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be kind of an interesting version of a utility presentation so I'm anxious to to get your feedback at the end on what you think about this because it's not quite probably where you think it's going in terms of utility but I want to really want to share our story with you and show you how we got to where we are yeah with a very very unique product and with the help of a peon so just to kind of start out we've got we got a picture of Birmingham Alabama where Alabama power is headquartered Birmingham beautiful city if any have you any of you been to Birmingham and you mean been alright yes come back to Birmingham Birmingham fantastic city but one of the reasons that Birmingham was great was it hit it was really established based on the fact back in the 1800s it was one of the few places in the country where you could find the main three ingredients to make steel so coal iron ore limestone and so those components bring coming together that are in the hills and around the city of Birmingham are really kind of what make Birmingham what it is and so Alabama Power as a utility has been around since 1906 we started electrifying the state as you see here we've got trees skinned down making power poles in the state and what we were trying to do is go around at that point people didn't know anything about electricity or the how to use it and it was a scary concept and so what we had to do is go around the state and teach people the benefits of using electricity in their homes and it started with oddly enough it started with women like this who would go around to home owners and teach the women of the homes about the power of having electric appliances so they would go into the home and you can see this contraptions all these different devices here that they would take into the home and they would teach everybody about you know plugging in what it was like how fast you could mix how fast you could do dishwashing with electricity so we've really been trying to not only light homes for four years but really also trying to show how to make life better you know what can we add to a lifestyle to make it better so these ladies would go around they would teach about things like and you see all these interested guys here you know you see a bunch of guys interested in the mixer but they would do this and have these little shows and they would take goat from place to place and set up these little booths and they would have things that show you about the amazing you know cooking that could be done with electric cooking the dishwashing how much time that would save you so getting into the home and helping the helping our customers benefit from electricity was really something that we started with early on now I need to back up a little bit and tell you and talk to you about our business and where the competitive aspects of our business are so we have warm time we have cool time so everybody knows that you're gonna cool in the summertime you're gonna cool your your house with electric air-conditioning that's pretty much a no-brainer so from a load standpoint every time your meter spinning in the summertime we're really appreciative and we know that there's no other option right but in the wintertime you have a competitive option you can either choose gas heat or electric heat and so those are that's our big competition for space when we're talking about heating and cooling homes we want to make sure and have a marketing department that ensures it that anytime a customer has an option between going with electric heat or gas heat that they choose electric heat and so people ask us often why do you have a marketing department you know what's what's the point of marketing electricity the winter load is really where we're trying to attack because we know that there's really no option the summer winter is where it's at so every time heating and cooling system goes down what we're trying to do is find a way that that customer is going to be incented or wants to convert if they have gas heat to convert to electric heat so that's kind of our that's kind of our goal that's really what we're driving toward is getting customers more aware of electric heat anytime that their HVAC systems go down so just as a staff Heating and Cooling is the largest single user of electricity and home so at 29% we want to make sure that combined that we have every bit of that from a competitive advantage standpoint so you know any of you had have you had a recent HVAC system failure where you had to replace the system like big money right it's not fun it's like putting a roof on the house there's nothing sexy about it so when that happens that's a that's a really really big deal and it's a really big cost issue so some HVAC dealer will come out give you an assessment you can see this is a very worried couple because like where you're gonna spend that money on other things and now you've got to spend five seven ten thousand dollars on a new heating and cooling system and nobody plans for that I mean nobody sits around go hey I'll tell you what let's just go ahead and proactively replace our heating and cooling system that just doesn't happen so they tend to be unexpected things unless you have something that starts making a noise or whatnot you're you're usually surprised by it and as a result of that what we were trying to do is make it much easier for people to to bear that load so what we have done since the mid-80s is actually offered financing for replacements and conversions of HVAC systems so we're trying to take that blow and lessen it for our customers now again this is kind of a outside the realm business model right for a utility but what we're trying to do is ensure that customers when the time comes and they're panicked about how they're going to pay for a replacement or a conversion from an HVAC system that we're there to help so these two couple dapper guys in the mid 80s they're sitting there they're really swell and they're talking about you know these these all-electric heat pumps and so if you're not familiar with the way a heat pump works a heat pump you know cools in the summertime and it heats in the wintertime and there's it's all electric so what we wanted to do is find a way even though we don't sell heat pumps we would not want to engage in that we're trying to find a way for our Heating and Cooling dealers in the area to encourage them to promote all-electric homes all electric heating and cooling so what we did is we went through and we said let's set up a process by which we are helping a customer get financing for these products and I'll walk through that with you just so you have an idea of how this goes so an HVAC dealer comes out they go out and assess the problem they come to you in your garage they knock on the door I say okay got some really bad news this is like 7,000 bucks that you're about to have to spend to replace this unit kind of here's here's the deal and so what we've done since the mid-80s is then you know the dealer provides these quotes and then we try to get offer them financing so we're telling the customer ok Alabama power the HVAC dealer is telling the customer we have all these financing things are available from Alabama power we have you know a variety of interest rates based on your credit score and they kind of pitch the idea to the customer again we're not involved we're just in but we're just the program administrators at this point and the customer would have to have their credit you know run and so that was a manual process that involved you know calling back in you know again imagine the scene you're in the garage it's hot you know now the dealer calls Alabama power yes I've got mrs. Smith on the phone you know about to give her the phone to you we're gonna do an approval for credit and I hand the phone over and the mrs. Smith gives information to the person back at Alabama power who's then entering that and you know one of our credit checking systems getting a credit score getting the dealer back on the phone to say hey by the way just run mrs. Smith's credit she's good you're fine to proceed for the amount of the the unit to be replaced so after that point the dealer would then go out and go okay you know what I know Alabama powers gonna pay me then Alabama power is actually gonna bill the customer so I can go ahead and do it before perform the work so the work is all performed the customer then has to sign a whole bunch of paperwork one all the standard stuff that an HPC dealer would have with on the pad but they have a whole set of other loan paperwork now that the have to sign with us so that's where our marketing representatives from all that power get involved and they're getting the completion of all this paperwork they're meeting up with the customer because by the way again we're not in the garage we're not out there right now so the customer has just now gotten warm or cool but now we have to follow up with them to get them to sign paperwork how much of a high priority do you think we are at that point now the customer is now warm or cool so we have to find a way to meet up with this customer how do we get the customers paperwork from them you know sometimes it's calling the customer up and saying hey we need to meet you I don't know in the McDonald's parking lot to get you to sign the paperwork for this loan because then what happens is the HVC dealer gets paid by Alabama power and then the customer their loan payment is actually put on their power bill so every month that customer now has their electric service charge and in addition they also have a loan payment so this is kind of the general Indian process and this was all paper-based since the mid-80s so you can imagine how much paperwork that produces so we did in our analysis before we started this process to say we got to find a better way to do this let's just let's look into how much paperwork is actually generated by this process and in one year we were generating 62,000 pieces of paper just to handle one year's worth of paperwork and if you stacked all that paper up a pole it would reach that high in one year so now that's each year and retention standards have to have us retain all that paperwork ten years after the last payment of the loan so a seven year loan payment I got to hold on to 62,000 pieces of paper every year for ten years so you can imagine what a nightmare this is and so all around our state we've got these files that are in bankers boxes all over the places there's being stacked up and by the way this is a because it's a loan and financing thing the state banking auditor wants to every so often come around and pull files randomly to see whether or not we're billing the customer the right thing and all the numbers match up so the state banking auditors would be driving to one of our you know 80-something offices around the state saying hey pull file a B and D and I want you to pull all the information about that and I've got to go through it so these things were scattered all over the place so we didn't know necessarily if a given customer was that all their files were in this officer or their files in this office or where they were so management of paperwork in general was a nightmare so we when we diagrammed it kind of this is a simplified version of it but this is really what we had before so we had you know a variety of different folks who were involved on this side marketing administrators a marketing specialists a division customer service representative out in the local offices division accounting manager who had actually create the check payments and everything that goes through they go to the dealer and weary envision this because we started we had to know exactly what we were doing what were we dealing with if you're gonna make it better you gotta at least know what the lay of the land is first so by starting here and really putting a lot of focus and a lot of time into this we transformed the bad process into something that was much simpler so now you've gone from you know six or seven people being involved to roughly three people being involved from a swimlane standpoint along with our credit bureau our internal customer information system as well as our software that does all the check creation so those were our these bottom three were really our integration points at that point real time credit checking with Equifax our internal customer in customer information system that we access through through middleware and then check creation with Oracle financials to be able to do that so now we have a process that's completely streamlined and we've cleaned this up at the start as if you start backwards with you know taking an old paradigm and you just digitize an old crappy way of doing something you're not really making headway so our kind of fun thing is we just burn everything to the ground and rebuild it with a better process and that's really where do you start so that's where I'm bringing you now to smart financing so this is our tool that we're we have developed over the last year and a half we started actually our first day of sprint zero was in 2018 January of 2018 and I want to walk through the digitized version of what this looks like and what we came up with after kind of reimagining it so this is a timeline of where we started and kind of what our first release was so we did a series of releases and we did a first release but the the real valuable part of this was the beta testing that we did with actual live HVAC dealers at the end of that first release at the beginning of the second release we took the release one app which was not exactly where we wanted it to be and we put it in the hands of a select few HVAC dealers and we said what if you were just able to completely end-to-end do all of the credit checking do all of the processing all the paperwork was all digitally signed you know and you could control all of that you didn't have to call us you didn't have to wait on us something to happen you had no mystery about where your check payment was that you were gonna get what would you think of that and so we put it in their hands and got some really great feedback that allowed us to take it for the the subsequent Sprint's and and put some of those features and functionalities back into it so it was a really really valuable process horse so this is the app we really for the most part most of our users for smart financing are mobile we have a couple folks who are doing administrative duties whether it's through some of our HVAC dealers who have like an office administrator who can administrate and and manage user accounts on their own it's really powerful because they can use the desktop version they get a lot more information they're able to take advantage of the wider desktop form factor but this is something that each of the dealers each of the HVC dealers and the technician could put on their device it's branded branded a paean app and they walk the customer through and what I want to do is kind of show you what that customer journey looks like for a customer and HVAC dealer interaction so we kind of started some multiple phase process where you start with a customer you have the HVAC dealer engage and then the customer engages and imagine this this is going to be a handing it back and forth kind of iPad journey so when you start with the customer the customer when they're initially presented with the first screen they can apply as an applicant ko applicant and the dealer has basically started the process from the previous screen I showed you they've handed the iPad to the customer and now the customer is managing their own journey so they figure out how they want to apply they enter all their contact information all their applicant details social security numbers in their encrypted we take all of that information and we look at our own internal CIS system to figure out if they already have an account with us because we have a way to set up a what we call a non service account so that if you don't have an account with us for some reasons and a different you know your husband wife's name whatever it happens to be we can create a separate account on the fly but this is an integration point at which it will ask you do you is this you is
this the account that you're actually trying to get financing for something on and so we check that and the customer can then say yes for the most part that's that's them and we have these handoffs screens that show when you go back and forth between the dealer and the customer and so now the customer has finished applying they've been approved for credit they hand it back to the HVC dealer so now the dealer knows the dealer will get in a notification that the customer is approved you're approved you can go ahead and start your work or good for the bill on this so the dealer now will get a task in their task list that says hey here's some work to do for the customer the next thing you need to do as the dealer is you need to tell us some information about the actual the actual invoice and the project cost and the pieces of equipment so if you think about this from an asset and liability standpoint you know we're basically doing a loan for a piece of equipment that's going to be out installed at a house we want to know that if we have to repossess that which sounds like a really cumbersome awful idea but if you have to repossess an HVAC unit that you have the model number and the serial number and everything so that you can go out to a specific piece of equipment and grab that that piece of equipment back so we ask the dealer hey put in the information that you have put in your invoice number so that if we have to do an audit we can go back to your office and say hey dealer a I need you to pull the invoice for Mrs Smith's shoot I just need to check some stuff so they give us their invoice number they give us the total project cost and we walk them through and they enter all that information telling us exactly what they put in and then they they swear by it at the bottom with all the legalese the lawyers love that part so all the legalese is in there and now the dealer is done really they've got at this point they're kind of finished with the thing so now they have to go back and get the customer to fill out the information about and signed do all the signing for the paperwork this is the legal part right you're filling out and basically completing a loan application so the customer gets handed the device back they can finger sign using the inherent capabilities within the mobile device they hand it back to the dealer and at that point they're done so the entire process that's it on credit check internal internal CIS check and now at this point the check has been created that will pay the dealer back for the for the equipment so we're paying the dealer customers paying us on their power bill right so the customer now at the same time that this just happened billing was set up on their next monthly bill so they'll start getting billed for the loan payment and then the dealer's been paid and the dealer can leave and we have taken the process from around two to three weeks down to 48 to 72 hours for the dealer to get paid back for a small company that's a big deal to not float that much money so we also have real-time insights before we didn't have anything related to knowing what loan tranches we know we had loans in how many were in the different interest rate tranches so now we have this all in real time that we can monitor on from an administrative desktop view so let's look at some of the results we have roughly 600 plus HVC dealers who are using this product we a little over 1,100 users now spread across those again they can manage their users so an administrative office assistant at each one of these companies can go in and create as many technician accounts as they need to and manage that and see the performance of each one of those dealers along the way some of those technicians we've seen a 20% increase in loans and instigate initiated monthly since we rolled out last fall actually last month we had a 400% increase in a year over year from last April in the number of loans and the interest that we gained off of those loans just because of the fact that we made it easy for the HVAC dealers to use they gave us more business so for our top four these were their year-over-year increases from 2018 to 2019 so they're using this thing three hundred and sixty-four percent two hundred eighty eight percent more than they were last year they told us in focus groups when we first started this that was going to be the case and this is actually proving that to be true so here's where we get into a number of employees around the state roughly 80 employees were involved somewhere touching this process at the end of this process when we digitized it to to administrative people to manage exceptions to manage issues that come up but for the most part two people now oversee the day-to-day operations of this app so it's kind of follow up give you a summary of what I would say you're some kind of some lessons learned for this process first of all optimize your process don't make a better 1982 all right that's we've said that internally don't go in and take whatever your process is and think just slapping some technology on top of it is going to make it better start from the beginning rethink it put some metrics behind your process that also helps you evaluate and do a cost justification to when you go to do a purchase ask your users about their needs focus groups I know there's a big conversation out there about whether focus groups are good or not well let me tell you when we sat down we learned from these guys what what they wanted these companies it was fascinating we had one dealer that tell us hey look right now in your old process I have to cap you because you won't pay me back quick enough and I can't float all this money out there until you do so he was using other finance ears it went once we reached a certain point with him and we hadn't paid him back he was using other loan companies so we listened to that feedback and we changed it and we said what if we make it faster and make it as competitive as these other companies he said I'll give you all my business so those kinds of things are important to hear so it's definitely worthwhile asking create an effective cross-functional team so our group resides outside of our technology organization at Alabama power but we heavily involve them because it was important for us to have access to the systems that we needed they were key in making sure that we were able to get the data that we needed out of our CIS system we also created this cross-functional team from across a marketing accounting all of our division customer support folks we want to make sure we got a variety of ideas and then finally sitting there on the Appian Way leopards yapping platform for rapid results because I can't tell you how much more how much more efficiently we were able to put this product out and it still blows people away when we tell this story of going from really nothing and from a design in January of 2018 to actually having a finished product that was rolled out in the fall of that same year that integrated with three different systems I mean that was while it's not we don't have necessarily the staggering app numbers and you know application numbers and and user volume and some other companies for us as a utility because utilities move not quite so fast we take our time because usually if we move too fast somebody gets hurt so we're used to taking our time and so for something to be produced this rapidly was really a testament to the team that we put together the Rhian visioning of the of the process so just like Birmingham started a turn of the you know turn of the century and back in the Steel days these key components to me were the things that made made this project successful and we're really looking forward to other appium products as we launched a couple other ones based off of this so with that thank you everybody
