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Integrating Commodity Pricing for a Global Integrated Energy Company

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Integrating Commodity Pricing for a Global Integrated Energy Company • Cognizant Case Study Integrating Commodity Pricing for a Global Integrated Energy Company Business Scenario making this process cumbersome and faulty. An increasing number of errors in logged deals Gas and electricity prices have been extremely resulted in a substantial loss to the business. volatile over the last few years, owing to changing market conditions. Suppliers use competitive Because of these issues, our client decided to pricing to gain market share, which leads to the explore an integrated proposal management need for distinct pricing strategies that target system that not only integrates various systems each product group and sales channel. but is also robust and user-friendly to handle its day-to-day operations, such as generating pricing Market forces are driving the need for not just and proposals for its electricity and gas business product scalability but also product adaptability units. The company first started implementing to suit market conditions. With the deregulation the integrated system for electricity, with plans to of markets, and suppliers’ penetration into new extend it to commodities such as gas and oil. geographies, energy companies need to con- tinuously enhance their existing systems to gain We partnered with the client to build the proposal customer confidence and business. As a result, management system, which was aimed at inte- it is now imperative for energy companies to grating processes across the sales, operations, implement robust pricing and proposal systems wholesale desk (trading), contract administra- to integrate operations so they can effectively tion and billing teams, which are instrumental react to dynamic market situations. throughout the entire pricing process through a single workflow. Client Situation Our client, an oil and gas major with a presence in Challenges both upstream and downstream businesses, was Our client faced the following business challenges operating with a siloed electricity pricing process. in managing its pricing process: The sales team, operations team and trading desks worked on independent systems, with no • A time-consuming process that involved formal process of interaction with each other. manual operations at various checkpoints for pricing/proposal information flow among The company utilized a manual and Excel macro- teams. based pricing process for its daily updates, cognizant case study | may 2012 • Iterative re-pricing, causing time and often Proposal Management System: deal loss to the client, as multiple stakeholders Integration with Various Applications were involved in the process. • Ad hoc interaction among siloed teams, with informal communication mechanisms, often resulting in a loss of pricing data. Sales Customer Master System Data Management • High process complexity, due to multiple stakeholders and multiple pricing variables. Faulty information management, due to • Integrated dependency on manual operations that were Contract Proposal Billing prone to human error. Administration Management System Application • Revenue leaks, with details from the sales system failing to be updated in the billing system. Trading Solution System We developed custom applications to achieve a higher degree of automation through customiza- Initial information flow tion and system integration. Reviewed information flow Integrated Electricity Pricing Figure 2 For this application, we followed the traditional Enable the development of multiple in- software development lifecycle model for applica- > stances of the product for the same com- tion development and suggested an application modity to suit market needs. for integrated proposal management to facilitate the entire order-to-cash process. Key solution • Allow the sales team to re-price proposals highlights included the following: without intervention from the operations team within a specified limit, thus saving time for • Processes were defined across all the involved iterative pricing and, hence, a higher deal-con- teams, including sales support, electric version rate. operations, wholesale desk, contract adminis- The integrated pricing system has also been tration and billing. extended to an iPad application, allowing sales to • The application was integrated with the lead make quicker and more informed decisions with management system (sales) for receiving lead/ changing market prices and, hence, closing deals opportunity data. It fetches customer master more efficiently. data, creates a proposal in the integrated appli- cation, which is key to pricing, and then sends it Integrated Gas Pricing to the operations team for proposal generation. On witnessing the benefits from the electric- Once the proposal is accepted by the customer, ity integrated proposal management system, these details are passed to the contract admin- our client is also considering integrating its gas istrator and appropriately populated in the pricing systems. As a part of our solution, the team billing and trading systems. suggested a CSLA-based Windows application to • A workflow management process was defined facilitate proposal management for natural gas for tracking purposes. customers. Proposed solution highlights include the following: • Configurable user roles and rights management were developed. • Customer data management for managing pro- spective customer information. • The pricing module was configured to do the following: • Sales support alignment for: Creating proposals and summary > Consider future business growth, with a > plan to extend the system to support natu- proposals. ral gas and fuel oil commodities at a later > Generating proposal transaction stage. confirmations. cognizant 20-20 insights 2 • A baseline process for finalizing a deal proposal. • Developed a tracking mechanism through a • Alignment with the trading system for hedging seamless workflow process, minimizing losses fixed price deals. due to missed opportunities. • Alignment with operations by blending and • Minimized manual processes, thus increasing extending deals present in the legacy applica- process efficiency. tion. Gas: Maintenance of default values of various • The following are a few of the expected benefits proposal parameters. from the client’s integrated proposal system for • Allowing users to view different types of price gas: feeds. • Considerable reduction in time/effort for Benefits proposal generation. Electricity: • Improved process accuracy due to a higher level of process automation. • Reduced time required for initial proposal generation by about 20%. • Ease of prospect management for users. • Reduced time required for deal re-pricing by • Proposal and pricing confirmation through a 30% to 40% by enabling the sales team to single system instead of manual processes with re-price deals without operations’ intervention multiple windows. under an assigned tolerance limit. • Real-time price views, resulting in effective • Developed pricing and proposal generation pricing and better conversion rate for deals. under a single window for the sales, electric operations, wholesale desk (trading), contract administration and billing teams. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out- sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 137,700 employees as of December 31, 2011, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant. World Headquarters European Headquarters India Operations Headquarters 500 Frank W. Burr Blvd. 1 Kingdom Street #5/535, Old Mahabalipuram Road Teaneck, NJ 07666 USA Paddington Central Okkiyam Pettai, Thoraipakkam Phone: +1 201 801 0233 London W2 6BD Chennai, 600 096 India Fax: +1 201 801 0243 Phone: +44 (0) 20 7297 7600 Phone: +91 (0) 44 4209 6000 Toll Free: +1 888 937 3277 Fax: +44 (0) 20 7121 0102 Fax: +91 (0) 44 4209 6060 Email: [email protected] Email: [email protected] Email: [email protected] ­­© Copyright 2012, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners..
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