Utility Week

Utility Week 7th March

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Page 26 of 31

UtILItY WEEK | 7th - 13th March 2014 | 27 Customers Market view M any organisations around the world are embracing the rising power of the customer, introducing radical customer-centric change at the heart of their businesses to secure a competitive advan- tage. Utility companies are no exception. However, the complexity of the current UK energy environment can mean that incum- bents seeking to adapt their approach are being presented with a double-edged sword. Under the fierce scrutiny of politicians and the media, UK energy companies are under pressure to deliver cheaper energy to their customers. Yet from the companies' standpoint, the costs to serve customers are high, driven by regulatory imperatives including Standards of Conduct and Tariff Reform, as well as industry mandates such as smart metering and the Energy Company Obligation (Eco). These challenges will cer- tainly remain on the public agenda as long as the cost of living remains a concern. Consequently energy companies are grappling with a myriad of transforma- tion programmes, including digital and big data analytics projects that have a direct effect on internal processes, systems and data. Although such programmes lead to far-reaching changes in how customers are served, many are run in silos. This situation is creating a quandary where energy companies, many of whom are updating their legacy systems, are also attempting to manage a number of trans- formation programmes. As a result, the end objective or vision of such projects can oen get lost among the complexity. When simultaneously running heavily interdependent programmes, including cus- tomer transformation, digital strategy and Smart, it is essential that the overall manage- ment and co-ordination are centralised and rigorously governed. Energy companies typi- cally have a number of operating divisions, each of which is led by an executive who sponsors one or more of these programmes. This plethora of initiatives and diffusion of sponsorship can result in programmes conflicting with each other, confusing staff and competing for scarce internal resources. This can affect organisations as programmes cost more in both time and money, as well as deliver below the expected results. Furthermore, programmes led under the "customer" banner, albeit devolved across the organisation, can easily lose sight of their primary purpose. When we work with clients to take a customer-lens to their projects, we oen find that about 15% of those projects identified as being customer-focused rarely add any customer value. Only a small per- centage of these projects actually warrant the investment from a customer value per- spective. Thus, significant amounts of time and resource could be saved if projects had been validated for customer value up front, so that adjustments could be made. Despite these challenges, there are steps energy companies can take to lower the cost to serve their customers, improve affordabil- ity and ensure they are on track to achieve a lean, compliant, digitally enabled customer- centric operating model. First and foremost, business leaders should seek to establish an enterprise-wide team responsible for designing and imple- menting an operating model built around its customers. The best approach is to create the right, consistent context to guide the rest of the organisation to prioritise, co-ordinate and manage the various transformation pro- grammes. In our experience, utilities that are consistently rated highest in customer satis- faction and customer experience across the UK and US are those that have embraced this customer-centric approach. These organi- sations have been successful in translating their brand and values into their daily prac- tices. This has been achieved by drawing upon the strategy and vision of the board- room, bringing this through the organisation and all the way into the contact centre. This culture starts at the boardroom, oen by leveraging a C-level or V-level cus- tomer experience leader who is responsible for ensuring consistent quality of customer experience across the organisation. Design- ing a customer-centric operating model requires senior business leaders to have a deep understanding of what the customer values, allowing them to drive a transforma- tion of business performance that maximises results at key customer "moments of truth". A well-designed customer-centric operat- ing model can provide a number of benefits by delivering a differentiated customer expe- rience and therefore maximise the economic value of customer relationships. The best approach for redesigning an operating model is to ensure it is relevant for the whole organisation and unrestricted to accommodate changes down the line. This redesign should be led by C-level executives who not only have a focus on improving cus- tomer experience, but have also been given the mandate to halt, alter or even reverse current change programmes when required. Therefore it is important that executives and the change team truly understand what is important in their customers' world. This way, they can ensure their redesigned oper- ating model ultimately adds value to the end customer. In turn, it is beneficial for staff in the field to understand their roles as part of the bigger picture and remain conscious of their contribution to the overall customer experience. With this vision, organisations can make successful business transformations that are aimed at putting the customer first and even- tually make these changes business as usual. UK energy companies are facing an unprecedented movement of consumer- driven change, driven directly from their cus- tomers, but also indirectly through Ofgem. It will be the players that are able to most effectively translate this plethora of complex change into opportunities to improve service to customers who will ultimately succeed. In this way, they can not only meet regula- tory requirements and reposition themselves in the public eye, but also secure long-term, sustainable revenues. By fully asserting the primacy of the customer experience across the enterprise, energy companies can realise the organisation-wide step change needed to become high-performing, compliant and customer-centric businesses. Cliff Fitzpatrick and Alan Riley are with KPMG's UK Power and Utilities team The customer comes first A deep understanding of customer values is vital for energy firms to implement a successful customer-centric business model while keeping energy costs down, say Cliff Fitzpatrick and Alan Riley.

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