In Idaho, where energy is not deregulated, if you want a back-up generator, surge protection, a home safety audit, energy-efficient financing for a new roof, or other energy-related services, you would buy them from Idaho Power Services, a subsidiary of Idaho Power. But Idaho Power Services has no storefront. Nevertheless, its creative approach to reach customers has been so successful that it recently tied for the prestigious J.D. Power and Associates award for “Highest in Customer Satisfaction with Residential Electric Service in the Western U.S.” What’s their formula for success? Outsourcing.
“In order to give customers an advantage to buying from us instead of Sears or Home Depot, we needed to be able to tell customers about our company and bundle our Idaho Power Services line items on the Idaho Power customers’ bills,” explains Product Manager, Lisa Miller. The bills at that time were difficult to read. Often the customer name, total due amount or kilowatt hours printed on top of a pre-printed column because they were produced on a dot matrix printer, using pre-printed paper that didn’t line up on the printer. There was no room to add the services company’s line items. They also wanted the capability to selectively put separate messages in separate envelopes, which could not be accomplished without redesigning the process.
Idaho Power approved the plan but said the services subsidiary would have to pay for redesigning the bill. “So we took a look at what it was going to cost,” says Miller. “We were going to have to get very sophisticated printers plus have a back-up printer in case one went down, and we would need sophisticated staffing capabilities to put different stuffers in different peoples’ bills. It was going to cost millions of dollars to get the flexibility we needed in marketing, and we didn’t have the space for those big stuffers. The utility side of the business didn’t have to accommodate us and we, as a small business unit, couldn’t afford to do it. Frankly, with 400,000 bills, we don’t have the customer base to support doing this in-house.”
Designing a Solution
After a cost analysis and requests for proposals, they selected DocuCorp’s ASP. The company hosts Internet-enabled document automation solutions, such as customer statements, electronic bill presentment and payment and insurance policies. Miller says DocuCorp was the only company with ideas for significantly increasing customer communication and also lowering costs. Bulk paper buying and printing reminder notices on customer bills instead of mailing separate reminders (saving over $300,000 postage annually helped to offset costs for DocuCorp’s redesign of the bill.
“One of our RFP questions was ‘whose software do you use?’ because if that software company goes out of business, there would be concerns about our bill not looking the same,” says Miller. “That’s one of the things we really liked about DocuCorp. They use their own software. And they are going to be the first ones that find any bugs with new releases.”
For those who may be interested in following the path forged by Idaho Power Services, Miller warns that the process of redesigning a bill (or designing other print impressions) has some potential pitfalls. She recommends that the people with authority to nix the design be included on the design team from the outset. It’s also important to work closely with a supplier who will advise about design issues that may impede implementation. Time, after all, is money; and these types of problems can result in additional per-hour charges for the supplier’s design work.
The three-year agreement with the ASP includes paper, printing costs, stuffing and mailing the bills. Miller says there have been zero errors on the bills or data since DocuCorp took over the process. Idaho Power Services pays a monthly fee for the ASP services and also deposits money into an account for postage. The Service Level Agreement states no bill will be delayed for more than 24 hours.
With its secure server, Idaho Power is able to see its bills online before they go to print and can call the supplier if they want to implement changes. Miller says they also have some very large accounts where bills must be hand delivered. DocuCorp images those bills on the Internet, and the utility company then prints them on a laser jet and hand carries them to the customer.
Plans are underway for DocuCorp to host utility bills online (they are already imaged for the Internet now) and provide electronic bill presentment and payment capability. “The regulated side of our business was saying we can’t afford it,” Miller recalls, “and the marketing side was saying we have to do it. But only 5% of our customers are going to look at their bills online for probably the next two years before there is real demand for this service.” They approached DocuCorp about hosting it for them and recently signed a contract for these services. “We don’t have to do anything since they’re an ASP. Once they get it up and running we just pay them for it,” says Miller.
Among other qualities, the trophy that Idaho Power received for the J.D. Power award recognizes performance in billing, customer service and company image. It is evidence that this outsourcing relationship and the bills it produces for Idaho Power are making impressions as striking as the inked images on paper. Miller says the company views the bills as a way of talking to its customers every month. “It’s an effective communication vehicle, not just a call for payment,” she says.
Lessons from the Outsourcing Primer:
- One question when selecting an ASP is ‘whose software do you use?’ because if that software company goes out of business, it could affect the product or services you are buying from the ASP.
- In designing a product, the people with authority to nix the design should be on the design team from the outset.
- It’s important to work closely with a supplier who will advise about issues that may impede implementation of the project.