whitepaper How to evolve smart grid roll-outs into a smart customer experience Why centralized pricing and billing, dynamic customer communication and multichannel payment ’ create true business value for smart metering without revamping a utility’s CIS infrastructure. two The utility industry is on the verge of technological change with new technologies, new domains and new business models being introduced around smart metering and smart grid roll-outs. In addition regulatory, environmental and commercial factors have created a significant shift in focus in a once-monopolistic utility industry. Market deregulation and growing competition is one of the challenging factors for utilities that drive the adoption towards a more transparent and customer-centric approach to improve customer intimacy. Author: Olaf Vieselmann The introduction of smart metering and smar grid technology is one of the most disruptive changes to the utility industry. Utilities need to think beyond just providing energy to their customers. New technologies and infrastructures create opportunities to offer new products that change the way customers use services and interact with their utility companies. Providing tangible, visible, and direct benefits to consumers is key to exploiting new areas of business and operational efficiencies that are dependent upon customer intimacy. Contrary to the past approach of “siloed” software solutions and applications, utilities today are starting to look for future-proof best of breed solutions to solve pain points with their smart grid implementations and prepare for future areas of business, e.g. in Smart Homes, e-Mobility and renewables. Limiting the risk – Learning from other industries Scalability is imperative in a growing ecosystem that is strongly influenced by today’s digital economy. Telecom is a perfect example of how an three industry can grow from a few thousands of early adapting customers to multi millions of end customers demanding everything to be on their fingertips when they need it. So leveraging the experiences of other verticals is a must to prepare for growing and changing business needs. This is even more important as customers today expect ways to manage things similarly across different areas of their digital life. Looking at the past decades in telecommunication, the challenges to this industry were quite similar to what utilities are facing today. Utility Engage with customers in real-time Utilize the smart grid data Create flexible tariffs and bundles Prepaid and hybrid offers – new segments Telecom Transparency and enhanced self-service Managing the 3G / LTE data networks Competition on offers and promotions Prepaid offers with centralized charging Different industries – similar opportunities four The move in telecom to software defined networks using virtualization technologies and the cloud is a great example of how an industry develops and increases efficiency by moving into an IT based future. It is a tremendous shift in paradigm for utilities to grow into a more IT driven architecture that consolidates and virtualizes systems and infrastructure but also a must to find fast, flexible, and efficient ways of addressing continuous changing business challenges. transparency smart metering de-regulation budget control customer engagement smart payment revenue assurance smart grid new tariffs vending five What does this mean for the utilities billing environment? Imagine every mobile user would have his own decentralized rating and billing on his mobile especially when running on prepaid the telecommunication business would never be able to grow by multi millions of subscribers each year following this approach. Fraud rates would skyrocket if all charging related parameters were “on device”. So the question is if a highly distributed AMI infrastructure with decentralized meter based intelligence is a future proof approach to cope with growing complexity in a smart grid. Lean smart metering with centralized pricing and billing Upgrading or replacing existing customer information systems are long term investments and business critical projects incorporating technological and financial risks. Industries such as telecommunication have proven successfully that a “best of breed” strategy can help to limit the risks and efforts. Implementing a smart rating and flexible pricing engine, closely integrated with customer communication channels, helps to boost the business agility without renewing the whole billing and CIS landscape. There is no need to decide on hardware technology today that will sit on customer side for decades. Managing all intelligence centrally means to keep one system up to date instead of thousands or millions of meters installed on site and being delivered by various vendors. six Billing Real-time pricing Dynamic rate plans Metering Selling Thin Smart Meters New tariffs Vendor agnostic Bundles and promotions Prepaid, Postpaid, Hybrid Prepayment Engagement Real-time notifications Recommendations Offers Adding a flexible vending and payment infrastructure closes the loop at the important sales touch points. Especially for prepaid scenarios, add on solutions require only a limited number of interfaces and interaction points to the existing infrastructure and keep event driven processing separated from the established billing and backend environment. A deeper integration of systems remains an optional future step. Business validation is key! Utility companies need to validate if new concepts of e.g. energy pricing will meet customer needs and expectations before rolling out meters and systems at large scale. Pilots and field tests need to seven prove the business cases, check technological aspects and help to evaluate compliance to legal and regulatory conditions. Nevertheless, pilotrelated costs and efforts easily exceed budgets and available resources. That’s why innovative and efficient architectures need to be considered to streamline efforts and keep a pilot set up lean. Hosting of systems and managed services are established IT solutions to reduce the total cost of ownership. Following an IT based centralized architecture will prepare utility companies for the efficient use of this technology in pilots and start-up phases as well as in a full scale system operation. Adding billing capabilities to new business models The utility industry is traditionally a hardware driven business characterized by long investment cycles for generation sites and network infrastructure. Well proven technology decisions have to limit the risk that comes with huge investments in these areas. Future proof architectures and systems are an imperative to this. In a centralized system design for smart metering using a thin meter infrastructure, the business model is no longer a question of hardware and meters. Launching a prepaid energy offering, for example, is simply a new type of payment model the customer can select. No need to send out workforce to change meters, no additional hardware investment – just assigning a new tariff in the billing and the customer migration is done. It becomes a question of minutes in a centralized billing infrastructure that is designed around an IT based pricing and billing. eight “Prepaid becomes a true payment option with budget control instead of a penalty for bad dept customers. A new level of flexibility can be achieved when keeping tariffs, configurations and pricing centralized and close to the IT back office. Customers expect changes to their products and services to be applied instantly and maybe with the option to go back after a period of trial. Being able to offer this kind of customer orientation fuels acceptance of new offers and cross-promotions of add-on services. Selecting the customer, changing his payment settings to prepaid – “save and close” - and a former postpaid customer becomes prepaid without touching the field. Next to the customer experience side of flexible tariffs, this opens up new options for utilities to introduce an enhanced revenue collection and to reduce bad debt. All tariffs available for postpaid customers can be continued in a prepaid service. This is an additional and essential element in changing the market perception of prepaid energy. Prepaid becomes a true payment option with budget control instead of a penalty for bad debt customers. All this based on a lean thin meter infrastructure that limits investment and improves the return on invest. Engaging with customers in time Utilities are urgently looking for a valid business case when rolling out the smart grid and AMI infrastructure. Often pushed by regulatory bodies, smart metering is rolled out and the related infrastructure is build up. In the end, interval metering data is aggregated and shown once a month to end customers. “ nine ten The true potential an intelligent smart grid can deliver goes far beyond this. Closing the loop to customers delivers the ground for budget control, more dynamic tariffs, and new services, bundles and promotions. Showing customers actual and timely data is a must to get connected. To create positive energy experience consumption data and cost transparency must be linked to the customer behavior. Being instantly informed via mobile devices, a web portal or a home display is what attracts people’s attention. The customer’s interest will decrease when tons of kWh meter reads are shown in portals, detailed charts are created without putting this into context and making it meaningful to the customer: It is about talking the customers’ language! The question is how utility companies can transform their current technology driven organization into a customer centric business that is able to meet customers’ expectations. Customers need to see the benefits. But is a small statistic on my bill which has been sent to me weeks after the usage took place a real benefit? Customers need relevant and understandable information instantly delivered that gives them the opportunity to react. Energy is not as appealing as Facebook or Twitter. In order to target customers, instant information enhanced by recommendations and predictions are essential. eleven On top of this, engagement with customers is not a one way street. It is not only about informing, providing information or notifications. A two way communication with customers is giving them the possibility to interact. React to changing tariffs, special promotions or low balance warnings in case they are in a prepaid model. It is about the possibility of opting in, choosing a tariff or refilling a prepaid account – it is about selling and vending. Full support of vending via several channels is a must for closing the loop of billing, engagement and the ability to interact successfully. Benefits of an advanced utility billing Flexibility Tariff flexibility – prepaid, postpaid and dynamic tariff plans Utilizing multichannel payment – making prepaid energy a real alternative Customer interaction – based on timely, relevant and context related information Cost Savings Utilize the smart grid data with instant event processing Utilizing smart metering infrastructure and create added value Future proof Customer engagement – multichannel and on time Evolve from AMI to smart customer engagement Close loop to create an end to end application view – without touching the CIS Less risk Centralized architectures – utilize the installed meter base Deploying an adjunct solution – no need to replace CIS Talking the customers’ language – cost, days, benefits and added value twelve For 20+ years, Orga Systems’ portfolio of real time products and consulting services has been designed for living in a connected world. Scalable architecture, outstanding performance, lowest rating latency and consequent customer-centricity ensure reliable access to any kind of cross vertical NG services for 400+M subscribers in Africa, Americas, Asia and Europe. Worldwide 40+ telecommunications providers, energy suppliers, car manufacturers, automotive and logistics companies rely on Orga Systems and achieve reduced OPEX, real time-to-market, shorttermed ROI as well as beneficial access to new value chains and profitable M2M revenue streams. Take the shortcut to monetize the digital life in real time: www.orga-systems.com contact details: [email protected] Follow us on Linkedln | Facebook | YouTube | Twitter