Power and utilities (P&U) companies, and their CIOs, should act; and they should act now – a post on things P&Us can do to deal with change. By Dr. Cornelius Anger, Partner, Power & Utilities Customer Leader, EY.
The rapid pace of change in the power and utilities sector is often grossly underestimated. Faced with change in every aspect, P&U companies can’t afford to wait and see how things unfold and take decisions slowly; the sector is changing too quickly and P&Us must move fast. But unsure of what exactly to do, companies sometimes respond to change by going into an overdrive of kicking off multiple initiatives without a clear road map, which can create confusion among employees on priorities and decrease efficiency.
Moving quickly isn’t always moving forward. What P&Us should start doing is prioritize – and prioritize ruthlessly. Focus on the most promising ideas at the outset, improve data and analytics capabilities, build customer loyalty and, when – and only when – they have mastered all front-office capabilities, start to innovate.
So, what exactly should P&Us do and how can their CIOs play a role in that?
Optimize costs: P&Us need to advance customer operations to reduce costs and improve customer experience. This can be initiated, for example, by overhauling legacy IT systems to support the sales and billing of new products and services across multiple channels. The CIO will be at the center of this development, being charged with creating the business case for the selection and implementation of upgrades to old or completely new systems.
Gain customer insights: P&U companies are very rich in customer data, but some are still poor in customer insights. CIOs need to help drive gaining customer insights from the data they have to understand what different customer groups need, want and buy; what product and customer segments are most profitable; the cost involved in acquiring different customer groups, etc. This will enable P&Us to embark on innovation with greater confidence.
Increase customer engagement: The brand-building techniques of the past — coupons, loyalty cards and the like — have undergone a digital revamp. The leaders in the sector, with the help of their CIOs, have developed robust online platforms that offer value-added services such as product information, free moderated online chat forums, and online games and contests. In other words, companies that manage to integrate community elements into their business models are much better equipped to respond successfully to the invasion of new, technology-backed entrants than those who don’t.
Go omni-channel: Today’s consumers want to interact with their service providers via the channels of their choosing. So, utilities are forced to provide omni-channel experiences to customers. The amount of data and insights companies can get through smart technologies can help them create effective omni-channels. But not all channels are digital, so companies can also explore non-digital (offline) channels. It will be the CIO’s task to ensure digital and non-digital channels are aligned and that the company can create the best value out of the data they are collecting.
Only after P&Us master the front-office basics listed above should they move to product and pricing innovation. New products and the right partnerships will define success in this area. And innovation should be based on the results from data analytics that help P&Us uncover opportunities; ideas should be first tested in the marketplace; and only the profitable ones should be encouraged.
The key to survival and success is adopting an agile, customer-focused, risk-embracing mindset. P&Us and their CIOs need to evaluate ideas quickly and put aside what isn’t working. This is a big shift for the slow-moving, risk-averse IT function of traditional P&U. Dealing with it will be struggle. But, as American social reformer Frederick Douglas said, “if there is no struggle, there is no progress.”