Water companies need to be able to compete in the digital age

Water companies need to get their IT systems up to speed quickly to cope with customer expectations shaped by the digital age – because competition will expose the laggards, says Geoff Sheppard.

The Water Act 2014 outlined plans to drive water market competition by creating a market that will allow customers to choose their supplier of water and wastewater services. From April 2017, 1.2 million UK businesses will have the right to switch provider, followed in 2020 by tens of millions of domestic customers, if government has its way.

Increased competition gives consumers greater choice over which products and services they want to buy, and from which supplier. The changes will require water providers to put the customer at the very centre of their business because increased competition means the consumer can take his or her custom elsewhere if they do not feel they are getting the service they want.

For the customer these changes are positive, but are the water companies prepared for them, and can they meet the expectations of customers in a digital first world?

One thing is for sure, neither the industry nor its customers want to see a repeat of the chaos caused by deregulation in the electricity industry, with customers billed twice when old contracts were not properly terminated or out-of-date customer records resulting in a far from seamless experience.

The proposal for deregulation in the water industry opens up lots of potential challenges for providers in terms of customer experience, as well as data and information management. To avoid disappointing customers who are looking to switch to gain a better, more customer-centric service, it is imperative that companies get their ducks in a row sooner rather than later.

Just as electricity deregulation gave rise to well-known retail brands becoming energy suppliers, it is likely that consumers will consider changing their water supplier to a brand they know and trust. If the choice is a well-known high street retailer with a reputation for good customer service over their current water supplier, consumers will consider the options that retailer has to offer. But any transition needs to be seamless to the customer. As Ofwat chief executive Cathryn Ross perfectly summed it up, “customers’ priorities should be at the heart of water services”.

Ahead of the April 2017 deadline, and even more importantly the advent of consumer services deregulation, water companies need to ensure that both their information management systems and the customer experience provisions are suitable for a digital, deregulated world.

If a customer does decide to switch provider, this needs to happen digitally within a 24-hour period. Equally important, the current water supplier needs to put in place the sort of customer-centric service that customers expect if they are to retain their customer. Historically, the water industry has not needed to worry too much about omni-channel commerce, or online switching and market comparison sites. However, by 2020 these will be the digital experiences that today’s water companies need to embrace – or see customers float away in their millions.

While we can draw similarities with, and learn lessons from, the electricity switchover, there is one fundamental difference. The UK’s electricity system is fully connected on the national grid, making the wholesale market effective because retailers can buy power from any generator that wants to sell it. But there is no UK national water grid. While a customer may have switched retailer, they will still be getting the same water, through the same network of pipes and services. As retail brands begin to enter the water industry, massive, complex, cross-country negotiations will be required to ensure that fresh, clean water comes out of the customer’s tap, no matter where in the country they live. The result, a very obvious need for clear, accurate and well-defined data management strategies across the organisation, and a business network allowing the secure exchange of information around billing, management, service delivery and wholesale water market trading.

If that wasn’t complicated enough, as retailers become water companies, they will be subject to the same Ofwat-imposed regulations as the incumbent players in the market. As with any industry that is subject to a regulatory framework, a well-executed information management processes is vital to ensure compliance to these strict regulations.

Be prepared

Market Operator Services Limited has been tasked by the government with making the Open Water programme a success by delivering the core IT systems that will enable registration, customer switching and settlement between wholesalers and retailers for 2017. Questions over how information about customers is shared with other water suppliers, and how that information is secured and managed, are yet to be fully considered. It is important, however, that organisations get information management processes in place now, and that they start to consider how to deliver an experience that puts the customer at the heart of everything they do.

The 2017 switchover with non-domestic customers will, undoubtedly, be a test bed for organisations to get ready for the changes in 2020. Those that have embraced a digital first approach, that have their data and information management systems in order, and understand what their customers want, will have the competitive advantage in 2020 and will handle the switchover like a duck takes to water.

Geoff Sheppard, sales director, OpenText