Large suppliers do not have a great track record of handling their IT, with billing problems continuing to plague the industry. Complaints continue to be so high that Citizen’s Advice felt compelled to call on suppliers to address billing systems or risk undermining the whole smart meter programme with historic problems.
Despite billing being an issue for ten years, Citizens Advice points out that progress in that time has been woefully slow. And large suppliers do not have anything like ten years to prepare for the demands smart metering will thrust upon them.
When the national smart meter communications network goes live in just over a years’ time, smart meters will allow customers to change suppliers more easily. This means that potentially customers will be less loyal and more likely to move to a supplier with the best service and product offering. Smart Energy GB, which runs the national consumer campaign, certainly thinks so, saying “companies that offer good deals and great service will compete on a more level playing field”.
Even some of the big six appear to acknowledge that their IT capabilities may hold them back in that ‘field,’ allowing smaller players with newer IT systems to capitalise on the data and leave the larger suppliers trawling in their wake.
In a summary of its hearing with the Competition and Markets Authority SSE cited “flexible IT systems” as being one of small supplier’s key advantages over the big six, and said it is “likely that some smaller suppliers would be able to exploit these changes to grow their customer numbers.”
It also suggests that bigger suppliers are weighed down by “unattractive” customers with high service costs, while smaller suppliers are able to focus on “those who could use the internet, could pay by direct debit and were unlikely to have bad debt.”
While apparently excusing some performance issues with the difficulty of having to service a wider range of customers, SSE admitted to the CMA that it had “limited its spending on IT” to increase efficiency in recent years. Its future business strategy is focused on “ensuring its IT projects are properly delivered and to increase its roll-out of smart meters.”
The Energy Savings Trust’s director of operations Duncan McCombie expects large suppliers to acquire data and analytics specialists rather than try and ‘reinvent the wheel’ and develop the skills in house.
Eon has already partnered with software company Opower to provide its behavioural change energy efficiency ‘Saving Energy Toolkit’, and will continue to work with them through the rollout. Opower are experts at data analytics and consumer marketing, two things McCombie says will be critically important for suppliers moving forwards.
One should expect to see further partnerships with companies like Opower in the near future then, but Goldsmith’s director of innovation Dr Chris Brauer says large suppliers are not getting their skates on.
“Beginning the adaption process now is fairly critical, there has been a lot of resistance from the existing energy suppliers around these transitions, they are preparing by making acquisitions, but they have been on top of a very profitable marketplace in a relatively monopolised position for a very long time, and it’s going to take a little while before that grip is loosened.”
Opower’s senior vice president and international general manager, Nadeem Sheikh also agrees that suppliers should not be dragging their feet. He says that despite the global utility industry spending $30 billion each year on customer operations, mainly on billing and call centres, “there is still room for improvement.”
He suggests that “the challenge for utilities is sending customers the right information, at the right time, and using the right channel. If they get this personalisation right, the result is a reduction in complaints and an improved relationship with their customers.”
While this is relevant at any point, McCombie says this ‘personalisation’ will be critical “if suppliers wish to survive going forward in a federated energy sector in the future.”
Although Brauer says it will be five years before these disruptive smart technologies start coming through, and the start of the official rollout not until next year, installations of SMETS1 type meters are already ramping up. More than a sixth of the total domestic smart electricity meters were installed in Q1 of this year, suggesting the move towards digitisation is already gathering pace.
So with a legacy of billing problems still to tackle, inflexible and older IT systems and a tardy attitude, large suppliers do not appear to be giving the signals that they are exactly gearing up for battle on this ‘level playing field’. Sheikh also warns that customers in receipt of a smart meter will expect to see immediate benefits the big six might be unable to provide on that timeframe, so large suppliers should expect to see customer migration towards those better prepared.