Business Process Outsourcing
in the North American Utility Industry
April 19, 2007—Deregulation has changed the competitive environment of some utility companies, forcing them to manage the dual challenges of reducing costs and improving business process performance. Rising energy costs create operating expense challenges. Increased demand drives the need for costly investments in both generation and delivery capabilities. Regulatory mandates and constraints from investment, operations and financial perspectives are expanding. These collective issues and pressures for utility executives require a "back-to-basics" strategy that is not business as usual. In fact, after years of successfully pruning the trees of low hanging fruit with various productivity and cost reduction initiatives, making meaningful improvements in core service delivery is a significant challenge.
Business Process Outsourcing (BPO) is not new to utilities, however it is changing in scale and scope; as well as the potential benefits utilities hope to get from its expanded usage. While not alone in their increased appetite for BPO, utilities employ some business functions and processes that are relatively unique to their industry and operate under a more stringent regulatory and financial environment-conditions that complicate BPO efforts. As a result, the attributes of BPO in the utility space-and the best practices for BPO success-are unique and vary by utility type, geography, regulatory jurisdiction and operating model.
Against this background, UtiliPoint International and EquaTerra and undertook a study of BPO in the utilities market. The goal of this study was to identify the nature and level of BPO uptake in the utilities industry, assess satisfaction, understand the benefits utilities seek when undertaking BPO, and learn the key challenges faced when pursuing these benefits.
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