Power to the People

Following a string of power plant acquisitions, Keyspan Corp. unifies seven different billing systems.
Jackie CohenSeptember 4, 2001

In 1998, everything was changing in the energy business. At the time, industry regulators in a number of states were putting the finishing touches on programs to bring free-market capitalism to the power business. One after one, state legislatures signed off on the plans, ushering in an era of true competition in the electricity business.

Soon after, many of the once-regulated utilities went on acquisition jags. Keyspan Corp. was one of those acquirers. The Brooklyn, N.Y.- based power producer quickly snapped up six other East Coast utilities. The thinking: Keyspan’s management wanted to broaden the utility’s overall customer base, and then cross-sell different services to those new users.

To date, the acquisition strategy has paid off. Revenues at the utility have jumped from $1.7 billion in 1998 to $5.1 billion last year. But the company’s sudden surge in business has also left Keyspan with a major headache. More customers means more customer service — not always easy to manage when you’re dealing with a handful of legacy systems. So, in 1999, Keyspan management decided to centralize its customer service functions. Starting that year, the company began moving its 3.5 million accounts to Siebel System’s CRM 8 platform. The conversion wasn’t completed until earlier this year.

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That should tell you something about the difficulty of rolling out CRM systems at sizeable companies. Granted, Keyspan needs more flexibility with its customer relations software than many CRM deployers. Cheryl Smith, the company’s CIO, explains: ”The reason we bought Siebel is because we don’t know what’s about to happen” with deregulation of the power markets in New York, New Jersey, and New Hampshire (three of the nine states the company does business in). ”The software will allow us to either continue to operate separate call centers, but in a completely integrated way,” says Smith, ”or consolidate down to one call center.”

For Those Who Are About To Pay

Consolidation is something CRM software vendors are familiar with. Siebel remains the big name in the CRM applications market, due in part to the software functionality that’s come from acquisitions and partnerships over the company’s eight year history. ”No one has 100 percent enterprise wide-CRM,” says Sam Clark, program director at research and consulting firm the Meta Group. ”But Siebel is further- reaching than other vendors.” Nevertheless ERP/ecommerce specialists SAP, i2 and Oracle are bulling their way into the CRM market, as is PeopleSoft, which acquired CRM specialist Vantive in 1999. In addition, Peregrine Systems recently bought CRM niche vendor Remedy. And supply- chain software maker J.D. Edwards announced on August 15 it had agreed to purchase collaborative CRM software maker, Youcentric.

The shake-out in the industry means potential customers should have a shorter short-list when deciding on a CRM vendor. That’s a process a lot of companies are apparently going through right now. In a Meta Group survey of 300 companies, respondents said they plan to increase their investments in CRM projects by 75 percent over the coming year.

They’d better bring their wallets. CRM applications for larger companies can easily run into seven figures. The software that Keyspan bought, for instance, normally sells for $5.7 million. According to Smith, Keyspan was able to negotiate an undisclosed discount that included free consulting and system integration services. Indeed, with a recession on, some CRM vendors are offering deep discounts to customers who purchase systems now.

The payback for Keyspan’s CRM investment is pretty obvious. The company now has unified customer information coming from seven proprietary billing systems — some as old as 25 years. Keyspan has consolidated it’s billing to one system for gas customers and another for electric customers. The utility has also consolidated its customer operations into three call centers: one for gas, on for electric, and one for unregulated services such as appliance repair. Siebel’s CRM platform is being used as the sole set of code for customer interaction — whether that interaction comes over the phone or the Web.

In August, Keyspan launched an extended Web service, where customers will be able to virtually pay bills and order new services. In May, Keyspan went live with an online function called MyQuote. The service lets customers choose to have their energy supply converted from gas to oil, with oil companies bidding to win the business. MyQuote was up and working in just six weeks at a cost of $200,000. In its first month, 440 customers used it, and some 60 oil contractors bid on these conversions.

So why bother for 440 customers? When it comes to CRM projects, even a modest takeup can be a cost-saver. ”Every call into our call center costs $5, because we’re in an expensive marketplace,” says Smith. ”Each Web site visit costs about 26 cents. So that’s a big savings,” Future savings, she notes, will depend on how deregulation progresses in other states. “There are one million different laws out there, and I have to provide systems that support the company and customers while complying with the laws,” Smith explains. “Siebel provides some commonality, so I can respond to whatever the legal and corporate climate is.”

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