries are still suffering from poor water quality leading to sickness and high mortality rates, particularly among children.
What are the metrics used by water utility companies to monitor their revenue cycle?
For the typical water utility that basis2 supports, the primary metrics are with regard to collection. While operations may measure billable revenue each cycle, broken down further in terms of Commercial & Industrial versus Residential, the day- to-day revenue cycle is focused on collecting what is owed and managing the outstanding or overdue amounts by increasing date ranges. Collections take on differing approaches in different locations. In the UK, where a customer cannot be ‘forced’ to pay a bill, the levels of bad debt are the lowest in the world. This is achieved in part by campaigns that offer incentives to customers to subscribe to a direct debit payment plan, aligned to the customer’s income profile. Using predictive models, based on past behaviours at an account level, is helping utilities manage their revenues more effectively by providing aligned payment choices.
In a water utility, which department owns the customer care and billing system?
The ownership is affected by a variety of factors including the age of the legacy Customer Information System (CIS), regulated versus deregulated operation, customer contestability, the maturity of the leadership, the power of the IT group and the location. In the North American Public Sector industry, the ownership of the CIS is generally being transitioned from the Water Operations Department to the IT department and now to the Customer Services department rolled up as part of the Finance division. Historically, the CIS was operation-centric, based around premises, meters and supply pressure; the CIS was a simple billing system. The move towards a customer-centric system for better account and financial management is driving a better bottom line for the utility. This has transitioned ownership to the customer services department with the IT department providing the CIS and services to meet the business needs.
With regard to HCWW contract, could you elaborate briefly on the factors that helped Prophecy International clinch the deal?
The HCWW evaluation and selection process was conducted over some 18 months. During the period, they investigated many different products as well as approaches to address their billing needs. In the past, functionality was used to select a CIS application. Today, however, almost every CIS application provides a comprehensive ‘meter-to-cash’ set of business processes. HCWW prioritised how these are provided, including the application architecture, technology platform, flexibility, extensibility, whether it is standards-based or not and Total Cost of Ownership (TCO). The basis2 Oracle applications architecture and pure Oracle technology platform drives down the cost of ownership while providing the most flexible extensible CIS on the market with the least risk.
What should utility companies be looking for while evaluating customer care and billing solutions?
There are two items I would prioritise – first, flexibility in the application to meet the needs of the utility today, and in the future; second, standard-based deliverables, such that the utility can decide who will implement and maintain the application, thereby providing some control over their own destiny.
Are the imperatives driving utilities to implement customer care and billing solutions the same for regulated and deregulated utilities?
While some distinction can be drawn from the deregulated utilities, the drivers tend to be similar for all utilities including the inability to maintain, change or extend the existing CIS application. Another common driver is better revenue management. Commercially driven utilities focused on the bottom line and the cost plus model are finding pushback on rate increases, forcing them to fund their own operations from cashflow more effectively.
Is it possible to address multiple customer segments like commercial, residential and industrial with a single customer care and billing solution?
Yes – A single CIS application and instance should be able to meet the needs of all the customer segments of a utility inclusively.
Is there a correlation between size of the utility and complexity of the implementation?
While there is influence, there is no direct correlation between the size and complexity. A small utility with undocumented processes, lack of requirement definitions and poor quality legacy data can be much more difficult to implement than a much larger utility. The cost to implement a CIS should not be based on the number of meters or customers to be served. Scalability should be inherent in the CIS application.
To what extent are customer care and billing solutions required to be integrated with other enterprise applications like ERP and systems, like GIS , AMR etc?
Interfacing with external and internal systems is a key delvierable for all CIS applications. One of our US based customers was required to interface to nearly 27 different third party systems including internally developed legislative applications, financial and the like. While EAI and Web Services can help, they don’t address the needs. You cannot force a bank or a third party application vendor to accommodate your interface specifications. A CIS needs to provide a menu of choices to be able to provide a complete array of interface capabilities. basis2, being architected as an Oracle E-Business application, provides significant benefits and advantages for organisations that have standardised on Oracle Applications or middleware. basis2 includes native E-Business interfaces as well as personalisation capability that can provide web interfaces to third party applications in a matter of minutes.
What are the pre-conditions for a successful implementation? What are the factors that can derail an implementation?
The first order of business is to define what constitutes success. Is it meeting a deadline or not exceeding budget or the ability to decommission a legacy application? Often there are KPIs to be met in terms of customer care standards such as responding to customer phone calls in a given time frame, answering written correspondence in a number of days, not to exceed call volumes.
Once success is defined, we can develop a plan to achieve that. On the other hand there are a number of well known factors that can derail an implementation including:
- Inadequate executive sponsorship
- Lack of leadership in the implementation team
- Inadequate planning
- Poor project management
- Inflexible CIS application
- Too much customisation as opposed to configuration
- Unrealistic time frames
- Inadequate data conversion cleansing
- Poor quality end user training
- Missing or inadequate requirements definition
- Unskilled resources both internally and externally
Are there any interesting trends you can leave us with?
In the CIS market, utilities are starting to ask why it costs so much money and takes so long to implement a CIS. We know it’s not easy, though its not rocket science. Why do we need to have a team of proprietary, expensive vendor experts? From that point of view, Basis2 offers an attractive alternative.
