Challenges posed by legacy infrastructure in the energy industry
6 mins read
As we’ve seen, next-generation customers are increasingly expecting more from their energy suppliers. They want their providers to adopt lower carbon technology, use smart meter data to improve billing visibility, simplify microgeneration and integrate with other sectors, such as insurance.
This means the pressure is on to innovate. While challenger brands are progressing in leaps and bounds with agile software and new, adaptable infrastructure, some traditional brands are finding it harder to make the same progress.
So, what changes should large energy providers be working towards to meet the demands of this next generation of consumers? And what should take priority?
Overcoming the challenge of legacy infrastructure
The larger, traditional energy suppliers serving the lion’s share of both domestic and commercial customers in the UK are often burdened by legacy systems which control how they serve consumers and make it more difficult to evolve. The industry last implemented major enterprise system changes about 15 years ago when it moved from existing CRM systems to SAP-based platforms.
The cutting-edge enterprise systems of the time demonstrated considerable scope for customisation, but many suppliers chose to tailor their systems during implementation to the point that they became unwieldy. This made it very difficult to make simple adjustments down the line and change the proofs of concept into something that would be applied to all customers rather than individual targeted ones.
As we’ve seen with the multiple possibilities afforded by smart meters, with the drive toward carbon net zero and the adoption of electric vehicles, the necessity to move to new, agile enterprise systems is one of the key challenges the industry currently faces. The government’s Energy White Paper 2020 has increased the emphasis on net zero carbon, as well as the role energy suppliers, distribution networks and consumers will play in helping the UK move towards that goal.
Traditional brands face competition from new challenger brands with more agile platforms, which make them more adaptable and allow them to address market needs more quickly. Some of the longest-standing players are looking to adopt the processes they need to fix the issues presented by outdated enterprise systems and infrastructure, and are frequently prevented from responding swiftly to the demands of government and next-gen customers by their systems.
Established energy companies in general can also typically be risk averse – they’re often reluctant to take action that might expose them to risks and that might impact their ongoing operations, cause reputational damage or earn them fines for non-compliance. They’re recognising that they need to lean towards more agile practices, but there’s still work to be done to implement something as highly adaptive as they need it to be.
Other energy providers are carving out new niches for themselves in the supply chain. Octopus Energy isn’t just a challenger brand anymore, but a supplier. They’ve taken Kraken, the system that underpins how they service their customers, to market and are selling to other energy suppliers – E.ON, for example, now serves its domestic customers via Kraken.
It’s clear that greater agility and integration are needed to change proofs of concept into something that can be done for all customers, but the bigger the ship, the more difficult and time-consuming it is to turn around. In addition, while larger organisations have higher costs than start-ups, their customers also expect more from them, which leaves them at a disadvantage when they try to implement any kind of innovation.
An action plan for larger organisations
If you’re a part of a larger organisation the priority must be to understand what your customers want, and work proactively to anticipate problems that will arise, rather than plug leaks as they appear. Integrated systems that collate data in one repository will help to ensure that your customers only need to explain a problem once.
Legacy systems can be streamlined to make them more efficient: automation can help in the short to medium term to free capital being spent on tweaking inherited systems and playing catch-up, while providing pathways towards new ways of working. Investing in modernisation would quickly develop a better customer journey and help you more readily understand what your customers are asking from you. If you lack the latest technology to enable automation and machine learning, partner with organisations that do, to bridge the gap whilst you focus on the foundations.
Get a complete picture through process mining
Our advice is to stop point-problem solving; that is, resist the temptation to accept short-term wins at the cost of long-term excellence. Make sure that any solutions you implement are future-proof as well. You can gain a full end-to-end view of your complete operational chain through process mining; fundamentally assess what you have and build towards fixing that.
A common mistake is to examine each process individually in a vacuum, rather than as an integral element of the larger system with all the other processes it interacts with, all the other systems that it talks to – and why. Process mining provides a complete picture, and from this point you can trim the fat from processes and cut unnecessary steps, delays and approvals.
Once process mining has laid bare your available data, rationalise which datasets to use. Assess your process landscape in its entirety rather than performing hasty triage: you can’t put sticking plasters on gaping wounds and expect overall health. No investment is effective if it's confined to short-term firefighting rather than long-term planning. That said, you’ll soon discover that you can re-engineer some processes, even without automation, that will provide a relatively fast fix. Others you’ll need to completely re-engineer for automation, so be prepared to make investments for the long-term as well as the short-term.
Set your long-term goals.
Perhaps you aim to respond to every customer within an hour with all their information instantly available at customer service agents’ fingers? Or you’d like to manage everything in the cloud? Set your vision and work backwards to establish the medium and short-term steps to getting there.
Use meaningful data
A common error lies in the accumulation – and the application – of vast quantities of data for its own sake. You may have a wealth of information, but that doesn't mean that it's all useful or that you need all of it. That’s why it’s imperative to fully articulate your question before looking for an answer. This will help you to isolate which datasets will help give the most accurate answer to your question – otherwise you’re wrangling reams of disparate and irrelevant data and wondering: “What does this tell us?”.
For example, if you want a detailed view of any given customer’s experience, you don't need to analyse how many times they've moved house. You need a tally of every time you’ve called them or vice versa, how long it took to resolve the issue on the phone, whether they were happy with the outcome and whether the solution was sticky or the problem persisted.
Process mining helps to ensure that your data is together in one place. Use it smartly to gain insights into what works, what doesn't and how to move forward. Disparate solutions and systems don't offer you a one-customer view. If data interacts with three or four points on a customer journey, it’s important. System integration needs to take intersecting data into account – it can also tell you where the holes are.
Be prepared to change your culture
If utilities haven’t got the infrastructure to serve the net zero carbon ambition, they're not going to be able to deliver it effectively and we’re going to miss the target. There will be a massive knock-on effect if we can't manage, track and understand usage data effectively. Companies now need to identify ways of training people with agile skills to support the products and serve the customers of the future.
In my next blog I’ll focus on the workforce of the future and how organisations can ensure they have the right culture to enable and sustain change.
Account Leader, Critical Infrastructure
Rupal is a proven leader with a track record of delivering in challenging circumstances without compromising quality or losing sight of the overall business strategy. She has played a fundamental role in transforming the utilities sector and implementing digital and innovation practices and is a recognised source of expertise in the utilities and smart energy industry with over 15 years of experience.