Liquidity, integration, key to e-business, Reliant exec says
Reliant Energy Inc. has invested $20 million over the last 10 months building its e-businesses, Reliant Energy Inc. Vice-Pres. Brian Landrum said in Houston Wednesday. He emphasized liquidity and integration with core businesses are key to success in e-business ventures.
Ann de Rouffignac
Reliant Energy Inc. has invested $20 million over the last 10 months building its e-businesses, Reliant Energy Inc. Vice-Pres. Brian Landrum said in Houston Wednesday.
When launching into �new economy� businesses, old economy financial rules still apply. And e-business should be integrated into a company�s basic core business, he said.
�We don�t want a 1,000 points of light that are not integrated with the company,� Landrum said at the E-Business Strategies for Energy Industry conference. �And �old economy� financial rules should always apply.�
Reliant�s e-business strategy includes an in-house effort called InSync, which is an internet services provider in Houston that provides web hosting and web design and other services for businesses. Reliant also embarked on a completely separate business called GuideStreet.com, a home services site for consumers. GuideStreet helps residents of Houston get access to home services in one �fell swoop,� he says.
The site is another way for Reliant to communicate with existing customers, says Landrum. It also will help attract new customers for energy services and retail electricity once deregulation of the electricity industry in Texas is underway in 2002.
Another e-business venue is of the consortium/ venture type. Reliant and 20 other big energy companies, including Cinergy Corp, Duke Energy Corp., and Southern Co. formed Pantellos, a supply chain marketplace. The site will provide information from suppliers about wires, transformers, and even business supplies such as computers. The software interfaces for suppliers and buyers still must be developed. The site is expected to be operational by yearend, said a Reliant spokesman.
Reliant has also entered e-business through a strategic partnership with EpicEdge Inc., another e-business company, to provide �online customer service� for its utility customers. EpicEdge and other small companies are helping Reliant set up this new customer service system on the web. This is expected to be operational by October.
Reliant�s fifth e-business effort is participation in the IntercontinentalExchange, an electronic trading forum for many commodities, but especially oil, gas, and power. Reliant partnered with American Electric Power Co. Inc., UtiliCorp United Inc. unit Aquila Energy, Duke Energy, El Paso Energy Corp., and Southern Co. Energy Marketing who have all joined the original exchange initially formed by BP; Royal Dutch/ShellGroup; TotalFinaElf SA; SG Investment Banking, a unit of Soci� G�rale Group; Deutsche Bank AG; Goldman Sachs; and Morgan Stanley Dean Witter & Co.
�It�s not the technology that will win here,� says Landrum. �It�s the liquidity. If it�s deep they will come and trade.�
Landrum says that if there is not at least 30-40% liquidity on the marketplace or exchange, it won�t work. Matching buyers and sellers is not enough. There must be a link to consulting services and there must be ancillary services so trades can clear. He said the exchange will run like an over-the-counter financial market.
�The exchange has partners that represent 25-35% of total gas and power trading in the US,� says Landrum.
The InterncontinentalExchange will be different from EnronOnline, Landrum said. Enron was the first to launch an online trading platform for gas and power last year. But critics point out that the other party in a trade is always Enron.
�That�s a great idea for them as a company,� Landrum said. �We prefer not to give away information value to only one buyer.�
The IntercontinentalExchange will be open and unbiased to all buyers and sellers, he said. Landrum said he couldn�t stress enough that liquidity is the key and that will be the great advantage that the IntercontinentalExchange will have over other trading platforms.
Landrum who came to Reliant from the high tech world of Compaq Corp. warned energy companies trying to participate in e-business to beware of spending 12-18 months on a new e-business endeavor with no results.
�You must always be reevaluating and asking the question should we shut this down?� he said.