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Danish utility NRGi goes offshore for IT platform transformation

Danish utilty NRGi has outsourced its IT to Indian services supplier Wipro as it attempts to transform its operations amid increased competition

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Danish energy company NRGi is modernising its IT platform through in a deal with Indian services supplier Wipro.

The deal – penned in December 2015 – is part of NRGi’s response to growing competition in the Danish energy market.

“IT is going to be the key differentiator in the utility market. What happened in the telco sector is going to happen in the utility market,” said Gert Rieder, CEO of NRGi Infrastructure AS.

“There will be a lot more competition, a lot more focus on digitalisation and processes. We can see the platform we are running today wouldn’t be able to meet our requirements.”

Wipro will build a new customer information system (CIS) platform as a platform as a service and will cover NRGi’s billing and customer relationship management. It will be used to introduce more digital tools to the company’s 220,000 customers.

The company expects the platform to ensure compliance with data-sharing requirements in Denmark as the country opens up its energy sector to competition and price transparency.

Wipro will build, host and deploy the platform based on Oracle’s billing, customer care and meter data management software and customer experience systems. According to Rieder, Wipro has a small team of five to six employees dedicated to the project in Denmark and a further 30 to 40 people working on it in Delhi, India.

Minimising the risks of offshoring

The value of the agreement was not disclosed, but Rieder said it is one of NRGi’s largest IT investments to date: “This is the first time we have done a project of this scale offshore,” he said.

“The main risks we looked into were going with a new vendor we have never worked with before, and to do it in a setup where a lot of the development will be done far away from Denmark.”

NRGi chose Wipro based on its experience in Oracle system integration and large offshoring projects. Rieder said delivery risks had been minimised by using standard systems and processes – already widely used in the utility sector – as the basis of the platform.

Read more about offshoring IT in the Nordic region

Rieder expects to start deployment during the second half of 2016. The older platform will be retained while NRGI’s customers are gradually moved to the new platform.

“We will be running two platforms, one will do the business it does today and the other will give us a chance to go out and do something completely different,” Rieder said.

Brokering services to other utilities

NRGi plans to use the scalability of the platform to introduce a service bureau model and sell its CIS services to other small and medium-sized utility providers. Rieder believes this kind of approach will become increasingly common as IT and customer requirements in the utility sector grow.

NRGi's contract is the latest in a series of deals Indian IT providers have closed in the Nordic countries. Henrik Ringgaard Pedersen, sourcing expert at PA Consulting, believes the success of the Indian suppliers comes down to their strong focus on customer relations and flexible delivery. But he believes the competition will start to level out.

“Until recently Indian providers have had more attractive cost models because of their great near- and offshoring capabilities,” he added. “But some of the traditional US players, and local players as well, have started to close the gap with more global delivery models.”

Ringgaard Pedersen expects an increased variety of outsourcing models as growing competition in the Danish energy market will place new demands on IT. “The need for outsourcing and offshoring will be two-fold: One is cost reduction, and the other is having a good customer centric system,” Pedersen explained. “Competition over customers is going to be much fiercer than what we have seen so far.”

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