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Magic Quadrant for Utilities Customer Information Systems

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

    What You Need to Know

    Gartner has covered utilities customer information systems (CISs) since 2000 to address the needs of clients seeking solutions to improve meter-to-cash (M2C) and customer service processes. We are updating the "Magic Quadrant for Utilities Customer Information Systems" to reflect changes in customer buying criteria that have resulted from emerging business and regulatory trends, which subsequently impacted vendor offerings and, consequently, vendor positioning.

    CIS products cover utility M2C business processes with a level of functionality adequate for an integrated utility, and support customer service needs for utility companies operating in regulated markets. In contestable energy markets, CIS products also cover billing needs for network companies (focused on asset management) and retail/supplier companies (focused on customer management and commodity management). However, packaged CIS products are generally inadequate for the advanced customer-facing functions that competitive retailers need – functions such as customer retention, customer acquisition, campaign management and customer analytics. In competitive markets, therefore, retailers tend to supplement packaged CIS products with an add-on CRM solution to enhance customer-facing business processes beyond customer service.

    Current CIS products support billing for multiple customer segments – for example, residential or large commercial and industrial customers – that were previously addressed with separate product-complex billing. Most leading vendors also support billing for multiple utility services, as well as metered and unmetered services/products. The CIS product requirements defined by electric utilities tend to be more complex due to the nature of the business. Issues such as the inability to store and manage commodity flow, more complex market structures such as retail competition and unbundling, smart grids, and the deployment of advanced metering infrastructure (AMI) tend to keep the electric utility at the forefront of business innovation and IT investment, compared with other sectors. As a general rule, configurable commercial off-the-shelf (COTS) CIS products developed for electric utility markets can accommodate business rules and rate structures required by utilities that offer other commodities (such as water or gas) or combined services, since they are built for the superset of business requirements.

    From the IT application portfolio perspective, a CIS represents a core investment focused on supporting a "run the business" strategy. As the largest ticket item among energy companies' IT applications (particularly for regulated utilities or competitive retailers), CISs can account for up to one-third of a utility CIO's IT application operations and maintenance budget.

    CISs tend to have a long life expectancy. Therefore, when CIS users select technology partners, they must not only weigh criteria that will foster operational efficiency and cost reduction, but also evaluate the capability of vendors' products to ensure the scalability and flexibility needed to accommodate changes in still-evolving retail markets. In addition to having long-term viability, successful CIS vendors should also:

    • Have deep domain expertise and long-term commitments to the energy utility.
    • Be able to make the necessary R&D investments to address emerging needs, such as the increased focus on energy efficiency and energy provisioning transformation, the emergence of prosumers and e-mobility, and the impact of "big data analytics" that was introduced with smart metering and social computing.

    In addition, utilities operating in different markets may have specific needs. For example, in regulated markets, they need a product capability to:

    • Provide end-to-end business process integration to achieve operational excellence by supporting service delivery optimization.
    • Reduce the cost of customer service provisioning – for customer care as well as M2C.

    In a competitive market, utilities need a product capability to:

    • Support advanced CRM analytical functions (such as customer churn and profitability analysis).
    • Manage interactions with retail market participants.
    Magic Quadrant
    Figure 1. Magic Quadrant for Utilities Customer Information Systems

    Magic Quadrant for Utilities Customer Information Systems
    Source: Gartner (June 2011)


    Market Overview
    CIS Market Evolution

    Traditionally, utilities' customer care and billing solutions were provided by system integrators (SIs) that created a custom-made product during an engagement and then took it to the next assignment as a starting point. The product evolved from an engagement to the next engagement, creating a leveraged product offering. During the mid-1980s and mid-1990s, this resulted in the prevalence of SI-developed custom "one-off" CIS solutions that were "meter centric" or, later, "account centric."

    Retail market restructuring activities in the late 1990s created a need for "customer centric" CIS. Compounded by Y2K concerns, this created a surge of legacy CIS replacements. The new need for CISs to act as enablers of the contestable retail market temporarily elevated CIS products from the "run the business" portion of the IT application portfolio to the "grow the business" or even the "transform the business" segment, and also elevated CISs' visibility and importance, consequently attracting a host of product vendors into the utility billing market, and fostering market development and maturation. This ultimately resulted in what is now a mature replacement market with numerous players offering COTS CIS software products.

    Following the downturn of the market and restructuring in the U.S. in early 2000, and after almost a decade of preparation for retail competition in the EU, where most utilities have updated their customer care and billing platforms with COTS CIS products, a majority of the global energy market's CIS products have gone back into the "run the business" portion of the utility IT application portfolio. Consequently, in most global energy markets, utilities have reverted back to seeking CIS solutions that can help them improve operational efficiency and reduce customer service costs.

    Despite the current focus on reducing the cost of customer service (and the potential benefits of "replatforming" legacy billing and customer care solutions with COTS CIS products), utilities operating in the regulated retail environment are still struggling to justify costly CIS replacements. Although the demand for new CIS products is improving, when compared with the trough of the global financial crisis, the smart grid "irrational exuberance" and, in some cases, the almost mandatory investment in smart-grid-related activities have not reinvigorated the CIS market to the extent that the retail restructuring of the late 1990s did.

    Implications of the Smart Grid on the Utilities CIS Market

    The increased emphasis on energy sustainability and security of supply – and the resulting focus on the smart grid and AMI – have made an impact on the CIS market in the past few years, and will continue to shape market requirements for CIS products in the years to come. Following are examples of some emerging capabilities expected from CIS products in the future:

    1. One of the key requirements of a smart grid is to integrate consumers into energy markets, and to enable better asset utilization and more efficient energy use through programs such as economic demand response. CISs play a major role in achieving these smart grid benefits; however, this will require new capabilities in CIS products:

      • On the M2C side, CISs now need to support a new type of billing, such as decoupling of commodity and distribution charges, time of use (TOU), feed-in tariffs (FITs), critical peak pricing (CPP) and interval billing for mass-market residential customers.
      • On the customer-facing side, CIS products now need to enable more frequent updates of consumption and energy pricing data, and to support more active customer participation in the energy market through new means of customer engagement via multiple channels and social computing environments.
    2. The anticipated consumer adoption of electric vehicles, and the subsequent buildup of electric charging infrastructures ("at home" and "publicly available"), will require the introduction of different billing paradigms (some akin to roaming charges). Other models of energy technology consumerization, such as on-site renewable generation and storage, which are promoted in many markets through subsidized residential generation tariffs, will also require new billing models, such as FITs.
    3. The mandatory rollout of energy efficiency programs in some jurisdictions also poses new requirements, such as energy efficiency program management, consumer enrollment and participation tracking.
    4. Many markets that have already started AMI deployments expect to realize business benefits through tight AMI CIS integration to support processes such as out-of-service meter reads, credit collection enforcement through remote turn-on/turn-off, and enabling a prepayment function through AMI.

      Legacy CIS solutions are unable to meet many of these new requirements, and are often perceived as barriers to attaining benefits from smart-grid-related investments. Furthermore, scalability and performance needs arising from the increased volume of metering data are challenging legacy CIS solutions.

      Although smart-grid-related initiatives (AMI deployments in particular) should have a positive impact on legacy system replacement and garner increased demand in the CIS market, many of the new requirements are not yet being met by existing vendor offerings.

      In addition, the prevalence of interval metering will enable the transition from traditional "batch process billing" to an "incremental billing" model, wherein the status of the account can be updated incrementally after every metering interval. This billing model – also known as "event billing" or "real-time billing" – is akin to how rating engines operate (incrementing account status after every transaction) in some other markets – particularly the telecommunications market. Leveraging CISs to support more frequent consumption calculations will require significant rearchitecting of the billing engines that are currently optimized for monthly batch processing.

      Large vendors have started to address those requirements through the acquisition of the add-on billing engines (such as SAP Convergent Billing, based on the Highdeal solution) or, in some cases, by leveraging high-performance in-memory analytical engines. Niche vendors in particular will be challenged and may decide to focus on particular market segments or geographies, because many of them will be unable to afford the R&D investment required for such an effort. Additionally, some billing vendors from other markets (such as telco vendor Convergys), or purveyors of "complex billing" engines (such as Nexant RevenueManager or Hansen-Technologies-acquired NirvanaSoft) that are capable of dealing with interval billing, continue to offer "bolt on" billing solutions to legacy systems to support pilot and small-scale implementations of the smart grid programs. Many utilities perceive this as a lower-cost alternative to the full replacement of a legacy CIS product that is unable to address smart-grid-related requirements with a COTS CIS product.

    The following observations summarize CIS market dynamics since Gartner published the previous "Magic Quadrant for Utilities Customer Information Systems" in 2009:

    • There have been no significant changes or quadrant switching among existing vendors, or the addition of new vendors in the 2011 edition of this Magic Quadrant.
    • The CIS market continues to bifurcate into two product clusters. Two products that are part of the large enterprise application providers' vertical offerings – SAP IS-U Customer Relationship and Billing (CR&B) and Oracle Utilities Customer Care and Billing (CC&B) – have achieved leadership positions and continue to break apart from the rest. The niche vendors are falling behind – not primarily based on the lack of traditional sets of functionality or inferior product quality, but rather because their positions are a consequence of lower corporate and product viability compared with the leading vendors.
    • Niche vendors tend to have a small market share, and their maintenance and support revenue from their installed bases does not allow for adequate R&D investments to address emerging needs. As a result, in the long run, they will functionally fall behind and be unable to address emerging customer care and billing market needs.
    • Niche vendors tend to have a regional market focus, so most of the Niche Players in this Magic Quadrant – such as EG Utility (formerly EDB Gruppen), Gruppo Engineering and Ferranti Computer Systems – lack the marketing activities, installed bases or implementation partners outside their native markets.
    • As a result of niche vendors' struggle to break out of their native markets, some are increasingly seeking service opportunities in the CIS sector, including custom development and CIS platform hosting.
    Market Definition/Description

    The Gartner Magic Quadrant concept is based on a customer-oriented market analysis. Consistent with the approach espoused by business author Geoffrey Moore, a market is "a set of actual or potential customers, for a given set of products or services, who have a common set of needs or wants, and who reference each other when making a buying decision."

    Accordingly, the CIS market is composed of utility companies looking for COTS software packages (commonly known as CISs) that address business-critical utility M2C and customer care business processes. The CIS products cover two core utility life cycle processing areas: revenue management and customer management. They reach into two additional areas: commodity management and service delivery management. The CIS functional "footprint" primarily covers the operational functions of CRM:

    • Account maintenance
    • Order processing
    • Product/service management
    • Rate design
    • Billing
    • Credit collection
    • Accounts receivable
    • "Statementing"
    • Payment processing

    Customer interaction functionality supports call center and customer self-service needs. Depending on the vendor's retail market focus – that is, competitive or regulated markets – a CIS may include some analytical capabilities, such as customer churn and customer profitability analysis, or it may have more emphasis on customer service delivery, such as scheduling and service optimization. In a competitive market, a CIS product also needs to enable data exchanges with other market participants (network companies, competitive retailers/suppliers and/or market operators).

    Inclusion and Exclusion Criteria

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

    Worldwide, there are more than 200 vendors that address utilities' need for customer care and billing through a variety of product/solution offerings. Most of these vendors are too small, in terms of company size or product scope, or have too small a geographic reach, to be of interest to Gartner clients. For these reasons, we evaluated only the top seven products that meet an estimated license fee revenue threshold (from new product sales) of $2 million (generated during the past 12 months). To be considered, vendors must have had systems in production with at least three utility clients.

    Added

    No new products were added in 2011, although several new candidates were considered. Convergys (with its Smart Utility Solution product) was originally considered for inclusion in the 2009 Magic Quadrant and reconsidered for this Magic Quadrant. This is because of Convergys' ability to address the emerging requirement for "incremental or real-time billing," which was introduced by smart grid initiatives through its Rating and Billing Manager (RBM). However, because the product was not in full production at three utilities at the time of the evaluation, Convergys was dropped from consideration.

    Two other CIS providers were considered for inclusion this year for the first time – CGI with efluid and Infor with Hansen – but both failed to meet the inclusion criteria.

    Dropped

    No vendors have been dropped from the Magic Quadrant in 2011. Vendors that were dropped in 2009 – Hansen Technologies' Hub and Peace, and Ventyx's Customer Suite – were reconsidered for inclusion this year, but again didn't meet the $2 million license fee threshold from new product sales.

    Evaluation Criteria
    Ability to Execute

    This axis evaluates CIS software application vendors on the quality and efficiency of the processes, systems, methods or procedures that enable their performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. For utilities seeking CIS software, a vendor's ability to execute is primarily a combination of factors driven by product functionality, architecture and performance, and by the ability to meet customer expectations during product delivery and operation. Software application providers are judged on their ability and success in capitalizing on their vision. Our evaluation of a vendor's ability to execute is based on the following criteria:

    • Product/service: The breadth and availability of the vendor's products that compete in and serve the CIS market
    • Overall viability: Product quality and consistency, as well as the vendor's financial strength, including the likelihood of continued investment in CIS software for the energy and utility market, and advancing the state of the art within the provider's portfolio of products
    • Sales execution/pricing: Capabilities of presales structures and management activities, including pricing and negotiation, as well as the overall effectiveness of sales channels
    • Market responsiveness and track record: Ability and responsiveness in meeting changing market dynamics
    • Marketing execution: Market share (and mind share) in the global enterprise market
    • Customer experience: Ability to provide technical and relationship support and services that drive customer satisfaction
    • Operations: Structure that is put in place to effectively meet organizational goals and commitments

    Table 1 lists the relative weighting of the various criteria in terms of a vendor'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 2011)

    Completeness of Vision

    This axis evaluates CIS application vendors on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs, and competitive forces, and on how well those statements map to Gartner research positions. CIS application providers are rated on their understanding of how market forces can be exploited to create opportunities. For utility companies seeking CIS COTS software, vendors' completeness of vision is primarily a combination of vendor domain expertise in different retail markets and customer segments, an appropriate go-to-market strategy, and a focus on innovation in product functionality and enabling technology. Table 2 lists the relative weighting of the various criteria with regard to the completeness of a vendor's vision in this market. Our evaluation of a vendor's completeness of vision is based on the following criteria:

    • Market understanding: Competitive position, market knowledge and mechanisms for customer feedback, combined with the ability to articulate market direction and aligned product direction
    • Marketing strategy: Ability to articulate market direction and aligned product and service offerings with market requirements
    • Sales strategy: A vendor's ability to work with customers through its sales force and sales tools
    • Offering (product) strategy: A vendor's strength of R&D, capability in product design and ability to offer image stability
    • Business model: Soundness and logic of the underlying business proposition
    • Vertical/industry strategy: Ability to provide a vertical-specific product and service for the market with a different level of contestability, and serving different products (for example, electricity, gas and water)
    • Innovation: Ability to have investment resources, expertise or capital for consolidation, defensive or pre-emptive purposes to address emerging market needs
    • Geographic strategy: Ability to provide products and services globally
    Table 2. Completeness of Vision Evaluation 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 2011)

    Leaders

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

    Leaders in this market have paired advanced technology with broad offerings and rich functionality. They are utility vertical businesses of the leading enterprise application vendors (such as SAP and Oracle). They have demonstrated the financial viability needed to fuel R&D to support new technology requirements (such as Web services and service-oriented architecture) and to enable business process integration across functional silos in utilities. SAP attained leadership status in 2003, and has reconfirmed it due to the combined effects of its significant market share globally and continuing R&D investments in integration technologies and productized competitive market interface extensions. Oracle Utilities (then SPL WorldGroup) attained leadership status in 2004, and has retained its status in this Magic Quadrant due to improved corporate viability following acquisition by Oracle, solid business performance, and access to a strong corporate technology platform and sales and delivery channels.

    Challengers

    These vendors perform well in their selected markets or industries. Although they have a high capability and performance (in sales and growth), they may not be targeting all segments or geographies of the energy utility industry, or they may have a more limited vision of their functionality or technology. Clients with a conservative approach to business will find lower-risk options in this sector.

    In our 2011 Magic Quadrant, no vendors have been placed in the Challengers quadrant.

    Visionaries

    These vendors have unique functional or technical offerings, but also have constrained capabilities in geographic or financial terms. Visionaries are characterized by their ability to anticipate market transformation, such as increased analytical functionality or integration, and by their optimization of commodity and service management business processes. Clients that have a tolerance for risk and are seeking a differentiating product should consider vendors in the Visionaries quadrant.

    In our 2011 Magic Quadrant, no vendors have been placed in the Visionaries quadrant.

    Niche Players

    Niche Players in this market are still worthy of consideration. Given the size of the market (more than 200 billing and customer care software products), potential buyers should consider that any listing on this Magic Quadrant is a good indication of vendor/product credibility. Nevertheless, vendors in the Niche Players quadrant are situated there because of a geographical shortfall, narrow focus or lack of financial strength (that is, they have not achieved financial viability compared with the Leaders), or they have not come as far as the Leaders in advancing their technologies or functionality. This prevents them from being universally suitable to all customers.

    Indra, Gruppo Engineering, Ferranti Computer Systems and EG Utility are in the Niche Players quadrant mostly because of their limited geographic presence. Nexant's placement in the Niche Players quadrant is the result of its almost exclusive focus on competitive retail billing. Clients should carefully review these vendors' target markets and capabilities, and include them in evaluations if the vendors match clients' business scope, geographic areas and specific needs.

    Vendor Strengths and Cautions
    EG Utility

    EG Utility, headquartered in Hjorring, Denmark, is a utility-focused IT solution provider owned by Scandinavian IT service vendor EG A/S (formerly known as EDB Gruppen). EG Utility's focus is ERP solutions for different vertical industries built on its own ERP platform, Aspect4, or on third-party products such as SAP ERP or Microsoft Dynamics AX. EDB Gruppen has been providing utility solutions since 1979. In 2001, EG Utility was formed as a wholly owned subsidiary of EDB Gruppen and focused on the utility sector. In 2002, EG Utility developed and started marketing a vertical solution called Xellent by adding several vertical modules on top of Microsoft's Dynamic AX product. Xellent's functionally covers M2C, as well as work and project management's need for a utility.

    EG Utility's CIS solution is composed of Xellent Billing and several other modules, including Xellent Customer Portal, Xellent EDM, Xellent ebIX, Xellent FlexPricing, Xellent CRM, Xellent Payment and Xellent PDA. EG Utility has 120 customers, a vast majority of which are small and midsize Scandinavian utilities. The Xellent product's reliance on Microsoft applications and technology makes it affordable to smaller IT organizations that may find the complex IT requirements of leading CIS products to be prohibitive. Xellent is a good candidate for companies whose application strategies are based on Microsoft products.

    Strengths

    • EG Utility's Xellent CIS product is built on and leverages Microsoft's ERP solution – Dynamics AX.
    • Xellent is fit to purpose for small and midsize utilities, including municipal utilities.
    • The Xellent product offers lower implementation and operation costs, compared with leading CIS solutions that address diverse energy market needs and various company sizes.

    Cautions

    • EG Utility has a regional presence in Northern Europe, which may create support concerns in other areas that are targeted for expansion (such as North America).
    • Users serving a large number of customers and/or having large billing batch cycles should scrutinize Xellent's billing scalability, because some customers have expressed concerns with the product's batch performance.
    • The Xellent product lacks COTS maturity and implementation partners, and it is usually delivered as a leveraged product, mostly by parent company EG's subsidiaries in different Nordic countries.
    Ferranti Computer Systems

    Ferranti Computer Systems, founded in 1976, has been a member of the Nijkerk Group (a Benelux-based industrial IT provider) since 1994. In the Benelux region, Ferranti acts as an SI. Outside the Benelux region, Ferranti delivers its Metering and Contract Management System (MECOMS) product through a channel organization of certified MECOMS partners. MECOMS is Ferranti's solution for the M2C process in competitive and regulated energy and utility markets. MECOMS is built on top of the Microsoft Dynamics AX ERP suite, and it is certified for Microsoft Dynamics AX.

    Ferranti's MECOMS is designed to support customer care as well as the billing needs of companies with different roles (for example, merchant generators, metering companies, retail companies and network companies). MECOMS can be used by companies offering different services (for example, electricity, water, gas and heat) in different markets (regulated and deregulated). As a Microsoft Gold Certified Partner, Ferranti leverages the Microsoft Dynamics AX partner network to expand beyond its home market (Benelux).

    Strengths

    • MECOMS is built on top of the Microsoft ERP platform Dynamics AX and leverages its n-tier architecture.
    • Ferranti's partnerships with larger SIs (such as Logica and TCS) have built delivery channel bandwidth, while its global independent software vendor agreement with Microsoft as a platform vendor for MECOMS indicates Microsoft's commitment to support Ferranti products and offerings.
    • Ferranti's CIS product has a lower total cost of ownership compared with leading CIS products, which positively affects the overall customer cost to serve. This makes MECOMS attractive to the smaller energy retailer that is concerned with low margins in competitive energy retail markets.

    Cautions

    • Some users have reported concerns regarding MECOMS's front-end workflow usability, which they attribute to the complexity of the Microsoft Dynamics AX ERP environment.
    • As a relative newcomer in the CIS product market, MECOMS is still going through initial product maturation. Some customers have reported concerns with batch performance, as well as training and implementation services.
    • Reliance on Microsoft technology and the Dynamics AX ERP platform may make MECOMS less attractive for clients that own or plan to acquire different ERP platforms.
    Gruppo Engineering

    Gruppo Engineering, founded in 1980, is an Italian IT product and service provider composed of 13 companies that specialize in different market segments or lines of business. The company employs 6,500 professionals and reported revenue of more than $1.0 billion for 2010. Two-thirds of the company is privately held by the founders, and one-third is floated on the Italian stock market. Key offering areas are system integration and consulting, outsourcing, and products and solutions. The utility sector contributes approximately 12% of the company's revenue – mostly from system integration and consulting activities.

    Gruppo Engineering's CIS product, Net@Suite, is built as a modular solution. It has two components: Net@SIU, which addresses revenue management needs, and Net@CRM, which addresses customer service back-office and front-office needs. Gruppo Engineering owns 30% of the Italian utility market, and 12.8 million utility customers in Italy are billed using Net@Suite.

    Strengths

    • Gruppo Engineering is the leading CIS product provider in the Italian market. It has more than 150 clients and serves more than 28 million customers/meters.
    • Net@Suite addresses CIS needs for multiple services, with particularly large installations in gas and water utilities (serving more than 30% of Italian municipal utilities).
    • Net@Suite has evolved to support energy and utility market transformation (in Italy), including unbundling and the introduction of retail competition.

    Cautions

    • So far, Gruppo Engineering has been exclusively focused on the Italian utility market and its liberalization needs. It has not been proved in other national and regional energy markets.
    • Less than one-quarter of Net@Suite clients are electric utilities. Electric utilities – particularly those operating in regulated markets or network companies operating in competitive markets – should scrutinize Net@Suite's service management functionality.
    • Some clients have reported concerns with Net@Suite's online performance and usability.
    Indra

    Indra is an IT solution and service provider headquartered in Madrid with a reported $3.5 billion in revenue in 2010. In the IT services space, it offers consultancy services and systems developed for the energy and utility markets. Indra entered the utility market through its acquisition of Soluziona (a consultancy spinoff of the third largest Spanish utility, Union Fenosa), which, in addition to IT and engineering services, offered hosting of its legacy CIS solution, and sold the CIS product called Open Utilities Customer Management starting in early 2000.

    Despite the name, Open Utilities Customer Management is not a CRM product; rather, it covers the entire commodity-related, revenue-related and customer-service-related processes of a utility. Open Utilities Customer Management was developed by Soluziona in early 2000, and although it was aggressively marketed outside of the Spanish-speaking world, it has not gained much traction – with some exceptions in Eastern Europe and Asia. Indra's CIS solutions in production are used to bill 48 million utility customers. However, a significant number of those customers are billed on Indra legacy solutions rather than the COTS CIS product Open Utilities Customer Management. Indra is currently in the process of developing a custom solution for a Spanish utility, and is considering bringing that to market as a leveraged product for future customer engagements.

    Strengths

    • Open Utilities Customer Management is a functionally rich product whose footprint extends into customer service, outage management and commodity management areas.
    • According to clients, Indra's CIS has good usability and a familiar Microsoft Windows "look and feel" user interface.
    • Indra has a good presence in Spain, Latin America, Eastern Europe and Asia.

    Cautions

    • Ninety percent of bills produced by Indra's clients are for services provided in regulated energy markets. Users considering Open Utilities Customer Management for the competitive retail market should scrutinize product capabilities in that segment.
    • Most of Indra's utility clients still run Soluziona's legacy CIS product.
    • Being part of an IT services company may affect future product direction and limit COTS focus by favoring the corporate system integration business.
    Nexant

    Nexant, founded in 2000 as a spinoff of Bechtel, is a San Francisco-based, privately held energy technology consulting and solution company with a wide range of offerings in the energy sector. Nexant entered the utility billing market in 2008 through the acquisition of Excelergy, a U.S.-based vendor founded in the mid-1990s, to pursue opportunities in the competitive and transforming energy markets – particularly in the revenue and commodity management domains.

    Nexant RevenueManager for utilities addresses needs of the competitive retail market for high complexity in product configuration and relatively low deployment costs. In addition to its significant presence among North American retailers, Nexant RevenueManager has achieved some traction among retailers in Western European competitive retail markets. Recently, Nexant started repositioning its product as an add-on billing engine to legacy CISs for utilities seeking more complex rate structures based on interval or dynamic billing, or complex product offerings including demand response and energy efficiency rebates.

    Strengths

    • Nexant RevenueManager can be quickly deployed by new entrants in competitive energy markets, and it tends to result in lower customer service costs for its users.
    • Users accustomed to dealing with large enterprise product vendors find the Nexant CIS team responsive and easy to deal with when addressing service needs or future product functionality.
    • The new Nexant offering, FlexRate, is addressing new functionality resulting from smart grid and energy technology consumerization trends.

    Cautions

    • Nexant's focus on competitive retail markets makes its RevenueManager product inappropriate for regulated mass markets.
    • Although RevenueManager offers some CRM capabilities, it does not meet the full CRM needs of competitive retailers.
    • Nexant RevenueManager has been recently used by U.S. competitive retailers serving more than 1 million customers; however, scalability beyond that has not been proved in production.
    Oracle Utilities

    Oracle is a large enterprise software and IT technology company headquartered in Redwood Shores, California, with revenue exceeding $26.8 billion for FY10 (which ended 31 May 2010). Oracle entered the utility application market through the acquisitions of SPL WorldGroup and Lodestar in 2006 and 2007, respectively, and the subsequent formation of its Utilities Global Business Unit. Oracle Utilities offers a wide range of IT applications in the utility sector.

    Oracle Utilities' CIS product CC&B has evolved from SPL WorldGroup's leveraged product CIS Plus, which SPL WorldGroup productized and started offering as a COTS product renamed CorDaptix in early 2000. Through the Lodestar acquisition, Oracle obtained the Lodestar CIS solution Customer Choice Suite, which is not currently marketed as a complete CIS, but rather as a set of individual products (such as Billing Component, Load Profiling and Settlement, and Quotation Management) in a broader M2C market space. Due to Oracle Utilities' longtime focus on the CIS COTS market, CC&B (which is completely technologically replatformed from the original SPL WorldGroup CIS Plus) is a configurable product with a rich functionality set that has successfully met the requirements of various size companies that provide various utility services in markets with different levels of contestability.

    Strengths

    • Oracle Utilities has structured CC&B as a series of modules that can be assembled into specific market segment solutions to address the needs of competitive retailers, fully integrated utilities, water utilities and others.
    • CC&B can be integrated (leveraging Oracle Application Integration Architecture) with other Oracle products (vertical and horizontal) to provide an extended environment that includes mobile workforce management, meter data management and CRM (Siebel).
    • Oracle has proven performance in large Tier 1 energy companies and can address scalability with up to 550,000 billing services per batch cycle (currently in production).

    Cautions

    • Although Oracle continues to have good traction in the CIS market, deals that Gartner has seen are mostly with nonelectric utilities, or utilities from the market segments/regions trailing smart grid initiatives. In Gartner's view, since ongoing implementations tend to influence vendor product development directions, smart-grid-related functionality could emerge somewhat slower.
    • While Oracle Utilities currently provides CIS product on multiple platforms (such as Oracle, DB2 and SQL Server), being part of an enterprise application vendor that is also a technology platform provider may influence Oracle Utilities' technology choice in favor of "home based" technology, thus affecting integration costs with non-Oracle-based environments. Users should monitor Oracle PartnerNetwork (OPN) activities and its involvement in open standards bodies.
    • Some Oracle Utilities' customers have reported that their CC&B implementations were longer than the average COTS CIS implementation (18 to 24 months). Because the CIS implementation project duration is not necessarily affected by the product, users should monitor the project scope and plan for the integration effort with additional applications (if integration is not offered out of the box).
    SAP

    Founded in 1972, SAP is a publicly traded global enterprise software vendor headquartered in Walldorf, Germany, with revenue in 2010 exceeding $17.5 billion. In addition to its horizontal ERP offering, SAP has been providing utility-specific software since the mid-1990s, initially focusing on the revenue cycle and then following with asset management. Current SAP for Utilities solutions are part of Business Suite 7 Innovation 2010 and cover a wide set of functionality for companies focused on different segments of the energy value chain, operating in a variety of markets as well as offering different services.

    SAP's utility M2C offering is composed of SAP Customer Relationship Management and Billing for Utilities as well as adjacent products (SAP Energy Data Management for Utilities, SAP Customer Financial Management for Utilities and SAP Collaborative Services Management for Utilities), which companies can assemble to address the specific needs of their markets and a specific domain focus. According to SAP, 602 utilities worldwide are using its CIS solution. Because of its traditionally strong presence among large energy companies, SAP has the largest market share, defined by the aggregated number of end customers billed on its installations in production (close to 500 million customers, compared with 96 million from its closest competitor).

    Strengths

    • Users seeking an integrated horizontal ERP solution and vertical billing solution may find the SAP offering conducive to their needs.
    • SAP continues to invest in broadening product functionality to address the needs of the transforming energy market. In addition to meeting specific competitive market requirements, SAP is addressing new requirements emerging from smart grid initiatives, such as "big data analytics" in utility retail and smart metering sectors through its in-memory HANA offering.
    • SAP has a well-developed network of implementation partners and technology product vendors that help cover the "white space" in SAP's utility offering. For example, by successfully leveraging ecosystems of vendor partners and customers, SAP developed AMI@SAP as an off-the-shelf integration framework to support utility companies' needs for CIS and AMI integration.

    Cautions

    • Even though SAP has attracted a substantial number of implementation partners, the large numbers of concurrent implementations can strain the SAP utility organization's ability to get close involvement and oversight of the implementation project, which can cause project budget overruns.
    • According to SAP, initial customer complaints with the low usability of CR&B are being addressed through CRM, with releases CRM 2007 and higher (CRM 7.0) having vertical features. However, customers continue to give low grades to product usability and e-service functionality.
    • Some clients have reported concerns with training and support services.
    Vendors Added or Dropped

    We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

    Evaluation Criteria Definitions
    Ability to Execute

    Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets, skills, etc., whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed 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 the business unit, and the likelihood of the individual business unit to continue investing in the product, to continue offering the product and to advance the state of the art within the organization's portfolio of products.

    Sales Execution/Pricing: The vendor's capabilities in all pre-sales activities and the structure that supports them. This includes deal management, pricing and negotiation, pre-sales support and the overall effectiveness of the sales channel.

    Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.

    Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message in order to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional, thought leadership, word-of-mouth and sales activities.<.

    Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements, etc.

    Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

    Completeness of Vision

    Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those with their added vision.

    Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

    Sales Strategy: The strategy for selling product that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

    Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements.

    Business Model: The soundness and logic of the vendor's underlying business proposition.

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

    Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

    Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.

    Source: Gartner RAS Core Research, G00213510, Z. Sumic, 15 June 2011
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