The utility of the future just may be taking shape at Cinergy Corp. (Cincinnati, Ohio, U.S.), one of the largest diversified energy companies in the United States. With 1.4 million electricity and 478,000 gas customers in Ohio, Indiana and Kentucky, Cinergy recognized the need in the 1990s to prepare for the competitive deregulated energy market and to reinvent its business model and business processes in order to compete successfully in the new economy. It took a significant management and operations challenge to lead the company to a new vision of its future.
Facing New Economic Realities
Cinergy was created in 1994 through the merger of The Cincinnati Gas & Electric Co., PSI Energy Inc., Union Light, Heat and Power Co. and Lawrenceburg Gas Co. Faced with combining the operations of the merged utility companies and preparing for a highly competitive deregulated business environment, Cinergy sought a business solution that would enhance customer service, reduce operations and maintenance costs, and improve the productivity and effectiveness of its work force.
The solution began to take shape with a mission-critical application initiative called the Energy Delivery Systems Integration Program (EDSIP) for Cinergy's U.S. operations. To implement EDSIP, Cinergy hired Convergent Group (Greenwood Village, Colorado, U.S.), one of the most experienced systems-integration companies in the country with an expertise in energy-delivery operations.
EDSIP was designed to support streamlined post-merger work processes and to integrate and consolidate more than 40 previously disparate information systems used by Cinergy's Energy Delivery business unit. The 40-plus systems were consolidated into five.
As Cinergy developed the vision and strategic plan for EDSIP, Convergent Group conducted a needs analysis and technical gap analysis, and developed and deployed a technology-implementation plan. The first phase of EDSIP was successfully completed in 1998 and, as a result, Cinergy contracted with Convergent Group to create a strategic technology-deployment plan to help the energy company compete effectively on the Internet and in the deregulated utility economy. This will enable Cinergy to develop scalable e-business applications to respond to rapid business changes over the next two to five years.
Cinergy had developed a vision for a 21st century energy company and had taken concrete steps to implement its transformation plan. The company was positioned at the end of the last century to be a leader in the new economy.
Today and the Future
To kick off the millennium, Cinergy Chairman and CEO James Rogers challenged the energy company's employees. Can we:
Create a new e-economy business model?
Harness the explosion of new technology?
The answer he heard was a resounding “yes.”
Cinergy is preparing to integrate the Internet into its business strategy with the launch of Convergent Group's Digital Utility in early 2002. The Digital Utility umbrella (Fig. 1) encompasses three business initiatives: creating an energy portal, developing customer-facing e-business applications, and leveraging the benefits of an extensive energy-distribution-integration program begun in 1998.
To provide focus, a team of Cinergy and Convergent Group employees manages each of the initiatives.
The Digital Utility
The Digital Utility is distinctive because, using a variety of e-business applications, customers and business partners communicate directly with Cinergy's back office and energy-delivery systems. Unlike systems that encourage customers to generate e-mail requests that ultimately must be reentered by customer service representatives (CSRs), Cinergy will connect customers to operating systems in real time.
Four components create and define Cinergy's Digital Utility functionality: the energy portal, e-business applications, blended media contact center and EDSIP (Fig. 2).
The energy portal will serve as Cinergy's “front door.” Via the portal, customers using the Internet can enter the regulated utility where e-business applications provide rich information content and the opportunity to schedule services and perform transactions. Alternately, from the same entry point, customers can select from a variety of unregulated products and services.
The blended media contact center integrates, routes and manages all contacts, regardless of which channel the customer chooses. EDSIP supplies the operating data that e-business applications translate into meaningful information for customers.
EDSIP is the foundation of the Digital Utility. The 44 previously disparate systems were consolidated into five that provide an integrated approach (Figs. 3, 4 and 5) to:
Resource optimization and mobile dispatch
Graphical information, facility data maintenance, energy-delivery asset-system reporting, design tool and graphical design.
In addition to enabling the underlying data for the e-business applications, EDSIP provides business benefits related to improved service reliability and delivery, an optimized work force, and reduced operations and maintenance costs.
The energy portal provides Web-enabled opportunities to purchase energy online, conduct price discovery and select from an array of innovative products and services provided by Cinergy or its business partners. In the future, the portal will allow customers to view online energy-consumption histories and load profiles, or to use the Internet to explore energy-management opportunities and real-time pricing options. Ultimately, the portal will provide the broadest venue for future energy services provided to a borderless service territory.
Blended Media Contact Center
At the heart of customer interaction is a blended media contact center that handles customer communications via phone, fax, voice response or Internet functionalities, such as live chat, frequently asked questions (FAQs) or directed browsing. The center's contact management/customer relationship management (CRM) system routes and manages all customer interactions, regardless of which communication channel is used. Contact management provides a central data repository that remembers each customer interaction and reminds CSRs of the subject of all recent contacts.
The system helps script CSR responses with the use of FAQs and drop-down menus. Multiple screen functionality allows the CSR and the customer to view the same page simultaneously. With directed browsing, the CSR can work interactively with the customer to complete a form. The content management system also tracks each time the customer seeks help or abandons a transaction. With that data, Cinergy will be able to improve its e-business applications based on continuous customer feedback.
In addition, the system's CRM capabilities capture information for feedback messages and targeted marketing. Service metrics are collected and fed into intranet decision tools to drive operating improvements.
The e-business applications rely on the EDSIP backbone to handle utility transactions. The applications are presented in a customer-friendly format (Figs. 6 through 9). Careful behind-the-scenes programming translates EDSIP's operating data into customer-usable information. Finally, testing by both novices and experienced Internet surfers determines which wording and navigation instructions are easiest to use.
What is the real-life impact of the e-business applications?
Service can be scheduled on the Web in customer time, not utility time.
Monthly data from hard-to-read meters (35% of all Cincinnati meters are inside) can be entered directly into the billing system.
Addresses, telephone numbers and employers can be updated.
Budget and electronic billing options can be explored and ordered.
Bills in HTML format can be delivered directly to the customer's e-mail account.
Multiple accounts can be summarized on one report for landlords or business owners.
Customers can access payment information, such as account balance and status, last payment and next due date. Rate analysis, estimated billing and real-time billing options can be added in the future.
Outages or electric trouble can be reported via the Internet.
Developers or builders can check the status of their specific construction projects through a customized list. They'll know whether the project is being designed, estimated or built, as well as the planned completion date. Future functionality can be added to allow a builder or developer to create the preliminary design, submit a digital site plan and receive the approved cost estimate and meter location — all online and without a long wait.
The Digital Utility enhances Cinergy's customer focus, improves customer service and reduces costs. The customer gains easier access via new channels, and rapid content-rich information and control of scheduling. The Digital Utility also provides differentiation that strengthens loyalty and limits costly churn.
The Digital Utility improves operational efficiency and savings, and therefore, makes good economic sense. Cinergy will realize major productivity gains and cost reductions in a variety of areas. For example, the end-to-end automated process allows a customer to schedule an appointment online, then moves that appointment directly to the resource allocation/computer-aided dispatch program. It is then printed on the service worker's laptop computer, reducing costs and eliminating handoffs.
The blended media contact center pays strong financial dividends. Research firm E Source estimates that a call to a service representative costs US$5 to $7, while an e-mail message costs 10 to 50 cents. Live chat falls between the two extremes with costs estimated at US$2.50 to $4. E Source projects that 30% of contact center traffic will shift to the Internet in the next five years.
Lessons Learned — Tales from the Trenches
With a business transformation as thorough as Cinergy's, a well-integrated project team and project plan are crucial to ultimate success. This would include business stakeholders, external solution partners, and internal IT systems and staff. The goal here is management of expectations, the time line and budget, and overall communications. Effective integration helps guarantee that all affected stakeholders are on the same page and know what to expect as the project unfolds.
Be prepared for “change overload.” Employees, partners and customers who have weathered a business merger may feel the impact of new technology is the last straw. Getting all user communities involved at the start will encourage acceptance of change. Well-defined and agreed upon processes for operational testing, training and acceptance are necessary.
Better-informed customers expect more. Employees must keep appointments. Employees need to provide consistent, accurate and timely information. CSRs are expected to use new channels of communication effectively. Operating personnel need to update information as frequently as possible.
Remember, the user community expands from hundreds of employees to thousands of customers.
Clearly, Cinergy has met the challenge from its chairman and CEO. As a first mover, it has created a new energy economy business model by integrating Web applications broadly into its strategy. It's also harnessed and leveraged new technology to define what it means to be an electric Digital Utility.
Greg Ficke is vice president and CIO of Regulated Businesses (RBBU) for Cinergy Corp. In his current role as CIO, Ficke is responsible for the RBBU information technology organization, as well as ongoing system development projects at Cinergy, including the Digital Utility eBusiness applications project, which was initiated by Convergent Group. Ficke has an engineering degree from Ohio State, the MBA degree from the University of Cincinnati and a law degree from the Chase College of Law at Northern Kentucky University. He is a registered professional engineer and a member of the Ohio State Bar Association.