Utility Week

UTILITY WEEK | JULY 2022 | 19 Technology order to reduce costs and minimise Npower's growing losses, and also to turn the wider business around so it made a pro t in a erce, and what was for a lot of players an unsustainable, market." While the bene ts of re-platforming are clear, and in cases such as Npower, unavoid- able, the challenge facing energy suppli- ers to successfully transition to the new IT options emerging cannot be underestimated. According to research conducted by McKinsey in collaboration with the Univer- sity of Oxford, half of all large IT projects massively blow their budgets. On average large IT projects run 45% over budget and 7% over time, while delivering 56% less ben- e t than projected. Soˆ ware projects run the highest risk of cost and schedule overruns, with 17% of IT projects going so badly that they threaten the existence of the company. No easy answers The rst barrier facing legacy suppliers is actually making the decision to migrate. "Utilities do not want to do this, they put it o‹ forever. It's because traditionally this has been really hard to do, this cannot be overstated," says Lara Beers, vice president of global sales at soˆ ware provider Kraken Technologies, part of the Octopus Group. "There's all kind of things that go wrong, there's a massive percentage of IT project failures in this space." Klaus Lichtenauer, a management con- sultant who was heavily involved in Eon's decision to re-platform Npower's customers rather than absorb them into the company's existing platform, agrees. He believes the challenges facing legacy suppliers are so great that most will not look to re-platform until it is clear it is their only option to stay nancially viable. Once the decision to re-platform has been made, suppliers must choose which route to go – the more traditional option of choosing a range of operating systems from the market and integrating them into a bespoke solu- tion, or opting for a more end-to-end solu- tion, known as soˆ ware-as-a-service (SaaS). There are advantages and disadvantages with each option, with modularity coming at the expense of speed but potentially o‹ er- ing more opportunity for suppliers to create individuality. History shows that the risks of a bad soˆ ware migration are very real, and it is therefore an area that SaaS providers have been keen to handle to ensure smooth migra- tions. The experiences of both Eon and Good Energy show this can be achieved. "Kraken gave us con dence they could handle a migration of the scale of both Npower and Eon's base, and they could do this at the speed needed to stabilise our busi- ness and return to pro tability and growth," says Lewis. "We think the success of this project is unparalleled in the industry – whether it was the scale of the task in migrating almost six million customers, the complexity of bringing together residential and business customers from two previously competing suppliers, or just the rapid turnaround and success in delivery. Nobody has done some- thing of this magnitude at this speed before." However, some of the main risks still lie ahead, because the key challenges will revolve around implementing the new oper- ating models necessary to extract the best value from SaaS platforms and dealing with the scale of change management necessary. The broad consensus among those o‹ er- ing SaaS platforms and retailers who have been through the re-platforming experience is that changing the operating model, and therefore how employees work, is the hard- est part of the transformation. Currently legacy suppliers are far from agile, says Lichtenauer, and have a lot to learn from the disruptors that followed them. He says the key di‹ erence between dis- rupter brands and legacy suppliers is how their customer service is operated. Legacy brands operate a hierarchical or matrix organisation with a back o˜ ce in the UK and a front o˜ ce which is oˆ en sta‹ ed abroad. Meanwhile, most SaaS suppliers favour a pod or squad-based approach that sees a team of "energy experts" handle all interac- tions for a speci c customer base. With Good Energy's transition completed, and Npower's legacy customers safely transi- tioned over to Eon Next, the pace of re-plat- forming is stepping up as EDF and British Gas prepare to transition their entire domes- tic and SME customer bases. While early signs indicate that legacy suppliers will be able to re-platform success- fully on to one of the SaaS systems currently available, challenges remain. These include enacting real cultural change within the workforces of huge estab- lished businesses, ensuring that suppliers don't slip into old habits around their oper- ating model, and not acting on the penchant for standardisation that has traditionally existed in the industry. Doing so will undermine all the bene ts to be gained by re-platforming, such as scal- ability and œ exibility, and will leave legacy suppliers struggling to compete in an energy market on the cusp of evolution. Lucinda Dann, features editor in association with A Utility Week research report in association with Expleo Technology UK May 2022 The challenge of adopting new systems for energy retailers Platform alteration Download the report Download the report Platform Alteration: The Challenge of Adopting New Systems for Energy Retailers free at: https:// utilityweek.co.uk/platform-alteration-the- challenge-of-adopting-new-systems-for- energy-retailers/ Key fi ndings of the report • The main drivers for re-platforming are the need to reduce costs due to tightening margins in the energy supply market, to increase flexibility and agility in order to compete as the market moves to providing energy as a service, and to compete with new entrants providing good customer service at a lower cost. • Traditional platforms will not be able to cope with the wealth of data from smart meters when the market moves to half- hourly settlement. • There is a range of options on the market including so• ware-as-a-service (SaaS) platforms which provide less modular cloud-based solutions, or energy sup- pliers can opt for the more traditional model of picking and choosing individual products from the market and combining them into a bespoke solution. • SaaS platforms require a large cultural shi• for both the transition process and their operation, but conversely combining solutions risks flexibility and agility. • Energy suppliers should split their domestic and SME, and I&C customers into di„ erent silos and avoid too much integration and standardisation. • SaaS platforms require new operating models and a shi• from siloed customer service operations to energy experts. • Change management will be the hardest part of the process as established work- forces are unlikely to be receptive to the level of change necessary. "Utilities do not want to do this, they put it off forever. It's because traditionally this has been really hard to do." LARA BEERS, VICE PRESIDENT OF GLOBAL SALES, KRAKEN TECHNOLOGIES

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