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5 Reasons Why ERPs Alone Are an Inefficient Choice for Utility Billing

ERP_Systems_Vs._Utility_Billing_Graphs

Have you ever tried to work on a project where you’ve had a tool that’s just “close enough” to get the job done, but not the right tool for the job?

Sure, you might be able to hammer a screw into a piece of wood with enough force and will power…But isn’t using a screwdriver so much more efficient and effective?

Maybe a Toyota Corolla could win the Indy 500, but wouldn’t a highly engineered Indy car be a better fit to get to victory lane?

Making an enterprise resource planning product, or ERP, fit as your primary billing engine for the unique needs of utility services is like hammering in a screw or racing with a reasonably priced mid-sized sedan.

With enough effort and money, utilities could make the ERP fit utility billing’s unique needs. But using a specific tool built for the task makes it so much easier and more efficient

ERPs are a great tool for some utility entities’ accounting needs, but they can be inefficient for the majority out of the box. Truly a jack of all trades, but master of none when it comes to utility billing systems.

But what do we mean by an accounting system for utility organizations? Isn’t any system that records transactions and numbers an accounting system?

Accounting and billing work together to manage the movement of money in your organization.

The effort is distinct and typically done by two different operating entities within an organization. However, billing often focuses specifically on the money coming in which is known as accounts receivable. Accounting, and their supporting software, gives a much wider view of the money flow by pulling all the pieces together to enable analysis of your financial status.

With how complex just the billing processes are in the utility industry, utility entities should be using billing systems that are built to solely focus on doing this mission critical job and doing it exceptionally.

And maybe a more accounting and reporting focused ERP could be setup to fit those unique needs, but usually that involves massive amounts of customization, lack of updated features, concessions on internal user experience, implementation headaches, and additional friction for customers.

Let’s dive deeper into the five areas that will cause inefficiency in billing processes should you choose an ERP to fit the needs of Utility Billing. 
 

Who Does Your System Serve?


The first step of doing any job well is understanding not only the job at hand but for whom the tool was designed to help accomplish that task. 

When setup well, ERPs are amazing for serving accounting department and executives, due to the depth of how they operate and the level of reporting they provide. However, they really lack in the necessary flexibility to manage customized rate structures and run complex billings successfully in a way that serves your customers, or those who receive the bills.

Utility entities should not have to lose out on efficient and effective billing processes because their accounting system is trying to be a billing system, accounting system, CRM, marketing platform, or anything and everything else.

Because ERP’s try to be the “jack of all trades” for businesses, they end up becoming large and complex systems, and when they stray from their ideal use case, that breeds inefficacies with the more specific the tasks are they try to take on. As such they don’t offer great experiences that utility customers come to expect, such as utility specific customer portals.

Below is a quick comparison chart of what ERP systems are designed for and what Utility systems are designed for:

ERP_Vs._Utility Billing_Comparison Chart

Asking ERP systems that are not designed to handle utility entity’s billing complexity is like needing to haul a kids soccer team to practice in a pickup truck. It’s possible but using a Mini-Van would just be a better and safer way to get the job done.

But it is understandable and desirable to invest in a great ERP! Accounting and executives LOVE having a single place to see all the data for their business. It gives them the opportunity to make near real-time decisions based on all the business variables at once.

With the right billing system, however, utilities don’t have to have the inefficiency of siloed platforms. It’s possible to make sure that both customers and executives are happy with all the data they need through robust platform integrations and well-defined business processes.
 
Implementation Challenges to Efficiency
Any software is only as successful as how it is setup and implemented into an organization. For ERPs specifically, they’re most successfully implemented when started with a well-defined and time-tested business processes and an understanding of the customizations needed to make going into the process.
 
There are plenty of nightmare stories about ERP’s taking YEARS to get implemented, or large organizations pouring millions into a new system only to abandon the project after it takes on a monolithic Frankenstein life of its own. Panorama Consulting Solutions found that only 58 percent of organizations rated their latest ERP project a success in 2015. In 2019 that figure climbed to 88 percent. (CIO)
 
When implementing complex and mission critical systems, initial setup is critically important to the long-term success of the product.

The more customization that is required the longer and more complex the implementation process is going to be.

For utilities who are looking to improve billing efficiency, many other systems don’t recognize or understand the complexities of bill generation and presentment for metered and non-metered usage.

For example, once metered usage comes into the billing system, analysis of that usage should happen to look for any abnormalities, then the system needs to apply set entities rates, ensure that the appropriate customer’s data is being recognized, apply any discounts or other recurring charges as well as non-recurring credits, then add any payments taxes and fees, THEN generate the bill and send it.
 
And multiply that by two if billing for two metered usages or a non-metered usage.

If the system that generates bills does not understand that specific need out of the box, then the implementation team will have to customize the platform to make it fit those specific utility needs.

ERP’s are amazingly flexible platforms so that customization is often possible, but utilities need to go into the project with the understanding that not only will that add additional customization costs but also there will be a major project efficiency hit throughout implementation process which will impact the ability to quickly accommodate those future and more costly upgrades.
 
The True Cost of Customization and Updates

No one wants to invest their utilities hard-earned money into a platform that can’t deliver the necessary results to justify the cost right out of the gate. But on top of that, no one wants to spend upwards of potentially millions of dollars trying to keep up with those updates that can often break those customizations you just spend time and energy setting up.

As a utility entity, updates are a natural process for any billing system to keep customer date safe and secure, while also leveraging the fast-paced changes of technology. 

However, those constant updates are vital to maintain security and scalability of an ERP, as a utility billing system, can cause setbacks in the platform’s capability to do the job it was designed to do. 

When utilities need to build customization on ERP platforms to handle billing needs, they often look to third-party development organizations to map and build customizations. Those third-party organizations are often constrained to work in the present development environments to build those customizations, which often freezes the infrastructure that the mission-critical system is built on top of. 

When an ERP has a security vulnerability, a redesign, or a new feature that is needed in another part of the organization, that customization must be rigorously tested and potentially patched PRIOR to upgrading the full system. 

Not only is that another costly round of customization development, but it is also costly to the efficiency of your department and maybe other departments as well, because they can’t leverage those improvements to the system. 


The Adaptability loses equal Efficiency loses


Short of having a time machine, it’s impossible to predict what’s coming next, even though we have tried.

Because no one can see the future, any billing system used needs to be flexible and agile to adapt with changing times. With a nonspecialized utility billing platform, such as a highly customized ERP, the necessity of flexibility can be either expensive or slow and cumbersome.

Remember the hammer and a screw. If you’re trying to insert a screw into a piece of wood you could very well use a hammer to pound it down in there, but through that sheer blunt force, the wood could split in the process. Instead, if you were to use a screwdriver, specifically created with the screw in mind, the wood would remain intact.

Now think of that screw as your billing platform. If your hammer is an ERP then you’re going to split the wood. There’s zero chance of you being able to insert the screw without purchasing any other costly tool to aid the hammer in inserting it. Sure, it’ll inevitably get the job done, but why not leave the hammer just for nails? Especially when you have a perfectly fine screwdriver available to you. Additionally, what happens when the power drill comes out and makes your job even faster? Are you able to take advantage of the new technology if you’re still trying to make the hammer work?

The tools, representing an ERP’s customizations, can sometimes take months to finish. ERPs can be slow moving with their customizations as they’re also busy managing several other services they provide for utility entities. And in the ever-turning cycle of the utility industry, time can be crucial.

By investing in a specialized tool that has deep integration points, you can get the best of both worlds and not be constrained by the needs of other departments.
 
User Friendliness: Minutes Equals Dollars
Ben Franklin said that a penny saved is a penny earned. We easily attribute that saying to dollars, but the same sentiment could be applied to the seconds saved during the day are seconds earned back into it.

If you’re going to invest into a billing system, a mission critical part of any business platform, don’t you want to make sure that it’s easy to use and intuitive? The short answer is yes, especially because utilities must generate new bills every month with all new data points. Whatever kind of software that handles billing, if not intuitively designed, can become complex and cumbersome and cost utility employees time and energy.
 
When creating business systems that are not intuitively setup, employees not only lose time and energy to be trained on the system, but they also lose out on seconds performing their job with the system…which adds up to minutes…which adds up to hours.

User experience for software systems is more than just nice representations on screen. It is the direct contributors to how efficiently employees do their jobs.

When employees are given a tool that is not setup for efficiency for their work, like many ERP systems tend to become overtime, it breeds inefficiency that can cost utilities in not only time but money and employee satisfaction.

That inefficiency means potential delays on sending out bills, or even worse rushes at the end of the month for an employee to get all of the data setup to bill utility customers.
 
In Summary
 When it comes to a mission critical piece of software, such as a billing system, don’t settle for a tool that’s “close enough” to working. Your investment into a properly formatted system could mean everything for the efficiency of utility billing system and bottom-line costs.

By thinking about processes and users at the beginning, investing in platforms that are well integrated and specific for the task will be what allows utilities to run an efficient, effective, and user-friendly organization. It will attribute to the bottom line, customer satisfaction, and employee satisfaction.

Choose a tool that doesn’t breed inefficiency but is focused on efficiency from the very start.
 
ERPs vs. Billing Systems Compare