Sept. 11, 2000

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Seizing Opportunity To Grow Markets

By Martin J. Garvey

on't tell Reliant Energy Co. that the 102-year-old utility can't compete in a deregulated industry. The Houston company topped the InformationWeek 500 list for utilities because it's charging ahead with Internet efforts that enhance customer relationships and promote stockholder value.

In this new competitive era, IT executives working for utilities need to do more than merely keep the power on. They also need to be prepared to seize new opportunities that appear in the Internet-driven economy.

"The pace of change has gone up in the past 12 months and the number of meetings with outside or internal sources has gone up," says VP for E-business Brian Landrum. One reason: the availability of new funding for the industry that has been attracted by consolidation, the Internet, and deregulation.

However, those same factors have increased the number of variables and create a lot of uncertainty when determining what will generate profits. "We must understand the drivers and screen things out that aren't drivers," Landrum says. "That allows us to understand the trigger points and know when to change direction."

Some of those drivers include the utility industry's online procurement exchange, online customer-relationship management, and the growth in online home services other than power.

Last spring, Reliant and a consortium of 20 other North American energy and utility companies formed Pantellos Corp. to create and operate by year's end an open, independent Internet marketplace for the purchase of nonfuel goods and services.

Pantellos obtained $100 million from members to fund the development and creation of supply-chain systems and for continuing operations. Reliant is one of the companies that has an equity stake in the new company. Pantellos is working with Commerce One Inc., a leading supplier of E-commerce infrastructure systems. The business-to-business industry marketplace will operate as a single portal for purchasing anything from transformers and wire to turbines and equipment repairs. The goal is to make the $130 billion North American utility and energy-supply market more open and accessible to all participants. Any utility can join the exchange, and initial services will include online proposals, price quotes, and auctions. Reliant and other members say Pantellos should streamline the purchasing process, shorten buying cycles, and increase accessibility between buyers and sellers.

An industry marketplace will simplify procurement, as well as cut costs. "Hundreds of companies buy wires and poles, and if every one of them buys on their own, the supplier would have to create an interface with hundreds of implementations," says Landrum. "Ours is a good industry for this because we have a history of collaborating. The new part is the Internet."

Customer service is also important. Reliant hired application service provider EpicEdge to develop and host Reliant's online customer-service management system. EpicEdge is working with Reliant's E-business team to plan, build, and manage the system using applications from iPlanet, the Sun-Netscape alliance. EpicEdge will host the iPlanet applications in a data center equipped with Sun servers and network facilities able to handle high-volume, high-speed Internet traffic. Modules from iPlanet include BillerXpert, a billing and customer-care application that will let Reliant provide customer convenience, build loyalty, manage relationships, and generate new revenue opportunities.

"The Internet allows us lower costs to serve, acquire, and retain customers, and that becomes even more possible as broadband reaches the home," Landrum says. Online customer service provides a great opportunity for utilities. "The Internet is about the best technology to give one-to-one levels of customer service," he says. "The customers can tell us what they want and like."

The Internet also offers expansion opportunities. Reliant is developing a Web site called Guidestreet.com that will let residential customers access information on everything from home services, such as lawn care and housekeeping, to long-distance phone service and cable TV. There will be a utility section for electric and water services.

The site will include customer reviews and a facility for requesting services. "Customers view our brand as highly trusted and this is where people would like to see us," says Landrum. "A customer goes to the site, clicks on Lawn Care, and only the highest-rated providers come up."

Reliant also is developing online billing capabilities. "Our approach is to have a portfolio of many projects so we get better results than we would with one big play," says Landrum. "Add them up, and if two or three of them hit, we'll more than cover our investment."

Return to main story, "IT Helps Utilities Stay Competitive."

Illustration by Jeffrey Fisher

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