Gas Utilities Are More Aggressive in Adopting Business Process Outsourcing Than Their Electric Counterparts

HOUSTON - According to the results of a study conducted by EquaTerra and UtiliPoint, gas utilities in North America have strategic objectives beyond cost savings in mind when implementing business process outsourcing (BPO).

Findings from the telephone-based study include:

Gas utilities look to BPO as a means to improve business process improvement more readily than electric utilities
Gas utilities reported a higher percentage of fully outsourced processes than their electric counterparts, and appear to be more accepting of BPO in general
While reducing costs is a common goal, gas utilities are more interested in gaining access to business process skills and knowledge than electric utilities (42 percent versus 22 percent)
Said Matt Smith, Managing Director of EquaTerra’s Energy and Utility practice, “We believe the higher level of interest and adoption of BPO is a reflection of the significant impact increasing commodity costs are having on bottom-line results for many gas utilities. In addition, the relative size of gas utilities leaves fewer executive levers, such as acquisitions, available as alternatives. The relative size also drives the desire to gain access to business process knowledge that BPO providers can offer.”

Other results from the study – disclosed in UtiliPoint’s February 19, 2007 “IssueAlert” – included: 44 percent of total respondents said BPO was important as a means to improve business process improvement, and an additional 15 percent said it was very important; 33 percent have already fully outsourced some processes while 53 percent have partially outsourced some processes; and 65 percent of all respondents are either satisfied or very satisfied with BPO, 31 percent are somewhat satisfied, and the remaining 4 percent are not satisfied.

Said Smith, “Gas and electric utilities are both facing across the board cost increases and significant capital investment to address reliability and environmental concerns. Utility executives are exploring business process outsourcing to obtain cost reduction and enhanced service delivery benefits that have been realized in other industries in which BPO adoption is more common.”