Last week I spent some time at an energy and utilities conference in the UK. It was attended by a number of traditional providers, challenger start-ups, green energy companies and upstream & downstream partners. Together, these organizations make up the whole ecosystem of water, electricity and gas that means we have warmth, light, as well as the means to drink water and cook food in our homes. It’s a complex landscape and listening to the opening keynote sounded initially like an industry under siege, or midway through Armageddon!
As businesses, energy and utilities organizations have huge external pressures from regulators and the government, competition between themselves and internal supply chain challenges. To give you an idea of these pressures, the government is forcing both capped and variable tariffs (which would appear to only favour the customer), there are new and disruptive ‘upstarts’ without any legacy infrastructure — or the associated costs — waiting in the wings to woo away customers.
As customers, we decide to spread ourselves either far and wide across the country in remote locations, or choose to pack ourselves tightly in to densely populated areas on top each other. In both situations, consumers have unwavering expectations of utility delivery.
The thing is, it’s not only the delivery, but the production, or extraction of raw materials. The supply and cost of these goods fluctuate and are often from finite sources, which are difficult and sometimes dangerous to obtain. With difficulty and danger comes cost.
With these seemingly unachievable demands on a business, it’s not surprising its already taken toll — with some companies going out of business. The industry has attempted to curb the risk, by creating a process called SOLR (Supplier Of Last Resort), meaning another supplier with sufficient scale and reach in the failed company's region will pick up the slack, so all us householders aren’t left in the dark (literally), kept warm and able to heat up some beans.
The reality of the pressures on utility companies, however varied and problematic, can actually be alleviated by addressing some simple core business drivers – Reduced Cost To Serve, Operational Efficiency and Process Excellence. Easy to say, less easy to deliver.
However, there are some solutions that can deliver some short-term deliverables to all three of these drivers without massive transformation investment, replacement of systems, or hundreds of additional resources.
Intelligent Automation and AI is set to address all three. In a recent Accenture report, it is estimated that AI and Automation will impact GDP growth by an incremental £620bn in the UK by 2035 over steady state growth. It does this by augmenting existing resources and processes with AI to be more intelligent and therefore more efficient — allowing you to do ‘more with the same’. But also, with the automation of volume tasks that are concluded without human intervention - at a scale, cost and speed way beyond that of any people-based delivery model. Whether staff are in-house, on-shore, or off-shore, AI and Intelligent Automation is driving productivity gains and reducing costs in huge swathes.
Some high level numbers from my own customers are startling. A large utility has reduced the cost of physical payments from £8.00 to just 65 pence and another is on track to reduce work effort of staff by one FTE time per month.
This is just a start point in terms of addressing energy and utilities pain points, with Intelligent Automation and AI. I’d even go as so far to say this is just phase 1. There are still more cost to serve reductions to be had in areas of customer services and back office processing – one utility I know has already mapped in excess of 2000 processes.
This is even before we start to address Operational Efficiency or Process Excellence across energy and utilities businesses. They have highly distributed environments with their customers and supply networks that currently are delivered, run and managed in silos by skills-based teams. Intelligent Automation is showing huge efficiency and productivity gains in ‘cross organisational’ tasks. Virtual Workers can be trained in many tasks that span the business from, sales, operations, finance, field engineering, customer services and generation. One client has reduced the elapsed time for project initiation from 3 weeks to just 2 hours. How is this possible?
The Virtual Worker is trained in a number of fairly simple tasks that today are conducted by individuals in the skills based teams. Currently no one individual is either trained or authorised to conclude all the tasks across the business, so the elapsed time for each task to get completed, by a member of each team, means the total time is elongated to nearly 3 weeks. Now, because the Virtual Worker is able to conclude all the tasks across the business, the tasks are all pre-agreed as part of an end to end process and the Virtual Workers aren’t going to do something they shouldn’t. One Virtual Worker does it all in just under 2 hours.
Intelligent Automation and AI, or a Digital Workforce, is not a panacea. However, in terms of driving a step change in cost to serve and delivering operational efficiencies, it potentially could be the proverbial ‘Lid of the Box’ to the ‘Jigsaw puzzle’ of operational processes, customer services demand and applications and technology challenges faced by energy and utility companies today.
One thing we do all know is: Regulation only gets worse, customer demand and satisfaction expectations only go up and competition only expands. Changing how you do it today, must be the only focus to avoid the Armageddon...
James Ewing, Senior Client Manager