PT Perusahaan Listrik Negara (PLN) Persero, a state-owned electric utility company in Indonesia, is selected as the client for this group field project. The main objective of the project is to evaluate and propose for an improvement in the existing collection system, as PLN Director raised concerns on several problems perceived to exist in the system, i.e.:

i) Unreconciled (missing or mismatch) payments that may bring to loss of cash assets;

ii) Incorrect data entry;

iii) Heavy burden on staff to complete end of the month reports

iv) Poor records of payment;

v) Poor record of bill payment is weak and/or not recorded properly.

This project report does not attempt to solve all of PLN's collection system problems. However, there is an intention to recommend system improvement. Key findings from the assessment work on the collection system will be highlighted as well as the recommendation for improvement and suggested implementation milestones.

The collection analysis includes examination of the current business process, working patterns, organization & people, as well as the Customer Information System (CIS) that support the collection function. Other elements included in the CIS, such as the process for new customer connection, customers information, billing, customer complaints, supply interruption management, assets and maintenance management, are not included in this project.

The focus of the project is on the current collection system at PLN Distribusi Jakarta Raya and Tangerang (PLN Disjaya). The project analysis is based on the survey and investigation on the two UPs, i.e. UP Menteng and UP Cikokol. PLN Disjaya has installed CIS, the so-called CIS RISI, in 1996 to handle processes with regard to customer service management. The system has been able to manage the six functions of the standard PLN TUL-94. Three out of 35 UPs, i.e. UP Menteng, Cempaka Putih and Grogol have implemented CIS RISI since 1996. Such implementation replaced stand-alone DOS-based applications previously used. Not all the CIS RISI functions work well in 35 UPs. The implementation is quite sporadic, for example 25 UPs have started using function no.3 (billing) of the CIS RISI while the rest is still using in-house application SPRD for billing function; 9 UPs have worked with function 1, 2, 3 of CIS RISI; 8 UPs have used function 2 and 3; while there is UP which have used only function 1 of CIS RISI.

CIS at PLN was developed as a tool to improve the efficiency of electricity distribution, sales, as well as services to the customers. A new guidance in the form of customer administration manual 1994 (TUL-94) was formed to replace the early 1984 format.. This guidance was used as the blue print to the development of the CIS that related to electricity sales activity, which includes:

1. Customer services

2. Meter reading system

3. Billing system

4. Accounting system

5. Collection system

6. Credit Supervisory system

Based on the guidance in the manual for the customer information system (TUL-94) and the development for the function of the collection system to date, the collection system can be divided into three methods, i.e.:

- On-line payment method (PRAOTIS)

- Offline payment method using Non-Banks

- Offline payment method using Banks

The project will look at each of the collection methods. Business process, CIS, organization and people related to each of the collection method will be identified. Key findings on such issues will be compared with current industry best practice to form the gap analysis. The result will then be used for building the recommendation for the improvement.



Key Findings & Gap Analysis

From the assessment of the current system and the best practice or the expected conditions we found that there are rooms for improvement in the business process, CIS and in the aspect of organization and people. Some important points are the followings:

(i) Collection system should be directed towards online payment method (PRAOTIS) to ensure better revenue protection system.

(ii) The IT intermediary business model has to be amended to encourage PRAOTIS

coverage.

(iii) The CIS function 5 accompanied by CIS function 2 and 3 has to be rolled out as soon as possible to achieve a better collection performance.

(iv) The employee should be equipped with proper digital business skills to enable successful CIS implementation.

(v) Positive behavior of all employees towards change and IT based business process adoption should become a top management commitment.



Recommendation

Key recommendations for collection system improvement are:

(i) Change payment method towards bank online system. Current position with 12% share of customers covered by PRAOTIS and 40% of offline payment points are non- banks should be moved to a better position with at least 56% shares of customers paid through PRAOTIS (taking 50% of 88% non-PRAOTIS customers) and leaving only 20% of non-bank payment points.

(ii) Consider to have additional IT intermediary between PLN and banks.

(iii) Change payment point compensation scheme from revenue basis towards transaction basis. This will naturally dispose current cooperatives handling large customers' bills and shift the payment to online/PRAQTIS system.

(iv) Establish pooling account and zero balance arrangement.

(v) Accelerate meter reading two days earlier and change payment period from day 5 -25 (30 for business and industrial customers) to day 1-20 (25 for business and industrial customers).

(vi) Ensure there is local IT staff empowerment and regeneration for CIS implementation to be successful.

Suggested milestones from end 2003 up to year 2006 for collection system improvement are presented at the end of the report.



Conclusion

We conclude that the improvement in collection system at PLN Disjaya can be achieved through improvement in the business process, working mechanism, institutional arrangement and, even more importantly, with the commitment to change the culture and behavior of employees towards adoption of the new IT-based working environment such as CIS.



Research Location: PT PLN Persero

Supervisor: Alexander Cyrus

Accepted: 12 August 2003