The big issue

Big data provides a big opportunity to regain customer trust. Take it, say Ben Taylor and Richard Postance

When you use your mobile phone, or when you go online, you create and share data about who you are, what you do, where you are going, how you are getting there and – more importantly – what you spend your money on.

You are not alone. With 43 billion mobile devices expected to be activated in the next seven years, you can start to grasp the amount of data about each one of us that companies have at their disposal and have to make sense of.

So when does data become big? We define “big data” as the level where the volume, variety and velocity of the data an organisation is generating and handling outstrips its ability to handle it. A couple of decades ago that meant a few megabytes. Today it means ­terabytes, petabytes, exabytes. What these strange words mean is that data will get bigger and at a faster rate than ever before.

Utilities have the opportunity to exploit big data across the whole of their value chains (see box overleaf, Making a start). To start with, they can continuously analyse the network and look for indicators of failing assets to replace and maintain before issues arise. They can help management make the right decisions about their workforce. Through big data they can analyse field force movements and positions, link up the underlying work orders in the enterprise resource planning systems, look at an individual’s training records and past performance, and allocate the best worker to the job in real time.

Knowledge gleaned from big data can also be applied to customer relationship management (CRM) systems. Big data can help call centres allocate calls at speed, analyse transaction histories, assess a customer’s profitability and decide on the necessary course of action. In the back office, finance functions are deploying big data to analyse transactions in real time and drive major improvements in working capital and tax compliance.

So there are many operational benefits from big data. But how can utilities use the deeper insights they gain to redefine the nature of their relationship with their customers? Look at the bright example of the telecommunications industry. A few years ago you would sign up on a contract and then be largely ignored by your provider until your contract was up for renewal. Then you would be bribed in the hope you would renew it.

Big data changed the game. Nowadays you almost expect your provider to proactively act in your best interests. A call from your provider to let you know that your tariff is out of kilter with your usage, resulting in you paying more, or a call with snippets on how to get the most out of your smart phone, would almost come without surprise. Telecoms companies knew what questions to ask the data to get the right answers on what customers were expecting of them. How can utilities learn from that and establish a proactive relationship with their customers?

Let us use an example: consumption data from smart meters. While it is interesting to show to a customer how much energy they use over time, why is that of real value? If you ask the right question, however, and then bring the right technology and the right data analyst on board, you can look at historic or demographic data and demonstrate to the customer how to make savings. That’s real value for everyone: the long-sighted provider, the customer and, above all, their relationship.

Smart metering presents the industry with an opportunity to change the way it interacts with customers. Utilities can use smart data to monitor home appliances and proactively intervene on behalf of customers when they see indications of a problem. That would be a pleasant surprise for today’s energy consumers, wouldn’t it?

That takes as a given that customers will go to their energy provider for data services. It takes as a given that customers trust suppliers to handle their data responsibly. With wider trust in energy suppliers at rock bottom, we have to question how likely it is customers will trust them with such matters.

If utilities do not protect and manage big data the same way they do their physical assets, they will lag behind other industries. Decisions will be taken without the right evidence and facts and internal processes will be weighed down by data clean-up efforts. More importantly, it means that consumer trust levels in utilities to respect their privacy and handle their data securely and reliably will not improve.

So big data is valuable, but only as a means to an end. Plus, there are elements that need to be in place before utilities embark on the big data journey. The industry first needs to understand the opportunities big data can present and the problems it can solve, and build trust by proving it can handle this data reliably and securely. Only then will the industry have truly enhanced its relationship with its customers.

Ben Taylor and Richard Postance are advisory partners at Ernst & Young

Mapping the future

Ordnance Survey has been a creator of maps since before Wellington’s victory at Waterloo. While the company’s brand is well known for its quality paper maps, the business demand now is for accurate, accessible, digital spatial data. This was a “big data” challenge.

Ordnance Survey has all but completed a five-year IT improvement programme to transform its operations into an enterprise grid computing solution that pulls 17 databases into one spatial database management platform. It has created a single, seamless and editable database with the flexibility to collect almost any information it wants.

Its story of a journey from a partitioned and complicated operation to a unified and seamless system is one that should resonate with energy suppliers. In most instances these organisations have not unlocked the value of the data that they hold – often in silos- such as customer contacts, streetworks, asset management and so on. On top, smart metering will generate data in quantities and at rates that firms have never before encountered.

However, by upgrading their data management they can exploit this data bonanza to their advantage and to the benefit of their customers. The ultimate gain to the business is in a greater capacity to meet customers’ current needs and to respond to emerging demands.

Marc Hobell, Ordnance Survey’s head of public sector, energy and infrastructure

Making a start with big data

Technology giant IBM describes big data as “the data of desire”. Unfortunately many utilities lack the tools and knowledge to make sense of big data or to integrate it effectively with information gathered from assets, transactions and billing. There is evidence, though, that utilities are starting to wake up to the possibilities of big data.

· Thames Water has made IBM its technology and innovation partner with a brief to analyse its social media channels and deliver real-time analysis of public opinion, trends and usage behaviour. IBM is also providing deep insight into Thames Water’s existing business and service data and gathering information from smart meters, the treatment process and from the nanotechnology being applied in energy production and environmental pollution prevention across London and the Thames Valley.

· Yorkshire Water is using predictive analytics – which deploys statistics, modelling and data mining to examine current and historical facts to predict future trends and identify risks – to forecast flooding and pollution in its network of 100,000km of water and sewerage mains.

· EDF Energy uses a tool from software provider SAS to dissect its customer base and evaluate how likely individuals are to defect. The insights it uncovers are used to implement a targeted marketing strategy to reduce churn.

· Companies including British Gas, Npower and Scottish Power use insights shared by Experian to manage credit risk and improve customer service and retention rates. “Data integration helps companies to be compliant, communicate with customers who might be struggling to pay their bills and to inform them about tariffs,” says Rob Haslingden, Experian’s head of marketing for utilities. “Understanding how people are using social media also helps to acquire new customers and to reach people with targeted advertising through new technology such as smart TVs.” Experian provides a unique ID for each customer, which links to a utility’s customer database. It can also merge email and address data into online and social data – all connected to regular transactional information.

· Anglian Water is working with energy manager Schneider Electric to make the most of big data gathered from smart water meters. Barrie Cressey, head of water and wastewater industries at Schneider Electric, gives an example. “Water companies must react quickly to leaks, and big data can help them to optimise the water pressure,” he says. “In future, households could become part of this huge data network which would enable even greater flexibility.”

However, utilities investing in big data and smart meters are unlikely to see the promised benefits unless they can control and improve their current data sources. “Utilities must ask whether the different types of smart meters installed transmit data that can be automatically verified as accurate and then matched perfectly to the correct meter, property, customer name and billing address,” says Nigel Turner, Trillium Software vice president.

He says companies must ask themselves whether incoming data can be integrated flawlessly and in real time with the existing records used by back office systems for billing, customer relationship management and service and asset maintenance. “Get it wrong, and rather than happy customers there could be many angry ones, affecting not only payment times and customer churn, but causing smart meter implementation costs to skyrocket,” he says.

Over the next few years all utilities will need data at a more granular level and over longer time periods to feed predictive models, forecasts and trading impacts throughout the day. With improvements possible in customer service, companies must stop sitting on the fence when it comes to investing in big data and unlock the real value of their IT and marketing departments.

Steve Hemsley is a freelance journalist

This article first appeared in Utility Week’s print edition of 28th June 2013.

Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here: http://bit.ly/zzxQxx