Prepare for competition

How can water companies position themselves favourably to prosper in the competitive market that is due in less than two years’ time? Andrew Reeks makes some suggestions.

The opening up of the water sector in April 2017, so that industrial water users can choose their water supplier, is designed in the words of regulator Ofwat to ‘‘make sure the market operates in the interests of customers”. It will deliver freedom of choice, drive competition and create a
new operating and commercial landscape for water companies for the foreseeable future.

Inevitably, like any market that has undergone a similar exercise, service will determine the ultimate winners and losers, especially if, as forecast, new market entrants seek to capitalise on the retail opportunities that present themselves from an open market.

Using innovative billing methods and delivering additional added-value services could see such middle-men make real inroads into current revenue streams that water companies have traditionally relied upon. So, with less than two years until change becomes a reality, water companies need to consider a number of factors that will heavily influence their ability to compete.

Driving operational efficiencies. In the race to compete, the efficiency level of operations will be a key component. Accessing essential operational efficiency knowledge around plant and water transportation performance can help drive cost and service efficiencies. This can range from water quality measurement, water pump performance, distribution efficiencies, ongoing predictive maintenance programmes and much more. Underpinned by proven automation technology that can assess, predict, visualise, measure and optimise plant performance, and taking a holistic approach, can support efficient operation objectives at a critical time.

The role of data. Supporting operational efficiency aims, the role of data will become more important. The challenge still remains to optimise the current and future delivery of increasing volumes of data from across the water company – including previously untapped measuring sources – and, in turn, convert accurate, timely and inexpensive data sources into useful management information that can benefit both day-to-day operational objectives and underpin strategic long-term planning. This presents a new kind of challenge and one the industry should be looking to tackle in partnership with trusted technology vendors.

Data and information strategy influences, among many others, critical areas such as cost control, technology choice, efficiency targets and regulatory responsibilities. It sits at the centre of the service a water company delivers. The water industry recognises the importance of data; the challenge is it has too much going into too many areas. The key to the future will be less is more.

Data management will also heavily influence the service-orientated area of key performance indicators (KPIs). If competition sees the involvement of third-party companies operating between the water company and the end customer, strict KPIs will be put in place to protect all sides, especially linked to issues around supply, quality and cost and who is to blame if things go wrong. Effective data management can ensure such important KPIs are deliverable and measurable and mean that the water sector can minimise incidents through preventable measures when failure to meet KPI standards occurs.

Collaboration across the supply chain. The supply chain will continue to play a pivotal role as the sector opens up to competition. However, could this lead to an adverse reaction in terms of the propensity to information share, and see perhaps the onset of more confidentially based agreements across the supply chain? Companies may increasingly refrain from making information available to potential competitors as they are forced to operate in a brand new world.

The water sector faces an uncertain and turbulent short-term future. As well as 2017, industry talk continues around the opening up of the domestic water market, where some of the issues outlined in relation to industrial water consumers will be magnified.

In preparation for even more change, it makes good business sense to address the key areas that will impact on the services water companies can deliver. Working with customers through a strategic and added-value approach, such as collaborating on reducing water usage, tackling energy consumption issues, delivering technology-driven answers such as wireless meters and more flexible billing options, are just some of the ways water companies can ramp up their holistic view of customer service.

Technology can help deliver all these by driving efficiencies, realising the true potential of data management and helping to secure a collaborative supply chain. It will be the water companies that get on the front foot and implement such answers who will be best placed to succeed.

Andrew Reeks, business manager for the water sector, Siemens