With the Open Water Act scheduled to take effect from April 2017, the UK water industry is preparing for a deregulated non-domestic market. The Act will give B2B water customers the flexibility to choose their own suppliers.
Deregulation, already implemented in Scotland’s water industry, yielded several benefits – like cost-optimization of over £72.6 million in water charges and approximately £54 million in water efficiency. Additionally, 24 billion liters of water volume and more than 42,000 tones in CO2 emissions were saved.
The Open Water Act will thus open up the UK market, leading to increased competition, innovation, and efficiency.
Furthermore, the previous deregulation of the energy and gas market in the UK demonstrated certain results. That formed the basis for a SWOT analysis to simulate the outcome of deregulation for water utilities.
- Established water infrastructure, pipelines, maps, etc.
- Existing customer connections and deep knowledge of customer requirements
- Business knowledge of upstream and downstream functions – both wholesale and retail
- Integrated operations and processes between wholesalers and retailers – new arrangement will require these two functions to operate separately
- Existing traditional ERP systems are incoherent and don’t provide business insights readily
- Customer engagement platforms work in silos and deliver average experience
- Generic customer offerings; minimum customization possible
- Efficient operations with focus on innovation to reduce cost to serve
- Lower retail price for customers
- Range of tariff options
- Better water efficiency
- Reduce water consumption
- Reduce CO2 emissions
- Better customer service
- Ensure regulatory compliance
- New retail entrants from Scottish markets
- New cross market entrants due to lowering of entry barriers
- Complexity of managing transactions between wholesaler, moderator, and retailer
- Stringent compliance requirements; punitive actions by OFWAT if retailer is non-compliant
- Lower margins
- Greater customer switch
- Increase in contract renegotiations
The analysis clearly outlines greater competition, pressure on profit margins, and customer retention as a result of deregulation.
What are the ways in which a traditional UK water utility can prepare for this? What does a fairly reputed water utility with an established customer base need to do to adapt to this evolving and competitive market place? Can technology be leveraged to transform existing business operations to increase profitability and customer satisfaction?
In operations in utilities, large volumes of transactions are carried out daily and they require constant manual intervention. To increase speed of work and reduce cost-to-serve, Robotic Process Automation (RPA) should be implemented comprehensively.
An effective Robotic Process Automation (RPA) framework presents opportunities for automation across multiple levels— back end, rule-based bots, and advanced machine learning. Thus, an RPA framework helps drive down operational costs, improve productivity, and enhance customer experience.
Delivering differentiated offerings and tailored customer services is possible only when you know your customer thoroughly. An Insight Driven Customer Engagement platform, driven by Big Data analytics is therefore the most viable solution. A centralized data analytics hub, connected to all the customer touchpoints would provide real-time information, discrete insight, and a holistic view. This will help provide consistent and valuable services to them on each instance of contact.
A centralized analytics hub enables us to understand each individual in depth – both newly-acquired as well as long-time customers who may consider changing services.
Customer insight also holds the potential to address other requirements, such as boiler care, household insurance, usage reduction, and more.
As we improve efficiency and know our customers better, the final step involves connecting with them effectively.
Contextually targeting customers through Social Media Engagement would be essential in the water utility market. Today, customers typically devote a large proportion of their time to social media. These are one-stop shop platforms to stay connected and updated— with friends, events, and news as well as brands. Experiences—particularly negative ones— no longer go unnoticed. Feedback is now shared across public platforms. Therefore, water utility suppliers must leverage social media engagement in order to address customer issues and broadcast services proactively. Initiating consumer engagement is far more advantageous than merely taking reactive measures in the event of customer complaints.
Realigning service models to modern digital technologies can equip water utilities with the tools to create significant business value for customers. However, leveraging the aforementioned solutions (Robotic Process Automation, analytics, and social media engagement) optimally is a complex procedure. Collaborating with seasoned professionals like HCL will help ensure a seamless transition.
Looking Ahead: Partnership for Open Water
HCL has a proven track record of partnering with utility companies to ease the process of industry deregulation. Our package provides support for critical functions throughout various phases— both before and after transformation.
Our four-step business remodeling solution (PISATM) is designed to win and retain customers in the deregulated landscape. We also offer business renovation solutions for converting traditional customers into users of next-gen digital utilities.
HCL Preparedness for Open Water: PISATM
|Cat.||Plan||Invest||Smart ops||Assured delivery|
- Market driven
- Profitability based
- Touch e2e customer lifecycle
- Predict customer behavior
- Robust delivery as per plan
- Drive accountability
|How HCL can help?|
- Market identification
- Customer segregation
- Skillset or talent based mergers/acquisitions
- Vendor, utility partnership, tie-ups
- Variable pricing models (transaction based/outcome based)
- Skilled resources/domain experts/SMEs
- Embedded and integrated transformation – maturity model, continuous improvement, benchmarking
- Cloud-based billing and CRM platform
- Digital/mobile platforms for customers and ﬁeld services
- Industry speciﬁc point solutions
Intelligent customer services: e.g. Omni-channel framework, NLP, mobility solutions, visual IVR, photo meter app, leak management systems, etc.
Leverage Big Data analytics to know your customer better and obtain digital insight (e.g. behavior/sentiment) and smart insight (e.g. reduce waste, tariff plans)
- Outcome based smart quality model
- Automated workflow manager
- Transformation suits
- Outcome based billing and payments model
- Best of breed customer interaction management apps (chat bots)
HCL’s Digital Renovation Model: Helping You Become a Next-Gen Digital Utility
Technology and RPA to reduce cost to serve
- Deploy robust Customer Management System
- Customer data aggregation from all sources
- Alerts and reminders
- Automated work force management system
- Bespoke business and regulatory reporting
- Real-time performance management
Data analytics for customer insight
- Customer profiling and segmentation
- Behavioral and sentiment analysis
- Speech and text analytics
- Root cause and complaints analysis
- Propensity to complaint and action segmentation
- Model development and mitigation insights
- Continuous improvement
- Real-time customer insights through social media engagement
Smart process to increase efficiency
- Realigned customer touchpoint based smart unified processes
- IT BPO collaboration
- Synergy between front oﬃce and back office
- Outcome based smart quality model
- Closed looped feedback to other processes
- Embedded transformation and value maturity model
Smart people to improve CX
- Clearly deﬁned customer outcome based KPIs
- Converting customer KPIs to operational KPIs – clearly defined at agent level
- Customized training to identify high-risk work streams
- Customer experience management
- Empower employees to resolve customer complaints
- Gamification to encourage right behavior