How can agility help business tackle the ongoing energy crisis?
Image credit: Mike Taylor/Dreamstime
Companies in the energy and utilities sector can’t afford to avoid dealing with legacy systems and processes that prevent them from gathering vital intelligence about their customers.
With Europe currently experiencing one of the worst energy crises of all time, the UK has been badly impacted – with soaring gas prices driving up energy bills across the country. Energy suppliers are scrambling to counter the effects of shifted energy demands as well as cost-management challenges brought on by economic difficulties and political instability. As we enter the winter months and the cost-of-living crisis begins to take hold, addressing this problem has never been more important.
In a market fraught with uncertainty, firms within the energy and utilities sector need to reconsider their business strategy to become more agile and responsive to the rapidly changing economic and business landscape. This can help them to channel their existing resources strategically to make them work as effectively as possible, while they take on operational transformation initiatives that are imperative to business survival. It will also ensure they are prepared to tackle future disruption.
According to Expleo’s BTI 2022 report, 57 per cent of energy and utilities companies plan to use digital transformation to revamp their business model, but 42 per cent of these businesses admit their existing IT infrastructure is insufficient to enable a smooth and timely transition.
Riddled by core legacy systems and processes, these companies are still relying on a traditional and underdeveloped IT infrastructure to gather the market intelligence that is key to managing change within the organisation. This can be damaging to overall business survival and growth, especially when operating within a hyper-competitive landscape.
At its very core, achieving business agility is about thinking outside the box when it comes to deploying processes and technology to drive up operational efficiency and long-term business profitability.
Adopting a more agile mindset allows energy suppliers to experiment with new technology and make the best use of it. It also encourages companies to engage with people who have the right kind of industry expertise to identify problems and develop solutions to help their business embark on its digital transformation journey and to keep up with the changing customer behaviour and demands.
As the ways in which power is produced and consumed continue to evolve, there is also a tectonic shift in the technology landscape that underpins the power grid. For example, the use of renewables and electric vehicles is on the rise, and smart metering solutions are gaining popularity among both energy suppliers and consumers.
Smart meters are already helping consumers to reduce energy consumption and lower energy emissions. These smart meters will really start to come into their own when Ofgem’s market-wide half-hourly settlement (MHHS) goes live, which will allow customers to benefit from greater and more granular opportunities to reduce their consumption costs by changing their time of use – as indicated by their smart meter. These behavioural changes will help to reduce carbon dioxide emissions by reducing the need for additional peaking power generation, which is often the most polluting kind.
The other lever that the industry is in control of is the new faster switching regime, which now enables customers to switch between gas and electricity suppliers, more reliably, in 24 hours – rather than weeks. Although there has not been a great deal of switching since the start of the energy crisis, we expect this will become a critical tool again for consumers in the coming years, enabling them to shop around not just for the lowest unit rate, but also the most innovative deal which rewards their behaviour change.
To facilitate these changes in the long run, suppliers need to work on fine-tuning their operational agility on a routine basis. By creating a crystal-clear mission and regularly reviewing business goals, enterprises can unlock sustained operational efficiencies and become well positioned to swiftly respond to changing market trends or other external variables.
The energy suppliers that innovate and make best use of the latest technologies, while retaining excellent customer service, will be the ones to emerge from the crisis leading the pack. This will mean engaging with customers in a more holistic way, in addition to the corresponding technological and system changes. By doing so, suppliers have an opportunity to make themselves a key partner for consumers looking to reduce their bills – while playing a key role in the UK’s transition to net-zero.
Rachel Eyres is business unit director for energy & utlities at Expleo.
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