Market View: Operational excellence, the utilities industry’s kryptonite?

Dr. Gero Decker, CEO of Signavio, discusses how energy companies can achieve operational efficiency to ensure a reliable service and avoid fines.

In the utilities industry, efficiency and effectiveness are typically top of mind. But hiccups do happen: Ofgem fined energy firm Npower £2.4m for failing to install advanced meters by the April 2014 deadline. This resulted in affected customers missing out on the opportunity to receive better information about their energy consumption and control costs.

Additionally, water companies have been urged by the government to “raise the bar” on tackling leaks, with over 175 Olympic-sized swimming pools’ worth of water to go down the plughole daily. In June, Thames Water, Britain’s biggest water company, was ordered to pay back £65m to customers as part of a £120m package of penalties over poor management of leaks following an Ofwat investigation.

While water companies obviously need to review what’s happening with their leak process, with energy companies’ customer service under the microscope, many are looking to revamp how they deliver to customers, often by transforming their back-office processes to address growing regulatory and cost pressures. Government and consumers alike have high expectations, and they trust utility providers to supply affordable energy. In addition, the increase in competition from challenger suppliers makes it important for traditional energy companies to ensure that their processes are optimised and costs are reduced.

Following Npower’s failure, the question on everyone’s lips is how utility providers can achieve operational efficiencies, to pass on to the public in the form of reliable service, as well as to avoid fines.

Energy companies need to be aware that operational excellence is no longer the excep­tion, but rather the expectation from consumers. To remain competitive in the market, organisations need to take a considered and intentional look at their business model and make changes where appropriate.

Taking a more people-centric approach to process management will help energy companies to remain customer-focused, whilst achieving optimised results and more effective management of their day-to-day operations. When driving an operational excellence program in harmony with a business transformation initiative, it’s important to consider the future model or process before worrying about understand how things are currently working. , Gaining an understanding of what the people using the process or system think is not working well and why, and listening to how they might improve it is easier and faster when you understand your future goals. Ultimately, getting a grasp of why things need to done different is the first step to success. Taking a future first approach helps you avoid the analysis paralysis, or boiling the ocean issues with previous approaches to process management

After having worked out what needs to be changed and why, many organisations jump straight in to automating existing processes, whether with workflow, BPMS or RPA technology. But the danger with this is that it can simply deliver the wrong things faster! Companies need to ensure that they’ve carefully identified their preferred processes and practices, and simplified them appropriately.

Having worked out which parts of the organisation, processes, and practices require improvement, streamlining the work can be considered. Often this will include some sort of workflow or process automation. But when thinking about automation, companies shouldn’t assume that everything needs to be heavily specified, planned, and implemented. In many cases, if staff are provided with simple and easy to use workflow tools, they will create the systems they need to improve productivity by themselves. Indeed in many cases you may need to blend different types of automation technology, which is challenging without having an end to end view.

Ultimately, strong processes offer the foundation that will empower utilities to be both agile and adaptable, limiting the risk of poor service for customers. This involves taking a systematic approach to regulations, ensuing clear documentation and a thorough understanding throughout the organisation. But more importantly, placing employees at the centre of the system and mapping processes based on their feedback will ensure better engagement and collaboration – getting their expertise and insight on how the business could run better is invaluable.

In a pressurised environment, all utilities companies need to respond to developments more rapidly and more efficiently than ever before. If organisations work towards making their processes more efficient, they also become more effective, which leads to better-informed decisions, improved execution of necessary tasks and enriched customer experiences. In the long run, this will empower utility organisations to become more profitable and competitive.