Customers’ expectations of their energy providers continue to grow. Performance standards set by the global digital giants in their own industries are increasingly becoming the benchmarks for everyone else. This is fueling a new customer paradigm, where utilities are judged less on the energy they supply, and more on the services they provide.
As a result, the market is starting to shift its focus from the traditional core business of supplying energy toward far more customer-centric offerings. Accenture’s New Energy Consumer research shows that 80 percent of consumers would consider purchasing electricity, energy-efficient products or related services from alternative providers, with almost half of consumers expecting their energy provider to partner with other companies to offer distributed energy resources (DER)-related packages that enable them to generate and store energy.
The stark truth is that, in this hyper-competitive, rapidly changing environment, utilities must develop new channels of growth or face reduced profitability, increased commoditization, and continued customer churn. The finance function must play a key role in leading this transformation or risk becoming irrelevant.
Finance at the forefront of change
As finance expands its footprint and seeks to drive value creation across the enterprise, it is uniquely positioned to release trapped value, supporting a shift into the new retail reality for energy providers.
Customer-centric services on such a scale requires a holistic, integrated approach to data management, using analytics and data-led insights to build personalized user stories. Only then will utilities be in a position to service customer demands in a truly “new” way. CFOs need to act now.
By optimizing existing operations, eliminating, digitizing or reducing the cost of processes, finance can free resources to fund the investments required to compete with new market entrants and acquire the tools and capabilities that will deliver value at speed and scale.
How the utility chooses to invest these savings will ultimately determine its future success, whether that’s driving efficiency, pivoting to new growth opportunities, or creating new and better customer experiences.
CFOs must position themselves at the heart of this value-driven decision, confirming cost-saving initiatives are properly communicated, managed and delivered. As they do so, they should be supporting business leadership to determine the appropriate strategy to deliver sustainable shareholder value. The focus of the finance function thus shifts away from “accounting” and toward “enterprise value.”
Taking control of the data
Today’s connected home and integrated utility management devices are providing energy providers with unprecedented volumes of data. That gives them the means to understand their customers’ energy usage patterns, buying habits and payment preferences with unparalleled granularity. What’s more, consumers are responding to this new data currency, with nearly two-thirds of switchers being comfortable with their energy provider gathering additional personal information to offer more personalized offers and experiences.
It’s a huge opportunity in everything from personalized tariffs, to usage-based promotions, to product bundling. But competition is fierce. The technology giants that built their entire businesses on data analytics and customer insight are entering the market, whether that’s Google’s Nest, Amazon Alexa, Tesla’s home battery storage or many others like them.
And data quantity does not equal data quality. That’s critical, given that more than 60 percent of organizations say they lack the data insights needed to answer even basic questions about business performance, according to Accenture’s research.
Here, again, is where CFOs can step in. Finance should be looking at where they can invest, whether by building, renting or buying the new technologies and digital innovations which can dramatically improve the data supply chain and manage exponential data proliferation.
These capabilities are now essential for competing in an increasingly complex and data-driven utilities industry. Yet many utilities have been slow to use them, with the majority of companies struggling with data access and automating of the data supply chain, fewer than half are investing in solutions like master data management, data cleansing, data movement and application programming interfaces. The onus is on CFOs to drive these investments forward. Now, more than ever, finance is at the center of transforming utilities into the agile, customer-focused, data-driven organizations of the future.