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Energy & Utilities: Deregulation, Record Demand, And High Prices Challenge Utilities

Web services, CRM, and BI tools are helping companies improve customer service and roll out new products and services.

Record heat waves, blackouts that hit both coasts, excessive demand for electricity, and rising prices for oil and natural gas have made this a rough year for energy companies and utilities. They're turning to technologies such as Web services, CRM, and business intelligence tools to better understand their customers, improve service, and roll out new products and services.

Regulatory shackles also are being relaxed, which is spurring a wave of mergers and acquisitions. How well companies use technology to get an edge on their competitors may help determine the industry's winners and losers.

While IT investment as a percentage of revenue slipped to 2.1% from 2.5% last year, 60% of the energy and utility execs surveyed by InformationWeek say they expect to increase their IT spending, with a focus on boosting operational efficiency and developing more effective field service. And to unleash data hidden in legacy applications, 60% have widely deployed business intelligence tools, and 70% have widely deployed Web services.

A key effort is to manage power usage, rather than just deliver it, using technology such as smart meters, which provide information on when energy is being used. With that data, energy providers can work with customers to reduce power usage during peak times when prices are highest. Air conditioners, for example, could be turned down a few degrees during the hottest times of the day.

At No. 8, Xcel Energy is ranked highest among InformationWeek 500 energy and utility companies.

Budget Breakdown

Tech Innovation

Inside Energy & Utilities
2.1% of Industry's Annual Revenue Devoted to IT
34% of IT Budget Devoted to New Projects
60% of Companies Expecting 2006 IT Spending to Exceed 2005

Business Change
25% Creating New Products/Services for Customers in 2006
45% with Global Supply Chain
35% Deploying Business Intelligence Tools to Raise Productivity

Return to the 2006 InformationWeek 500 homepage

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