Magic Quadrant for Utilities Customer Information Systems

Magic Quadrant for Utilities Customer Information Systems 9 June 2010 Zarko Sumic Gartner Industry Research Note G00200897

For buyers of customer care and billing solutions in the energy and utilities market, we map vendors' products for customer information systems.

What You Need to Know Gartner has covered customer information systems (CISs) since 2000 to address the needs of clients seeking solutions to improve meter-to-cash and customer service processes. We are updating "Magic Quadrant for Utilities Customer Information Systems" to reflect changes in customer buying criteria that have resulted from emerging business and regulatory trends, which have caused subsequent changes in vendor offerings. CIS products cover utility meter-to-cash business processes, with a level of functionality adequate for an integrated utility, and support customer service needs for utility companies operating in regulated markets. In contestable energy markets, CIS products also cover billing needs for network companies (focused on asset management) and retail/supplier companies (focused on customer management and commodity management). However, packaged CIS products are generally inadequate for the advanced customer-facing functions that competitive retailers need — functions such as customer retention, customer acquisition, campaign management and customer analytics. In competitive markets, therefore, retailers tend to supplement packaged CIS products with an add-on CRM solution. In the CIS market, vendors tend to focus on either: Unregulated markets, requiring higher billing complexity, high levels of data exchange with market operators and participants, enhanced marketing/analytical functionality and relatively low volume. Regulated markets that have lower billing complexity, address service order management and have a high volume of bills. Despite different vendor focus, customer care and billing solutions (also known as CIS) have not separated into different product sets. Rather than offering products designed to meet specific needs of companies that operate in regulated or competitive markets, vendors tend to

Vendors A dded or Dropped W e re vie w and adjust our inclusion crite ria for Ma gic Q ua drants a nd Mark e tScope s as m a rk e ts cha nge . As a re sult of the se adjustm e nts, the m ix of ve ndors in any Magic Q ua dra nt or Mark e tScope m a y cha nge ove r tim e . A ve ndor a ppe aring in a Ma gic Q ua drant or Mark e tScope one ye a r and not the ne x t doe s not ne ce ssa rily indicate tha t we have cha nge d our opinion of that ve ndor. This m ay be a re fle ction of a change in the m a rk e t and, therefore, change d e va luation crite ria, or a change of focus by a ve ndor. Evaluation Criteria Definitions

Ability to Execute Product/Service: Core goods and se rvice s offe re d by the ve ndor that com pe te in/se rve the de fine d m a rk e t. This include s curre nt product/se rvice capa bilitie s, quality, fe ature se ts, sk ills a nd so on, whe the r offe re d native ly or through O EM a gre e m e nts/pa rtne rships a s de fine d in the m a rk e t de finition a nd de ta ile d in the subcrite ria . Overall Viability (Business Unit, Financial, Strategy, Organization): Viability include s an a sse ssm e nt of the ove ra ll organization's fina ncia l he alth, the financial and practica l succe ss of the busine ss unit, and the lik e lihood of the individua l busine ss unit to continue inve sting in the product, to continue offe ring the product a nd to a dvance the state of the a rt within the organization's portfolio of products.

that operate in regulated or competitive markets, vendors tend to assemble a specific solution with add-on components to their basic customer care and billing offerings. Current CIS products support billing for multiple customer segments — for example, residential or large commercial and industrial customers — that were previously addressed with separate product-complex billing. Most leading vendors also support billing for multiple utility services, as well as metered and unmetered services/products. From the IT application portfolio perspective, CIS represents a core investment focused on supporting a "run the business" strategy. As the largest ticket item among energy companies' IT applications (particularly for regulated utilities or competitive retailers), CIS can account for up to one-third of a utility CIO's IT application operations and maintenance budget. CISs tend to have long life expectancy. Therefore, when CIS users select technology partners, they must not only weigh criteria that will foster operational efficiency and cost reduction, but also weight vendor products to ensure they have the scalability and flexibility needed to accommodate changes in evolving retail markets. Vendors should also have long-term commitments to the energy utility sector and be able to make the necessary R&D investments to address emerging market needs through innovation. In regulated retail markets, utilities should look for: A solution that can minimize the cost of providing customer service — for customer care as well as meter-to-cash A CIS product's ability to provide end-to-end business process integration to achieve operational excellence by supporting service delivery optimization In contestable retail markets, utilities should remain focused on vendors that offer: Advanced analytical CRM capabilities — for example, churn and customer profitability analysis (CPA) Product extensions that facilitate interactions among retail market participants Global concerns about climate change and energy sustainability haven't missed the CIS market. Utilities should consider the ability of CIS products to address environmental concerns by: Enabling marketing, selling "green" products and managing energyefficiency campaigns Handling the large volumes of metering data required to support energy efficiency, economic demand-response programs, and consumer-deployed renewable generation through "time of use" billing and "feed-in tariffs" Additionally, CIS vendors must demonstrate the ability to address new requirements that are emerging as the result of the transformation of the energy-provisioning models globally. Return to Top

Magic Quadrant Figure 1. Magic Quadrant for Utilities Customer Information Systems

Sales Execution/Pricing: The ve ndor’s capa bilitie s in all pre -sale s activitie s a nd the structure that supports the m . This include s de a l m a nage m e nt, pricing a nd ne gotiation, pre -sale s support and the o ve ra ll e ffe ctive ne ss of the sale s channe l. Market Responsiveness and Track Record: Ability to re spond, change dire ction, be fle x ible and achie ve com pe titive succe ss a s o pportunitie s de ve lop, com pe titors act, custom e r ne e ds e volve a nd m a rk e t dynam ics change . This crite rion also conside rs the ve ndor's history of re sponsive ne ss. Marketing Execution: The cla rity, qua lity, creativity and efficacy of program s de signe d to de live r the o rganization's m e ssage to influe nce the m a rk e t, prom ote the brand a nd busine ss, incre ase awa re ne ss of the products, a nd e stablish a positive ide ntifica tion with the product/brand and organization in the m inds of buye rs. This "m ind share " can be drive n by a com bination of publicity, prom otional, thought le a de rship, wordof-m outh and sa le s a ctivitie s. Customer Experience: R e lationships, products and se rvice s/progra m s that e nable clie nts to be succe ssful with the products e va luate d. Spe cifica lly, this include s the ways custom e rs re ce ive te chnical support or a ccount support. This can also include ancillary tools, custom e r support program s (and the quality there of), availability of user groups, se rvice-le ve l agre em ents and so on. Operations: The ability of the orga niza tion to m e e t its goals and com m itm e nts. Fa ctors include the quality of the organizational structure including sk ills, e x pe rie nce s, program s, syste m s a nd othe r ve hicle s that e nable the o rga niza tion to o pe ra te e ffe ctive ly a nd e fficie ntly on an ongoing basis.

Completeness of Vision Market Understanding: Ability of the ve ndor to unde rstand buye rs' wants a nd ne e ds and to tra nsla te those into products and se rvice s. Ve ndors that show the highe st de gre e of vision liste n and unde rsta nd buye rs' wants and ne e ds, a nd can sha pe o r e nhance those with the ir adde d vision. Marketing Strategy: A cle ar, diffe re ntiate d se t of m e ssage s consiste ntly com m unicate d throughout the o rganiza tion a nd e x te rna lize d through the we bsite , adve rtising, custom er program s a nd positioning state m e nts. Sales Strategy: The strate gy for se lling product that use s the appropriate ne twork of dire ct and indire ct sale s, m ark e ting, se rvice and com m unication a ffilia te s tha t e x te nd the scope a nd de pth of m ark e t re ach, sk ills, e x pe rtise , te chnologie s, se rvice s a nd the custom e r base . Offering (Product) Strategy: The ve ndor's approach to product de ve lopm e nt and de live ry tha t e m phasize s diffe re ntiation, functiona lity, m e thodology and fe a ture se t as they

m ap to curre nt a nd future re quire m e nts. Business Model: The soundne ss a nd logic of the ve ndor's unde rlying busine ss proposition. Vertical/Industry Strategy: The ve ndor's stra te gy to dire ct re source s, sk ills and offe rings to m e e t the spe cific ne e ds of individua l m ark e t se gm e nts, including ve rticals. Innovation: Dire ct, re late d, com ple m e nta ry a nd syne rgistic la youts of re source s, e x pe rtise or capital for inve stm e nt, consolida tion, de fe nsive or pre -e m ptive purpose s. Geographic Strategy: The ve ndor's strate gy to dire ct re source s, sk ills and offe rings to m e e t the spe cific ne e ds of ge ographie s outside the "hom e " or native ge ography, e ithe r dire ctly or through partne rs, cha nne ls a nd subsidiarie s as a ppropria te for that ge ography a nd m ark e t.

Source: Gartner (June 2010) Return to Top

Market Overview CIS Market Evolution Traditionally, utilities' customer care and billing solutions were provided by system integrators that created a custom-made product at a particular engagement and then took it to the next assignment as a starting point. The product evolved from an engagement to an engagement-creating leveraged product offering. During the mid-1980s and mid-1990s, that resulted in a prevalence of system integrator (SI)developed custom "one-off" CIS solutions that were either "metercentric" or later on "account-centric." Retail market restructuring activities in the late 1990s created a need for "customer-focused" CIS. That was compounded by Y2K concerns that created a surge of legacy CIS replacements. The new need for CIS to act as enabler of the contestable retail market elevated CIS products from the "run the business" portion of the IT application portfolio to the "grow the business" or even the "transform the business" segment, which gave rise to CIS's visibility and importance. Increased demand and investment levels attracted a host of product venders into the utility billing market, fostering market development and consequent maturation of the CIS products. That ultimately resulted in what is now a mature replacement market with numerous players offering commercial off-theshelf (COTS) CIS software products. Following the downturn of the market and restructuring in the U.S. (originally the largest CIS market segment), and after almost a decade of preparation for retail competition in the European Union (EU; where most utilities have updated their customer care and billing platforms with COTS CIS products), the majority of the global energy market CIS products have gone back into the "run the business" portion of the utility portfolio. Consequently, utilities have reverted back to looking for a solution to improve operational efficiency and reduce customer service cost. There are two exceptions. One is the Asia/Pacific market, which is undergoing liberalization and contestability, and still has not achieved the same CIS COTS level of saturation as have EU member countries. The other is the Eastern European energy market, which is still ripe for introduction of the best practices and automation through new CIS COTS products.

Despite the current focus on reducing the cost of customer service (and the potential benefits of "replatforming" legacy billing and customer care solutions with COTS CIS products), utilities operating in the regulated retail environment still struggle to justify costly CIS replacements. The relatively low level of replacement activities has been reported by most of the vendors, in particular those focused on North America's Tier 1 utility market. Although this can be partly attributed to the economic crisis, there is another key factor emerging that will shape the CIS market in the long run, though it may have initially acted as a demand suppressant. That factor is the smart grid. Implications of the Smart Grid on the Utility CIS Market The increased emphasis on energy sustainability and security of supply — and the resulting focus on smart grid and advanced metering infrastructure (AMI) — has made an impact on the CIS market. One of the key requirements of smart grid is to integrate consumers into energy markets, and enable better asset utilization and more-efficient energy use through programs such as economic demand response. CIS has a major role in enabling those functions through its ability to deal with new billing requirements. Such requirements include decoupling of commodity and distribution charges, time of use (TOU), feed-in tariffs (FITs), critical peak pricing (CPP) and interval billing for residential customers. In addition, CIS should be able to address the need for different billing paradigms, such as one required through the introduction of plug-in hybrid electric vehicles. The mandatory rollout of energy efficiency programs in some jurisdictions also poses new requirements, such as the ability to track customer participation in demand-response programs and energy efficiency offerings. An additional requirement emerging in markets focused on AMI deployment is integration with AMI to support processes such as out-ofservice meter reads, credit collection enforcement through remote turn on/turn off and enabling a prepayment function through AMI. Legacy systems are unable to meet many of these requirements and are often perceived as barriers to attaining benefits from AMI and smart grid investments. Furthermore, scalability and performance requirements arising from the increased volume of metering data are introducing even more requirements that legacy CISs cannot address. Thus, smart-gridrelated initiatives (in particular, AMI deployment) should have a positive impact on legacy system replacement and increased demand in the CIS market. In addition to these requirements, which act as CIS replacement accelerators, there are new forces put in motion by smart grid initiatives that have the opposite effect. The common premise in all jurisdictions focused on addressing energy sustainability concerns through smart grid initiatives is to achieve consumption reduction that utilities need to provide customers with more frequent (in some cases up-to-date) feedback on their energy consumption/costs. Several approaches are currently under consideration to address that need: The distributed model — providing energy cost calculation locally via customer gateways, in-home display or home energy management (HEM) systems (based on a utility-provided pricing signal) The hybrid model — using a rating/consumption cost engine built outside of CIS on top of the MDM as a meter data repository The centralized model — leveraging the rating engine of a CIS as the central billing system The prevalence of interval metering will enable changes to the traditional "batch process billing" into an "incremental billing" model, where status of the account can be updated incrementally after every metering interval. This billing model — also known as "event billing" or "real-time billing" — is akin to how rating engines operate (incrementing account status after every transaction) in some other markets, in particular the telecom market. Leveraging CIS to support more-frequent consumption

g g pp q p calculations, will require significant rearchitecting of the billing engines that are currently optimized for monthly batch processing. The new rating paradigm naturally has attracted vendors from markets that employ incremental billing (real-time billing) such as Convergys, which has already entered the market through a deal with Duke Energy. Their key value proposition is that the architecture of their products makes them better positioned for emerging utility billing market needs than cycle-based billing engines provide by current COTS CIS vendors. This is not the first time telco billing vendors have tried to enter the utility billing space. During the heyday of retail market restructuring in North America, numerous telco vendors tried unsuccessfully to enter the utility market, but failed — mostly due to the inability to address specific vertical requirement such as variable jurisdictional rules for flexible payment plans, sensitive load customers, estimation techniques and different product dimensions. Neither incumbent utility CIS solution vendors nor telco vendors at this point have product able to meet the billing needs of the future. CIS vendors will be challenged to rearchitect their products or address the issue through acquisition of add-on billing engines (such as SAP Convergent Billing based on Highdeal's solution). Niche vendors in particular will be challenged, and may decide to focus on particular market segments or geographies, because many of them will not be able to afford the R&D investment required for such an effort. New entrants, on the other hand, will be challenged to address specific market needs, which previous telco vendor experience demonstrates is not trivial. So the race is on, and although needs are not imminent, buyers are sitting on the fence trying to ascertain which solution will emerge the winner in the race to be a provider of the future billing and consumption calculation engines. The following observations summarize CIS market dynamics since Gartner published the most recent CIS Magic Quadrant in 2009: The CIS market continues to bifurcate into two product clusters. Two products that are part of the large enterprise application providers' vertical offerings (SAP IS-U/CR&B for Utilities and Oracle Utilities CC&B) have achieved a leadership position and continue to break apart from the rest, while all others are trailing behind. The niche vendors are falling behind — not primarily based on the lack of functionality or inferior product quality; rather, their positions are a consequence of lower corporate and product viability. Niche vendors tend to have small market share, and their maintenance and support (M&S) revenue from the installed base does not allow for adequate R&D investment to address emerging needs. As a result, in the long run, they will functionally fall behind and will not be able to address emerging customer care and billing market needs. Niche vendors tend to have a regional market focus, so most of the vendors — such as EG Utility (formerly EDB Gruppen), Gruppo Engineering and Ferranti Computer Systems — lack marketing activities or implementation partners outside their native markets. Niche vendors continue to struggle with getting new contracts. Some of these previously analyzed vendors no longer even meet our Magic Quadrant inclusion criteria. Return to Top

Market Definition/Description The Gartner Magic Quadrant concept is based on a customer-oriented market analysis. Consistent with the approach espoused by business author Geoffrey Moore, a market is "a set of actual or potential customers for a given set of products or services who have a common

g p set of needs or wants, and who reference each other when making a decision." Accordingly, the CIS market is composed of utility companies looking for COTS software packages (commonly known as CIS) that address business-critical utility M2C and customer care business processes. The CIS products cover two core utility life cycle processing areas — revenue management and customer management. They reach into two additional areas — commodity management and service delivery management. The CIS functional "footprint" primarily covers the operational functions of CRM: Account maintenance Order processing Product/service management Rate design Billing Credit collection Accounts receivable Statementing Payment processing Customer interaction functionality supports call center and customer self-service needs. Depending on the vendor's retail market focus — that is, competitive or regulated markets — a CIS may include some analytical capabilities, such as customer churn and CPA, or it may have more emphasis on customer service delivery, such as scheduling and service optimization. In a competitive market, a CIS product also needs to enable data exchanges with other market participants (network companies, competitive retailers/suppliers and/or market operators). Return to Top

Inclusion and Exclusion Criteria To be included in this category, software products must cater to the majority of the functional requirements outlined in this Magic Quadrant. The software products evaluated are all marketed as stand-alone customer care and billing solutions. To be considered in this market, vendors must be able to address global market needs, as well as the needs of the regulated and contestable retail markets. Worldwide, there are more than 200 vendors that address utilities' needs for customer care and billing through a variety of product/solution offerings. Most of these are too small, in terms of company size or product scope, or have too small a geographic reach to be of interest to Gartner clients. For this reason, we evaluated only the top seven products that meet an estimated license fee revenue threshold (from new product sales) of $2 million generated during the past 12-month period. To be considered, vendors must have had systems in production at more than three utility clients. Return to Top

Added No new products were added in 2010. Convergys (with its Smart CIS product) was originally considered for inclusion in the 2010 CIS Magic Quadrant due to its ability to address the emerging requirement for "incremental or real-time billing" introduced by smart grid initiatives. However, the product was not in full production at the time of the evaluation and the vendor was dropped from consideration for not meeting revenue threshold requirements in the energy and utilities CIS market.

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Dropped Both of Hansen Technologies' products — HUB and Peace — and Ventyx's Customer Suite were dropped from consideration for this year's CIS Magic Quadrant because they did not meet the $2 million license fee threshold from new product sales. Return to Top

Evaluation Criteria Ability to Execute This axis evaluates CIS software application vendors on the quality and efficiency of the processes, systems, methods or procedures that enable their performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. For utilities seeking CIS software, a vendor's ability to execute is primarily a combination of factors driven by product functionality, architecture and performance, and the ability to meet customer expectations during product delivery and operation. Software application providers are judged on their ability and success in capitalizing on their vision. Our evaluation of a vendor's ability to execute is based on these criteria: Product — The breadth and availability of the vendor's products that compete in and serve the CIS market Overall viability — Product quality and consistency, as well as the vendor's financial strength, including the likelihood of the continued investment in CIS software for the energy and utility market and advancing the state of the art within the provider's portfolio of products Sales execution/pricing — Capabilities of presales structures and management activities, including pricing and negotiation, as well as the overall effectiveness of sales channels Market responsiveness and track record — Ability and responsiveness to meet changing market dynamics Market execution — Market share (and mind share) in the global enterprise market Customer experience — Ability to provide technical and relationship support and services that drive customer satisfaction Operations — Structure that is put in place to effectively meet organizational goals and commitments Table 1 lists the relative weighting of various criteria in terms of a vendor's ability to execute in this market. Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria

Weighting

Product/Service

High

Overall Viability (Business Unit, Financial, Strategy, Organization) High Sales Execution/Pricing

Standard

Market Responsiveness and Track Record

Standard

Marketing Execution

Standard

Customer Experience

Standard

Operations

Standard

Source: Gartner (June 2010)

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Completeness of Vision This axis evaluates CIS application vendors on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs and competitive forces, and how well they map to the Gartner position. CIS application providers are rated on their understanding of how market forces can be exploited to create opportunities for the provider. For utility companies seeking CIS COTS software, vendors' completeness of vision is primarily a combination of vendor domain expertise in different retail markets and customer segments, an appropriate go-to-market strategy, and focus on innovation in product functionality and enabling technology. Table 2 lists the relative weighting of various criteria with regard to the completeness of a vendor's vision in this market. Our evaluation of a vendor's completeness of vision is based on these criteria: Market understanding — Competitive position, market knowledge and mechanisms for customer feedback, combined with the ability to articulate market direction and aligned product direction Marketing strategy — Ability to articulate market direction and aligned product and service offering with market requirements Sales strategy — Ability to work with customers through its sales force and sales tools Offering (product) strategy — Strength of R&D, capability in product design and its ability to offer image stability Business model — Soundness and logic of the underlying business proposition Vertical/industry strategy — Ability to provide a vertical-specific product and service for market with a different level of contestability and serving different products (for example, electricity, gas and water) Innovation — Ability to have investment resources, expertise or capital for consolidation, defensive or pre-emptive purposes to address emerging market needs Geographic strategy — Ability to provide products and services globally Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria

Weighting

Market Understanding

Standard

Marketing Strategy

Standard

Sales Strategy

Low

Offering (Product) Strategy High Business Model

Standard

Vertical/Industry Strategy

Standard

Innovation

Standard

Geographic Strategy

Low

Source: Gartner (June 2010) Return to Top

Leaders Leaders are vendors that would normally be included in shortlists for CIS p od cts fo all t pes of tilities o ld ide The pe fo m p ofitabl

products, for all types of utilities, worldwide. They perform profitably, grow their revenue and have a presence in all major markets. Their functionality is above average, and their technology and scalability are leading edge. They offer solutions for retailers in different market models (such as regulated and competitive) and support large utilities with multiple commodity offerings, as well as small single-commodity utilities, along with utilities focused on different customer segments. These vendors would be followed and tracked by other CIS vendors. Leaders in this market have paired advanced technology with broad offerings and rich functionality. They are utility vertical businesses of the leading enterprise application vendors (such as SAP and Oracle). They have demonstrated the financial viability needed to fuel R&D to support new technology requirements (such as Web services and serviceoriented architecture) and enable business process integration across functional silos in utilities. SAP attained Leader status in 2003, and reconfirmed it due to the combined effects of its significant market share globally and continuing R&D investment in integration technologies and productized competitive market interface extensions. Oracle Utilities (then SPL WorldGroup) attained Leader status in 2004, and retained its status in this Magic Quadrant due to improved corporate viability following acquisition by Oracle, solid business performance and future access to a corporate integration technology platform that can support the continuing drive for functional footprint extension. Return to Top

Challengers These vendors perform well in their selected markets or industries. Although they have a high capability and performance (in sales and growth), they may not be targeting all segments or geographies of the energy utilities industry, or they may have a more limited vision of their functionality or technology. Clients with a conservative approach to business will find lower-risk options in this sector. In the 2010 CIS Magic Quadrant, no vendors have entered the Challengers quadrant. Return to Top

Visionaries These vendors have unique functional or technical offerings, but have constrained capabilities in geographic or financial terms. Visionaries are characterized by the ability to anticipate market transformation, such as increased analytical functionality or integration, as well as optimization for commodity and service management business processes. Clients that have a tolerance for risk and are seeking a differentiating product should consider the vendors in the Visionaries quadrant. In the 2010 CIS Magic Quadrant, no vendors have been placed in the Visionaries quadrant. Return to Top

Niche Players Niche Players in this market are still worthy of consideration. Given the size of the market (that is, more than 200 billing and customer care software products), potential buyers should consider that any listing on this Magic Quadrant is a good indication of vendor/product credibility. Nevertheless, the vendors in the Niche Players quadrant are situated

, y q here because of a geographical shortfall, narrow focus or a lack of financial strength (that is, they have not achieved financial viability compared to the market Leaders), or they have not come as far as the Leaders in advancing their technologies or functionality. This prevents them from being universally suitable to all customers. Indra, Gruppo Engineering, Ferranti Computer Systems and EG Utility are in the Niche Players quadrant mostly because of their limited geographic presence. Nexant's placement in the Niche Players quadrant is the result of its relatively limited focus on competitive retail billing. Clients should review carefully the vendors' target markets and capabilities. They should include them in evaluations if the vendors match their business scope, geographic areas and specific needs. Return to Top

Vendor Strengths and Cautions EG Utility Strengths EG Utility's Xellent CIS product is built on and leverages Microsoft's ERP solution — Dynamics AX. Xellent is fit to purpose for smaller and midsize utilities, including municipal utilities. The Xellent product offers lower implementation and operation costs, compared with leading CIS solutions that address diverse energy market needs and various company sizes. The Xellent product's reliance on Microsoft applications and technology makes it affordable for smaller IT organizations that may find the complex IT requirements of leading CIS products prohibitive. It is a good candidate for those companies whose application strategies are based on Microsoft products. Return to Top

Cautions EG Utility has a regional presence in Northern Europe, which can create support concerns in other areas targeted for expansion (such as North America). Users serving a large number of customers and/or having large billing batch cycles should scrutinize Xellent's billing scalability, because some customers have expressed concerns with product batch performance. The Xellent product lacks COTS maturity and implementation partners, and it is usually delivered as a leveraged product with a high level of customization by parent company EG A/S (formerly EDB Gruppen). Reliance on Microsoft technology and the Dynamics AX ERP platform may make Xellent less attractive for clients with different technology preferences. Return to Top

Ferranti Computer Systems Strengths Ferranti's MEtering & COntract Management System (MECOMS) is designed to support customer care and the billing needs of

g pp g companies having different roles (for example, merchant generators, the metering company, the retail company and the network company). MECOMS can be used by companies offering different services (for example, electricity, water, gas and heat) in different markets (regulated and deregulated). MECOMS is built on top of the Microsoft ERP platform Dynamics AX, and leverages its n-tier architecture. MECOMS is certified for Dynamics AX. Ferranti, as a Microsoft Gold Certified Partner, leverages the Microsoft Dynamics AX partner network to expand beyond its home market (Benelux). Ferranti's CIS product has lower total cost of ownership (TCO) in comparison to leading CIS products, which positively affects overall customer cost to serve. That makes MECOMS attractive for the smaller energy retailer concern with low margins in competitive energy retail markets. Return to Top

Cautions Although Ferranti offers a partner certification program (from the beginning of 2010), currently there are no MECOMS-certified partners. This may potentially have negative impact on CIS implementation projects. Some users have reported concerns regarding MECOMS's front-end workflow usability, which they attribute to the complexity of the Microsoft Dynamics AX ERP environment. As a relative newcomer in the CIS product market, MECOMS is still going through initial product maturation. Some customers have reported concerns with batch performance, as well as training and implementation services. Dependence on Microsoft Dynamics AX makes MECOMS unattractive for utilities looking for a different ERP platform. Return to Top

Gruppo Engineering Strengths Gruppo Engineering's CIS product, Net@Suite, is built as a modular solution that is composed of two components — Net@SIU, which addresses revenue management needs, and Net@CRM, which addresses customer service back-office and front-office needs. Gruppo Engineering is the leading CIS product in the Italian market, with 166 clients (serving more than 21 million customers/meters). Net@Suite addresses CIS needs for multiple services, with particularly large installations in gas and water utilities (serving more than 30% of Italian municipal utilities). Net@Suite has evolved to support energy and utility market transformation (in Italy), including unbundling and the introduction of retail competition. Return to Top

Cautions So far, Gruppo Engineering has been exclusively focused on the Italian utility market and its liberalization. It has not been proven in other national and regional energy markets. Net@Suite has not been implemented in many electric utilities (just 12% of installations). Electric utilities — particularly those operating in regulated markets or network companies operating in competitive markets — should scrutinize Net@Suite's service

management functionality. Although the company has made significant R&D investments during the past several years, the level of investment made to address AMI and energy-efficiency support may not be adequate for markets focused on smart grid and AMI deployments. Some clients have reported concerns with Net@Suite's online performance. Return to Top

Indra Strengths Indra is a leading Spanish IT solution provider that offers consultancy services and systems developed for the energy and utility markets. Open Utilities Customer Management is a functionally rich product whose footprint extends into customer service, outage management and commodity management areas. According to clients, Indra's CIS has good usability and a familiar Microsoft Windows look-and-feel user interface. Indra has a good presence in Spain, Latin America, Eastern Europe and Asia. Return to Top

Cautions Ninety percent of bills produced by Indra's clients are for services provided in regulated energy markets. Users considering Open Utilities Customer Management for competitive retail market should scrutinize product capabilities in that segment. Most of Indra's utility clients still run Soluziona's legacy CIS product. Being part of an IT service company may affect future product direction and limit COTS focus by favoring corporate system integration business and business process outsourcing (BPO) offerings. Indra does not have a presence in the North American utility market and is not currently focused on the North American utility market. Return to Top

Nexant Strengths Nexant RevenueManager can be quickly deployed by new entrants in competitive energy markets, and it tends to result in lower customer service costs. Users accustomed to dealing with large enterprise product vendors find the Nexant CIS team responsive and easy to deal with when addressing service needs or future product functionality. In addition to its significant presence among North American retailers, Nexant RevenueManager has achieved some traction among retailers in Western European competitive retail markets. The new Nexant offering, FlexRate, is addressing new functionality resulting from smart grid and energy technology consumerization trends. Return to Top

Cautions Nexant's focus on competitive retail makes its RevenueManager product inappropriate for regulated mass-market retail. Although RevenueManager offers some CRM capabilities, it does not meet the full CRM needs of competitive retailers. Additionally, users report concerns with the product's online performance. Nexant RevenueManager's scalability has not been proved in production and may become an issue if its current energy retail clients experience significant growth in their customer bases. As reported by some users, Nexant tends to miss schedules for occasional custom development requests, which users attribute to a small development team. Return to Top

Oracle Utilities Strengths Oracle Utilities has structured Customer Care and Billing (CC&B) as a series of modules — most of which can be sold as stand-alone components or assembled into specific market segment solutions to address the needs of competitive retailers, fully integrated utilities, water utilities and others. CC&B can be integrated (leveraging Oracle Application Integration Architecture) with other Oracle products (vertical and horizontal) to provide an extended environment that includes mobile workforce management, meter data management and CRM (Siebel). Due to its longevity in the CIS market, Oracle Utilities' CC&B has rich functionality and has successfully met requirements of various size companies in markets with different levels of contestability that provide various utility services (such as complex structure of water utilities in Europe). Oracle has proven performance in large Tier 1 energy companies and can address scalability with up to 550,000 billing services per batch cycle (currently in production). Return to Top

Cautions Although Oracle has a good winning record in a challenging market, most of its deals are with nonelectric utilities or utilities from the market segment/regions trailing smart grid initiatives. Because ongoing implementations tend to heavily influence vendor product development decisions, regardless of the Oracle smart grid marketing effort, the real smart-grid-related functionality may be slower to emerge. Being a part of an enterprise application vendor that is also a technology platform provider may influence Oracle Utilities' technology independence in favor of "home-based" technology, thus affecting integration costs with non-Oracle-based environments. Users should monitor Oracle Partner Network (OPN) activities and involvement in open standards bodies. Some clients have expressed concerns with the access to Oracle Utility technical resources and the quality of the training programs. Several Oracle Utilities' customers have reported that their CC&B implementations were longer than the average COTS CIS implementation (18 to 24 months). Because the CIS implementation project duration is not necessarily affected by the product, users should monitor the project scope and plan for the integration effort with additional applications (if integration is not offered out of box).

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SAP Strengths SAP is a large enterprise software vendor that leads in the CIS space — with 578 utilities worldwide using its SAP IS-U/CR&B product (as reported by SAP). Because of its traditionally strong presence among large energy companies, SAP has the largest market share, defined by the aggregated number of end customers billed on its installations in production (480 million customers, compared with 93 million from its closest competitor). SAP continues its good traction in the CIS market and has signed more new contracts (54) than all other evaluated CIS vendors cumulatively since the last Gartner CIS Magic Quadrant. Users looking for an integrated horizontal ERP solution and vertical billing solution may find the SAP offering conducive to their needs. SAP has put significant R&D effort into addressing CIS product integration with an AMI platform, and creating an off-the-shelf integration framework using Web services to support utility company needs for CIS and AMI integration. SAP has a well-developed network of implementation partners and technology product vendors that help cover the "white space" in the SAP utility offering. Return to Top

Cautions Even though SAP has attracted a substantial number of implementation partners, the large numbers of concurrent implementations can put a strain on the SAP utility organization's ability to get close involvement and oversight of the implementation project, which can cause project budget overruns. SAP CIS call center users continue to express concerns about product usability. Although SAP offers CRM as a means to mitigate IS-U/CR&B call center usability concerns, according to users the first utility-specific CRM release did not meet expectations. Recent releases (CRM 2007 and CRM 7.0), which are getting better usability/productivity reviews, have apparently addressed those issues. SAP CR&B users often find access to technical support (implementation and postimplementation services) challenging. Some clients have reported concerns with CIS product eService functionality. Return to Top

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