Utilities deregulation means enhanced focus on CRM

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By: Wise Marketer Staff |

Posted on June 21, 2002

The Western European utility market in early 2002 was a copy of the telecommunications market in the early 1990's, gradually opening up to deregulation, removing old monopolies and creating conditions for competitive markets to emerge, according to a report by IDC.

The firm suggests that in order to compete successfully in the deregulated (and increasingly competitive) Western European market, new companies offering utility services - and those recently privatised - are trying to find new and interesting ways to attract and retain customers.

As IDC research analyst Lars Schwaner rightly points out, the utilities must realise that price is not the only factor when a customer chooses a service provider. The kind of attraction and loyalty that the utilities are looking for really comes from top-class customer service.

Catching up
The utility sector has traditionally lagged behind other industries in the advanced use of IT - but all that is changing. Software is currently the fastest growing IT segment for utilities, and their investments are driven by the implementation of advanced applications covering the whole value chain: generation, transmission, and distribution. The Western European market for telecom and utility applications is expected to reach some US$408 million by 2006 (up from US$258 million in 2001).

The trends that are forming in the utility market in Western Europe are also impacting the IT players in that industry. The key trends are connected to the ongoing deregulation process across the whole region, and to the simultaneous 'fragmentation' of the utilities' value chain (i.e. the separation of the generation, transmission and distribution processes). Those trends are:
·  Deregulation
·  Global consolidation
·  Specialisation
·  Diversification of service offerings
·  Outsourcing of non-core processes
·  Power price reduction

The consequence
The direct consequence of efforts aimed at diversification in the utility sector is the emergence of multi-utilities. Such companies are offering comprehensive and integrated value-added offerings, encompassing the supply of electricity, gas and water, fixed and mobile telephone, internet services, call centre facilities, billing, and maintenance services.

"As utility companies supply products that are highly commoditised, a key competitive and differentiating factor is customer service - delivered both through traditional channels and online," Schwaner explains.

The report, Utilities - The Impact of European Deregulation on the Sector, focuses on trends in the market, and their impact on independent software vendors.

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