While the “big six” energy firms still largely dominate the utilities market, a smattering of independent suppliers have emerged in recent years that have started to challenge the status quo.
Figures released by analyst house Cornwall Energy in September 2014 revealed a steady decline in the percentage of market share held by the big six – which include British Gas, EDF, E.ON, Npower, Scottish Power and SSE – from 99.8% five years ago to around 92.4% today.
Around the time this data was released, First Utility became the first energy supplier outside of the big six to have accrued one million customers, meaning it could legitimately lay claim to wresting at least 2% of market share away from them.
It has achieved this by pioneering the use of smart meters to measure in-house energy use since 2008 as a means of differentiating itself from its competitors, explains First Utility CIO Bill Wilkins.
“People tend to forget that everyone was receiving estimated bills on an annual basis back in 2008, and there was no transparency around tariffs or how much people were paying,” he says.
“The customers that came to us at that point were there because they were interested in getting that extra information the smart meter provides, and they knew they were being billed against their actual consumption rather than a supplier’s estimate.”
The take-up of the company’s energy tariffs has also been buoyed by government efforts to make the energy market more transparent and competitive over the past couple of years, along with growing consumer awareness of the benefits smart meters can provide, he claims.
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For these reasons, the company’s user base started to seriously ramp up in size from 2012 onwards, and has continued to grow in this way since.
“Between 2012 and 2013 we went from 70,000 to 170,000 customers, which was pretty good growth. Last year we went from 280,000 to over 700,000. That rate of increase has become the norm for us over the past few years,” he says.
The power of cloud
This pace of growth may have presented the company with scalability problems if it hadn’t made the move to cloud some years ago. But, on joining the company in 2010, Wilkins made reducing the company’s use of on-premise technologies a top priority.
“When I joined two years into the company’s growth, it had a lot of in-house solutions and its own datacentre, but was already struggling with issues of scale and complexity,” he says.
Rather than get bogged down in the day-to-day management of those resources, Wilkins decided the company needed to move off-premise. It did so over a period of 18 months, setting the scene for First Utility to ditch its datacentre completely.
“We didn’t have as much legacy infrastructure as some of our competitors, which made the shift easier, but one of the things I’m most proud of is that we don’t have our own datacentre any more,” he says.
“Most of my systems are provided by the public cloud. We use Google for all our internal workforce automation tools and Salesforce.com for our CRM [customer relationship management] solutions. Even our telephony systems are hosted in the cloud these days.”
As the company’s customer base has grown, so has the number of staff it employs. Moving to the cloud has made it easier to bring on board new starters, says Wilkins, without taking up too much of the IT department’s time.
The key attraction of joining First Utility was the CIO had a position on the board
Bill Wilkins, First Utility
To emphasise this point, Wilkins explains how the company coped when faced with having to triple the size of its customer service team last year to handle the increase in calls to its help lines following the fast growth of its user base.
“Attempting that with on-premise PBX and an on-premise CRM system would have resulted in a lot of distractions for our tech teams but, because we’re in the cloud, that process was fairly straightforward,” he says.
The company also calls on Amazon Web Services (AWS) to host the data generated by its fleet of smart meters, but, despite the firm’s “all-in” approach to the cloud, Wilkins says he’d never rule out a move back to on-premise in the future.
“There is a very hard-nose economic evaluation we regularly do into how our business is run, and we know at what points in the future we may want to look at using in-house solutions again because of the economics involved,” he explains.
“But, at the same time, we know the economics of using a technology like Amazon are changing all the time and our cloud platforms are delivering a very good ROI for us at the moment.”
As well as promoting the use of cloud technologies, Wilkins went to great lengths on joining the firm to position the IT department as a help, rather than a hindrance, to business growth, which is, he claims, one of the firm’s founding principles.
“The key attraction of joining First Utility was the CIO had a position on the board,” he says.
“The way it works here is that there is a true partnership between technology and the business, meaning it’s rare for a business stakeholder to come to us and say they need a certain technology requirement fulfilled as that dialogue will have already been going on.”
That’s not to say there isn’t the odd disagreement between the business and technology sides of the company, but the firm has processes in place to mitigate this.
“I’m not going to lie to you, there are natural challenges, but if you let that ‘head-butting’ go on between the two and don’t have organisational processes in place to deal with it, top down, it can create a negative dynamic. And that’s why a partnership approach is really key,” he says.
All business divisions at First Utility are encouraged to take an interest in technology innovation through a scheme that lets staff members devote one day a month to a project or initiative that could have a positive impact on the way the organisation operates.
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Wilkins says the scheme has been a tremendous success to date, proving particularly popular with the firm’s engineering team.
“One initiative to come off the back of this is that we’ve started using Natural Language Processing (NLP) techniques to serve our customers better, after one of our team took the time to learn about it and how we could leverage an open-source technology stack to make use of it,” he says.
NLP is a form of linguistics focused on the way humans and computers interact to ensure the latter understands what the former is asking of them.
In the case of First Utility, the technology stack is used to auto-respond to electronic customer queries – such as emails or social media requests – but if the computer can’t or doesn’t know how to respond, the question will be passed on to a human member of staff to answer.
“This approach has reduced the in-bound electronic contact rates to our call centres by around 50%,” he says, “and is a good example of how an innovative, individually inspired project can transform the economics of running a customer contact centre.”
Building trust and customer loyalty
To ensure First Utility’s ongoing pursuit of the big six continues apace, the company is introducing a number of features designed to make energy use easier for consumers to understand so they can make better informed decisions about which supplier best suits their needs.
Central to this will be extending the capabilities of the firm’s MyEnergy platform, which essentially serves as an online information hub for customers who wish to access detailed information about their household’s energy use.
As such, customers will soon be able to share insights from MyEnergy with their friends and contacts via social networking sites, allowing them to pass on knowledge about steps they’ve taken to reduce the amount of power they use, for example.
“Consumers don’t trust energy companies, so being able to engage with our consumers online, and using the half-hourly data collected from their smart meters to explain their energy use in an accessible way, is all about building customer trust. Once you have that, customers are more likely to be loyal,” Wilkins explains.
This push for transparency is one of the reasons the firm has thrown its weight behind the government’s Midata initiative, which was set up to help consumers switch energy suppliers more easily by providing them with secure access to accurate statistics about their power usage.
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Traditionally, this information was estimate-based or required billing information that may not have been easy for consumers to obtain.
“The benefit for consumers is that it gets them a more accurate quote because they’re using real data and it will yield a better quality of switch because the suppliers will have higher quality information to process,” he adds.
Building trust through technology
The company is also hoping to foster customer trust by building on its background in promoting the use of smart meters to help customers cut their heating bills through the use of newer thermostat technologies.
To deliver on this, it has recently partnered with Cosy, a Cambridge-based firm specialising in the development of smart heating systems, to roll out this technology to its existing customers with the aim of helping them shave between 5% and 20% from the cost of their heating bills.
The deployment is still in the pilot stage at the moment, with 2,500 of the devices in use, but Wilkins says the company’s aim is to be in a position to offer the technology to all its customers by the end of the year.
“We can capture the heating information from a customer’s house and tell them how they’re heating their homes compared to others and what optimisations they can make to save some money.
“At the end of the day, we want to be the consumer’s partner and show them how they can save money through the use of technology,” he adds.