Many energy companies hesitate to modify their billing systems due to concerns over costs, operational disruptions, and the complexities of system changes. Nonetheless, today’s rapidly evolving energy landscape demands proactive system updates to ensure competitive resilience. 

Energy companies relying on legacy billing systems face increased risks of revenue loss, customer dissatisfaction, operational bottlenecks, compliance breaches, and delays in adopting modern technologies. These challenges highlight the importance of modernizing billing system solutions to avoid substantial market share loss and protecting reputational integrity. 

A billing system usually includes various backend features, including product setup, handling various EDI transactions, billing processes, payment posting, and reporting capabilities. The cost of updating or replacing a billing system, combined with potential operational disruptions, poses a significant challenge.

The initial financial outlay for new software and hardware and the indirect costs of integrating the system and training staff can be substantial. Operational efficiency may temporarily decline during the transition, impacting billing processing speed and customer service.
 
Energy companies often try to balance maintaining their legacy systems while simultaneously developing modern solutions. This strategy may be aimed at minimizing downtime but can complicate the transition. Furthermore, it could lead to capacity issues and resource constraints which may strain the institution’s capability to modernize. 
 
The complexities of system changes cannot be understated. Transitioning to a new billing system involves not only hardware and software upgrades but also the seamless integration of modern technologies with existing legacy systems. This integration process can reveal unexpected challenges, particularly during data migration, where it is critical to maintain the integrity and security of data. 
 
While these are significant hurdles, they are not insurmountable. With the right strategies and planning, energy companies can successfully navigate these challenges and emerge with a more robust and efficient system. It is imperative for energy companies to take action to remain competitive, and their decision to modernize or replace an existing billing system will depend on the robustness of their current system. 


CHOOSING THE RIGHT PATH: WHERE TO BEGIN

An effective approach to evaluating an existing billing system involves conducting a comprehensive review, assessing alignment with business objectives, user feedback, scalability, and compatibility with emerging trends. To ensure a thorough and consistent evaluation of your billing system, we have established a framework to serve as a guideline to assess all relevant aspects systematically and objectively. 

The framework comprises ten industry criteria, as set out in Figure 1, to help determine whether it is best to continue modernizing your existing billing system or opt for a complete replacement:


Figure 1

If an organization meets fewer than four of these criteria, then it would be beneficial to consider a complete billing replacement. If the organization fulfills five to seven of these criteria, an in-depth analysis is suggested to determine the best course of action in terms of any modernization. 

Finally, if the organization meets eight to ten of these criteria, the billing system is likely functioning at peak efficiency, possibly requiring only minor enhancements. Below we outline each criterion and how to realize each of them.

User Experience – Intuitive interfaces and workflows enhance the user experience for both employees and customers, reducing errors and improving satisfaction. User-friendly workflows improve efficiency and reduce training time for billing associates and customers. Features like real-time status updates, notifications, and self-service options enhance the overall experience and increase customer satisfaction.

Streamlined Processes – The billing and payment procedures are straightforward, reducing unnecessary steps and handoffs for efficient processing from new customer sign-up to final billing. These streamlined processes encompass integrated EDI transactions, billing cycle execution, invoicing based on product type, generation of invoice and fulfillment documents, and payment posting. Each process is mapped out from start to finish, identifying redundancies to optimize workflow and minimize delays.

Analytics and Reporting – The billing system can generate comprehensive reports and analyze data to identify trends, improve decision-making, and optimize processes over time. Analytical tools enable operation teams to track key performance indicators (KPIs), monitor trends, and identify areas for improvement. Reporting capabilities include customizable dashboards, ad-hoc query tools, and predefined reports to support decision-making and regulatory requirements.

Compliance – The system has built-in checks and controls to ensure adherence to regulatory requirements and industry standards such as PUC compliance standards, market and ISO rules and regulations, EDI transaction standards, and accounting/auditing (GAAP) standards. The system incorporates compliance checks, audits, and reporting features to ensure adherence to regulatory standards, fostering a culture of transparency and accountability. 

Data Security – The billing system has essential data security measures to protect sensitive customer information and maintain customer trust. Secured backup and disaster recovery procedures ensure data integrity and availability in case of system failure or data loss incidents. Robust data security measures, including encryption, access controls, and regular audits, protect sensitive customer information from unauthorized access or breaches. 

Flexibility and Customization – The billing system can be customized to support both simple and complex energy products, intricate workflows, and specific business rules, fostering agility and innovation. It also enables the creation of unique energy products and features, integration with upstream and downstream applications, specification of collection criteria, and generation of customized dashboards and reports. These customization options empower the organization to adapt to market trends, regulatory changes, and evolving customer preferences while ensuring operational efficiency.

Scalability – The system can manage varying billing volumes and adapt to changing business needs without sacrificing performance or accuracy. The system can manage growing amounts of data, users, transactions, or any other workload while maintaining optimal performance levels. Additionally, it is flexible enough to adapt to changing requirements and resilient to failures or disruptions. Scalability can be achieved through distributed cloud-based infrastructure, modular design, and flexible resource allocation to accommodate growth or seasonal variations in demand.

Automation and Integration – Billing systems leverage automation and integrate with a range of applications, including customer portals, online services, document fulfillment tools, payment services, EDI services, CRM systems, analytical data applications, and usage databases. This reduces manual intervention and accelerates decision-making. Automation technology performs routine tasks such as data entry, verifications, and risk assessments, minimizing manual effort and human error. Furthermore, the system seamlessly connects with external platforms, improving access to relevant information and further enhancing decision-making speed.

Performance Monitoring – Billing systems enable continuous monitoring of system performance and key metrics to enable proactive identification and resolution of issues, ensuring optimal operational performance. KPIs such as EDI response times, billing runtime, invoice generation time, payment posting error rates, and billing system throughput help identify and address bottlenecks or issues before they impact operations. Proactive monitoring enables timely interventions to ensure optimal system performance and reliability.

Cost – The system delivers value by improving efficiency and reducing operational expenses over its lifecycle. Stakeholders consider the total cost of ownership (TCO) over the system’s lifecycle. A regular cost-benefit analysis occurs to identify opportunities for cost reduction or optimization to secure long-term benefits such as efficiency gains, reduced operational costs, and improved customer satisfaction.

CONCLUSION

Organizations must continue to adapt to modern technology to remain competitive, meet evolving customer demands, and address emerging opportunities and challenges. Whether optimizing an existing billing system or opting for a total replacement, it is crucial to act quickly to stay competitive. Delaying these critical updates risks missing opportunities and losing competitive ground. 

Our framework and structure will help determine possible areas for improvement and offer guidance, but it cannot provide a definitive course of action. It serves as an initial indication of the direction to consider; however, further input and a cost-benefit analysis will still be necessary. By carefully evaluating the criteria and conducting a thorough analysis, organizations can make an informed decision that maximizes value and ensures continued success. 
 
Capco offers extensive subject matter expertise to guide energy companies through the billing system analysis and selection process. Additionally, we have several accelerators to help ease the burden and expedite the process of changing billing systems. We encourage you to contact us for support and guidance in billing system modernization to better serve your customers, achieve objectives, and stay ahead of the competition.