Magic Quadrant for Utilities Customer InformationSystems 9 June 2010

Zarko Sumic

Gartner Industry Research Note G00200897

For buyers of customer care and billing solutions in the energy and utilities market, we map vendors' productsfor customer information systems.

What You Need to Know

Gartner has covered customer information systems (CISs) since 2000 toaddress the needs of clients seeking solutions to improve meter-to-cashand customer service processes. We are updating "Magic Quadrant forUtilities Customer Information Systems" to reflect changes in customerbuying criteria that have resulted from emerging business and regulatorytrends, which have caused subsequent changes in vendor offerings.

CIS products cover utility meter-to-cash business processes, with a levelof functionality adequate for an integrated utility, and support customerservice needs for utility companies operating in regulated markets. Incontestable energy markets, CIS products also cover billing needs fornetwork companies (focused on asset management) and retail/suppliercompanies (focused on customer management and commoditymanagement). However, packaged CIS products are generally inadequatefor the advanced customer-facing functions that competitive retailersneed — functions such as customer retention, customer acquisition,campaign management and customer analytics. In competitive markets,therefore, retailers tend to supplement packaged CIS products with anadd-on CRM solution.

In the CIS market, vendors tend to focus on either:

Unregulated markets, requiring higher billing complexity, high levelsof data exchange with market operators and participants,enhanced marketing/analytical functionality and relatively lowvolume.

Regulated markets that have lower billing complexity, addressservice order management and have a high volume of bills.

Despite different vendor focus, customer care and billing solutions (alsoknown as CIS) have not separated into different product sets. Ratherthan offering products designed to meet specific needs of companiesthat operate in regulated or competitive markets, vendors tend to

Vendors Added or Dropped

We review and adjust our inclusioncriteria for Magic Quadrants andMarketScopes as markets change. As aresult of these adjustments, the mix ofvendors in any Magic Quadrant orMarketScope may change over time. Avendor appearing in a Magic Quadrant orMarketScope one year and not the nextdoes not necessarily indicate that wehave changed our opinion of thatvendor. This may be a reflection of achange in the market and, therefore,changed evaluation criteria, or a changeof focus by a vendor.

Evaluation Criteria Definitions

Ability to ExecuteProduct/Service: Core goods andservices offered by the vendor thatcompete in/serve the defined market.This includes current product/servicecapabilities, quality, feature sets, skillsand so on, whether offered natively orthrough OEM agreements/partnershipsas defined in the market definition anddetailed in the subcriteria.

Overall Viability (Business Unit,Financial, Strategy, Organization):Viability includes an assessment of the

overall organization's financial health,the financial and practical success of thebusiness unit, and the likelihood of theindividual business unit to continueinvesting in the product, to continueoffering the product and to advance thestate of the art within the organization'sportfolio of products.

that operate in regulated or competitive markets, vendors tend toassemble a specific solution with add-on components to their basiccustomer care and billing offerings.

Current CIS products support billing for multiple customer segments — forexample, residential or large commercial and industrial customers — thatwere previously addressed with separate product-complex billing. Mostleading vendors also support billing for multiple utility services, as well asmetered and unmetered services/products.

From the IT application portfolio perspective, CIS represents a coreinvestment focused on supporting a "run the business" strategy. As thelargest ticket item among energy companies' IT applications (particularlyfor regulated utilities or competitive retailers), CIS can account for up toone-third of a utility CIO's IT application operations and maintenancebudget.

CISs tend to have long life expectancy. Therefore, when CIS usersselect technology partners, they must not only weigh criteria that willfoster operational efficiency and cost reduction, but also weight vendorproducts to ensure they have the scalability and flexibility needed toaccommodate changes in evolving retail markets. Vendors should alsohave long-term commitments to the energy utility sector and be able tomake the necessary R&D investments to address emerging market needsthrough innovation.

In regulated retail markets, utilities should look for:

A solution that can minimize the cost of providing customer service— for customer care as well as meter-to-cashA CIS product's ability to provide end-to-end business processintegration to achieve operational excellence by supporting servicedelivery optimization

In contestable retail markets, utilities should remain focused on vendorsthat offer:

Advanced analytical CRM capabilities — for example, churn andcustomer profitability analysis (CPA)Product extensions that facilitate interactions among retail marketparticipants

Global concerns about climate change and energy sustainability haven'tmissed the CIS market. Utilities should consider the ability of CISproducts to address environmental concerns by:

Enabling marketing, selling "green" products and managing energy-efficiency campaignsHandling the large volumes of metering data required to supportenergy efficiency, economic demand-response programs, andconsumer-deployed renewable generation through "time of use"billing and "feed-in tariffs"

Additionally, CIS vendors must demonstrate the ability to address newrequirements that are emerging as the result of the transformation of theenergy-provisioning models globally.

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Magic Quadrant

Figure 1. Magic Quadrant for Utilities Customer Information Systems

Sales Execution/Pricing: The vendor’scapabilities in all pre-sales activities andthe structure that supports them. Thisincludes deal management, pricing andnegotiation, pre-sales support and theoverall effectiveness of the saleschannel.

Market Responsiveness and TrackRecord: Ability to respond, changedirection, be flexible and achievecompetitive success as opportunitiesdevelop, competitors act, customerneeds evolve and market dynamicschange. This criterion also considers thevendor's history of responsiveness.

Marketing Execution: The clarity, quality,creativity and efficacy of programsdesigned to deliver the organization'smessage to influence the market,promote the brand and business,increase awareness of the products, andestablish a positive identification with theproduct/brand and organization in theminds of buyers. This "mind share" canbe driven by a combination of publicity,promotional, thought leadership, word-of-mouth and sales activities.

Customer Experience: Relationships,products and services/programs thatenable clients to be successful with theproducts evaluated. Specifically, thisincludes the ways customers receivetechnical support or account support.This can also include ancillary tools,customer support programs (and thequality thereof), availability of usergroups, service-level agreements and soon.

Operations: The ability of theorganization to meet its goals andcommitments. Factors include the qualityof the organizational structure includingskills, experiences, programs, systemsand other vehicles that enable theorganization to operate effectively andefficiently on an ongoing basis.

Completeness of VisionMarket Understanding: Ability of thevendor to understand buyers' wants andneeds and to translate those intoproducts and services. Vendors that showthe highest degree of vision listen andunderstand buyers' wants and needs,and can shape or enhance those withtheir added vision.

Marketing Strategy: A clear,differentiated set of messagesconsistently communicated throughoutthe organization and externalizedthrough the website, advertising,

customer programs and positioningstatements.

Sales Strategy: The strategy for sellingproduct that uses the appropriatenetwork of direct and indirect sales,marketing, service and communicationaffiliates that extend the scope anddepth of market reach, skills, expertise,technologies, services and the customerbase.

Offering (Product) Strategy: Thevendor's approach to productdevelopment and delivery thatemphasizes differentiation, functionality,methodology and feature set as they

Source: Gartner (June 2010)

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Market OverviewCIS Market Evolution

Traditionally, utilities' customer care and billing solutions were providedby system integrators that created a custom-made product at aparticular engagement and then took it to the next assignment as astarting point. The product evolved from an engagement to anengagement-creating leveraged product offering. During the mid-1980sand mid-1990s, that resulted in a prevalence of system integrator (SI)-developed custom "one-off" CIS solutions that were either "meter-centric" or later on "account-centric."

Retail market restructuring activities in the late 1990s created a need for"customer-focused" CIS. That was compounded by Y2K concerns thatcreated a surge of legacy CIS replacements. The new need for CIS toact as enabler of the contestable retail market elevated CIS productsfrom the "run the business" portion of the IT application portfolio to the"grow the business" or even the "transform the business" segment, whichgave rise to CIS's visibility and importance. Increased demand and

investment levels attracted a host of product venders into the utilitybilling market, fostering market development and consequent maturationof the CIS products. That ultimately resulted in what is now a maturereplacement market with numerous players offering commercial off-the-shelf (COTS) CIS software products.

Following the downturn of the market and restructuring in the U.S.(originally the largest CIS market segment), and after almost a decade ofpreparation for retail competition in the European Union (EU; where mostutilities have updated their customer care and billing platforms with COTSCIS products), the majority of the global energy market CIS productshave gone back into the "run the business" portion of the utility portfolio.Consequently, utilities have reverted back to looking for a solution toimprove operational efficiency and reduce customer service cost. Thereare two exceptions. One is the Asia/Pacific market, which is undergoingliberalization and contestability, and still has not achieved the same CISCOTS level of saturation as have EU member countries. The other is theEastern European energy market, which is still ripe for introduction of thebest practices and automation through new CIS COTS products.

map to current and future requirements.

Business Model: The soundness andlogic of the vendor's underlying businessproposition.

Vertical/Industry Strategy: Thevendor's strategy to direct resources,skills and offerings to meet the specificneeds of individual market segments,including verticals.

Innovation: Direct, related,complementary and synergistic layoutsof resources, expertise or capital forinvestment, consolidation, defensive orpre-emptive purposes.

Geographic Strategy: The vendor'sstrategy to direct resources, skills andofferings to meet the specific needs ofgeographies outside the "home" ornative geography, either directly orthrough partners, channels andsubsidiaries as appropriate for thatgeography and market.

Despite the current focus on reducing the cost of customer service (andthe potential benefits of "replatforming" legacy billing and customer caresolutions with COTS CIS products), utilities operating in the regulatedretail environment still struggle to justify costly CIS replacements. Therelatively low level of replacement activities has been reported by mostof the vendors, in particular those focused on North America's Tier 1utility market. Although this can be partly attributed to the economiccrisis, there is another key factor emerging that will shape the CISmarket in the long run, though it may have initially acted as a demandsuppressant. That factor is the smart grid.

Implications of the Smart Grid on the Utility CIS Market

The increased emphasis on energy sustainability and security of supply —and the resulting focus on smart grid and advanced meteringinfrastructure (AMI) — has made an impact on the CIS market. One ofthe key requirements of smart grid is to integrate consumers into energymarkets, and enable better asset utilization and more-efficient energyuse through programs such as economic demand response. CIS has amajor role in enabling those functions through its ability to deal with newbilling requirements. Such requirements include decoupling of commodityand distribution charges, time of use (TOU), feed-in tariffs (FITs), criticalpeak pricing (CPP) and interval billing for residential customers. Inaddition, CIS should be able to address the need for different billingparadigms, such as one required through the introduction of plug-inhybrid electric vehicles.

The mandatory rollout of energy efficiency programs in some jurisdictionsalso poses new requirements, such as the ability to track customerparticipation in demand-response programs and energy efficiencyofferings. An additional requirement emerging in markets focused on AMIdeployment is integration with AMI to support processes such as out-of-service meter reads, credit collection enforcement through remote turnon/turn off and enabling a prepayment function through AMI.

Legacy systems are unable to meet many of these requirements and areoften perceived as barriers to attaining benefits from AMI and smart gridinvestments. Furthermore, scalability and performance requirementsarising from the increased volume of metering data are introducing evenmore requirements that legacy CISs cannot address. Thus, smart-grid-related initiatives (in particular, AMI deployment) should have a positiveimpact on legacy system replacement and increased demand in the CIS

market.

In addition to these requirements, which act as CIS replacementaccelerators, there are new forces put in motion by smart grid initiativesthat have the opposite effect. The common premise in all jurisdictionsfocused on addressing energy sustainability concerns through smart gridinitiatives is to achieve consumption reduction that utilities need toprovide customers with more frequent (in some cases up-to-date)feedback on their energy consumption/costs. Several approaches arecurrently under consideration to address that need:

The distributed model — providing energy cost calculation locallyvia customer gateways, in-home display or home energymanagement (HEM) systems (based on a utility-provided pricingsignal)The hybrid model — using a rating/consumption cost engine builtoutside of CIS on top of the MDM as a meter data repositoryThe centralized model — leveraging the rating engine of a CIS asthe central billing system

The prevalence of interval metering will enable changes to the traditional"batch process billing" into an "incremental billing" model, where status ofthe account can be updated incrementally after every metering interval.This billing model — also known as "event billing" or "real-time billing" — isakin to how rating engines operate (incrementing account status afterevery transaction) in some other markets, in particular the telecommarket. Leveraging CIS to support more-frequent consumption

g g pp q pcalculations, will require significant rearchitecting of the billing enginesthat are currently optimized for monthly batch processing.

The new rating paradigm naturally has attracted vendors from marketsthat employ incremental billing (real-time billing) such as Convergys,which has already entered the market through a deal with Duke Energy.Their key value proposition is that the architecture of their productsmakes them better positioned for emerging utility billing market needsthan cycle-based billing engines provide by current COTS CIS vendors.

This is not the first time telco billing vendors have tried to enter theutility billing space. During the heyday of retail market restructuring inNorth America, numerous telco vendors tried unsuccessfully to enter theutility market, but failed — mostly due to the inability to address specificvertical requirement such as variable jurisdictional rules for flexiblepayment plans, sensitive load customers, estimation techniques anddifferent product dimensions.

Neither incumbent utility CIS solution vendors nor telco vendors at thispoint have product able to meet the billing needs of the future. CISvendors will be challenged to rearchitect their products or address theissue through acquisition of add-on billing engines (such as SAPConvergent Billing based on Highdeal's solution). Niche vendors inparticular will be challenged, and may decide to focus on particularmarket segments or geographies, because many of them will not be ableto afford the R&D investment required for such an effort. New entrants,on the other hand, will be challenged to address specific market needs,which previous telco vendor experience demonstrates is not trivial.

So the race is on, and although needs are not imminent, buyers aresitting on the fence trying to ascertain which solution will emerge thewinner in the race to be a provider of the future billing and consumptioncalculation engines.

The following observations summarize CIS market dynamics since Gartner

published the most recent CIS Magic Quadrant in 2009:

The CIS market continues to bifurcate into two product clusters.Two products that are part of the large enterprise applicationproviders' vertical offerings (SAP IS-U/CR&B for Utilities and OracleUtilities CC&B) have achieved a leadership position and continue tobreak apart from the rest, while all others are trailing behind. Theniche vendors are falling behind — not primarily based on the lackof functionality or inferior product quality; rather, their positionsare a consequence of lower corporate and product viability.Niche vendors tend to have small market share, and theirmaintenance and support (M&S) revenue from the installed basedoes not allow for adequate R&D investment to address emergingneeds. As a result, in the long run, they will functionally fall behindand will not be able to address emerging customer care and billingmarket needs.Niche vendors tend to have a regional market focus, so most ofthe vendors — such as EG Utility (formerly EDB Gruppen), GruppoEngineering and Ferranti Computer Systems — lack marketingactivities or implementation partners outside their native markets.Niche vendors continue to struggle with getting new contracts.Some of these previously analyzed vendors no longer even meetour Magic Quadrant inclusion criteria.

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Market Definition/DescriptionThe Gartner Magic Quadrant concept is based on a customer-orientedmarket analysis. Consistent with the approach espoused by businessauthor Geoffrey Moore, a market is "a set of actual or potentialcustomers for a given set of products or services who have a common

g pset of needs or wants, and who reference each other when making adecision."

Accordingly, the CIS market is composed of utility companies looking forCOTS software packages (commonly known as CIS) that addressbusiness-critical utility M2C and customer care business processes. TheCIS products cover two core utility life cycle processing areas — revenuemanagement and customer management. They reach into two additionalareas — commodity management and service delivery management. TheCIS functional "footprint" primarily covers the operational functions ofCRM:

Account maintenanceOrder processingProduct/service managementRate designBillingCredit collectionAccounts receivableStatementingPayment processing

Customer interaction functionality supports call center and customerself-service needs. Depending on the vendor's retail market focus — thatis, competitive or regulated markets — a CIS may include some analyticalcapabilities, such as customer churn and CPA, or it may have moreemphasis on customer service delivery, such as scheduling and serviceoptimization. In a competitive market, a CIS product also needs to

enable data exchanges with other market participants (networkcompanies, competitive retailers/suppliers and/or market operators).

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Inclusion and Exclusion CriteriaTo be included in this category, software products must cater to themajority of the functional requirements outlined in this Magic Quadrant.The software products evaluated are all marketed as stand-alonecustomer care and billing solutions. To be considered in this market,vendors must be able to address global market needs, as well as theneeds of the regulated and contestable retail markets.

Worldwide, there are more than 200 vendors that address utilities' needsfor customer care and billing through a variety of product/solutionofferings. Most of these are too small, in terms of company size orproduct scope, or have too small a geographic reach to be of interest toGartner clients. For this reason, we evaluated only the top sevenproducts that meet an estimated license fee revenue threshold (fromnew product sales) of $2 million generated during the past 12-monthperiod. To be considered, vendors must have had systems in productionat more than three utility clients.

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AddedNo new products were added in 2010. Convergys (with its Smart CISproduct) was originally considered for inclusion in the 2010 CIS MagicQuadrant due to its ability to address the emerging requirement for"incremental or real-time billing" introduced by smart grid initiatives.However, the product was not in full production at the time of theevaluation and the vendor was dropped from consideration for notmeeting revenue threshold requirements in the energy and utilities CISmarket.

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DroppedBoth of Hansen Technologies' products — HUB and Peace — and Ventyx'sCustomer Suite were dropped from consideration for this year's CIS MagicQuadrant because they did not meet the $2 million license fee thresholdfrom new product sales.

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Evaluation Criteria

Ability to ExecuteThis axis evaluates CIS software application vendors on the quality andefficiency of the processes, systems, methods or procedures that enable

their performance to be competitive, efficient and effective, and topositively affect revenue, retention and reputation. For utilities seekingCIS software, a vendor's ability to execute is primarily a combination offactors driven by product functionality, architecture and performance,and the ability to meet customer expectations during product deliveryand operation. Software application providers are judged on their abilityand success in capitalizing on their vision. Our evaluation of a vendor'sability to execute is based on these criteria:

Product — The breadth and availability of the vendor's productsthat compete in and serve the CIS marketOverall viability — Product quality and consistency, as well as thevendor's financial strength, including the likelihood of the continuedinvestment in CIS software for the energy and utility market andadvancing the state of the art within the provider's portfolio ofproductsSales execution/pricing — Capabilities of presales structures andmanagement activities, including pricing and negotiation, as well asthe overall effectiveness of sales channelsMarket responsiveness and track record — Ability andresponsiveness to meet changing market dynamicsMarket execution — Market share (and mind share) in the globalenterprise marketCustomer experience — Ability to provide technical andrelationship support and services that drive customer satisfactionOperations — Structure that is put in place to effectively meetorganizational goals and commitments

Table 1 lists the relative weighting of various criteria in terms of avendor's ability to execute in this market.

Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product/Service High

Overall Viability (Business Unit, Financial, Strategy, Organization) High

Sales Execution/Pricing Standard

Market Responsiveness and Track Record Standard

Marketing Execution Standard

Customer Experience Standard

Operations Standard

Source: Gartner (June 2010)

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Completeness of VisionThis axis evaluates CIS application vendors on their ability toconvincingly articulate logical statements about current and futuremarket direction, innovation, customer needs and competitive forces,and how well they map to the Gartner position. CIS application providersare rated on their understanding of how market forces can be exploitedto create opportunities for the provider. For utility companies seeking CISCOTS software, vendors' completeness of vision is primarily acombination of vendor domain expertise in different retail markets and

customer segments, an appropriate go-to-market strategy, and focus oninnovation in product functionality and enabling technology. Table 2 liststhe relative weighting of various criteria with regard to the completenessof a vendor's vision in this market. Our evaluation of a vendor'scompleteness of vision is based on these criteria:

Market understanding — Competitive position, market knowledgeand mechanisms for customer feedback, combined with the abilityto articulate market direction and aligned product directionMarketing strategy — Ability to articulate market direction andaligned product and service offering with market requirementsSales strategy — Ability to work with customers through its salesforce and sales toolsOffering (product) strategy — Strength of R&D, capability inproduct design and its ability to offer image stabilityBusiness model — Soundness and logic of the underlying businesspropositionVertical/industry strategy — Ability to provide a vertical-specificproduct and service for market with a different level ofcontestability and serving different products (for example,electricity, gas and water)Innovation — Ability to have investment resources, expertise orcapital for consolidation, defensive or pre-emptive purposes toaddress emerging market needsGeographic strategy — Ability to provide products and servicesglobally

Table 2. Completeness of VisionEvaluation Criteria

Evaluation Criteria Weighting

Market Understanding Standard

Marketing Strategy Standard

Sales Strategy Low

Offering (Product) Strategy High

Business Model Standard

Vertical/Industry Strategy Standard

Innovation Standard

Geographic Strategy Low

Source: Gartner (June 2010)

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LeadersLeaders are vendors that would normally be included in shortlists for CISp od cts fo all t pes of tilities o ld ide The pe fo m p ofitabl

products, for all types of utilities, worldwide. They perform profitably,grow their revenue and have a presence in all major markets. Theirfunctionality is above average, and their technology and scalability areleading edge. They offer solutions for retailers in different market models(such as regulated and competitive) and support large utilities withmultiple commodity offerings, as well as small single-commodity utilities,along with utilities focused on different customer segments. Thesevendors would be followed and tracked by other CIS vendors.

Leaders in this market have paired advanced technology with broadofferings and rich functionality. They are utility vertical businesses of theleading enterprise application vendors (such as SAP and Oracle). Theyhave demonstrated the financial viability needed to fuel R&D to supportnew technology requirements (such as Web services and service-oriented architecture) and enable business process integration acrossfunctional silos in utilities. SAP attained Leader status in 2003, andreconfirmed it due to the combined effects of its significant market shareglobally and continuing R&D investment in integration technologies andproductized competitive market interface extensions. Oracle Utilities(then SPL WorldGroup) attained Leader status in 2004, and retained itsstatus in this Magic Quadrant due to improved corporate viabilityfollowing acquisition by Oracle, solid business performance and futureaccess to a corporate integration technology platform that can supportthe continuing drive for functional footprint extension.

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ChallengersThese vendors perform well in their selected markets or industries.Although they have a high capability and performance (in sales andgrowth), they may not be targeting all segments or geographies of theenergy utilities industry, or they may have a more limited vision of theirfunctionality or technology. Clients with a conservative approach tobusiness will find lower-risk options in this sector.

In the 2010 CIS Magic Quadrant, no vendors have entered theChallengers quadrant.

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VisionariesThese vendors have unique functional or technical offerings, but haveconstrained capabilities in geographic or financial terms. Visionaries arecharacterized by the ability to anticipate market transformation, such asincreased analytical functionality or integration, as well as optimizationfor commodity and service management business processes. Clients thathave a tolerance for risk and are seeking a differentiating product shouldconsider the vendors in the Visionaries quadrant.

In the 2010 CIS Magic Quadrant, no vendors have been placed in theVisionaries quadrant.

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Niche PlayersNiche Players in this market are still worthy of consideration. Given thesize of the market (that is, more than 200 billing and customer caresoftware products), potential buyers should consider that any listing onthis Magic Quadrant is a good indication of vendor/product credibility.Nevertheless, the vendors in the Niche Players quadrant are situated

, y qhere because of a geographical shortfall, narrow focus or a lack of

financial strength (that is, they have not achieved financial viabilitycompared to the market Leaders), or they have not come as far as theLeaders in advancing their technologies or functionality. This preventsthem from being universally suitable to all customers.

Indra, Gruppo Engineering, Ferranti Computer Systems and EG Utility arein the Niche Players quadrant mostly because of their limited geographicpresence. Nexant's placement in the Niche Players quadrant is the resultof its relatively limited focus on competitive retail billing. Clients shouldreview carefully the vendors' target markets and capabilities. Theyshould include them in evaluations if the vendors match their businessscope, geographic areas and specific needs.

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Vendor Strengths and Cautions

EG Utility

Strengths

EG Utility's Xellent CIS product is built on and leverages Microsoft'sERP solution — Dynamics AX.Xellent is fit to purpose for smaller and midsize utilities, includingmunicipal utilities.The Xellent product offers lower implementation and operationcosts, compared with leading CIS solutions that address diverseenergy market needs and various company sizes.The Xellent product's reliance on Microsoft applications andtechnology makes it affordable for smaller IT organizations thatmay find the complex IT requirements of leading CIS productsprohibitive. It is a good candidate for those companies whoseapplication strategies are based on Microsoft products.

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Cautions

EG Utility has a regional presence in Northern Europe, which cancreate support concerns in other areas targeted for expansion(such as North America).Users serving a large number of customers and/or having largebilling batch cycles should scrutinize Xellent's billing scalability,because some customers have expressed concerns with productbatch performance.The Xellent product lacks COTS maturity and implementationpartners, and it is usually delivered as a leveraged product with ahigh level of customization by parent company EG A/S (formerlyEDB Gruppen).Reliance on Microsoft technology and the Dynamics AX ERPplatform may make Xellent less attractive for clients with differenttechnology preferences.

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Ferranti Computer Systems

Strengths

Ferranti's MEtering & COntract Management System (MECOMS) isdesigned to support customer care and the billing needs of

g pp gcompanies having different roles (for example, merchantgenerators, the metering company, the retail company and thenetwork company). MECOMS can be used by companies offeringdifferent services (for example, electricity, water, gas and heat) indifferent markets (regulated and deregulated).MECOMS is built on top of the Microsoft ERP platform Dynamics AX,and leverages its n-tier architecture.MECOMS is certified for Dynamics AX. Ferranti, as a Microsoft GoldCertified Partner, leverages the Microsoft Dynamics AX partnernetwork to expand beyond its home market (Benelux).Ferranti's CIS product has lower total cost of ownership (TCO) incomparison to leading CIS products, which positively affects overallcustomer cost to serve. That makes MECOMS attractive for thesmaller energy retailer concern with low margins in competitiveenergy retail markets.

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Cautions

Although Ferranti offers a partner certification program (from thebeginning of 2010), currently there are no MECOMS-certifiedpartners. This may potentially have negative impact on CISimplementation projects.Some users have reported concerns regarding MECOMS's front-endworkflow usability, which they attribute to the complexity of theMicrosoft Dynamics AX ERP environment.As a relative newcomer in the CIS product market, MECOMS is stillgoing through initial product maturation. Some customers havereported concerns with batch performance, as well as training andimplementation services.Dependence on Microsoft Dynamics AX makes MECOMSunattractive for utilities looking for a different ERP platform.

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Gruppo Engineering

Strengths

Gruppo Engineering's CIS product, Net@Suite, is built as a modularsolution that is composed of two components — Net@SIU, whichaddresses revenue management needs, and Net@CRM, whichaddresses customer service back-office and front-office needs.Gruppo Engineering is the leading CIS product in the Italian market,with 166 clients (serving more than 21 million customers/meters).Net@Suite addresses CIS needs for multiple services, withparticularly large installations in gas and water utilities (servingmore than 30% of Italian municipal utilities).Net@Suite has evolved to support energy and utility markettransformation (in Italy), including unbundling and the introductionof retail competition.

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Cautions

So far, Gruppo Engineering has been exclusively focused on theItalian utility market and its liberalization. It has not been proven inother national and regional energy markets.Net@Suite has not been implemented in many electric utilities (just12% of installations). Electric utilities — particularly thoseoperating in regulated markets or network companies operating incompetitive markets — should scrutinize Net@Suite's service

management functionality.Although the company has made significant R&D investments duringthe past several years, the level of investment made to addressAMI and energy-efficiency support may not be adequate formarkets focused on smart grid and AMI deployments.Some clients have reported concerns with Net@Suite's onlineperformance.

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Indra

Strengths

Indra is a leading Spanish IT solution provider that offersconsultancy services and systems developed for the energy andutility markets.Open Utilities Customer Management is a functionally rich productwhose footprint extends into customer service, outagemanagement and commodity management areas.According to clients, Indra's CIS has good usability and a familiarMicrosoft Windows look-and-feel user interface.Indra has a good presence in Spain, Latin America, Eastern Europeand Asia.

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Cautions

Ninety percent of bills produced by Indra's clients are for servicesprovided in regulated energy markets. Users considering OpenUtilities Customer Management for competitive retail market shouldscrutinize product capabilities in that segment.Most of Indra's utility clients still run Soluziona's legacy CISproduct.Being part of an IT service company may affect future productdirection and limit COTS focus by favoring corporate systemintegration business and business process outsourcing (BPO)offerings.Indra does not have a presence in the North American utilitymarket and is not currently focused on the North American utilitymarket.

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Nexant

Strengths

Nexant RevenueManager can be quickly deployed by new entrantsin competitive energy markets, and it tends to result in lowercustomer service costs.Users accustomed to dealing with large enterprise product vendorsfind the Nexant CIS team responsive and easy to deal with whenaddressing service needs or future product functionality.In addition to its significant presence among North Americanretailers, Nexant RevenueManager has achieved some tractionamong retailers in Western European competitive retail markets.The new Nexant offering, FlexRate, is addressing new functionalityresulting from smart grid and energy technology consumerizationtrends.

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Cautions

Nexant's focus on competitive retail makes its RevenueManagerproduct inappropriate for regulated mass-market retail.Although RevenueManager offers some CRM capabilities, it does notmeet the full CRM needs of competitive retailers. Additionally, usersreport concerns with the product's online performance.Nexant RevenueManager's scalability has not been proved inproduction and may become an issue if its current energy retailclients experience significant growth in their customer bases.As reported by some users, Nexant tends to miss schedules foroccasional custom development requests, which users attribute toa small development team.

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Oracle Utilities

Strengths

Oracle Utilities has structured Customer Care and Billing (CC&B) asa series of modules — most of which can be sold as stand-alonecomponents or assembled into specific market segment solutions toaddress the needs of competitive retailers, fully integrated utilities,water utilities and others.CC&B can be integrated (leveraging Oracle Application IntegrationArchitecture) with other Oracle products (vertical and horizontal)to provide an extended environment that includes mobile workforcemanagement, meter data management and CRM (Siebel).Due to its longevity in the CIS market, Oracle Utilities' CC&B hasrich functionality and has successfully met requirements of varioussize companies in markets with different levels of contestabilitythat provide various utility services (such as complex structure ofwater utilities in Europe).Oracle has proven performance in large Tier 1 energy companiesand can address scalability with up to 550,000 billing services perbatch cycle (currently in production).

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Cautions

Although Oracle has a good winning record in a challenging market,most of its deals are with nonelectric utilities or utilities from themarket segment/regions trailing smart grid initiatives. Becauseongoing implementations tend to heavily influence vendor productdevelopment decisions, regardless of the Oracle smart gridmarketing effort, the real smart-grid-related functionality may beslower to emerge.Being a part of an enterprise application vendor that is also atechnology platform provider may influence Oracle Utilities'technology independence in favor of "home-based" technology,thus affecting integration costs with non-Oracle-basedenvironments. Users should monitor Oracle Partner Network (OPN)activities and involvement in open standards bodies.Some clients have expressed concerns with the access to OracleUtility technical resources and the quality of the training programs.Several Oracle Utilities' customers have reported that their CC&Bimplementations were longer than the average COTS CISimplementation (18 to 24 months). Because the CIS implementationproject duration is not necessarily affected by the product, usersshould monitor the project scope and plan for the integration effortwith additional applications (if integration is not offered out ofbox).

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SAP

Strengths

SAP is a large enterprise software vendor that leads in the CISspace — with 578 utilities worldwide using its SAP IS-U/CR&Bproduct (as reported by SAP). Because of its traditionally strongpresence among large energy companies, SAP has the largestmarket share, defined by the aggregated number of end customersbilled on its installations in production (480 million customers,compared with 93 million from its closest competitor). SAPcontinues its good traction in the CIS market and has signed morenew contracts (54) than all other evaluated CIS vendorscumulatively since the last Gartner CIS Magic Quadrant.Users looking for an integrated horizontal ERP solution and verticalbilling solution may find the SAP offering conducive to their needs.SAP has put significant R&D effort into addressing CIS productintegration with an AMI platform, and creating an off-the-shelfintegration framework using Web services to support utilitycompany needs for CIS and AMI integration.SAP has a well-developed network of implementation partners andtechnology product vendors that help cover the "white space" inthe SAP utility offering.

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Cautions

Even though SAP has attracted a substantial number ofimplementation partners, the large numbers of concurrentimplementations can put a strain on the SAP utility organization'sability to get close involvement and oversight of theimplementation project, which can cause project budget overruns.SAP CIS call center users continue to express concerns aboutproduct usability. Although SAP offers CRM as a means to mitigateIS-U/CR&B call center usability concerns, according to users thefirst utility-specific CRM release did not meet expectations. Recentreleases (CRM 2007 and CRM 7.0), which are getting betterusability/productivity reviews, have apparently addressed thoseissues.SAP CR&B users often find access to technical support(implementation and postimplementation services) challenging.Some clients have reported concerns with CIS product eServicefunctionality.

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