Success runs deep for District of Columbia Water & Sewer Authority

Improving service is a challenge when your biggest customer is the federal government, your billing system is 30 years old, and manual processes are stifling customer service. Fortunately, there's good news from our nation's capital, where DC Water and Sewer Authority solved the challenges through a combination of technology enhancement, outsourcing of its Customer Information System (CIS) and billing services, and the adoption of best practice business processes to improve productivity...

By Jay Jerrier

Dec. 3, 2004 -- Being a service provider is the District of Columbia Water and Sewer Authority's (DC WASA) driving vision.

Improving service, however, is a challenge when your biggest customer is the federal government, your billing system is 30 years old, and manual processes are stifling customer service.

Fortunately, there's good news coming out of our nation's capital. DC WASA solved these challenges through a unique combination of technology enhancement, outsourcing of its Customer Information System (CIS) and billing services, and the adoption of best practice business processes to improve productivity.

"Since DC WASA outsourced its billing operations to Alliance Data, we have realized a savings of approximately $1 million," says Grace Beaman, manager of customer service for DC WASA. "Additionally, we streamlined and automated collection processes which reduced accounts receivables by 25%, capturing another $6 million."

The District of Columbia Water and Sewer Authority (WASA) is a multi-jurisdictional regional utility that provides drinking water, wastewater collection and treatment for over 500,000 residents and businesses in the District of Columbia and provides wastewater treatment for several counties in Maryland and Virginia. The U.S. Government is DC WASA's largest customer with services provided to the White House, Congress, and other Federal agencies.

THE PROBLEM
To provide better customer service and obtain more accurate billing data, DC WASA needed to move beyond its 30-year-old legacy system as the database was not relational and much of the billing data was inaccurate. Excessive system downtime, paper tracking, and high billing exceptions impacted billing accuracy. Manual processes prevented the department from charging late fees and collecting payments in a timely manner. And the lack of automation increased staffing requirements, drove up costs, and frustrated customers.

Figure 1. DC WASA Legacy Problems
Legacy System
-- 30-year-old billing system
-- No relational database
-- Corrupted data
-- No real-time access to data
-- No data sharing
-- Excessive downtime
-- Automatic shut notices prohibited
Billing
-- Estimated bills vs. actual usage
-- Quarterly only billing
-- High billing exceptions
-- No ability to resend late payment notifications
-- No tiered billing
-- Lack of timeliness
-- Delayed remittances
Business Processing
-- No standard processes
-- Little automation
-- Paper tracking
-- Manual processing
-- Duplication of work
-- High staffing costs
Customer Care
-- CSRs had no view into customer records
-- Protracted problem resolution
-- Increased call waiting times
-- Increased customer dissatisfaction

THE APPROACH
DC WASA realized that a new CIS would allow it to improve billing accuracy, increase productivity, and improve customer satisfaction. Clearly understanding its problems enabled DC WASA to quickly define the features and functions needed in a new CIS.

The utility investigated differing CIS applications through an extensive evaluation process. However, it came to realize that in addition to extensive data clean up, executing a CIS system in-house would require identifying and redesigning business processes, redefining roles and responsibilities, and changing its culture. In the end, in-house implementation could take DC WASA years to see results and meant shouldering all the risk.

To support its mission of becoming a World-Class service organization through minimizing risk, cutting costs, and gaining results more quickly, DC WASA turned to outsourcing as an option. It chose Alliance Data Systems, a market leading business process provider, for CIS hosting, billing, and statement processing.

THE SOLUTION
Alliance Data Systems provides billing and customer care solutions to more than fifty gas, electric, water, and sewer utilities across North America. Alliance Data's utility-centric expertise and broad CIS experience gave DC WASA confidence that the CIS implementation and billing automation would be competently handled over their eight- year service agreement.

CIS Implementation
From past experience, DC WASA knew to keep custom development and CIS modifications to a minimum. With strong executive support for adopting best practice business processes, DC WASA collaborated with Alliance Data to change its processes to match CIS functionality, rather than modify the software to match DC WASA's historic processes.

The effort paid off. Alliance Data migrated DC WASA's legacy system to the new CIS with only three modifications. "The CIS conversion was great," continues Grace Beaman. "There were so few issues that most of us sat around the weekend of 'go live'. Additionally, the new system balanced accounts receivables to the penny the first time."

Billing Exceptions
With the CIS conversion coming in on time and in budget within 11 months, DC WASA and Alliance Data then concentrated on resolving DC WASA's complex billing problems. With E-CIS, billing teams could now focus on creating a Quality Assurance process that would produce accurate bills within the first six months while data integrity was reestablished. The issues were challenging, but their combined expertise won out and billing exceptions are at less than 1%.

THE RESULTS
The partnership between DC WASA and Alliance Data has produced many benefits.

1. CIS Gains
By outsourcing its CIS system, DC WASA transferred significant implementation risk to a provider that guarantees system performance. The utility gained technical currency without capital investment, saved license and upgrade fees, and obtained a relational database that provides real time access to customer information and data sharing.

2. Billing Improvements
With the inception of E-CIS, DC WASA had the ability to offer its customers more functionality than ever before. Customers can now take advantage of budget billing, choose from various automated payment functions and even make contributions automatically to help other DC residents with their water bill payments.

In contrast to its legacy system, DC WASA can bill large entity customers such as the Federal Government through its group billing functionality eliminating the necessity of separate databases for those large customers. In addition, while DC WASA now bills on a monthly basis instead of a quarterly billing cycle, process efficiencies and outsourcing have reduced bill print and mailing costs by 30%.

3. Business Process Productivity Gains
Alliance Data streamlined and automated DC WASA's business processes through applying continuous improvement methodology. This effort gave DC WASA consistent, repeatable processes that reduced costs or created savings. For example, improvement of collection processes reduced DC WASA's account receivables by 25%.

4. Customer Care Improvements
Implementing the Alliance Data system gave DC WASA a Digital Dashboard that allows access to customer data through five windows on a single screen. Customer Service Representatives can now access up to 15 accounts simultaneously for researching customer problems. This real time functionality allows DC WASA to resolve most customer problems with one call.

...Online Customer Care
Concurrent to the CIS implementation, Alliance Data instituted an online customer care system for DC WASA. Customers can now access their account online, view usage records, update their account, and monitor consumption for conservation efforts.

...Electronic Bill Payment & Presentment
Through the enactment of Electronic Bill Payment & Presentment (EBPP), DC WASA customers are able to pay their monthly bill through an automated IVR system or online through reoccurring credit card payments. This convenience has increased customer satisfaction.

Figure 2. DC WASA Productivity Gains
CIS Outsourcing
-- Transfer of implementation risk
-- Technical currency
-- Real-time access to data
-- Significant IT savings
Billing
-- Less than 1% billing exceptions
-- 3-tiered billing in one step
-- Monthly billing
-- No missed billing periods
-- Bill messaging
-- Automatic shut notice capability
-- Account receivables reduced 25%
Business Processing
-- Streamlining and automating of key business processes
-- Ability to open and close service orders (necessary for AMR functionality)
-- Automatic collections/increased cash flow
-- Decreased operating costs
Customer Care
-- CSRs have full access to customer records
-- CSRs able to provide single-call problem resolution
-- Customers can choose an automated IVR or online payment system
-- More efficient staffing

5. Financial Benefits
The Meta Group estimates that the average cost to replace a legacy billing system is approximately $50 per customer. Custom modifications and hidden costs can drive the price tag up even further. Minor enhancements such as enabling customers to view and pay bills online or producing new reports, requires updates to millions of line of code, making CIS implementation a time consuming and cost prohibitive process.

Instead, the outsourcing relationship with Alliance Data has saved DC WASA more than $1 million (see chart below) in avoided upgrades, statement production cost reductions, and business process efficiencies through June of 2004.

CONCLUSION
Since going live with Alliance Data, DC WASA has implemented the largest fixed network automated meter reader (AMR) project in the United States. AMR integration with the Alliance Data system meant the utility no longer estimates customer bills. Also, consistent and ever-improving business productivity continues to drive cost savings.

This alignment of DC WASA's people, processes, and technology, supported by its decision to outsource billing and customer care, have assisted DC WASA in realizing its vision of becoming a world class municipal utility.

About the Author: Jay Jerrier is vice president of client services for Alliance Data Systems, of Dallas. He can be reached at 972-348-5100, jjerrier@alldata.net or
www.alliancedatasystems.com

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