Avista unit grows like wildfire
Company expects current business volume to increase tenfold by the end of 2000August 19th, 1999
Avista Advantage Inc., a Spokane Internet-based billing and information management company, expects to hire at least 30 more people, to more than double the number of customer locations it currently serves, and to land its first customer for a repair-and-maintenance-billing service it recently introducedall by the end of the year.
By the end of next year, the company, which is an affiliate of Spokane-based Avista Corp., hopes to be managing seven times the number of customer sites it does now, to be handling 10 times the amount of billings its processing, and to have expanded its services into Latin America, says Cathy Dixon, the companys marketing coordinator.
To handle the expected growth, Avista Advantage plans to continue to enhance technology it has developed, for which it expects to receive a patent within the next five months, and to look for additional office space.
The company, which currently occupies space on two floors of the CHC building, at 201 W. North River Drive, is evaluating how much additional space it will need immediately, as well as in the future. Avista Advantage employs 68 people now and expects to employ at least 100 by the end of the year, Dixon says.
Avista Corp. Chairman, President, and CEO Tom Matthews drew attention to Avista Advantage in June when he said Avista Corp. might move the fast-growing subsidiary and other business units out of Spokane so they could achieve their full growth potential. Matthews also said that such heavy hitters as Microsoft Corp. and General Electric, the worlds biggest company, had expressed interest in Avista Advantage.
Formed in 1996, Avista Advantage receives utility bills for its customers branch operations directly from various utilities and municipalities, identifies billing errors, consolidates bills into summary statements, forwards those electronic statements to the customers, initiates pre-authorized debits from the customers bank accounts, and submits payments on behalf of the customers to the utilities. Such bills can be for electricity, gas, water, sewer, garbage, and the like.
We can completely alleviate the need for our customers to interact with their utilities, and thats really attractive to them because dealing with utility customer-service representatives can be time consuming, says Ken Boni, Avista Advantages associate vice president.
Avista Advantage currently serves 45 customers that operate a combined 20,000 branch operations in the U.S., Canada, and Puerto Rico. Avista Advantage receives and processes the utility bills for each of those 20,000 branches, which translates into the handling of about 45,000 utility bills a month. Those impressive numbers are climbing rapidly.
At the end of last year, Avista Advantage was processing only about 21,600 bills a month for 10,000 customer sites. If the company is able to meet its goal this year of expanding the number of customer sites it manages to 50,000, it will be processing as many as 150,000 invoices a month.
Avista Advantage believes its market is ripe with opportunity. Boni says that studies have shown about 30 percent of companies worldwide are looking for ways to outsource tasks they currently handle in house. He contends one of the easiest functions to outsource is accounts payable, including the handling of utility bills.
Avista Advantage has determined that its market represents more than 1 million commercial customer sites worldwideand currently less than 10 percent of that market has been penetrated.
Because of that untapped opportunity, Avista Advantage hopes by the end of next year to be managing bills for 150,000 customer sites, which will mean processing about 475,000 invoices a month, Boni says.
In addition to the blistering growth in numbers, the companys customers, whose average utility expenditures total about $180 million a year, include such big names as Burger King, the U.S. Postal Service, DoubleTree Hotels, Eddie Bauer Inc., and AT&T Corp. Last month, Avista Advantage also signed up Starbucks Corp., Pier 1 Imports Inc., and Federated Department Stores Inc., which operates the Bon Marche, Macys, and Bloomingdales department stores.
Boni says that launching clients such as Starbucks likely will propel Avista Advantage into the international market, since Starbucks now has stores worldwide. Already, customers such as The Disney Store and Kinkos Inc. have enabled Avista Advantage to expand into Canada and Puerto Rico.
Each new customer means more opportunities for us to grow, Boni says.
A few European companies also have contacted Avista Advantage about its billing services, Dixon says. She says its unclear when the company will expand there, though, and for now it will continue to concentrate on the North American market.
Outside of the utility sphere, Avista Advantage might have an even bigger world to conquer. The company believes that the market for its new repair-and-maintenance-billing service is nearly four times the size of the utility-billing market, which could mean even more growth for the company. Boni says that customers receive an average of 2.5 utility-related bills a month for each of their locations, but receive an average of 10 maintenance and repair bills a month per location. Those bills can be from numerous vendors and can be for a variety of services, ranging from maintenance of a companys fleet to repair of its copy machines, he says.
Boni says Avista Advantage currently has in front of several customers proposals to process such bills.
Founded by WWP workers
Avista Advantage was the brainchild of five employees of Washington Water Power Co., which since has been renamed Avista Corp. Those employees proposed their idea of offering services to utility customers, such as energy audits, to Paul Redmond, the former CEO of WWP, in 1995. In 1996, Redmond gave the employees the go ahead.
Boni, who was one of the five WWP employees, says the business got off to a slow start because the concept was so new potential customers hadnt identified a need for such services yet. Tidymans Inc., of Spokane, was one of the first customers to sign up for the companys service back in October 1996, he says.
Within about 18 months, Avista Advantage had grown to employ 30 people and had become involved in services, such as energy-management consulting and retrofitting a buildings lighting to be more efficient. In December 1997, the company realized that it needed to focus on a specialty. It cut its work force to 17 employees and began focusing on its Advantage Customer Internet Site (ACIS), which is the customer web site that remains at the center of the companys business.
The decision to focus on one main thingthats what I believe has made us successful, Boni says.
In addition to its office here, Avista Advantage also operates a one-person sales office in Chicago and a data-processing center in Louisville, Ky. The Louisville center is managed by Avista Advantage, but the work there is contracted out to Louisville-based NPC, says Dixon.
Matthews said in his remarks in June that Avista Advantage is one of Avistas fastest growing business units, and its expected to be worth between $200 million and $300 million within the next couple of years. Since then, he has talked about possibly opening a processing center here thats big enough to handle all of the subsidiarys work.
One of the keys to the subsidiarys operation is the ACIS web site and AviTrack, a database that allows the company to create the detailed utility reports for its customers. The company expects to receive a patent for both by the end of the year. AviTrack has been developed so that it can be upgraded continually to meet customers needs.
Searching for savings
Once a customer signs up for Avista Advantages service, all of its monthly utility bills are sent to one of Avista Advantages two data-processing centers, where they are scanned into a computer. If a customers site is located east of the Mississippi River, the bills are sent to the Louisville center, while bills from branches located west of the Mississippi are sent to Spokane.
The scanned information then is transmitted electronically to computers at Avista Advantages headquarters here, where the bills are examined for errors and are consolidated. Workers here also analyze customers bills and produce more than 500 different reports and graphics, which customers can view via the Internet by entering a password. Some of the reports include data on cost of energy use per square foot, information related to weather, budget forecasting, and comparisons of energy use at each of the customers sites.
A customer can access those reports for up to three years, while its scanned invoices can be accessed for up to six months, after which they are archived onto compact disks. A customers billing data then is reanalyzed on a periodic basis, says Lisa Hagen, an energy analyst at Avista Advantage.
When customers sign up to receive Avista Advantages services, they dont have to buy software from the company. Rather, they pay a monthly fee, which Avista Advantage declines to disclose, for each invoice Avista Advantage processes.
Boni says candidates that are best suited for Avista Advantages service are high-growth concerns with a centralized accounts-payable department and between 10 and 10,000 branch operations.
Hagen says that as of the end of July this year, Avista Advantage estimated that it had saved its customers a combined total of $700,000 so far in 1999. Those savings came from ensuring that a customer was getting the best rate for utility service based on its usage, as well as finding billing errors and eliminating late fees.
Customers just werent capturing that kind of information off of their own bills, Boni says.
Avista Advantage claims that it can save a customer an average of between 0.5 percent and 2 percent of its annual utility expenditures, based on elimination of late fees, correction of billing errors, and analysis of its rate schedule. The Spokane company says it can eliminate up to 80 percent of a customers utility late fees.
Avista Advantage also believes that the information it provides its customers will help them as more states deregulate energy usage. Under deregulation, utility bills typically become more complex in that they include statements for commodity, transmission, and distribution costs rather than just the single usage statement utility customers traditionally have received.
Avista Advantage, which handles customers billings regardless of whether they operate several branch operations served by a single utility or a number of different utilities, currently works with more than 3,900 utility companies and municipalities nationwide. The company has developed a database on each of those utility companies and municipalities that contains contact information for each entity, late-fee terms, rate schedules, and various regulations.