A New Report from Energy Business Reports Phoenix, AZ – January 21, 2007 – In the wake of regulatory reform and restructuring, utilities in the U.S. developed strategies to shift risk, reduce costs, and focus managerial attention on aspects of their businesses that would give them competitive advantages. At the same time, they sought to access skills and capabilities that did not exist within their organizations and to develop and utilize technology in various non-core areas of their businesses. The solution to these challenges? Outsourcing.
Outsourcing is a long-term business relationship with an external service provider to procure services traditionally performed within a company. Outsourcing usually applies to a complete business process and implies a degree of managerial control and risk on the part of the external provider. Business Process Outsourcing in the utility industry is the subject of the latest report from Energy Business Reports.
Deregulation, technology, energy costs, infrastructure security, cybersecurity risks, and numerous other factors have created a dramatically changed landscape for utility companies and made utility functions such as distribution system management; metering, billing and customer care services; SG&A processes; and IT processes ideal candidates for outsourcing.
Companies stand to benefit from outsourcing through restoration of predictable growth, improved service levels and quality, and increased profitability for investors. However, pitfalls exist, and several case studies outlined in the report identify the potential perils of outsourcing.
A successful outsourcing relationship embodies incentives for all parties and has clear business objectives, strong sponsorship and leadership, a strong culture fit, clear and measurable performance standards, effective communications, and a human resources transition plan.
Given the industry's need to meet financial targets through quality, service, and efficiency, hundreds of utility companies are looking to streamline, modernize, and rationalize their business processes with the help of third-party companies. This report summarizes key drivers for outsourcing in the utility industry, outsourcing models, political and regulatory issues, and methods for sustaining cost savings and performance.
As outsourcing makes further inroads into the utility industry, companies are taking a closer look at the differences between operational and transformational outsourcing. A well-planned and well-structured outsourcing agreement results in a long-term, mutually beneficial relationship between the parties. With vision, careful planning and oversight, and proper governance models in place, utilities can find significantly better economics through outsourcing ventures.
About the Publisher: This report is published by Energy Business Reports, an energy industry think tank and leading source for energy industry information and research products. Other reports available from EBR include: Market for Cellulose Ethanol, Potential of Oil Sands as an Energy Source, Weather Risk Management, Natural Gas Storage Effects on Energy Trading, Fuel Cell Technology, Outlook for Unconventional Gas, Securing Energy Assets and Infrastructure, Market for Solar Photovoltaics, and Understanding the China Energy Market. This can be ordered at
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