Are CIS Vendors Missing a Market?


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published May 14, 2003

CIS, the customer information systems of utilities, merge meter reads, rates, customer data, accounting information, and service levels to produce bills. The CIS systems will manage millions of customers reliably, be the customer service focal point at call centers, alert workforce management systems of needs, and manage highly complex billing arrangements. Yet, somehow, they might be missing part of the market.

In speaking with a number of employees of utilities though, they expressed a failure of the CIS products to adequately manage some of their customers. The conversations were held at the Spintelligent Metering, Billing, CRM/CIS Americas conference held in Chicago, IL during May 2003 and sponsored by Elester, Excelergy, Itron, Kema, and Olameter.

The utility employees were satisfied with the CIS products for the bulk of their work, they expressed dissatisfaction with regards to their ability to service large C&I customers. Many stated that these accounts were not handled by the CIS systems, but rather through Excell spreadsheets.

While the large C&I customers are only a small fraction of the accounts of a utility, they represent the most profitable portion of their customer base. They also represent the most complex portion of their billing challenges. While the CIS systems I have examined can address the complexity of these customers and meet these challenges, the utilities expressed a lingering dissatisfaction with these systems.

Where is the Fault?

The dissatisfaction from the utility companies comes from the difficulty of making a change to the CIS system and the ease of making changes to Excell spreadsheets. First, C&I customers with multiple sites will request a single bill for all the sites but separate bill items for each site for their accounting function. Most modern CIS systems will meet that requirement. Second, some C&I customers have distributed generation and this requires the utility to be able to bill for the potential to supply power if the distributed generation fails. At the same time, a company with multiple distributed generation assets will have a lower risk profile than a company with a single distributed generation asset and as such their risk profile for a distributed generation failure will be different. The utility must treat these customers differently. Again, the modern CIS systems will meet this requirement. Third, competition at the C&I level forces contracts with customer to be renegotiated from time to time. Each contract negotiation potentially produces a new rate schedule for single customers. As before, the modern CIS systems will meet this requirement as well.

If the modern CIS system can meet each of these requirements, why are customers with these systems selecting to discard their system and produce bills from Excell spreadsheets?

Look at the Costs

While the modern CIS systems can perform each of the functions, people are electing to use Excell spreadsheets because of their ease of use and their low cost. Excell is a $250 product that is embedded within the standard Windows Professional Office Suite. Most CIS systems have an entry price north of $500 thousand and can reach into the tens of millions. But this is not a fair comparison. Modern CIS systems manage the hundreds of thousands to millions of residential customers as well as the thousands of C&I customers. Most of the cost of modern CIS systems comes from providing a system for the management of large numbers of similar customers, not small numbers of unique customers. But utilities will have these few unique customers.

The second cost factor comes from adopting the CIS system to manage the unique and changing demands of the complex billing arrangements made with C&I customers. If managed with Excell, the business manager can create the bills herself without the need for IT intervention. However, with the CIS products specialized training and perhaps an IT background is required to implement changes in the method by which the bill is calculated. Shedding control and incurring the costs of requesting specialists to manage the bill calculation for individual customers is perhaps asking too much.

The Route Out

Logica CMG is providing the market with the UtiliCalcPlus product for meeting the requirement placed by unique customers and their highly complex billing requirements. I can’t vouch for the strength of the product, but I should point out that Logica is not a major CIS product vendor. This raises the question, is there a market opportunity created by the needs of serving the few, unique customers of utilities that the major CIS vendors have overlooked? Perhaps. If so, Logica has also heralded the route to capture that opportunity. The major CIS vendors will have to rethink their product design and produce a separate product focused on this specific demand. This new product will need to be as easy to alter as Excell and be priced at a point in congruence with the value it provides by freeing up the time required for a manager to manually calculate a complex bill.

The advantage the major CIS vendors have in this competition is their brand awareness, sales force, and billing knowledge. Their disadvantage may come from an unwillingness to bifurcate their product. Calculated risk taking will determine the outcome.

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About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.