Water utilities can save time and money by assigning some of their more labor-intensive tasks by switching to utility management systems.
Municipal water utilities are under increasing pressure to provide their services for fewer dollars, with the elected officials in charge of these utilities always reluctant to raise rates. At the same time, many municipalities are constantly growing, always adding new customers, both residential and commercial. This puts utility engineers and general managers in a tough spot: They have to provide the same level of service to a greater number of users, without gaining any extra funds to do so.
The solution for a growing number of utilities? Outsource some of their services, whether it be billing and collection, reading meters, or providing monthly usage reports, to outside utility management service providers, companies such as Minol.
Minol, a worldwide company with its US headquarters in Addison, TX, provides a variety of utility management services. The company can handle billing and collection for a municipal water utility in California, read meters for another in Texas, and do both for a busy military base. The company can handle just one sliver of a water utility’s needs or an entire package. Minol serves 100 water districts across the country, reading their meters, sending out their monthly bills, detecting their leaks, and collecting their customer payments. It does the same for military bases. There’s only one thing Minol doesn’t do: It doesn’t provide any actual water to these districts’ residents.
And Minol is far from the only company providing such services.
As popular as utility management services are now, officials with companies such as Minol expect the market for their services to only increase.
“We just make more economic sense,” says Carlos Ochoa, director of business development with Minol. “If you have a town with 1,000 meters, it basically sends out 12,000 bills per year. Minol sends out 320,000 bills a month. If a town has one person reading the meters, one person reading the bills, and another person looking for leaks in the system, the salaries alone are killing them. And that is just to send 12,000 bills a year. We can put all that under our umbrella. The benefits to municipalities are immense.”
Companies such as Minol promise to lower the monthly expenses incurred by municipal water utilities. They do this by handling the most time-consuming, and labor-intensive, duties these utilities face. This naturally saves utilities money when it comes to doling out employee salaries. But utility management service providers promise something else, too: improved efficiency.
By hiring an outside firm to handle such onerous chores as collecting late payments or sending out monthly bills, utility engineers and managers can concentrate instead on more important matters: They can plan for upcoming system expansions, discuss innovative ways to serve growing communities, or develop plans for more efficient overall service, without having to waste precious time or resources on the more mundane duties inherent in providing water service.
These are all important benefits, but before signing up with a provider of utility management services, utility directors and engineers must first ask the important questions: What jobs should they outsource, what utility management company should they go with, and what software solutions make the most sense for their particular utility?
Boosting Efficiency
Officials with the City of Englewood, CO, in 2004 faced a decision: Their municipal water utility—which provides drinking water and sewer services to more than 40,000 active customers—relied on an extremely outdated database platform to handle billing, collections, and customer service. Utility officials quickly made their choice: They would replace the old system with a new billing and customer information system to better serve customers. Englewood chose CIS Infinity, created by Advanced Utility Systems.
The software allows municipalities and other users to analyze customer information, send out bills, collect payments, manage inventory, and issue service orders. It’s work that’s necessary for a utility but hardly as important as the task of providing clean, healthy drinking water. This is different, too, from outsourcing these tasks: Municipal employees still run the software provided by Advanced Utility, but now no employees have to find time in their schedule to handle the many tasks the CIS program tackles.
Don Ingle, director of information technology with the City of Englewood, says that the new system has allowed the municipality to better track who is using exactly how much water and when water demand is greatest in different parts of the municipality’s service area. It’s allowed the utility to do this without placing a greater strain on its already busy employees.
“We are able to capture more information about our customers than we ever could have done with our old system,” Ingle says. “Previously, we were only able to collect basic information about our customer base. This, though, is a true customer information system. It allows us to collect information through correspondence with customers.”
According to Ingle, the CIS program also allows Englewood’s water utility employees to perform in-depth studies of water-use patterns or customer queries. With the city’s old monitoring system, the job of creating detailed use reports involved a much more involved chore and—as a result—was less likely to be done.
“The reporting is more seamless,” says Ingle. “Previously, if we needed a report, it would have to flow through our programmers. That was just an extra step. In the new system, users can easily create their own reports and queries. They can generate their own output. There is a lot more power in users’ hands to do analyses and collection information.”
The system does this without forcing Englewood to divert its employees to the important but rather mundane tasks of billing, collections, and customer service. The end result is a cost savings for the city.
Developing a system in-house to handle these chores never was a serious possibility, says Ingle.
“We never really considered that option, given the skill sets we’d need. We always felt that it’d be best to go out into the marketplace. That is the most prevalent way for municipalities to do it now. There are good software companies out there that can make platforms to handle these tasks.”
Officials with Englewood’s water utility recently found out the true value of their relationship with Advanced Utility. Englewood provides wastewater services to an extensive ring of unincorporated areas located in the city and county of Denver, areas that lie outside of Englewood’s official city limits. While these areas receive their wastewater services from Englewood, they receive their drinking water from Denver. The question had always been how Englewood could accurately deduct and how much of a strain these unincorporated areas—which are primarily served by Denver—place on the city’s water utility. Figuring this answer, before Englewood purchased CIS Infinity, meant that Denver’s programmers had to perform custom data extraction. Englewood’s programmers then had to bring those data into the city’s database. This, of course, was an immensely time-consuming process.
Today, though, the process is simple. Denver’s programmers simply provide a file to Englewood. CIS Infinity then quickly extracts the necessary information and supplies it to Englewood’s own platform. The file from Denver contains the average water consumption for Englewood’s clients who receive their drinking water from the city and county of Denver. This provides Englewood with a good way of calculating the burden that these clients place on its wastewater treatment system. Armed with this information, Englewood can accurately bill these customers. Before signing on with Advanced Utility, this process took three months. Now? It takes two to three weeks, total.
“We are providing this wastewater service to the entire Denver Southwest (metro) Corridor, so it is a significant area,” Ingle says. “It was a very burdensome process in the past. Now it’s a standard process for us. It’s no longer a burden.”
Varied Services
Ochoa, from Minol, is used to such success stories. Minol has long provided support for busy utilities. The company can provide utilities with services such as automatic meter reading, bill processing, financial analysis, collections services, and call-center operations. Minol also provides these services to smaller entities that also provide their own water services. Another big client: military bases.
“Basically, you could picture Minol as one big water utility that does not provide the water but does provide service to 100 water districts at one time,” Ochoa says.
Outsourcing some of the duties of providing water makes sense for all clients, Ochoa says, but it’s an especially good move for smaller clients. By working with utility management providers, these clients can make the most of their often-limited financial resources.
“All the things involved with providing water, mailing out bills, and collecting payments adds up,” Ochoa says. “And that’s without labor. When you add in the costs of labor, you are talking about significant costs. For a water district that is not part of a municipality, where it just wants to provide potable water, they are reducing all those other costs by signing up with a management system. That will definitely impact their overhead. It will definitely lower their costs.”
Out With the Old
Officials with the utilities department in Bellevue, WA, turned to a utilities management company in 2004, when they made the decision to replace their water utility’s legacy automated billing system with Advanced Utility’s CIS Infinity system.
The city had been using its previous system since the early ’90s, says Margaret Nolen, assistant manager with the city’s utilities department. Former staffers had written the program but had since retired or had left the department. It became a struggle to find employees who had the technical skills to maintain the system.
“The old system was pretty much worn out,” Nolen says. “It was time to move on.”
Bellevue submitted a request for proposal, or RFP, for a new automated billing system. The city did not consider building its own in-house system because, according to Nolen, such a move would not have been cost-effective. For the city, turning to an outside utilities management firm for the software made far more economic sense.
The proposal sent in by Advanced Utility impressed city officials. But before finalizing a contract with the company, the Bellevue managers requested that Advanced Utility send its engineers and programmers to their facility so that the programmers could assess Bellevue’s specific needs. It’s a step that Nolen recommends for all utilities.
“We wanted our final contract to identify specifically what we wanted to have happen,” Nolen says. “In hindsight, we benefited from that practice. We came in on time and under budget with the new billing system.”
The system has worked well since its installation in March 2004, Nolen says. The utility relies on it to bill its 38,000 customers for water, wastewater, and storm drainage. The system also tracks customer consumption information, providing the City of Bellevue with important data regarding peak water-use times. As another benefit, the system handles delinquencies and collections. When customers call in with questions about their bills or service, utility operators can quickly call up their information online and respond to any questions they may have regarding their accounts.
Nolen says that going with an outside vendor for the billing system, as opposed to creating a new system in-house, has turned out to be a wise decision.
“We would have had to have developed and maintained our own systems, which not only involves staffing but also a certain amount of risk,” Nolen says. “Also, we have about 38,000 customers. Basically, that’s not enough volume to warrant having all the expertise on staff that we’d need to create and maintain our own in-house system. It wasn’t a good value proposition.”
Nolen recommends that utilities follow Bellevue’s lead by adding maintenance and updating agreements in whatever contracts they sign with outside vendors. Advanced Utility Systems, for example, provides regular updates to Bellevue’s automated billing system. Bellevue also has a maintenance agreement with the vendor. If the city experiences any problems with the billing system, it need only report them on Advanced Utility’s Web-based reporting system. Bellevue officials can rank the problems in terms of their severity, generating a faster response for the most serious of issues.
It’s little surprise to Nolen that a growing number of utilities, facing their own legacy systems that have become outdated, are turning to outside sources rather than in-house personnel to create new automated systems. The key, of course, is for utilities with outdated billing or meter-reading systems to find the courage necessary to order a full-scale conversion. No one likes the idea of such a massive change. But once the awkward transition period is over, Nolen says, utilities that do update will find it easier to run their billing, collection, and meter-reading functions more efficiently.
“I know that some utilities may be hesitant to update or change their systems. They may put it off as long as possible. There have been cases of failed conversions,” Nolen says. “But if you can get involved with an experienced vendor who has done this sort of thing many times before, they usually have a model for successful conversions. When we worked with Advanced Utility Systems, they had a model. It pretty much worked just as they said it would.”
A Growing Industry
Steve Hammond, vice president with Harris Computer Systems, the parent company of Advanced Utility Systems, points to three main reasons for the growth in the popularity of utility management systems. First, many of the municipal officials familiar with the existing automated bill and meter-reading systems at water utilities have retired. The new employees hired to take their place are unfamiliar with the legacy systems and would prefer to work on a newer, more efficient automated platform. Secondly, most new automated systems are what Hammond calls “out-of-the-box” systems. They don’t require much customization and are easier to operate. Thirdly, by working with a utility management service company, utilities save significant dollars over building their own in-house system.
“I think municipalities are realizing that a lot of systems out there can bring them more efficiencies than they can build themselves internally,” Hammond says. “When someone has a system that is aging, they can easily find a new system that not only meets the same level of service but actually exceeds it. The real driver for municipalities today is long-term cost. You can’t recognize a cost savings when you first purchase a new automated system. It’s always going to cost money to update your software and purchase a new system. But in the long term, utilities will realize significant savings with the efficiencies that the new automated systems bring.”
Working with an outside utility management services provider can bring a host a benefits to a water department. But what questions should utility officials ask before signing on with an outside vendor?
Hammond says that utilities should ask for references and make sure that the vendor has already worked with similar municipal clients in terms of size, services, and needs. Utilities should provide vendors with a checklist of functions they want their utility services management firm to provide. This can be as simple as providing automated billing software or as complex as staffing a call center and sending out meter readers on a regular basis.
“Take some key business processes that are so important to your utility that you couldn’t survive without them,” Hammond says. “Have the vendors explain them to you. I would ask a vendor, ‘Prove to me that your implementation works. Prove to me that your software works.’ You don’t want to end up with a great piece of software that the vendor can’t implement well.”
There are challenges involved in working for the first time with an outside utility management provider, Hammond says. The biggest is managing the changeover period. Municipalities at the very least will have to train employees to use new software. This will require new thinking from employees who may not be used to change, Hammond says.
“The utility workforce is not like the rest of the world. I know IT [information technology] people who change jobs every year. Utility people don’t,” Hammond says. “You already are fighting an uphill battle walking in there and announcing that there are going to be some serious changes.”
This can be overcome, though, if utilities involve their employees in the selection process of a utility management firm.
“It’s so important to have the actual users who take the phone calls and do the work be a part of the selection process,” Hammond says. “It’s important to have user involvement during the implementation process, too. One of the biggest challenges a utility will face is change management. Everything else is secondary.”
Ramona Yuskanich, commercial office manager for City Water, Light, & Power of Springfield, the municipal utility in Springfield, IL, installed Advanced Utility Systems’ CIS program in May 2003. The system replaces Springfield’s former billing system, which had originally been installed in the late ’70s. The change was necessary: The municipality could no longer receive customer support on the system because of its advanced age.
Today, Yuskanich is pleased with the way her system is operating and would recommend that any municipality follow Springfield’s example and work with a utility management service provider.
“This has helped us to operate so much more efficiently,” she says. “The system operates in real time. If a customer comes in to make a payment, the system shows it as pending on their account. If that person had been scheduled to have his service cut, we can immediately see if that payment is on the pending list. We can then put them off the cut list. If a customer said he made a payment, we’ll see it. If a customer isn’t being truthful, we’ll know that, too. It has certainly improved the efficiency. We’re not running around here like chickens with their heads cut off.”