How smartphones help CPS Energy boost the bottom line

In early 2006, San-Antonio, Texas-based CPS Energy, the nation's largest municipally-owned energy provider, was by all accounts riding the road to riches. The company had the highest bond ratings of any such utility provider. Its workforce and customer-base in general expressed satisfaction. And most importantly, it was profitable. In other words, there were no external signs that the company was about to launch a technology program that would redefine the way it did business and reshape its workforce of roughly 4,000.

There weren't external signs, but for those in the know, including Christopher Barron, CPS Energy's VP and CIO, it couldn't have been more clear that a change was imminent-and that the future of the company might depend on it.

"We had a much larger workforce than a business our size maybe should have," Barron says.

Barron, who had recently been named CPS's first CIO, looked at other companies with large mobile workforces like its own, companies like UPS and FedEx, and saw a huge disparity in the way his business was operating. For instance, specific CPS workers had little or no access to IT systems and resources while away from the office or warehouse. They were often required to visit work sites or customer locations to diagnose issues or suggest fixes before reporting back to the appropriate departments or parties, which would then initiate the next step of the resolution process. That could mean dispatching additional workers, and the whole ordeal could take days.

"If we kept with the amount of manual labor that it took for us to accomplish that work, we would not be in the position to be competitive in the future," Barron says.

From this realization, the company's Magellan Program was born. The Magellan Program was envisioned by Barron and his colleagues-the CIO was and continues to be the program's lead sponsor-as a way to better mobilize and connect its traditionally siloed workforce to the people and systems they needed to do their jobs. The goals of the programs: extend CPS's networking infrastructure; build its own secure Wi-Fi networks in offices and warehouse; and deploy smartphones and custom mobile applications to all CPS staffers who didn't currently have a laptop or other mobile device.

Project Magellan is currently about halfway deployed: CPS expects it to be fully implemented in 2011.

Getting Smart: Initial Challenges

CPS Energy currently employs approximately 3,660 people; more than half are domestic mobile or field workers doing construction, excavation and other manual labor. In 2006, when Magellan was initially launched, just 300 staffers had been equipped with smartphones, and most of them were office workers. Today, more than half of the entire workforce has BlackBerry or Windows Mobile devices and access to a plethora of corporate data.

For Barron, the first and most significant challenge in deploying smartphones to such a large user base was getting executive buy-in.

"One of our biggest headaches has been, and continues to be, the perception that the technology brings little to the table other than e-mail, and it costs a lot," Barron says.

So Barron did some research on device and carrier pricing and presented a business case demonstrating that new BlackBerrys and other high-end smartphones don't cost the US$400 or $500 that they once did. Barron explained that the devices were, in fact, so cheap that CPS could afford to do some "innovative experimenting," as he puts it.

CPS selected AT&T to be its sole wireless carrier for a number of reasons-not the least of which was the fact that AT&T was also located in San Antonio-the company has since relocated to Dallas-and its proximity made communication particularly simple. AT&T also made the BlackBerry and Windows Mobile devices "practically free" along with service contracts, according to Barron. And the carrier's coverage map was suitable, as the vast majority of CPS's workers travelled only to major U.S. cities with strong AT&T wireless service.

"For a CIO to try to eliminate all the resistance from a senior executive might take forever," Barron says. "So rather than try to get to the execs and mollify all their fears about cost, usage and safety, we've gone to specific groups, engineers, line workers, office workers, and because it's so cheap we've been able to give the devices out on 'experimental basis.'"

"There's so much value in these handheld devices and two or three applications that they prove themselves," he says. "You just have to get them into the hands of the people that actually need to use them in order to demonstrate that."

CPS has spent approximately $1 million on the Magellan Program since 2006, but less than 20 percent of that amount has been dedicated to the smartphone deployment. More than half of that cash has been dedicated smartphone-infrastructure and application-development fees. Still, Barron says, the cost of keeping smartphones up and running is a mere tenth of what it costs to keep a PC maintained.

Innovative Experimenting With Digital Cameras and More

Three innovative ways CPS staffers employ their smartphones are as digital cameras at work sites, as GPS tracking mechanisms and as emergency notification receivers-though Barron is quick to note that the subject of GPS tracking is a touchy one and the GPS app is now only in pilot testing.

In the past, CPS might've had to dispatch a small group of "generalist" workers to a service call to make sure the correct person was there. Today, a single worker can visit a site, take a photo of damaged piece of equipment or infrastructure, and then send it back to headquarters or the office. Then an expert diagnoses the issue and sends along instructions to fix the problem or dispatches the appropriate worker-who's available immediately via voice, e-mail and SMS text via smartphone.

Though the company's internally-developed GPS tracking app is being used sparingly, CPS has the ability to keep tabs on its smartphone users and sync up timesheets to verify that workers were where they claimed to be, Barron says.

Barron says neither GPS nor a digital camera is required in a smartphone, but he sees no reasons not have the features in the all the devices his staffers employ. In fact, all the company's smartphones have GPS and most have cameras, he says.

CPS also created its own emergency notification system that can send alerts via e-mail, as well as text messages to warn workers of bad weather, dangerous conditions or other emergencies. Because many staffers have e-mail inboxes jammed with messages and may not check them as often as they could, Barron says SMS text is the most commonly used delivery option.

The Business Payoff

One of the ultimate goals of the Magellan Program was to help CPS Energy automate as many of its day-to-day processes as possible, and the smartphones it deployed are now contributing to this objective in a number of ways, according to Barron.

Perhaps most significantly, employees' heightened ability to communicate within the company's various ranks has contributed to a staff reduction of roughly 10 percent since 2005, just before the launch of the Magellan Program. Barron says about 150 jobs have been eliminated to date due to automation efforts. And CPS is currently growing revenues by roughly 8 percent per year, according to Barron.

"The Magellan Program, through the use of smartphones and other technology, has or will empower all employees, no matter what work they perform, to become part of the greater company's 'though network'," Barron says. "Each person is now like a node in our network."

The company is also seeing significant gains in supply chain efficiency related to Magellan and the smartphone deployment, he says. For instance, smartphones help speed up the purchase order process, because in the past a specific person or group of people needed to be onsite to approve orders. Now the approvers can be practically anywhere with cellular coverage. The company's supply chain buyers can also visit warehouses to work with the people who actually order parts, leading to faster order times, and more proactive supply chain management overall, Barron says. In just one year, the time it takes to close purchasing and procurement deals decreased by more than 65 percent. Also, inventory levels were reduced by more than $8 million dollars since the Magellan Project began.

Additionally, Both employee and customer satisfaction levels are up, Barron says, due to the fact that staffers now have more access to corporate systems and information and feel closer to the business. Because CPS can now resolve more customer issues with fewer processes, they've reduced the time it takes to complete most service calls, leading to happier customers. In fact, the company received the highest score in J.D. Power and Associates 2007 Gas Utility Residential Customer Satisfaction Survey.

"One of the biggest metrics of satisfaction and trust in IT is the amount of money that the business invests in it," Barron says. "If you look at our budget in 2006, we had about an $18 million O&M (operations and maintenance) budget and a $15 million capital budget. Next year, we'll have a $37 million O&M and $30 million capital budget. That in and of itself should demonstrate that satisfaction and trust in IT to provide value has greatly increased over the last couple of years and the Magellan Program has contributed significantly to that."

How CPS Wrangled Wireless Fees and Mobile Device Management

Eighteen months after CPS Energy deployed the first new smartphones under its Magellan Program, it became obvious to Barron and his team that their efforts to manage users' wireless service costs, as well as the devices themselves, were failing.

At first, smartphone bills were being charged to individual CPS Energy cost centers. That meant that for more than a year, a group of internal staffers was dedicated to analyzing every single bill, as well as trying to spot trends in underused voice minutes or data usage overages.

So Barron decided to outsource that work to Richardson, Texas-based Advantix Solutions Group, a provider of various mobile phone consulting services. Finding and choosing Advantix was "simple," Barron says, because research on the subject yielded only three or four companies that could meet CPS's individual needs, and after a request for proposal (RFP) process, it was clear Advantix was best suited to serve the company, he says.

"Utilizing Advantix to handle our communications contracts with AT&T has allowed our internal IT resources to focus almost exclusively on developing new services and offerings for our smart phones," Barron says. "We are 'light-years' ahead of companies that try to manage this service in-house."

CPS also created two separate divisions within IT, the communications and technical services departments, to focus on smartphone infrastructure and device management. Communications focuses on managing relationships with Advantix and AT&T, as well as device procurement and support. The technical service department concentrates on infrastructure upkeep and data transfer between servers and systems, such as the company's BlackBerry Enterprise Server or Exchange Server, and mobile devices.

For a look at how other CIOs are tackling telecomm and mobile costs, see "Roping Telecomm Chaos".

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This story, "How smartphones help CPS Energy boost the bottom line" was originally published by CIO .

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