West Monroe attended the 2018 CS Week conference hosted in Tampa earlier this month. CS Week is the premier annual educational and customer service conference serving electric, gas, and water/wastewater utility professionals globally. I attended CS Week a few years ago, and the big talk then was how “rate payers are now our customers, and they are demanding improved service.” Since then we have all heard that the utility business model is undergoing profound change. But I was simply blown away this year by the industry paradigm shift to “customer-centric thinking”. This cultural shift has far reaching implications across all major business processes, people, underlying systems, and basic business strategy.
Through talking with many utilities and attending several educational sessions, it’s clear this industry is undergoing a digital transformation. One of the drivers for change is heightened customer expectations for choice, control, and convenience – similar to what they receive from other competitive suppliers. Technology options are also driving change, such as smart homes and behind the meter components, chat bots, and other self-service features. This is oftentimes labeled as the “Amazon Effect”. Internally, most utilities recognize many advantages to digital solutions. We have seen positive business cases which include improved efficiency, reduced operating costs, and attracting new talent to apply skills on progressive technologies, such as robotic process automation and other digital customer solutions. Nearly every utility I spoke with was embarking on or undergoing some form of process change or system upgrade to improve the way in which the business interacts with their customers.
These three utilities demonstrate how digital transformation improves systems, process, and operations to better improve the overall customer experience:
- Southern California Edison is improving overall efficiency using digital labor, and Robotic Process Automation – 25 robotic jobs to automate manual tasks, process 1M transactions, and produce 41 FTE savings.
- D.C. Water recognizes the need to move from an engineering-centric to a customer focused organization by implementing a flexible cloud-based customer information platform.
- Ameren recognized the opportunity to leverage digital tools, and a skilled workforce to improve customer outreach during outage management, resulting in improved customer satisfaction on outage management response time.
Coming off the heels of CS Week, I also had the opportunity to attend DNV GL’s 2018 Energy Executive Forum, an annual gathering of C-suite executives actively engaged in defining the future of energy. This was an open interchange of ideas across a spectrum of industry sectors, from IoT, to utilities, distributed energy providers, and retail energy providers. I got the sense that these companies are preparing to eat the lunch of the utilities – however, I was generally underwhelmed by the focus on “customer service” with respect to the retail energy providers. Most of the retailers focus on customer acquisition and retention strategies. Customer acquisition seemed gimmicky (i.e., we will give you airline miles for signing up). Some of the more progressive retailers (and consultants) pointed out that most customers don’t know who their retailer is because oftentimes the retailer only communicates with them upon acquisition (welcome letter), then a small update on their bill (perhaps 11 times during the year), and then a letter at the end of the contract saying their rate will be increased. This then turned the conversation to “value” for the customers, and associated the value provided to the retailer’s brand.
This entire energy and utility ecosystem seems eerily similar to the evolution of our U.S. telecom industry – in which those that made the major infrastructure investment (ATT, MCI, Bell, etc.) are not necessarily the content and application benefactors of today (YouTube, etc.). It almost seems there is a race for the customer (especially among deregulated states) and both sides (utility and the retailer) to figure out what it takes to unlock that customer value and retain that customer for the future.
We cannot accurately predict the future, but one thing is clear, the utilities’ relationship with customers is changing. Future change may be dependent on regulation, but the race to serve the energy customer of the future is on – who will be best positioned to reap the rewards by providing timely and differentiated services to support this customer of the future?