Software-as-a-service solutions have witnessed significant growth over the last five to seven years, as cloud computing providers such as Amazon Web Services and Microsoft have emerged as market mainstays, veterans such as Salesforce continue to capture increasing market share, and traditional on-premise providers such as Oracle and Cisco make strategic acquisitions to bolster their cloud strategy. 

The utility sector may have been slower to adopt cloud-based solutions than other sectors, but two recent reports from Navigant Research and IDC Energy Insights show that they’re not far behind. The surveys covered utility executives in both North American investor-owned utility and competitive retailer markets abroad. They centered on utility customer engagement capabilities, specifically what capabilities utility executives feel they need to succeed in today’s rapidly evolving energy landscape, and how confident they are in their ability to perform them.

The resounding response across both markets is an acknowledgement that utilities have to work on customer engagement. Less than 30 percent of respondents said that they are "very confident" in any of the 15 capabilities. What’s more, some utilities are least confident in areas deemed most important, such as cross-channel consistency and customer analytics.

To bridge their customer engagement “capabilities gap,” utility executives are deploying near-term IT investment strategies with a growing focus on advanced solutions that complement their existing customer service tools, most notably the customer information system (CIS). In both surveys, over two-thirds of respondents indicated their largest IT investments in the next three years will include technologies outside of the CIS, with nearly three-quarters of respondents saying they are either using or are interested in making these investments in cloud-based software-as-a-service (SaaS) solutions.

With so much pent-up demand for cloud-based software, it’s surprising that investment has been slow to take off. But most regulatory models favor on-premise software investments by allowing utilities to collect a rate of return on software license fees. Regulators are now catching on to the customer benefits of cloud-based software, and looking to level the playing field. 

The growing focus on third-party managed cloud solutions represents a significant industry shift for the utility sector, and is expanding utilities’ customer engagement capabilities well beyond the CIS. Utilities now need advanced capabilities -- including segmentation and personalized content, and proactive alerts and notifications -- to meet customer needs and address the convergence of widespread trends such as rising customer expectations, the proliferation of distributed energy resources, increasing regulatory mandates, and growing competition. 

Becoming more customer-centric has translated to placing customer satisfaction and reduced cost to serve at the top of the list for utilities executives’ customer-service business goals, with over 50 percent of respondents in both surveys ranking them their highest priorities. These executives are placing their bets on advanced customer engagement capabilities as the key to achieving their goals in this evolving market.

So how can cloud-based SaaS solutions improve customer service and cost-effectiveness?

They provide utilities with the flexible and agile tools they need to quickly address their critical customer engagement gaps, while avoiding a costly, resource-intensive CIS replacement.

Many forward-thinking utilities are now pairing their CIS with next-generation customer engagement tools that enable personalized cross-channel experiences and maximize the value of each customer touchpoint. This includes investing in their website to improve the digital experience and increase self-service levels, while also equipping account management and customer service representatives with advanced analytics tools to better proactively and reactively serve their customers. For example, customer service representatives can be armed with advanced CSR applications to help them better dissect the drivers of a high bill, improving key call-center metrics while enhancing the experience for customers.

Industry leaders such as Exelon Utilities are doubling down on this approach and placing customer choice at the forefront of their service strategy. And recent results from JD Power suggest this holistic customer engagement approach will pay significant dividends.

This trend in the utility sector is a growing indication there is more than just silver lining in the cloud: Utilities will find a significant competitive advantage that will position them for long-term success. 


Eric Gargiulo is a product analyst for FirstFuel Software.