Utilities need to see the big picture

Smart consumers need smart utilities providers: enterprise resource management can deliver long-term value.

The way in which we heat our homes, fill up our cars, get rid of our waste, use our drinking water, and power our consumerist lifestyles has come under intense scrutiny this year. Climate change activism has been gathering momentum, while customer satisfaction with energy companies has fallen, and a total of 13 suppliers have collapsed since 2018.

Furthermore, 200 fixed energy tariffs will end this year, meaning that unless consumers switch provider, there are major price hikes on the horizon. It’s clear things really need to change.

Consumers are getting smarter. The number of customers switching energy supplier hit a record high earlier last month, with more of us realising that poor service and high prices needn’t be the norm. In fact, Which?’s latest customer satisfaction rankings revealed the big six all sit in the bottom third of the table, while a relative newcomer, Octopus Energy, took the top spot. This was the result of its customers giving it the maximum rating for every measure they were asked about, including bills, customer service, complaints-handling and value for money.

Consumers may be getting smarter, but many energy suppliers – and legacy players in particular – have been slow to change and are failing to adapt to consumer demands. Yet the energy market isn’t alone in its seeming reluctance (or inability) to evolve.

Something in the water

In 2017, Ofwat allowed businesses to select their preferred water provider, but instead of driving up standards, dissatisfaction rates among business customers have increased dramatically. Complaints from the NHS and local authorities are 52 per cent higher than in 2017 and up 43 per cent on last year.

The sector has also been plagued by sewage leakages. It was reported back in February that the EU could impose significant fines on the UK for failing to stop sewage leaking at multiple sites in the south of England. River pollution and leakages remains a major issue and in response, Ofwat announced a requirement earlier this year for suppliers to invest the equivalent of £6 million every day over the next five years to improve deteriorating infrastructure.

Fortunately, change is trickling down to (at least some) areas of the UK. In London, construction of a 25km super-sewer is under way, which will mitigate incidents of raw sewage leaks entering the river.

UK-wide modernisation of traditional business models, accompanied by a digital-first approach, is needed not only to meet consumer expectations but to ensure that businesses can operate cost-effectively, and to support a thriving, competitive utilities market.

Accompanying this must be a shift in focus: from short-term profits and high dividends for shareholders, to long-term investment and a recognition that utilities cannot exist only as managers of assets. Instead, they must adopt a service-based model with an emphasis on lifetime customer loyalty and value.

What’s currently holding back the floodgates of innovation? For many in the industry, it’s down to a lack of insight into their assets and operations, and a disjointed, outdated approach to data management. To solve these issues, they need to adopt the appropriate technology. This means looking beyond simple enterprise asset management tools to more advanced, comprehensive, enterprise resource planning (ERP) software.

Many in the sector are unfamiliar with ERP, which is also a large part of the problem. Many water companies, for instance, are unaware of the precise location of all their assets, their current condition, and how or if maintenance needs to be carried out.

While a water company may have a geospatial solution, which represents their underground piping infrastructure on a map, for example, information on a treatment works might exist on a different piece of software, with no integration between the two. Platforms for managing customers, finances, sub-contractors, legal, HR, as well as mobile applications used by workers in-the-field also all too often exist in isolation.

This severely muddies (or completely screens) the visibility a company has into its assets and processes. Crucially, this lack of insight also means companies don’t have the level of agility needed to adapt quickly to change (such as the introduction of new targets, new regulations, or competing with new entrants to the market).

What would the water company – or any utility company like it – look like and be able to achieve with the required investment in technology? First, they’d be able to tackle inefficient data management processes. Spreadsheets, filing cabinets of paper, and manual data input remain a component of resource and asset management within many utilities companies. This information exists in silos, is quickly outdated, difficult to access and (due to human error) not always entirely accurate.

Predicting the future

An ERP solution provides a centralised hub for collating, analysing and actioning insight from across a business. Integrating historic and real-time data in this way provides a single, highly accurate version of the truth.

An ability to access up-to-date information is also crucial in terms of reporting to regulators and provides a source of proof for any potential disputes.

It’s not just reporting and insight in the here and now that ERP facilitates. Predictive maintenance has emerged as a game-changer in a number of markets in recent years. It would be a significant step forward for many utilities players, and just one benefit of a digital-first approach to asset management and resource planning. The utilities sector is in desperate need of modernisation, and with smaller, digital-native challengers entering the market, those who fail to digital transformation will fall behind – or fail entirely. Consumers are already smartening up, and an investment in tech that delivers long-term value will allow the utilities sector to get smart too.