Video: British Gas CIO Dave Bickerton discusses massive IT transformationDate: Apr 16, 2010
British Gas is underpinning its business strategy with massive IT transformation as the firm sets out to turn its bad fortunes around and become the most trusted energy supplier in the UK.
The company has moved from having the least satisfied customers two years ago to having the most favourable ratings in 2010, according to a Morgan Stanley survey.
British Gas has been working to repair its damaged reputation since deteriorating customer service standards caused the defection of about a million customers in 2006. It blames the blunders on a billing system provided by Accenture, now the focus of a multimillion-pound battle.
Speaking about the impact the billing problems had on consumer confidence, the firm's chief information officer Dave Bickerton said he had "never seen anything so severe" in his entire career
"The executive team, technology and several other departments all had to get behind that drive of improving customer service - we are far from finished, but are making good progress and getting the acknowledgement for it," he said.
Taking IT back in-house
The billing problems were the main driver behind the company's decision to bring its main IT operations back in-house in 2006, reversing its heavily outsourced model.
In an exclusive interview with Computer Weekly, Bickerton said his team delivered about 180 projects last year - all mainly related to the revamp of its core billing platform. In-sourcing was key to achieving that.
"Nobody knows our business and systems like our own people, and it is that approach that helped us make that kind of progress," he said.
British Gas will spend £150m on technology-driven change this year and will recruit an additional 100 staff to supplement its 600-strong in house team to continue driving simplification and improvements to its IT portfolio.
Since last summer, the energy giant has upgraded its billing system, which is based on the ECC6 version of SAP. In July, the redesigned and simplified prepayment module of the system went live. And the company has simplified the customer home-moving process, reducing 60-plus screens of information down to six. But the team is still working on repairing some of the design issues caused years ago.
British Gas' imminent replacement of its Siebel customer relationship management (CRM) system with an SAP-based platform will enable the company to make further improvement to the billing system.
"We want to get back to a place where all our customer data is in one place and simplified. We want more customers to come back and we would like them to be able to benefit from other products and services we offer," said Bickerton.
"The required infrastructure is now being put in place for that and we have started the development cycle. But we will not go for a big-bang approach - Siebel may be around for a while."
Improving and simplifying the billing and CRM systems presented integration challenges, said Bickerton. Service-oriented architecture is a "key building block" in the company's plans to replace its CRM and also enabled many changes introduced in the firm's online platform, he said.
At the same time, British Gas intends to roll out two million smart meters by 2012 as part of the first phase of its roll-out, ahead of the government's target for full roll-out to begin in 2013-2014.
The firm announced the suppliers involved in the development of the system last month. They include SAP, Vodafone, software and communications firms OSIsoft and Trilliant, as well as the provider of the wireless home area network, Zigbee Smart Energy.
Bickerton said he has no issues engaging multiple suppliers, despite the company's past problems.
"We are the integrator of those vendors who are working very closely to us and we have invested in those relationships, which takes risk out," he said.
"What we haven't got is the old-fashioned challenge of having a systems integrator on your behalf trying to pull it all together. It is much easier for us to align our objectives with those vendors than it is with a middleman."
Given that a core driver for outsourcing is the reduction of IT spending, how can the in-sourcing approach be a cost-effective alternative?
"It is impossible to say how in-sourcing has made an impact on the bottom line, but what is absolutely telling is what you can achieve in terms of reliability of service and the volume of change you can execute with certainty," said Bickerton.
"What we haven't got is a third-party contract negotiation, which always attracts a premium and contributes to time delays - this is not a criticism of outsourcers, it is just a fact of life," he said.
"[In-sourcing] also gives us flexibility - if the business wants to change something, it is much easier for us to do that without having to negotiate through a third party. We can get around the table, make decisions and move on if we need to change anything - that in itself is a major cost-saving."
Android mobile platform
In addition to the core projects around billing, CRM and online systems, British Gas has recently replaced laptops used by its engineering workforce, is due to replace the desktop equipment across its call centres, and is working on an Android mobile platform following the successful launch of its iPhone application.
The company saw the number of hits on its web double during the year to January 2010 and is simplifying the customer journey online. According to Bickerton, "a real shift in consumer behaviour" is taking place and the firm is flexing its IT strategy to be able to meet these demands.
The company's extensive IT project agenda also prompted new infrastructure demands. British Gas is discussing the options internally, including infrastructure-as-a-service, virtualisation and cloud computing.
Despite having one of the most challenging jobs in IT in the UK, Bickerton remains upbeat about the future.
"We have a great opportunity to improve customer service and grow the business here and we can clearly see the progress that we are making," he said.
"It is also great that the business has bought into the IT strategy. But at the end of the day, you could not possibly do all of that without the great people that we have - and the control."
British Gas' dispute with Accenture
British Gas' relationship with Accenture dates from the early 2000s, when the energy supplier engaged the supplier to deliver a state-of-the-art billing system, dubbed Jupiter.
The company had hoped to use SAP to consolidate the records of all its gas and electricity clients and handle hundreds of thousands of meter readings and bills daily.
But system problems caused such a mess in the company's billing that British Gas had to recruit thousands of staff to fix the issues at a cost of more than £180m. British Gas is seeking to recover the money in a court battle which began in 2008.
In the latest High Court judgment in November, the judge favoured the utility firm when Accenture raised preliminary questions around the construction of the contract as well as the warranty claim notice over the issues in 2007.
British Gas's parent Centrica said the outcome brought it "one step closer to holding Accenture to account" for the disruption caused to its customers, but Accenture disagreed with the ruling and decided to appeal.
"We cannot predict the future outcome, but given the favourable response we had last year, it's needless to say that we remain confident and also the evidence is plain to see: we are having to make repairs to the system and there are fundamental design issues that we are having to address," said British Gas CIO Dave Bickerton.
"However, our customers are showing us that service is improving and they are coming back, so we are clearly fixing the right things, but there is a lot more to do," he said.
Meanwhile, the IT supplier labelled Centrica's claim "baseless" and it is convinced that it will get the upper hand when the factual issues are examined in detail at trial.
"The Jupiter system Accenture delivered in 2005 met all contractual requirements; it was delivered on-time and on-budget. Centrica signed off on the design of the system and conducted extensive testing before formally accepting it and using it," said an Accenture spokesman.
"Centrica operated the system for over a year before its warranty claim was made and is still using the Jupiter system today. We believe that any problems with the system were based on their mismanagement after it took over the system and continued to load on further customers."
A growing workforce
British Gas scrapped its heavily outsourced IT model in favour of a steadily growing in-house department following its highly publicised problems with its SAP-based billing system, which Accenture was contracted to deliver.
The supplier has a 600-strong IT function supplemented by contractors and third-parties, including offshore staff provided by partners such as Capgemini and Cognizant.
British Gas CIO Dave Bickerton said his project agenda is so extensive that he will require an additional 100 people mainly in the areas of project management, systems architecture and development. SAP experience is a plus, he said.
"There is no doubt we have set ourselves an ambitious target and we have a huge change agenda, so we are looking for people to take part in that journey," said Bickerton.
"We truly invest in our people, both from a technical skills point of view as well as leadership development. We are far from perfect, but we are fully committed to continue to invest in our capability."
"My e-mail is email@example.com and we are looking for people who are great at what they do. If you fit the bill, send your details through."