Outsourcing of pipes and wires energy delivery lines of businessin North America will increase significantly over the next fouryears, according to a study conducted by META Group’s EnergyInformation Strategies (EIS).

The study specifically points to a very high degree of bothcurrent and planned outsourcing for pipes and wires infrastructureservices such as design, construction, maintenance.

Current outsourcing of revenue cycle items such as metering,billing, settlement and IT (e.g., mainframe operations, networkmanagement, application hosting) services is moderate, while thecurrent level for customer relationship management (CRM) servicessuch as call center, telesales, marketing is low, the Stamford, CN,based research and consulting firm said. Planned levels ofoutsourcing for revenue cycle, IT, and CRM services all indicatesignificant increases above current levels, with IT servicesshowing the second highest level after infrastructure services.

“We see a number of business and regulatory pressures, such asperformance-based regulation and new prudency reviews, drivingpipes and wires lines of business toward increased outsourcing ofservices,” said Rick Nicholson, vice president of EIS. “This, inturn, will drive fundamental changes in client/outsourcerrelationships and contract terms, leading to the emergence of thevirtual service network.”

“We believe the progress shown during 1997-99 in applicationimplementation and application integration is directly related toenergy industry restructuring activities, which are driving a focuson the reduction of operations and maintenance costs andimprovement of system reliability and quality of service,”Nicholson said. “Based on the survey results and ongoing researchefforts, we predict that, during 2000-04, pipes and wires lines ofbusiness will continue to grow both via mergers/acquisitions andthrough expansion of multi-utility services,” including electric,gas, water, and telecom. We further predict that these businesseswill evolve toward an asset owner/manager role, driving a return onasset (ROA) focus.”

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