Kassel. In this era of smartphones, social networks and online customer portals, data are available everywhere and at any time. This is changing the energy industry too. WINGAS spoke to Jan Maciejanski, Managing Director of REE! Managementgesellschaft mbH, about the new market realities and the challenges facing energy suppliers.
Mr. Maciejanski, everyone's talking about the "digital transformation" at the moment. What does it mean for you?
Nowadays, we're permanently contactable, very mobile and our social lives are becoming virtualized. In addition, information is available at all times and the performance of end devices and software is increasing rapidly. As a result, the world is changing. For companies, this means that they need to embrace digital communication and digitalize their processes and entire business models.
What impact does this transformation have on energy suppliers?
Municipal utility companies are part of this development and ought to be getting ready for it today. They also have to make allowances for other factors such as reduced customer loyalty, increased competition, cost pressure and the decreased profitability of conventional business models. I'm therefore convinced that municipal utility companies require new strategies and business models.
With what strategy can energy vendors react?
Municipal utility companies have huge amounts of customer data. Using these data correctly will be a key factor in the success of energy vending in the future. Firstly, having access to data means not having to make decisions on the basis of rudimentary information or gut instinct. Secondly, they can provide important insights into customers and the competition.
How, specifically, can data form part of a new strategy?
Let’s take a SWOT analysis for example. It examines the internal perception of strengths and weaknesses and the external perception of opportunities and threats. Internal information regarding tariffs, divisions, regions, customer groups or key figures such as gross margins and customer acquisition are already available in the various departmental systems. In contrast, external information regarding the competition, potential customer groups or national prices must be purchased.
How do you keep on top of these data?
We're talking about huge quantities of data here. With the help of a business intelligence system, the data can be compiled and prepared so that they can be used for all manner of analyses, simulations and reports.
To date, a lot of the work has been done manually using programs like Excel or Access. How will digitalization progress?
Energy vending will develop in three steps. In the future, the quality of sales management will increase considerably thanks to improved data quality and partial automation of the reporting process. We refer to this as pull intelligence because users themselves need to become active, obtain data and carry out simulations. In the next step, push intelligence, systems automatically identify changes and inform staff. In the third step, the processes themselves are automated. Programs validate and analyze large quantities of data, simulate market changes on a minute-by-minute basis and then change the prices on the company's own website for example. This will not only lead to a huge reduction in process costs but will also help to safeguard competitiveness.
Who can benefit from business intelligence? Small municipal utility companies or only the national sales companies?
In my opinion, it's not a question of who benefits. Companies will not be able to do without it in the future. Firstly, even small companies are exposed to major risks. After all, they need to know who is offering what within their market. Secondly, the companies need high-quality, correct data as they're not manageable otherwise.
Having said that, is it not far too expensive?
The fact that the data from various company divisions need to be aggregated, corrected and prepared from a qualitative point of view is the main reason why costs are incurred. Once the data are alright, there's not much more to do. After all, good business intelligence systems nowadays don't cost much more than office applications.
How will the working lives of sales staff and controllers change?
Staff will have ad-hoc access to all data that they need for their job. Being able to handle figures, data and facts will therefore be a new core competence. Complex connections within the market, customer inquiries on portals, competitors' prices – sales staff will be able to see all of these on a minute-by-minute basis, evaluate the information and then react to it equally quickly.
How can an energy vendor benefit from this?
If I know more about my customers, I can segment them and find out which of them are most valuable, i.e. what types of customer I really need to keep or recruit. I can then offer the various customer groups tailored products and manage communication on a group-specific basis. In conservative areas for example I could use more traditional advertising than in districts where young, ambitious single people live. To give an example, the automotive sector has been advertising specific models with specific images for years now and this technique has proven extremely successful.
What’s your verdict, Mr. Maciejanski?
To sum up, I think that the digital transformation is well under way and energy suppliers can rise to the challenge with business intelligence. At the moment, the opportunities lie in analyzing and managing competition, supplier switching, customer preferences, customer movements and commercial sales figures. Further sales opportunities lie in the integration of mobile end devices and smart technologies.