In the board game Monopoly, the utilities cards rank 10 out of 10 on the payoff list. The utilities industry is moving up toward Park Place in the game. In the real world, the industry is increasing innovation, effecting global markets, shareholder value, and delivering the home automation tools we have seen right out of Hollywood.
Historically, there has been a steady increase in the cost of utilities - electricity, natural gas and water, yet, in recent years, increases have become less “steady”. More significantly these less steady increases puts tremendous pressure on margins, as well as pressure on consumers who are still trying to stay afloat in a not-so-healthy economy. In an effort to transform itself, the industry is undergoing changes – changes that hope to bring about relief and ultimately help to improve business performance and shareholder value.
We have seen recent transformations in the way of technological innovations across the meter-to-cash (M2C) supply chain. These technological advances are being considered strategic game changers and run the gamut of smart metering and back end systems for data management to new security systems to protect the new network infrastructure. NOTE: [The M2C supply chain is defined by a set of business processes that span account creation and field installation to remote utility usage data to back end systems and then to billing, payment and credit/collections.]
Another game-changing transformation across the M2C lifecycle revolves around billing, payment, credit and collections, areas which contribute strategic value and significantly improve business performance.
Did you know that every year energy and utility companies write off millions in bad debt caused by customers who don't pay their bills? And guess what – according to some federal regulations, utilities often aren’t allowed to roll bad debts into the rate structure, which affects shareholder value, the balance sheet and credit rating.
Enter the need for robust and future-proof underlying business processes, particularly when it comes to the meter-to-cash (M2C) cycle. The tail end of the M2C cycle (Credit and Collections) can be as high as one to two percent of revenues according to a recent study by Everest Group. Being able to save revenues by optimizing M2C processes comes about by, and through the utilization of outsourced technology, a driving force behind utility companies looking at the tail end of the cycle as their new strategic advantage. By leveraging modern infrastructure with minimal upfront capital expenditures, Capgemini is a solid state partner with the utilities industry. In our partnerships, we are designing solutions which improve business processes throughout the M2C cycle, allowing utility companies to improve revenue realization leading to more generous margins in working capital optimization.
When we look at new smart metering technology deployments to smart home automation controls in this industry, we must also think about how to align processes such as billing, credit, collections and field service accordingly. Both ends of the M2C Process must be considered and aligned to achieve game-changing innovation and transformation as these next generation efficiencies require working capital performance.