IT spending by utility companies in the UK is expected to
drop slightly in 2004 to £2.3bn from last year's £2.4bn, according
to the latest Computer Weekly IT Expenditure Report, produced by
Kew Associates.
Much of the spending within the sector, which covers electricity,
oil, water, gas and nuclear fuels companies, is expected to focus
on IT services, which is expected to rise by 6% to £1.01bn, from
2003's £956m.
This increase would follow the trend of recent years, which has
seen large numbers of utility companies using consultants and
systems integrators to manage parts of their IT
infrastructure.
A study by AMR Research, conducted last year, revealed that 70% of
global energy companies outsourced IT services in 2003 in areas
such as application development and management and back-office
operations such as payment processing.
Some utility companies have also considered outsourcing their
customer service functions, but most will decide that it is too
important to leave to a third party, said AMR analyst Jill
Feblowitz.
"Most customer enquiries are too complex to be effectively
outsourced," she said. "Although there may be a few energy
companies that will take the bait and sign on for business process
outsourcing for customer care, we expect these companies to return
in-house in a couple of years."
In a climate where regulatory pressure and increased competition
require utility IT directors to improve customer services while
keeping costs low, many companies are putting customer-related
processes, such as billing, online.
Last November, British Gas began e-mailing bills to customers in
the first stage of the company's ambitious plan to bill one million
customers online by 2005.
Companies such as British Gas, which sends out more than 70 million
paper bills every year, will be able to boost customer service as
well as cut costs and increase internal efficiency by using
e-billing, said Avivah Litam, an analyst at Gartner.
"Internet billing and payment reduces costs and drives economies
and savings to the bottom line," she said. "However, by looking at
only cost savings, a biller can forget that e-billing generates
business value by enabling a company to deliver superior and
efficient customer service."
Other utility companies are using online systems internally to
improve customer service and efficiency, with some achieving
impressive returns on investment.
Last month, Computer Weekly reported that Scottish Water had saved
£18m in 12 months after rolling out a £7m online customer service
system from Oracle in conjunction with 200 Panasonic laptops for
field staff.
As well as improving the ratio of customer calls resolved first
time, the Oracle's E-Business Suite system improved productivity
with field staff carrying out 11 jobs a day rather than five.