Utility Work Powers Logica Growth
Utility Work Powers Logica Growth
By Dennis McCafferty
Lexington, Mass.-based Logica Inc. is finding these days that there is, indeed, something in the water.
Water and power utilities, that is. Since piloting a large-scale integration project with the Los Angeles Department of Water and Power in 1995, Logica has found a significantly increasing market of utility and local government customers. With the market significantly picking up within the last year, the company has now launched or is in the process of starting about 20 integration projects at utilities in places such as Pittsburgh; Akron, Ohio; Atlantic City, N.J.; and St. Joseph, Mo.
The contract values for the integration jobs amount to $1 million to $1.5 million each, company officials say. The Los Angeles project amounted to roughly twice that.
Deregulation of the utilities industry has boosted the demand for systems integration. Many utilities are separating into smaller companies, downsizing in the process and creating a need for better efficiency in operations and customer service, industry officials say.
Jim Cypert, vice president of marketing for Logica's energy and utilities division
"Our product fits the distribution side of the business very well,'' said Jim Cypert, vice president of marketing for Logica's energy and utilities division.
"These utilities are looking for more control over costs. In a regulated environment, they paid very little attention to customer relationships. Now, that is changing. With the downsizing, they're doing more work with fewer people, so you have to automate and integrate to get the work done they need to do. It's not only a matter of controlling costs. It's having a knowledge of what the costs are.''
Logica provides a central database that will track everything from quickly processed customer service orders to a six-month monitoring of subdivision construction and its impact on utility demand. In Los Angeles, the system was recently completed to provide full production in 10 service areas. It's estimated to save up to $3 million per year, according to estimates from the city water and power department.
The changes prompted by deregulation have caused a shift in the utility customers' needs as well.
"Four years ago, they came to the vendor and wanted a custom fit,'' Cypert said. "Now, with the increased demand for efficiency, they want a solution in nine to 12 months, so you need a packaged solution to provide them with.''
Logica is a subsidiary of Logica plc, a London-based systems integration, consulting and software firm that recently posted $440 million in annual sales and has offices in 20 countries with 4,800 employees worldwide.
Bill Loomis, an analyst who tracks information technology companies for Baltimore-based Legg Mason Wood Walker Inc., said the integrator companies' pursuit of utility markets makes good sense. If anything, he said, history is repeating itself after similar deregulation made a large impact on the telecommunications and banking industries.
"The breakup of the Bells drove the need for new information systems that they didn't need before,'' Loomis said. "Competition was introduced, so they needed better billing systems and customer service systems. Then, we saw it with banks, and they found the need to get more close and personal with the customer with better systems management. So here's another vehicle with a lot of money and resources that's undergoing significant change leading to more competition. Anytime you have those factors, you have large opportunity for information technology companies.''