Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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utILIty WEEK | 22nd - 28th January 2016 | 27 Operations & Assets Market view T he broad consensus is that the UK's utilities market is one of the most com- petitive in Europe. While this may be good news for British consumers, it presents challenges to providers. As well as the major players, there are numerous other, smaller suppliers looking to disrupt the market. On top of this, all providers have the fluc- tuations of international economics and the vagaries of nature to contend with. Customers themselves, however, present a complication for providers. Sophisticated customers have higher expectations of ser- vice than ever and want providers to be able to respond to their needs in real time, all the time. Moreover, they are using more chan- nels than ever to interact with their utility providers. First Utility, for instance, said this year that about half its customers interact with it through mobile devices. As the mar- ket becomes more competitive, utility pro- viders need to use every advantage at their disposal to attract and retain customers. As with all industries, customer insight is key. Only by knowing the current and likely behaviour of customers can a company be sure of keeping them. Utility companies can no longer rely on customer apathy and a limited market; customers are price sen- sitive and willing to switch. To understand their customers, utility providers need to use all the information traditionally at their disposal – as well as information from new sources such as social media and smart- phone apps. However, gathering this volume of data is technically challenging and processing it, even more so. Typically, in utility compa- nies this information is not used in an effec- tive way. For example, oen there are silos between customer information and billing, which can lead to frustration for the cus- tomer. Last year we commissioned a survey with Loudhouse of 800 sales leaders world- wide, including those in utilities, and found they considered only 50 per cent of customer data to be used strategically. Many utility companies have customer relationship management (CRM) systems in place to handle this volume of data, but some are no longer fit for purpose. Our sur- vey found that 73 per cent of respondents believed their customer engagement or CRM system needed overhauling now and that as buyers were becoming more sophisticated, their customer engagement system needed to evolve in parallel. This particular issue has become so important that 72 per cent saw a failure to improve it as an impediment to growth. Modern customer engagement solutions need to go beyond traditional CRM. Manag- ing customer calls, communication and sales is now just one component of a broader, more complex customer story. For a digital enterprise, systems that manage customer interaction have to be more sophisticated. For a system to go beyond CRM, it must have a front office that goes beyond the traditional marketing, sales and service "automation" functions to include real-time contextualisation, web and mobile com- merce, social customer service, and more. It must also have an understanding of the connection between the front-office and back-office in real time – linking people, sup- ply chain, pricing and customers together to optimise both customer experience and busi- ness outcomes. Finally, it needs live customer insight with a single view for all interactions and points of contact. Modern solutions need to predict and respond to live customer dynam- ics in the moment. They need to anticipate changes in consumer sentiment that lead to shis in market trends – whether it is at a global level or down to a single customer. Ultimately, the aim of this technology is to understand existing customers and keep them happy, while being better able to target and market to new customers. The premise is simple, but the execution complex and util- ity companies underestimate its importance at their peril. Kevin Kimber, UKI managing director, cloud, SAP Know your customer Kevin Kimber explains why gaining insight into customers should be every utility's first priority, and why a CRM system should match the sophistication of the customers it seeks to serve. SAP case study: MVV Energie Founded in 1873 in Mannheim, Germany, MVV Energie has become the country's sixth-largest energy producer, supplying natural gas, electricity, heat, and water to more than 1.1 million customers. MVV also provides energy management and consulting services to help customers use resources more efficiently. The challenge: to expand capacity and market share, MVV Energie needed to be able to collect data about pricing, the weather and the behaviour of energy customers to balance generation capacity with customer demand, as well as improve its ability to market directly to individuals and organisations. However, the company did not have the IT infrastructure to analyse this volume of data and provide real-time support for their sales personnel. The solution: MVV needed a sales platform tailored to the utilities industry, so it chose SAP. With SAP for Utilities as part of SAP CRM, MVV has an integrated platform that has been built with SAP's insight into both the utilities industry and best practice for sales. Implementing the SAP solutions at MVV took three-and-a-half months, ahead of schedule and within budget. The benefits: MVV gained the real-time data analysis capabilities it needed to improve the sales process. The company enabled its sales representatives to remotely access SAP CRM for real-time, 360-degree views of customer activity. MVV sales representatives have been empowered with tools that provide business customers with real-time information about complex energy markets and volatile energy prices. The future: as part of its commitment to renewable capacity growth, the company estimates it will invest €3 billion (£2.3 billion) in alternative energy production by 2020. With SAP for Utilities, SAP CRM powered by SAP HANA, and SAP Sales Companion, MVV hopes to capitalise on those investments by increasing revenues by 10 per cent annually. Additionally, the company hopes to increase its profit margin by 15 per cent.