Utility Week

UTILITY WEEK | 9TH - 15TH NOVEMBER 2018 | 23 Operations & Assets Market view U tility companies are facing increas- ing scrutiny from regulators over their operational resilience and customer service. A shrinking customer base and increasing competition from next-generation digital entrants such as Google and Amazon, who have created their own smart thermo- stats, is putting a squeeze on the profit mar- gins of utility providers. In the UK, the rise of smaller companies is taking customers away from the big six. This year alone, energy companies have experienced a high level of churn with more than three million custom- ers switching energy supplier so far. Already challenged with stagnant revenue streams from price-sensitive customers and next-generation challengers, utility execu- tives are now focusing on two major areas to maintain their market position. These areas are, first, providing a better experience for customers, and second, reducing operating costs to maintain profitability. Utility companies are increasingly part- nering with forward-thinking technology companies to keep pace with the disruptive forces changing their industry. Through col- laboration, utility companies are able to exe- cute a digital transformation strategy which boosts both operational performance and enhances customer experience. However, according to a joint report by EXL Service and Harvard Business Review – which compared the digital transformation efforts of more than 800 companies – only 20 per cent of utility companies are achiev- ing positive business outcomes as a result of digital transformations. The main reasons for these failures were insufficient resources and change manage- ment challenges. For a successful change project, businesses need to create a robust change management framework under- pinned by extensive domain knowledge and process expertise. Given that only one-third of companies are successful, utility providers need to start by embedding digital intelligence into their operation. What this means is that compa- nies need to initiate their digital efforts in the context of the business outcomes they want to achieve, whether that is better cus- tomer experience, increased revenues, or reduced cost. Through this, businesses can orchestrate a solution that blends their business-specific domain knowledge with deep insights from data, paving the way to achieving these outcomes. Many utilities struggle with manual oper- ational processes that are slow and expen- sive in nature. With the right combination of digital and human workforce, utility compa- nies can eliminate non-value work, freeing up employees to focus on improving end- customer experience. Operational resilience and customer experience are two sides of the same coin, which means utilities need to map their cus- tomer journeys through their customer oper- ations. The back office is the new front-office, as smarter operations translate into stream- lined customer service. Improving customer experience means aligning the front, middle and back office. Doing this effectively means looking at the end-to-end operations from the eye of the customer and their expectations. For exam- ple, there is no point reducing the customer on-boarding process from 21 days to 15 days, when the customer is expecting same-day switching. It's also important to eliminate processes that are not working – painting over the cracks by investing in next-generation tech- nologies is a waste of resource. Analytics-led intelligence and advanced digital technologies allow utility compa- nies not only to be more efficient but lay the foundation for them to become more cus- tomer-focused, delivering a compelling and differentiated experience. Utilities are increasingly using data to allow them to become more proactive in dealing with their customers – with the aim of eliminating the customer's need to ever pick up the phone or send an email altogether. For one large energy supplier, combining data and domain meant they could identify and proactively fix issues through advance digital technologies. This helped in delivering around £4.3 million business value, with £1.4 million of operating expenditure reduction and another £2.9 attributable from reduced revenue leakages, decreased regulatory non- compliance, reduced failure demand and other similar factors. Using domain expertise and analytics to provide deep insights into customer journeys and orchestrate outcomes through advance digital technologies can reduce costs without compensating on customer experience while creating a digital ready workforce. Working together with digital partners, utility companies can create solutions with a combination of data, domain, technol- ogy and talent to boost regulatory compli- ance, operational resilience and customer experience. Rahul Arora, vice president, EXL Service Leveraging digital intelligence Utility companies can better manage regulatory and customer pressures by combining talent and technology.

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