Solution Providers In the Spotlight

With California's energy shortage in the forefront of everyone's minds--and political tinkering, price spikes, lawsuits and uncertain market conditions affecting the utility marketplace as a whole--solution providers are carving out opportunities amid the sector's hardships.

While California-based utilities may be stuck in a holding pattern as they hash out their immediate problems, the rest of the industry is taking notes and preparing to avoid a similar situation. Deregulation is driving utilities and the solution providers that serve them to adapt.

"The California crisis provides an opportunity for us to explain and help our audience understand our array of offerings and strategies," says Paul Yarka, chief digital strategist at Convergent Group, an e-business solution provider based in Englewood, Colo. In fact, Yarka says he has spoken to the major utilities in California, as well as some of the smaller municipalities, as a direct result of the recent concerns. "We understand the details of their business models and problems as related to the nature of deregulation," Yarka says.

Silver Lining
According to Steve Woodmansee, senior product consultant for Connext, a Seattle-based solution provider, the situation in California seems to be scaring utilities from other states right into its hands.

"We have an easy sell to make with the larger utilities outside of California," he says. "They are scared, and they want the best systems to help them compete."

One example is Connext customer Puget Sound Energy, based in Bellevue, Wash., which conducts its business as if it were already deregulated. Puget uses Connext's billing and customer-care solution, ConsumerLinx, as the underlying technology for its Personal Energy Management program, which delivers real-time pricing to customers. Even though Washington is not slated to be fully deregulated until 2003, Puget is connected to the same independent system operator (ISO) as California and is prepared for any rolling effects that California's problems might bring to its own backyard.

Convergent is also able to see the opportunities arising from California's energy woes.

"The current energy crisis provides a great marketing, customer-engagement and involvement opportunity for us," Yarka says. "Our technology allows utilities to address their problems in a variety of ways, and now is the time to educate them about all of our capabilities." Convergent's client list includes Alleghany Power in Pennsylvania, Baltimore Gas & Electric, Florida Power & Light and New York's ConEd.

Miserly Times
Another issue affecting solution providers serving utilities is the unseen market conditions ahead: Deregulated utilities are suffering from their inability to pass along supply costs to their marketplace. In addition, they face legal actions, supply shortages, and environmental and political issues. These factors are causing them to be cautious in how they spend their money.

"Utilities are more conservative due to the debt issues they have, and that affects the type and style of engagements we employ inside of California. But outside of California, it is helping us engage customers," Yarka says. "As these issues are addressed, I see the utilities in a position to buy new solutions and services to prevent the problems that have come to light in the past few months."

Increasingly, solution providers are sharing their vision of where deregulation will bring utilities to get their foot in the door of these potential customers.

"We have to demonstrate our understanding of deregulation via philosophical conversations, just to make sure we and our customers are on the same page," Connext's Woodmansee says.

This need for increased communication has pushed many solution providers into consulting, without ever formally deciding to make that shift.

"We are absolutely playing that role more now than we did before," Woodmansee says. "The days of showing up with a PowerPoint [presentation] and talking only of the solution are long gone and not coming back. This is a time where solution providers have to embrace change as quickly as do our customers."

And solution providers can use the issues in California as a springboard into other, more stable, markets.