Over the last decade, utilities companies have faced changes including stringent energy and environmental policies, fluctuating economic conditions, disruptive technological innovations and ever-changing business norms. These challenges are arising from a combination of policy, technology and government interventions, as well as a changing customer mindset.
To remain competitive in this environment, utility organizations are replacing inflexible systems and adding new capabilities that enhance customer service.
A key aspect for managing these changes has been implementing modern billing and CRM systems.
Why is the industry changing billing systems?
Billing systems bind the consumption and metering process to payments, collections and other downstream processes that affect a company’s top line. Legacy systems are proving inadequate at handling the influx of changes brought about by recent regulation and innovations. The most common pitfalls include:
- Not equipped to handle the complexities of the smart grid
- Resource-intensive with multiple failure points
- Not helpful from a customer experience and scalability perspective
- Not able to provide valuable trend information
- Inability to meet regulatory requirements
Below is an illustration of the age of billing systems currently in use by the utility organizations.
To meet these changing needs, utility organizations across the globe are turning to modern solutions from various third party providers. Modern best-in-class energy management systems can help organizations with smart grid analytics, meter data management and demand-side management tools.
What should a new billing system do?
Billing systems enable utilities companies to overcome many current challenges facing the industry. They also offer benefits including:
- Support for future business requirements including smart grids and time-of-use
- Implementation with minor configuration or programming changes
Migrating to a new billing system
The graphic below illustrates the most common approach to migrating billing systems.
Billing system transformations can reduce costs up to 30% through technology driven process and operational efficiencies. However, these transformations can require significant effort, a huge financial investment, may take years to complete and introduces a host of potential pitfalls.
Common issues faced by utility organizations after migrating to a new billing system include:
- Higher exception volumes
- Unknown work types
- Poor integration with industry systems
- Delay in sending bills to customers
- Increase in calls/complaints
- Loss of customers to competition
- Failure to resolve ombudsman complaints
A total of 22,000 complaints were made during the first six months of 2014, more than double the complaints made during the second half of 2013. The figures follow similar findings from Citizen’s Advice, which reports that the number of customer complaints made against two of the top six UK utility companies have almost doubled per year following the introduction of new billing systems. (Source: Utility Week)
The typical technology-only transformation has gaps through the different stages of the implementation journey.
Looking ahead, utility organizations should learn from the experiences of their peers and avoid the pitfalls commonly associated with a large-scale transformation. Some utility organizations have been involved in acrimonious legal battles due to poorly documented expectations and requirements — resulting in the loss of revenues, customers and reputation.
Effective program management requires a holistic end-to-end solution to make a migration work. The solution needs to have a three-pronged approach encompassing technology, business and customer expectations.
Mitigation steps taken by utility organizations
One of the utility majors in the UK suffered a 95 percent loss in operating profit during the first half of 2015 as a result of transitioning to a new billing and CRM system. They were impacted by significant delays to issuing customer bills due to issues caused by the migration. Six common challenges following billing system implementations:
Challenge 1: Higher exception volumes
Challenge 2: Unknown exceptions with no work instructions
Challenge 3: Correcting billing system design to rectify faults and follow business rules
Challenge 4: Mismatch between industry data flows and billing system validations
Challenge 5: Delay in meeting customer output due to volumes. Delays in sending bills to customers and customer requests
Challenge 6: Call volumes and complaints increase
“The solution needs to have a threepronged approach encompassing technology, business and customer expectations.”
Utility organizations have developed partnerships with third-party providers to work through these challenges. The figures mentioned below are from a billing system implementation
- BPO vendors brought in operational flexibility to handle higher volumes and reduce backlog, as overall o/s volumes have been in excess of 192,000 lead to a higher cost-to-serve ratio.
- Collaborative approach between BPO vendor experts and client experts developed processes to handle new exceptions. 270 new work instructions were created.
- Business process experts performed root cause analysis for broken process flows causing higher volumes and errors. Working with the technology partners removed unwanted exception/exception types, resulting in 493,000 exceptions deleted.
- Domain experts from BPO partners provided insights into industry flows, as well as data input and output format.This ensured a seamless journey for all customer events
- Effective utilization of analytics managed unbilled accounts to help reduce revenue loss.
- Predictive analysis was performed for the expected delay while managing customer expectation through account managers and the front office.
- Effective integration of the client site front office and BPO vendor back office helped identify complaint drivers and reduce complaints.
Stabilizing a post-migration billing system can typically take up to 2 years. However, this time can be cut in half through better planning and intervention during design phase.
Many billing system transformation leaders report that the transformation play book exists only for technology change. It is also true that these transformation projects share many of the same challenges. Partnering with BPO providers can provide real insights into the challenges of transformation and issues facing customers.