E.ONCase Study

The last few years have witnessed an intensification of competition in the U.K.’s utility supply market. Deregulation in the supply of both gas and electricity has effectively diluted barriers to entry, making it easier for new players to enter and compete with incumbent suppliers. This has led, on the one hand, to increased choice for consumers, but on the other, to increased pressure on individual businesses to manage costs, retain market share, and seek new revenue-generating opportunities. It is no coincidence that this shift from a supply- to a demand-driven model has been mirrored by the growth of converged offerings from branded players, for a key differentiator in the market is now the ability to innovate around products and bring attractive packages to market.

E.ON was foremost among utility companies to recognise early on the link between success in the marketplace and a customer-driven strategy. The company identified the need to bring innovative and keenly priced products and services to market quickly, and the importance of offering these in a customer friendly way.

E.ON’s dual portfolio offering of gas and electricity provided a need for a truly convergent revenue management system. Convergys’ revenue management software, Rating and Billing Manager, was chosen to provide this, and to work seamlessly alongside the company’s existing legacy platforms to deliver converged offerings under a single brand.

Case Study E.ON

E.ONUsing Convergys Rating and Billing Manager to deliver gas and electricity services to business and residential customers

Don LeiperDirector U.K. IT E.ON

Our evaluation process was lengthy and if we had not found Rating and Billing Manager then we were prepared to build our own solution. Fortunately very little additional interfacing software had to be developed in order for Rating and Billing Manager to fit into our complex systems environment. This was a very significant point for us, as being able to continue to use our tried and trusted systems where appropriate and introduce new software in order to supplement that functionality considerably reduced the risk of our investment.

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Reduced risk through integration with existing software platformsIn addition to advanced functionality and true convergence, E.ON’s new revenue management system needed to operate in conjunction with its existing software. Whilst utility companies have traditionally developed bespoke billing systems to meet their industry-specific needs, replacing these has inherent risks, not least due to high build costs and long lead times. For utility companies, the barrier to implementation has often been fear that a ‘bigbang’ approach involving the complete replacement of an existing billing system is unavoidable. And such programmes have, in the past, led to a number of costly and high profile failures. Hence, E.ON was keen to fi nd a low-risk, cost-efficient solution that could be integrated seamlessly and quickly with its existing billing systems for gas and electricity, and one that could also handle future service offerings if desired; for example telephony services.

Case Study E.ON

Background and key billing requirementsE.ON U.K., formerly known as Powergen, was created out of the privatisation of the Central Electricity Generating Board (CEGB). Almost 20 years on, it is now a part of E.ON Power and Gas in Germany. In the U.K. it generates and distributes electricity and supplies gas to over eight million residential and business customers.

Given the size of E.ON’s operation and growth plans, it required a revenue management system that combined rich customer-centric functionality with proven scalability. The system also needed to be cost-efficient and to be able to handle tariffs and measurement systems relevant to the utility industry. The new billing infrastructure needed to handle different ‘product’ structures; for example, Economy 7 for electricity, and the company’s popular green tariff (operated jointly with the World Wildlife Fund) to enable customers to select the type of electricity they buy based on environmental credentials.

Product innovation and the ability to quickly exploit new opportunities in the market were key requirements, and Rating and Billing Manager’s flexibility and ease of configuration delivered the speed-to-market and loyalty-bolstering potential that the company was seeking.

Don LeiperDirector U.K. IT E.ON

Customer service has always been an integral part of E.ON’s business, and opportunities to offer consumers further choice and convenience are central to our long-term business strategy.

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E.ON infrastructureRating and Billing Manager’s flexible design and modular architecture enabled E.ON to optimise its infrastructure; benefiting from the system’s advanced functionality whilst retaining the best elements of existing systems has preserved the considerable value of the company’s existing IT investment.

The solution (see fig. 1) involved using the company’s separate gas and electricity billing systems for respective consumption charge calculations, the data from which could then be fed into Rating and Billing Manager, at which point products could be packaged, cross-service discounting applied, and a single bill generated for all services.

Rating and Billing Manager was integrated with inhouse CRM and finance systems, as well as Mercator mediation and middleware. The first phase of the implementation, catering for gas and electricity, was undertaken in-house and assisted by project management resources from a major systems integrator. It took only seven months from

Case Study E.ON

start to finish, including system testing. It was completed on schedule, and the first ‘live’ bills were issued in January 2001. The operating system was Sun Solaris 2.7, Oracle 8.1.6 64-bit, and the hardware platform was Sun E10000.

At the end of 2001, Rating and Billing Manager was being used to support over 3.2 million E.ON customers across its service portfolio. Today in early 2009, E.ON has upgraded to Rating and Billing Manager version 2.2, and Convergys now supports approximately 8 million E.ON customers and processes 2.5 million E.ON accounts per month.

Case Study E.ON

The benefits of Convergent billing and a single customer viewIn order for E.ON to leverage its brand value to the fullest and offer customers bundled services incorporating cross-product discounts, it needed a revenue management system that could provide a single customer view across all products and services in the billing database. Rating and Billing Manager enables the company to bring innovative multi-service packages to market quickly. It provides E.ON with a powerful marketing tool, aiding the identification of customers according to usage patterns, with the option of offering discounts between products within packages. This in turn will help E.ON to enhance customer loyalty and ensure that offerings remain competitive as market conditions change.

Rating and Billing Manager’s single customer view has enabled E.ON to refine its approach to marketing and customer retention, and cross-service discounts can be used to encourage customers to take up additional services. For example, a customer might be persuaded to sign up for gas supply by the promise of discounts on their existing electricity service or total energy usage. The permutations are manifold and, moreover, easily changed. Rating and Billing Manager’s event-based design means that new tariffs, discounts, or even completely new services, can all be introduced quickly by E.ON’s own staff, without the need for external specialists or modifications to the software code.

Ian EvettsManaging DirectoriSTRAT Ltd.

From a project management standpoint, Rating and Billing Manager’s ability to integrate easily with E.ON’s legacy platforms was a big plus. The implementation process was straightforward and completed within the exacting time frame specified by E.ON to enable it to meet its plans to bring new service bundles to market quickly.

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Case Study E.ON

The company is taking advantage of this enhanced marketing potential, and new products are being introduced all the time; a special set of tariffs in association with Age Concern, and schemes targeted specifically at house movers, are two recent examples. By using Rating and Billing Manager to offer customers a single bill covering all services, E.ON has delivered enhanced clarity and convenience which has proved particularly attractive to retail customers.

However, issuing just one bill at regular intervals that details both charges incurred and discounts earned in a simple and transparent way is not simply about convenience. It is also about minimising operational costs and passing on savings to the customer. As Leiper explains, “We have dramatically reduced the overhead of printing bills, which can be substantial when you add up multiple printing, enveloping, and mailing costs. Sending out one bill per customer is also more environmentally friendly. But the key reason consumers will take this route is that the economic benefit can be passed on to them—in the form of reduced charges.”

E.ON introduced converged billing for gas and electricity in early 2001. Since the initial launch, the company has seen a steady increase in the number of customers taking more than one service.

Duncan SedgwickRetail DirectorE.ON

Rating and Billing Manager has proved to be an inspired choice. We can now achieve the important benefits associated with a single convergent billing engine, including the option of a single bill for multiple services.

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Case Study E.ON

Convergys provides billing and customer care products and services, bringing together worldclass resources and expertise to help clients transform customer relationships into a competitive advantage.

Future plansE.ON continues to set goals to increase its customer base. This will be achieved by continued product development and by using Rating and Billing Manager to aid customer profi ling, enhance discounting/loyalty options, and by offering customers the convenience associated with choosing all energy services from a single provider. Rating and Billing Manager is thus a catalyst for both increasing customer loyalty and for growing the business.

According to Leiper, “Rating and Billing Manager is a key platform to help us build our business volumes.” Rating and Billing Manager has been used to support the scalability and functionality needed to meet whatever other billing challenges the company faces in the future.

Don LeiperDirector U.K. IT E.ON

Rating and Billing Manager’s flexibility, getting all the information onto one bill, complements our bespoke software to provide the ultimate single view of the customer, allowing us to not only innovate but also improve the quality of the service we offer consumers. This in turn has helped us both to improve customer retention and loyalty and to attract new customers.

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© 2010 Convergys Corporation. All rights reserved. Convergys and the Convergys logo are registered trademarks of Convergys.Convergys refers to Convergys Corporation and its wholly owned subsidiaries.

CS07 - E.ON - September 2010

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