Preview: MySAP CRM for Utilities

SAP gave attendees of its 4th International SAP Utilities Conference in Leipzig, Germany, a preview of the sales functionality it plans to include in the next release of mySAP CRM, as well as other industry-specific enhancements to its utilities application.

The new capabilities will provide utility companies with a closed-loop, front- and back-end application for sales to commercial and industrial customers, providing sales teams with customer profiles and detailed calculations of complex pricing structures throughout various regions.

Sales personnel will be able to, for example, take into account variable access usage fees for cluster and chain customers with widespread locations, and make appropriate quotations for a customer’s entire network of branch offices. Once a contract is closed, customer and usage data will be fed automatically into back-end office systems for billing and accounting.

Competing in Verticals

SAP’s focus on verticals has been part and parcel of its overall CRM strategy, according to Darc Rasmussen, SAP’s vice president of global CRM initiatives. Although Siebel remains the top CRM vendor, both in its industry-specific and general applications, SAP — along with independent analysts — says it is gaining.

“Look at what we have accomplished since we started our CRM initiative in 2001,” Rasmussen told CRM Buyer Magazine. “We set ourselves some very aggressive goals, including establishing ourselves as the number two vendor. At that time, that was considered by many to be an unlikely event — but by early 2002, independent analysts were confirming SAP to be, in fact, the number two vendor.”

However, as in the general CRM space, SAP has yet to best Siebel with its vertical products. “Siebel is by far the top vendor in industry-specific applications,” AMR Research senior analyst Louis Columbus told CRM Buyer.

Shifting Dynamics

The global utilities industry is undergoing significant restructuring, thanks to deregulation — which in some cases has not always worked out (California is a case in point) — and severe volatility in energy market prices, not to mention Enron’s meltdown and subsequent access-to-capital issues. All of these developments bode well for vendors that want to compete in this space.

SAP, for example, entered this particular vertical last year in response to the wave of deregulation sweeping Europe, the company said. It combined its back-end and database integration applications with mySAP CRM, creating an application that allows users to tailor proposals for commercial customers, plan special campaigns and target group-specific promotions.

Tough Market

Demand for new applications exists. A recent study by Accenture shows that the average utility with US$2 billion in revenue could increase its pretax profits by $250 million to $360 million by improving its CRM capabilities. Profit increases could be even greater for larger utilities.

Some of these savings are simply a matter of utilities claiming the low-hanging fruit. For example, Jim McCray, general manager of Siebel eEnergy, told CRM Buyer that utilities realized they had to figure out a more cost-effective way of handling the volume of calls that flood in when an outage occurs. “Customers would react by calling or e-mailing the utility, driving up volume substantially,” he said. Indeed, one of the most popular modules in Siebel eEnergy is contact center customer management, he said.

“While CRM has historically been a low priority for utility companies, the marketplace today is tougher, the environment more complex, and customers more informed and demanding,” said Stu Solomon, a partner in Accenture’s Utilities industry group who specializes in CRM.

“In the wake of industry restructuring, executives must change their expectations about CRM and understand that now is the time to look for ways to optimize existing CRM investments — not only to attract and retain customers, but also to fuel additional profits,” Solomon said.