Case Study 4 The Utilities Industry

1. Case Study 4 The Utilities Industry By Buddy Landry Case Study Analysis December 1, 2006

2. Monopolization has ended • Deregulation leads to competition and lower prices. • Technology leads to faster service and lower costs. • Globalization is necessary because companies need more customers to compete in the marketplace.

3. Company Four • Company four is a 100 year old utility company. It has become a wholly owned subsidiary of a larger energy corporation serving a wider geographical area. • The company wants to operate under its own name and brand for customer retention purposes. • They are a company with a business history and they want to keep this intact because they already gained public trust. • The company has reinforced its brand based on its philosophy to leverage technological enhancements in energy distribution and increase operating productivity.

4. The Web Based Model • This company had the idea of going on the internet to use differentiation and their reputation for long time service. • Company 4 read a report published by Andersen consulting about competitive benchmarking and E Business practices on the utilities industry. • After 1999, the results had been released. “Most utilities websites lack functionality needed to compete in the e-Ecomony.”

5. Web Based Model cont. • The study warned utility companies websites were unimpressive. The report noted that the majority of the sites lacked sophisticated features and functionality that would differentiate them. • The CIO at company 4 agreed their site was unsophisticated. • The report said that the development of a sophisticated online presence would lower costs to the company including mailing energy bills to people when they could charge them over the internet.

6. Company 4 Strategy • Focus on customer service to retain and build the customer base while reducing revenue loss from competition. • The utilities company needed to stop brand erosion and strengthen its brands through exceptional service offerings. • Now that they have competition, they have to re-promote their history of service so people did not overlook them since the monopoly broke up. • The company concluded that a website will reduce costs in the long run. If they wanted to compete now, they had to lower prices to stay in competition but also had to cut other fees to maintain the status quo and a website was their solution.

7. E Business Marketing Strategy Implementation • The Company 4 executive committee decided to follow through with the Andersen report and the next step was deciding on the appropriate marketing model online. • The Company’s goal is to become a solutions provider to their customers. • They wanted to use the internet as a way to customize the needs of every customer. • The company wanted to create a “branded customer experience” meaning extraordinary customer service leading to customer loyalty online. • They established a four step plan to achieve their goals.

8. Step 1: Determine the most important service attributes for meeting and exceeding customers’ expectations. • They conducted an employee feedback survey to gather some business intelligence. • The utility company thought that the invention of the internet was going to be their greatest threat on the market but ironically there were many dot-com failures in the industry and those companies did not survive. • The most important attributes were • 1. Quick and efficient service. • 2. Electronic Bill Payment. • 3. Meter Reading. • 4. Set up and tracking status. • 5. A fixed rate per month on monthly payments.

9. Step 2. Determine the important service attributes that make competitors the most vulnerable. • 1. Information gap: Service attributes that are company centric and not customer centric. This is avoided by giving the customer what they prefer based on their preferences. • 2. Design gap: Website design that does not meet customer expectations. This includes ease of use, downloading times and navigation. • 3. Communication gap: The design of the website does not optimize the communication channel between the customer and the firm. This occurs when the marketing department is excluded or not involved in the website creation which is ridiculous. • 4. Fulfillment gap: The website has operational deficiencies that prevent it from meeting the customer’s online needs. This occurs when the website cannot effectively deliver what the customer wants.

10. Step 3: Determine existing and potential service capabilities of the company. • The company wants to determine strengths and weaknesses. • 1. Strengths. Long term customer-contact employees. Management committed to customer service as a differentiation strategy. Parent company willing to invest in long term growth of company 4. • 2. Weaknesses: Legacy computer system which are older mainframe computers running database management systems. The integration of previous projects into a more flexible database driven architecture had failed. Their current IT department was only trained to use the older Legacy computer system so they could not adapt to the newer technologies.

11. Competencies and Incompetencies. • Competencies: • 1. Ability to transition existing customer base into the online service site. Demographic study indicated ability of customers to use technology. • 2. Full cooperation and support from customer contact employees. The employees had more time to solve complex and difficult issues since questions and requests were answered by the website. • Incompetencies: • Inability to quickly reconcile the technological weaknesses in order to enter the online environment as soon as the company wanted.

12. Step 4: Develop a service strategy that addresses important, enduring customer needs, exploits competitor vulnerabilities, and fits the company’s capabilities and potential • Company 4 decided to outsource its customer interface to a well established firm. • This would allow the company to compete with other utilities online presence without the delays hat it would otherwise endure. • Company 4 was only committed to outsourcing until it had the internal resources to operate its site. • Company 4 was now positioned to develop and announce its site. Executives strategized on how to maximize its potential while it was being designed.

13. Primary Stakeholders • The company came up with a plan to place other aspects of their business online to reduce paperwork and support. It had separate sections for suppliers, investors, and for stakeholders. • Turning into a brick and mortar company into a web based company created benefits. • 1. Customers had convenient and efficient access. • 2. Reduced paperwork and time for suppliers. • 3. The investors had more confidence in the company and were more willing to invest now that they were online. • 4. The employees could sell their services with more convenience and efficiency as an online business.

14. The Value Bubble • 1. Attract • 2. Engage • 3. Retain • 4. Learn • 5. Relate

15. The Attracting Phase • The technologies used were Flash movies(swfs), and Cascading Style Sheets(CSS). • These technologies are visually and structurally import technologies. • CSS allows the structure of the site to stay the same while changing the style and colors dynamically on the fly. • Flash allows more impressive multimedia capabilities than a generic website because Flash movies interact with the visitor while they visit the site using Action script and regular flash animations. Action script is a powerful Object Oriented programming language in itself.

16. The Engaging Phase • Company 4 had an idea of a visitor community center. The link they had failed and there was poor navigation where the user had to click the back button to get back to the main website. • Company 4 had not yet set up clickstream technologies on their site to monitor visitor selections. They could not learn what they wanted about the customer. • The search page did not work giving the company a bad reflection. • The Company placed a few simple gif files to show customers how to read meters. They were not flashy but potential customers got the point. Keeping it simple and consistent works sometimes.

17. The Retaining Phase • Because so many of the pages in the site failed, all of the retain technologies in the world could not make a viewer want to return to the site. • You only lose a customer once. Broken and inoperable links made the site fall apart. Even though the navigation system and flash movie worked, the functionality never. • They included dead end under construction pages that turned away customers. • There was no error checking. If the web server was down, it did not display any message to the visitors. • There was simply a link to contact the web master but no server side script in CGI or PHP to send the customer an automated email.

18. One Point of View • An interesting point the case study made is the company hired a “Company Webmaster” which is fine for a small company with a talented webmaster, but the site was in his hands solely and there was no team effort. • The webmaster cannot do many tasks at once. For a sophisticated E Business website the following are required. • 1. A developer to do the client side programming. • 2. A Graphic Designer to do the artwork and design. • 3. A back end developer creating the middleware. • 4. A database designer. • 5. A manager to understand how everything fits to see the big picture.

19. The Learning Phase • Company four used Clickstream and log file analysis to learn about their visitors. These were important elements to learn about customers. • All of the learn technologies used to gather and store data failed. The registration was set up in Cold Fusion but failed so the company could not gather any information and store it in a database from the registration form. • Newer browsers and versions were coming out and the site needed updating to integrate in these newer browsers. • Company four used Javascript technology for browser detection so the browser version could be detected prior to loading the site so the user could get a message telling them to use an older browser to view the site.

20. Additional Problems • Since the website was not working, it could have been shut down and a temporary bulletproof HTML site with text and pictures could have been set up to inform the user to look out in the future for the new and improved website. • Instead the company hung on to the ineffective poor navigational website hurting their image and presence on the web. Because the site had excellent graphics and design the temporary solution would have informed the customer better. • Company 4 ultimately stood there and let the site fail which gave visitors a negative view about the company.

21. Conclusion • I feel the elements the company were going to use would have gave them a strategic advantage ahead of the other utilities companies because the technologies are highly in demand. Talented graphic designers can really shape a company’s image and strengthen the brand. • Databases and Cold Fusion middleware was an important business intelligence strategy to allow the website to learn about the customers for them. While the customer is online, the information is being collected from the customer easily and efficiently but unfortunately this failed and the Webmaster had free reign over the design without input from the other departments. • There was also inappropriate database management and support.

22. The Relate Stage • The Relate stage of the Value Bubble could not be done because they could not learn anything about the customer so this prevented them from relating with the customer. The company was known for customer service as a Brick and Mortar company so this hurt their reputation and it was risky to stick with an established brand.

23. Questions and Comments • Open Discussion