Written by Jonathan Goldstein, Senior Vice President, Cyber Group
I was introduced into the world of Retail Energy in 2014 when I joined the Project Management Office of what was North American Power & Gas. At our height, we dominated the eastern seaboard and boasted 125,000 residential meters. We were the marketing powerhouse. I daresay, very few firms could market better than NAP. It helped that we had one of the best CMO’s I have ever had the pleasure of working with.
However we had one major disadvantage: our systems were crap. Well…not all of them. We used Excelergy’s RevenueManager platform as our billing engine and, I have to say, I’m a fan. But, in between the website and the billing engine sat this monolithic piece of spam we called Informed Power (IP). IP was a bespoke CRM platform built by a classic IT snob who thought primary keys were an aberration. As my team and I were left grappling with this spaghetti web of confusing code to support and maintain, I can offer the revised opinion that primary keys are just fine…and some really bad judgement calls were made on the design of IP.
NAP grew despite this middle layer not because of it. Since my time at NAP, I have interacted with many other Retail Energy Providers (REP’s) who, in their infancy, made the same decision to build their own bespoke customer relationships management (CRM) platforms – most have primary keys…so I’m perhaps less critical.
When NAP was first coming to market, there were very good reasons for following this path. CRM, itself, was in its’ infancy. CRM platforms that understood what the heck to do with retail energy were non-existent. And, at the time, it was viewed that these platforms were core differentiators. They are…for sure.
It’s just that I have learned the hard way that having a CRM platform is the differentiator…owning the intellectual property for it is a fools’ errand.
Let me explain…
As often is the case, the world has changed since de-regulated energy became a viable business model. Not only have the dynamics of running an REP changed, but so have the solutions and platforms available to REP’s to help them run their businesses.
While the presence of a CRM platform is still a core differentiator for nearly every firm that has customers, it can certainly be argued that the need to develop a bespoke CRM capability is, at a minimum, an awfully expensive and never-ending cost flow, and at its maximum, an unnecessary usage of valuable capital.
Flashback to a time when I had more hair. In 1999, I was working for an eLearning startup called Blackboard who decided to enhance our productivity with this new-fangled Salesforce Automation platform (SFA, for short) from a new company called Salesforce.com. It was a glorified Palm Pilot in 1999, but it integrated with Exchange and unified the sales team on a platform that could automate a lot of the reporting that often took hours to produce. It was good enough for us.
Today, Salesforce is obviously not a little company anymore and its service offering has expanded manifold to offer a comprehensive suite of solutions that capture vital enterprise information from customer engagement to conversion to servicing and termination.
So, why should Retail Energy firms adopt Salesforce? A couple of key reasons…Ok…a few more than a couple…
First and foremost, I would offer that the development of best in breed CRM platforms is now a daunting task for firms that do not boast the USD$ 227.4B market capitalization that Salesforce offers. Simply put, Salesforce wakes up every morning and all they endeavor to be is the #1 provider of CRM software to its 150,000+ customers. In our opinion, they are more than achieving that mission. This is their job and they clearly take it very seriously.
If you are running a Retail Energy Provider or a Brokerage, your job is not the same. Your mission is to provide best in class energy management solutions for your customers and proactively manage energy risk for your Suppliers. Put another way, what differentiates you in the market is HOW you accomplish these tasks…not WHAT you perform those tasks on. No one knows. Frankly…your customers don’t care.
So, what differentiates you in the market are the products you can offer, the rates you can manage, and the customer experience that customers spanning residential and commercial profiles have with your firm. While you certainly need a flexible CRM platform to enable all of this, what you likely don’t need is the multi-million dollar headache that is often required to manage and maintain the innovation lifecycle for such a platform. This is what makes Salesforce a valuable partner for REP’s.
Salesforce essentially allows you to hit the ground running, accelerate time to market and readily adapt to the often-changing winds of the Retail Energy space. The core solution, “out of the box”, per se, is often more than enough to get started.
Cyber Group offers the compliment to this platform which is deep Retail Energy expertise coupled with seasoned Salesforce administrators, developers, and architects on staff to help solve even the most daunting of business challenges.
These two elements combine to offer you an exceedingly quick to market solution that can be in Production in a fraction of the time it might take you today if you are navigating through cumbersome legacy applications. In a recent case, Cyber Group was hired to help a leading commercial REP develop an acquisition engine that enabled them to incorporate a newly purchased REP into their core systems. We were able to accomplish in six months what likely would have required a year or more if we had to extend a legacy application.
As you have probably already experienced, providing energy management services for your client is a full-time job. It is your mission as an REP. So why allow anything to distract you from this vital business imperative? Salesforce offers a unique opportunity to streamline and automate key business processes in your enterprise. It allows you to focus on your core mission while the platform works with you to optimize your business.
Many of our REP’s who are navigating around legacy applications reach a point where their systems become the major blocker preventing them from developing new products and/or expanding into new markets. This happens because legacy applications rapidly grow stale, and it is often difficult to justify the cost of platform upgrades.
Salesforce (coupled with Cyber Group’s Salesforce Consulting Practice) effectively removes this constraint. The system is malleable enough to bend to unique business environment drivers and the platform is geared toward rapid application development tenets.
On average, Salesforce users use a small fraction of what the entire system is truly capable of, which means solutions that cannot be solved on this platform will be few and far between. As business leaders, technology should enable your growth vision. It should not be in your way. Salesforce takes this effectively off the table.
I’ll be honest. Salesforce is not cheap. In fact, we typically have to leave the room when our customers receive their Salesforce contracts. Once the screaming has stopped, we often remind our clients that it is helpful to take a step back and recalculate how much it would cost to replicate the same breadth and depth of base functionality themselves.
In 1995, the Standish Group published a statistic that, on average, users of Microsoft Word use about 8% of the platform’s total functionality. I’m an over-achiever and use 10% (no science was used to produce that number). I could probably convince myself that I should build my own word processing program that represents 100% of the features I use the most out of Word…but really why? Jonathan’s Postulate #1 in Technology: Just because you can doesn’t mean you should.
The same is true for CRM platforms. Yes, you could create your own CRM layer…but does that mean you should? Remember, companies like Salesforce are multi-billion dollar companies that have nothing better to do than build the world’s premier CRM platform.
Do you have that kind of capitalization?
Also, you’re not done with v1 of your fabulous bespoke CRM platform! That’s just the beginning of the journey. It’s not just the one-time cost of initial development. You should also factor into your cost model the ever-growing ongoing cost of Production Support; patches and upgrades to the underlying supporting technology (servers, databases, filesystems, etc.) as well the cost of ongoing innovation to keep your platform current with emerging technology trends. Before long, your Cost Benefit Analysis (CBA) should rapidly point you to the value proposition that Salesforce brings to the table despite the high per seat cost.
It’s simply not possible to sustain that velocity of ingenuity required to stay current. And that is just the minimum cost to keep your platform viable. You haven’t built anything on top of it yet! Salesforce is not cheap, for sure, but neither is the cost of trying to build a better version of it.
My advice? Examine your core vs. non-core matrix. Odds are you will see that CRM is core to your strategy, but owning and operating your own version of it is not as cost effective as using a platform like Salesforce.
Let CRM companies be CRM companies.
Let you focus on being the best REP the world of energy management has ever seen! And together let Salesforce and Cyber Group’s Salesforce practice take your business to places you have not thought of yet.
These are just my thoughts. As always, comment below and share your experiences with me. Let’s learn together!
Jonathan Goldstein, CSP-SM, MBA