Meter-to-Cash (M2C) is a significant process for utility companies as it not only represents their revenue cycle but also touches the end customer directly. This webinar will discuss key findings from Everest Group’s latest study around M2C BPO opportunity assessment and solution trends.

1. Today’s Webinar is brought to you by Everest Group
Today’s Webinar
Opportunities in the Meter-to-Cash BPO Market
Synopsis: Meter-to-Cash (M2C) is a significant process for utility companies as it not only
represents their revenue cycle but also touches the end customer directly. This webinar
will discuss key findings from Everest Group’s latest study around M2C BPO opportunity
assessment and solution trends.
About Everest Group
Everest Group is an advisor to business leaders on next generation global services with a worldwide
reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and
middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels
organizations with complex challenges related to the use and delivery of global services in their pursuits to
balance short-term needs with long-term goals. Through its practical consulting, original research and industry
resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing
models, technologies and management approaches. Established in 1991, Everest Group serves users of
global services, providers of services, country organizations and private equity firms, in six continents across
all industry categories. For more information, please visit www.everestgrp.com and
www.everestresearchinstitute.com.
For more information, contact Mark Williamson at mark.williamson@everestgrp.com
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2. Q&A
To ask a question during the Q&A session
 Click the question mark (Q&A) button located on the floating tool bar in the bottom right
of your screen – this will open the Q&A Panel
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 Then, type your question in the rectangular field at the bottom of the Q&A box and click
the send button to submit
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3. Opportunities in the Meter-to-Cash
BPO Market
Webinar
May 10, 2011

4. Introductions
Saurabh Gupta
Vice President
Everest Group
saurabh.gupta@everestgrp.com
Kuldeep Lulla
Senior Research Analyst
Everest Group
kuldeep.lulla@everestgrp.com
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5. In today’s session, we will cover four key aspects of
the meter-to-cash BPO market
Meter-to-Cash (M2C) definition
and overview
 Meter-to-cash functional
definition and value chain
Solution trends and service Demand potential and
provider landscape penetration analysis
 Leading service providers  Estimation of global potential for
offering M2C BPO services M2C BPO meter-to-cash outsourcing and
 Evaluation of solution market current penetration levels
requirements for M2C BPO
 Service provider go-to-market
trends
Drivers to outsource M2C scope
 Assessment of business issues
that drive utility companies to
outsource meter-to-cash process
scope
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6. The study is based on three key sources of information
Everest conducted 10+ executive level interviews across the following stakeholders in the market to
create holistic perspectives on the M2C BPO market
 Buyers
 Service providers
 Subject matter experts
Executive interviews with
multiple market stakeholders
 Everest leveraged 20+ case 1  Everest leveraged a
studies on outsourcing database of 80+ meter-to-
relationships involving cash BPO contracts
meter-to-cash scope to
augment the analysis and 3 2  The details of the contracts
insights were leveraged to
understand the solution
 These cases represent characteristics of meter-to-
Everest’s client advisory cash BPO
experience in utilities,
secondary research from
public sources, and
repository of service
provider capability decks
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7. Meter-to-Cash (M2C) is an integral part of the
downstream utilities value chain. Companies focusing
purely on utility generation do not have a M2C process
Meter-to-cash processes
Upstream functions Downstream functions
Functions
Fuel Transmission
Trading Sales Services
sourcing/generation and distribution
Mining Forecasting Targeting Maintenance Customer interaction
Logistics Hedging Campaigns Operation Billing and payment
processing
Contract Derivatives trading Product management Capacity planning Customer administration
management
Processes
Quality control and Pricing & Structuring Revenue management Field services Service request
planning management
Capacity planning Portfolio management Customer intelligence Metering Third-party settlement
Construction Dealing & settlement Market intelligence Installation services Receivables
management
Operation and EDM Emergency response
maintenance
Bulk sales
Finance, Accounting, and Administration
Horizontal
Functions
Human Resource Management
Procurement services
Knowledge services
Regulator management, Environmental compliance
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8. M2C is a utility-industry version of the Order-to-Cash
cycle
Typical meter-to-cash process
Account Meter data Payment Credit and
Field services Billing
creation management processing collections
 Verify customer  Order  Meter reading  Prepare bill  Receive  Process credit
information Scheduling (automated/  Bill verification payment requests /
 Credit analysis  Dispatch manual) (tariff applicable  Process adjust charges
and risk  Routing  Upload to by “time of day” payment  Collections
assessment  Meter Customer and “time of (including  Bankruptcy
 Application installation information / use”) exceptions processing and
processing and  Order tracking billing system  Generate and handling) settlement
account set up (CIS) dispatch bill  Apply payment  Report charge-
 Generate field  Data validation (e-bill, print and  Finalize off customers to
service ticket and processing mail, etc.) accounts credit agencies
 Update A/R
Customer care operations
In-Bound contact Out-Bound contact
 Service order/service request  Balance and due date reminders
 Billing and account enquiries,  Payment reminders
dispute resolution  Customer promotion/campaign
 Customer complaints management
 Meter relocation/removal requests  General correspondence
Note: The traditional value chain for meter-to-cash is undergoing significant changes with the advent of advanced or smart
metering initiatives. Several processes like field services will get automated. At the same time, the analytics capabilities required to
manage the process will increase
Source: Everest Research Institute (2011)
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9. M2C process costs typically represent 1-2% of the total
revenues for an electrical utility
Electrical utility costs as a % of revenues Typical break-up of electrical utility operating costs
100% 100%
Cost of meter-
to-cash
25-30%
10-15%
15-20%
30-40%
40-45% 5-10%
50-60%
10-15%
Revenues Operating Fuel, energy Total non- Power Trans- Distribution Customer Administra Total non-
costs purchases, fuel electric production mission expenses sales, -tive and fuel electric
and utility costs expenses expenses accounting general utility costs
transmission & service expenses
interchange
fees
Typical O2C cost as a % of revenues is around 0.2% as compared to M2C costs that could be 1-2% of revenues
Sources: FERC form 1 database; Everest experience; annual reports of utility companies
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10. Everest estimates that the total global potential for
M2C outsourcing is around US$50-70 billion
Meter-to-Cash outsourcing potential for utilities1
US$ billion
600-900
 Based on financial data of 16,392 utilities
across the globe with a minimum revenue
of US$5 million
 Represents potential based on estimates
of on-going annual spend. Does not
500-760 include capital expenditure or one-time
spend on initiatives like smart-metering
50-70 50-70
100-140
Operating and Non-M2C related Cost of M2C In-house M2C Outsource-able
maintenance costs function spend M2C spend3
costs2 (~85% of operating (~15% of operating (~50% of M2C (~50% of M2C
(10-15% of and maintenance and maintenance spend) spend)
revenue) costs) costs)
1 Excludes companies with revenue below US$5 million
2 Includes power production, transmission, distribution, and SG&A. Excludes fuel, energy purchases and transmission interchange fees
3 Includes both BPO and ITO spend
Sources: Everest Research (2011); OneSource
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11. Current level of penetration is low implying significant
untapped opportunity and value creation potential
Publicly announced third-party outsourcing contracts in utilities
Number of contracts
460 255  Overall meter-to-cash
third-party outsourcing
penetration is around
~3%
 The penetration for
meter-to-cash third-
205 party BPO is even
40 IT+BPO lower at ~1-2%
42 BPO  There is a high
propensity to
outsource IT with M2C
123 ITO
BPO (~50%)
Outsourcing Contracts with no Contracts with
contracts by utilities M2C scope M2C scope
Notes
 Penetration = number of organizations with outsourcing contracts as a percentage of all organizations
 There are more than 16,500 utility companies across the globe1 (Source: OneSource Database)
 Everest Transaction Intelligence capture publically announced outsourcing contracts which represent rough 30-40% of
all outsourcing contracts
1 Excludes companies with revenue below US$5 million
Source: Everest Research Institute (2011)
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12. There are three key drivers for outsourcing
meter-to-cash
Business issues Drivers for M2C BPO M2C BPO value proposition
Inefficient processes
 Modernize infrastructure with minimal upfront
Disparate and
expenditure
outdated technology
 Standardized processes to drive efficiency and improve
Optimization
key process metrics
Cash constraints  Cash flow optimization by improving revenue realization
and reducing costs
Pricing/cost pressure
Rising customer  Reduced cost-to-serve to increase price competitiveness
expectations  Leverage third-party provider’s technology and process
Competitiveness expertise to improve overall customer experience
Deregulation  Provide new platform (e.g., online portals) for customer
interactions
Regulatory mandates
 Support in managing impact of smart metering on meter-
to-cash processes
Smart metering
 Provide new capabilities like analytics that become
Demand-supply important post smart metering implementation
management
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13. Smart metering
Impact of smart metering on M2C
Demands on a traditional M2C process during/post smart metering
Account Meter data Payment Credit and
Field services Billing
creation management processing collections
 Managing the  New  MDMS  Variable and  Provision of web-  Revise debt
cutover from technologies upgrades and complex rate based services for management
traditional to (e.g., WiMAX) integration with structures online bill strategy using
smart meter that utilities have smart metering (Winter/ pay/view, customer
(smart meters can not dealt with infrastructure summer; time - customer self- analytics
report 50% higher before of –use etc. service etc.
consumption  Diminished role  Billing system
because earlier of field services upgrade and
estimates were integration
wrong)
Customer care operations
In-Bound contact Out-Bound contact
 Less painful after smart metering – automated/self service  Change management during roll-out - Proactively call
 Reduction in call volumes as smart meters directly alert the customers to let them know about cutover from analog meter
system for issues, however need real time identification of and potential issues and available options (amortize costs
problems and responsiveness etc.)
Analytics
 Explosion in meter-read data (half-hourly meter reads as opposed to once in 2 months in a traditional meter)
 Operational analytics (system performance, effectiveness, load trends and forecasts etc.)
 Customer analytics (demand profiles based on consumption patterns, demand response behavior, customer segmentation
based on payment traits etc.)
Source: Everest Research Institute (2011)
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14. Smart metering
Other offerings are also emerging due to smart metering initiatives
Pre- Advisory support
implementation  Conducting feasibility analysis
 Business case creation and analysis
 Help build vision and execution roadmap
During Program management (including pilot roll-outs)
implementation  Meter provisioning support – vendor management and procurement services
 Case management – Case handling based on pre-defined business processes
 Work order management - Creation, technical planning, allocation and assignment to
resources and execution
 Mobile applications – Personal Digital Assistants (PDA) applications for execution of work
orders in field
 Device & Meter Data Management - Collection and delivery of energy consumption, asset
management and meter operation
 Monitoring & Troubleshooting – Analysis of meter performance and communication status
 Customer Management - Management of customer contact via multiple channels
Post Smart grid/smart metering analytics support
implementation  Network analytics – Operational and security monitoring of systems, applications, and
devices
 Technical analytics – Carbon impacts, technical losses, asset utilization
 Engineering operational analytics – Operational effectiveness, system performance, asset
health and stress indication, load trends and forecasts
 Customer analytics – Demand profiles, consumption patterns, debt analytics, customer
churn analysis, demand response behavior
Source: Everest Research Institute (2011)
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15. The solution requirements for M2C BPO can be
considered across multiple dimensions
 M2C BPO service offerings can vary from piecemeal to comprehensive
Process
coverage across meter-to-cash function
scope
 Nearly 75% contracts in Everest database of M2C BPO contracts had
piecemeal scope
Technology  Role of technology in M2C BPO can vary from pure-play BPO solutions to full
scope scale integrated IT+BPO offerings. IT services in such cases can include
systems modernization, maintenance, or even platform solutions
 Everest database reflects an almost equal prevalence of both scenarios
Pricing  Beyond FTE-based pricing, instances of outcome-based or usage-based
structures pricing models are also emerging in utilities BPO
Performance  Overall M2C business metrics of concern to utilities include cost-to-serve,
metrics average days from meter-to-cash, and customer satisfaction ratings
 M2C sub-function metrics of interest are timeliness and accuracy of billing
and payment processing, % e-bill adoption, % bad debts etc.
Solution  Offshore-ability for meter-to-cash is relatively high but factors such as onshore
challenges field services requirements, union issues, language barriers etc. impede the
full realization of offshoring potential
 Lack of standardization (given the myriad of regulations that vary from country
to country) makes it difficult to design a common solution
 Pro-outsourcing culture is often lacking in utilities, particularly for BPO services
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16. We classify meter-to-cash service providers into four
broad categories
Diversified IT/BPO global majors Voice-centric players
Offshore majors Technology-focused players
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17. Go-to-market varies by the type of players
Diversified IT/BPO Voice-centric Technology-focused
global majors Offshore majors players players
 Focus on large-  Significant market  Highest market  Weak market share
Deal size and sized contracts share in contracts share in terms of overall but
market share signed during overall contracts improvement in
2009-2010 contracts signed
during 2009-2010
 Coverage of end-  Focused around  Focused around  Focused around
Solution
to-end scope billing and payment billing and meter data
characteristics
across M2C value processing customer care management
chain  Most contracts  Most contracts  Most contracts carry
 Strong leverage carry piecemeal carry piecemeal piecemeal
of technology M2Cscope M2Cscope M2Cscope
capability in M2C  Mostly offer pure-
offering play BPO solution
Client  Dominant focus on  Dominant focus on  Dominant focus on  Regional focus, no
acquisition U.S utilities UK utilities both U.S. and UK particular dominance
approach  Majority of contracts  Majority of  Majority contracts by geography/type
with electrical utilities contracts with gas with gas and water of utility
utilities utilities
Sample size: 82 Utility outsourcing contracts including M2C in scope
Source: Everest Research Institute (2011)
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18. Key takeaways
 Meter-to-Cash (M2C) is an integral part of the downstream utilities value chain. Companies focusing
exclusively on utility generation do not have a M2C process
 Essentially M2C is a utility-industry specific version of the Order-to-Cash (O2C) process. Key processes
within M2C are customer account creation, field services, meter data management, billing, payment
processing, credit & collections, and in-bound/out-bound customer care
 M2C process costs typically represent 1-2% of the total revenues for an electrical utility
 Everest estimates the global potential for M2C outsourcing to be around US$50-70 billion. The current
level of penetration is low implying significant untapped opportunity and value creation potential
 Originating from a number of business issues, there are three key drivers for utilities outsourcing meter-to-
cash scope – business optimization, staying competitive, and smart metering implementation
 Smart metering has a significant impact on meter-to-cash processes. Other offerings are also emerging
due to smart metering initiatives
 The solution requirements for M2C BPO can be considered across dimensions such as process scope,
technology scope, pricing structures, performance metrics, and typical challenges in serving this market
 Meter-to-cash service providers can be classified into four broad categories – Global majors, offshore
majors, voice-centric players, and technology-focused players.
 Go-to-market varies across categories in terms of solution characteristics, target deal size, and client
acquisition approach
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19. Q&A
 Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your
screen – this will open the Q&A Panel
 Be sure to keep the default set to “send to a Panelist”
 Then, type your question in the rectangular field at the bottom of the Q&A box and click the send
button to submit
Upcoming Webinar
Q1-2011: Key Market Developments in Global Sourcing
Date: Thursday, May 12, 2011
Time: 9:00 a.m. CDT; 10:00 a.m. EDT; 2:00 p.m. GMT
Presenters: Eric Simonson, Managing Partner, Everest Group
Amneet Singh, Vice President, Everest Group
Salil Dani, Research Director, Everest Group
More Information: Visit www.everestgrp.com/category/webinars
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20. For more information
 Attendees will receive an email with a link to download today’s webinar presentation.
A recording of the webinar will be available within 24 hours on our website,
www.everestgrp.com/category/webinars
 For more information related to today’s topic, please contact:
 Saurabh Gupta, Vice President, saurabh.gupta@everestgrp.com
 Kuldeep Lulla, Senior Research Analyst, kuldeep.lulla@everestgrp.com
 For background information on Everest Group, please visit:
 www.everestgrp.com
 www.everestresearchinstitute.com
 Thank you for attending today’s presentation
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