According to the latest report from Ofgem, the Big Six energy suppliers now account for just 77 per cent of the market as Q218, down another per cent from EOY 2017. And the other utilities services are facing similar challenges, particularly the water utilities as all eyes are on them as they search for the most efficient ways to reduce the damage of water leakage. But with competition comes change and we are seeing active efforts from incumbents to transform their business practices to keep up with their smaller, agile rivals.
With this in mind, here are my key predictions for the industry in 2019:
Customer is key
Last year, we saw the digital-first entrants continue to encroach on incumbent energy providers, loosening their vice-like hold of the utility sector. Playing to their strengths in customer experience, they are slowly gaining the upper hand – personalising, streamlining and enhancing the customer journey, making it simple to switch suppliers and move energy plans to a new home.
The Big Six know their service has not been up to scratch, and are actively searching for ways to evolve and become more agile. We are going to see a real drive to transform the relationships they hold with their customer base, which traditionally have been transactional, to a more personalised and customer centric approach. Innovation is desperately needed by the incumbents, with investment in the customer interface a primary focus leading into 2019.
There is also the need to appeal to the important customer of all, the employee – be it attraction, retention or upskilling. We anticipate a strong impetus to personalise to the individual as workplaces recognise how diverse their workforce is. This will be delivered through leading edge digital services and learning offers to cater to the varying expectations of their employee base.
Rise of the robot
The utility sector has always been a late adopter when compared to other sectors, such as finance and retail. Now they are being forced to catch up quickly to keep up with new digital-first competitors. According to our recent research, 100% of players in the energy market expect it to be completely turned upside down by digital disruption within the next 5 years, and 86% are said to already be transforming their business model as a result. The latest WEMO report highlights that the utility industry is beginning to see traction with cutting-edge tech, such as IoT and blockchain, which are gaining progressive adoption globally. However, in the UK Robotic Process Automation (RPA) is fast becoming king.
Most large utility providers just don’t have the budgets to entirely replace legacy systems with the most up-to-date technology, nor do they appear to have the appetite from a risk perspective. As such, RPA is being looked to as the anchor point in which to kick off the digital transformation at the back-end to streamline processes and reduce overheads – although this is only a short-term solution to a larger problem.
Advances in analytics
Utility companies have been dabbling in data analytics for a few years, but we expect 2019 to be the Year that companies will really embrace advanced analytics, to improve asset management and transform their business. For instance, the water industry has decades worth of customer infrastructure data to call upon, which companies are realising could have great business value, if mined effectively.
However, companies need to be wary of focusing all their attention on one issue as it could be costly in the long-term. Organisations need to ensure they aim to implement analytics across the entire company, rather than just focusing on small segments to future-proof their organisations for the coming years.
Despite the many hurdles facing our utility providers, they are changing their traditional mind-sets and looking to drive real business change through digital transformation. This is only good news for end-customers who should expect a better experience across the industry as a result. The only question that remains is if large suppliers can initiate these changes fast enough to plug their customer leak before competitors gain an even greater foothold?
This article was first published in Utility Week.
If you’re interested in hearing more about the findings of Capgemini’s WEMO report that I mentioned earlier, listen to my latest podcast where I talk about the rise of robots and how analytics can impact customer experience within the energy market. Subscribe WEMO podcast here!