Few industries have been as burdened by change over the past 25 years as utilities. Industry restructuring, globalisation, deregulation, and digital technologies have upended a traditionally stable and comfortable operating model, characterised by a regulated monopoly, predictable demand, long service lifecycles, and highly commoditised products.
When customers in any sector are offered choice, research shows that service experience across the customer lifecycle becomes the major determinant in customer acquisition and retention. And the ability of agile challengers to respond to these drivers becomes a critical competitive advantage. At the same time, incumbent providers’ massive operating scale, a seeming impediment to agility, also creates a perfect laboratory for innovation.
The business challenge is the same for incumbents and challengers alike: how to offer reliable, personalised service at scale with constant customer-perceived improvements and keen pricing. For both incumbents and challengers, however, the solution begins first and foremost with the customer experience, and intelligent automation is a powerful competitive weapon for the utilities sector.
Four key real world intelligent automation trends for 2021
Better service through automation
Three management practices are central to automation in utilities: mass customisation, service quality (SERVQUAL), and customer life-cycle management. With highly commoditised products, it is in the customer-facing service dimension, where incumbents are most exposed and competition is most intense, that utilities can apply mass customization most productively.
What is impressive is how intelligent automation can be leveraged to address these management practices through high service, while generating analytics to improve and anticipate future service. What is surprising is how few utilities have yet to grasp the full potential of available automation opportunities within these practices.
Three examples
1. Personalisation at scale
In 2008, a national provider of electric power to residential and business customers became one of the earliest adopters of process automation, conducting several proof-of-concept implementations to explore the capabilities and potential of the technology. Typically, the provider’s initial focus was on efficiency, reducing operating costs by applying technology to handle rising transaction loads rather than hiring additional staff. At its peak, the utility’s digital workers were handling 500 separate processes involving 18 million work items, doubling the company’s initial forecasted productivity gains as automations grew.
Mirroring our research alongside Blue Prism in other sectors, this initial efficiency focus led on to more significant gains in effectiveness. By automating back-office processes and applying human workers to more complex customer-facing tasks, the utility simultaneously improved both regulatory compliance (traceability and auditability) and customer satisfaction (personalised service). By analysing the process data captured from its efficiency gains, moreover, the company re-configured end-to-end cross-functional processes, generating significant gains in employee satisfaction.
2. Industry restructuring
Global energy industry restructuring, divestment and re-aggregation across the value chain is creating multiple demands for intelligent automation solutions. When a major energy conglomerate split its power generation and energy trading operations from its retail operations, it established a new listed company in 2016 with 13,000 employees supporting retail operations in more than 40 countries.
The company used RPA to optimise processes, increase compliance, and improve reconciliations in large-scale energy trading activities for greater efficiency. Integrating chatbots and artificial intelligence tools with its RPA platform, the utility automated its end-to-end procure-to-pay process. Digital workers now create 120,000 purchase orders per year, generating new supply contracts and updating existing ones directly in the company’s SAP system. They confirm valid certifications from 4,000+ suppliers and send renewal requests where required, using an AI algorithm to distinguish certificate types. And they prioritise, bundle and dispatch urgent purchase requisitions to the responsible business groups, and book 50,000 goods receipts per year – all automatically.
Transaction speed is critical in a competitive marketplace, but management also realised that intelligent automation was a powerful enablement platform to instil and sustain a strong performance culture for the new company, built on values of agility, responsiveness, and rapid decision-making.
3. Scaled retail distribution
Our third example is a multinational retail energy provider with local operations in 30 countries serving 33 million customers that established a shared automation resource group to support its national customer-facing businesses.
The provider’s automation Center of Excellence (CoE) provides a trio of transformational consulting resources that ensure consistency, quality, and integrity across the multi-enterprise business family, creating innovations at scale. This CoE maintains a library of proven objects and automations, along with experienced and knowledgeable specialists, to ensure quality, promote consistency, and exploit innovations across the wider enterprise and its operating units.
As efficiency gains multiply across the highly distributed operating environment, the company has already doubled its expected effectiveness gains, and is on track to achieve significantly greater enablement value as innovations continue to gain scale across multiple business units.
How can banks harness automation to its fullest value?
Digital challengers
On the challenger side of utilities competition, a host of emerging digital natives are using intelligent automation to build streamlined operations platforms and transform utility customers’ experience, without the burden of maintaining and upgrading massive business systems.
By focusing on automating processes and data flows that might be critical but don’t require human interaction if done correctly, challengers enable their people to focus proactively on building positive customer relationships, creating richer experiences for employees as well as customers.
Conclusion
As competition spurs innovation across the industry – enabled by intelligent automation – the journey path to greater value is clear: efficiency gains feed directly into enterprise effectiveness and customer enablement. Value grows exponentially.
But transformational success requires a distinctive kind of executive leadership. Our research reaffirms earlier findings on IT potential by Michael Earl and David Feeny. ‘Believer’ executives – unlike ‘atheists’, ‘hypocrites’, ‘waverers’, and ‘agnostics’ – are not just convinced that intelligent automation and ‘going digital’ will enable strategic advantage. They demonstrate their convictions in their decision-making, pursuit of opportunities, resource allocation, problem-solving, and daily behaviour.
Ask yourself, what is your vision for intelligent automation? If it isn’t to irreversibly transform key parts of the business, you may be on the road to deteriorating competitiveness and missing out on massive value.
Written by Dr. John Hindle & Dr. Leslie Willcocks of Knowledge Capital Partners
