Over the past few months, the UK’s energy sector has become a political football. The players – the political parties and the organisations that generate or supply power – are all engaged in a highly tactical game of shifting the blame for high energy pricing elsewhere. For consumers, the finger pointing is creating a sense of anger and confusion. So it seemed perfect timing when the CIO of one energy retailer, First Utility, put himself forward for a profile interview at one of the most interesting times in the sector.
“First Utility is an energy retailer, we build a proposition and take it to the market and try to attract consumers to the brand,” says CIO Bill Wilkins, pointing out the difference between his organisation, which sells electricity and gas to consumers, and British Gas or Scottish and Southern, say, which likewise sell electricity and gas to consumers but also generate that energy.
“This is a highly regulated industry that is dominated by six main players that between them have 98 per cent of the market,” Wilkins points out.
Every time one of the major energy companies puts its prices up, as they have done regularly of late, the government’s response is to tell consumers and voters to switch providers. As a consumer myself, I have found the act of switching not as easy as politicians would have you believe. So what is it like at the providers’ end?
“The industry doesn’t make the switching time very easy,” says Wilkins. “On average it is 28 days, so it is a challenge to make consumers switch, which means we have a brand recognition challenge.
“If banks can switch with speed, then why can’t utilities? It is a change of information ownership.”
As with many of the problems that are blighting the Conservative-led government at present, the problem originates with policies the Conservatives put in place the last time they were in power. When a consumer decides to switch energy provider they notify the new energy supplier, which in turn notifies the industry, and that triggers a set of internal industry processes. It all creates delay for the consumer.
First Utility has not been immune to raising its prices. In April 2013 it hiked its prices by 18 per cent because, it said, of increased network costs and wholesale energy prices rising.
“Our job is to be different,” the CIO says. “The way we compete is to differentiate and the core way we do that is through our technology.”
First Utility was initially a spin-off from First Telecom by the same group of founders. Wilkins says they wanted to apply the analysis, billing and customer relationship processes they developed in telecoms to a newly deregulated market. Initially First Utility focused purely on providing and billing through smart meters, but as we will see, smart metering has had a troubled start in the UK energy environment. As a result, First Utility has had to adjust its strategy and compete instead as an energy retailer. Where it differentiates itself is by being a data and analytics-led organisation, which is a great opportunity for a CIO.
“We collect the data from the customer’s meter and push that into our analytics engine, which segments consumers into cohort groups. These are anonymous groups which share common attributes and therefore allow a fair comparison of consumption. This means we can engage with consumers about their energy usage.
“These technologies drive a higher engagement by the consumer in energy and the way they consume. Customers on the programme are more likely to submit meter readings, get accurate bills, be aware of their consumption and work to reduce the amount of energy they use and their bills.
“During a customer’s enrolment we take their consumption data, data on their type of property as well as weather data, and use it to model their consumption. All customers are in cohort groups and receive an annual analysis of their performance in that cohort.
“For example, I am in the high user category as I have four kids all with PCs. I am using 67 per cent more power than the average user, but it is coming down and that insight is useful for me as I never had it before.
“We are trying to make the consumer feel good about this experience, not stressed. People are initially disengaged about their energy usage, I was the same. You take energy for granted. There is a trigger event like a house move and then you worry about your energy.”
First Utility launched in 2008 aiming to take smart metering technology into the market and attract customers interested in the smart metering idea.
“We had to move away from pure smart metering as we could not scale our field organisation fast enough, therefore to grow faster we needed to decouple growth from the rate of installation of meters,” explains Wilkins. “Also, the government became serious about smart metering, which led to a smart metering standard, which stopped the innovation in smart meters and therefore the opportunity for us to differentiate became harder. We had to change our game to focus on data analytics.”
With a change of strategy Wilkins and his team had to consolidate First Utility’s technology estate to support a data-driven business model.
“When you are a start-up you have more time than money, so you build yourself and you build just enough to get going,” he says. “As a result we had multiple billing and CRM solutions.
“We had a mass of technology that was just about fit for purpose, but they did take a company from start-up to 20,000 customers. When I arrived in 2010 I had the opportunity to rethink the technology strategy.
“Now we are investing and focusing our resources on that differentiation. To do that we have put all our CRM onto a single instance of Salesforce, as it is good and rich.”
That doesn’t mean Wilkins’ strategy is just to buy vanilla and try and use vanilla to differentiate. The CIO and his team have built the customer engagement and data analytics models in-house.
“Ultimately this business is about the customer engagement strategy. To most consumers the only engagement they have with their energy providers is when the billing takes place – and even then it may be a direct debit.”
Again, Wilkins and First Utility focused on differentiating this process, which has been the biggest project for the CIO over the last two years.
“Our MaxCare billing system has given us a product that is a clear differentiation as a business as it is a multi-business product that can be used for energy, telecoms, smart metering and content services. We call it multi-play, multi-product or multi-product line. We believe we are the only utility vendor with a billing system that can support smart energy, telecoms, fixed, broadband. It’s all about the household and the large elements of their spend.”
To help deliver the strategic vision, First Utility has partnered with Lognet, from Israel, a new entrant into the UK billing technology market.
“We surveyed SAP and Oracle energy products and they are segmented by vertical market. We want to be a multi-service player, so the strategic importance of these vendors is very very small,” he says of the constrained nature of the incumbent players. This experience has led to Wilkins no longer bringing tier one vendors into his strategy on the whole.
“I didn’t have to inject a pace of change. I had to inject a strategy to meet the needs of the business and executives. An integrated platform is our key technology and the strategy,” he says.
“I’m passionate about delivering a single platform, so a large part of our team is the integration team.
“We use the Google Apps platform because Google is good enough for the content we produce and very good for the collaboration. The key benefit is innovation week by week. That is the kind of innovation that you want. Users are ill equipped to manage the large upgrade cycle. With Google you get more comfortable with the rate of innovation.
“Google Apps feels right. When people join they need a bit of retraining as they fight the machine a bit. But then they start to collaborate more and there is no ‘attachment hell’,” he says of the cultural change away from tools like Microsoft Office.
“There is some Microsoft in the organisation – PowerPoint if people need it, and the finance department needs Excel. But for general purposes, Google is 95 per cent good enough and it is £23 per user, per year, and I get that constant stream of innovation.”
With just 1 per cent of the UK’s energy market, First Utility is nevertheless the next challenger to the Big Six energy firms. Innovation and flexibility are clearly important to the company in increasing its market share.
“We are savvy enough to take it step by step,” Wilkins says of the total home utilities service it is aiming towards.
First Utility has suffered from some harsh criticism for its customer care, as Wilkins admits. “We grew too fast and that created the service errors,” he says.
Agile has become a popular management method in IT, but to renew its strategy, First Utility has put the entire organisation onto the agile methodology.
“One of the things I’m glad I did was invest in the leadership team and that has cemented Agile into the business.
“In IT, without agile we wouldn’t have been able to put Lognet in over two years – it would have been a four or five-year project,” he says.
Wilkins was instrumental in First Utility hiring Keith Stirling as an advocate of agile. “We were looking for an evangelist as you have to be passionate about it and it pays to invest in the right person,” he explains.
Wilkins’ technology team is 20 per cent of the business headcount, which totals 320 staff – small potatoes when compared to the scale of some of the energy companies. Data analysts make up 10 per cent of the First Utility team and work closely with the CIO. Wilkins has redubbed his unit the ‘business technology group’ to emphasise the key role it plays in both supporting and driving strategy within First Utility.
“We put resources into the business, so we wanted to blur the lines of distinction,” he says, referring to the issue of IT and the rest of the business considering the function as separate. Wilkins’ leadership team consists of heads of data architecture, software development and technology operations, which again helps blur that distinction.
“We created an aligned group of these three parts so that it curates the road map for the business technology investments.
“The data architecture group is responsible for the data inputs and outputs and that gives me a closed loop of all the data that the business strategy is built on.
“The data team is 10 people headed by Niall Horley, who has deep experience in the energy industry and the complex data that drives process flows within it. It is really important to have that insight team. Their role is to take abstract queries from the executive team and answer them. They also have two large projects: to drive efficiency and customer acquisitions from our customer data.”
As with other CIOs following a data-intensive strategy, First Utility found the search for a data scientist hard.
Unsurprisingly given the strategy of the organisation, Wilkins reports to the CEO and is on the board.
“We are not just a delivery function. We innovate and the CIO is customer-facing,” he says.
And facing the customer is the very next thing on Wilkins’ innovation agenda. He is planning to increase the amount of data access First Utility customers take part in by releasing customer data back to customers.
“I want them to consume their energy details through an API in their own applications. We will have a labs page for developers to come and download and develop from. We are already using this API for our mobile system. Open data is a key element of our strategy. We have been an early adopter of the government’s Midata strategy and will go further in providing access to important data sets via a range of APIs,” he says.
Wilkins came to First Utility and the CIO role from a vendor career. He was at Sun when Oracle made its acquisition.
“I had a choice and decided to come back to the UK. I started as an interim with First Utility to help with some of the changes they were putting in and wrote a report for them on whether to go with open source or IBM. But the issue was not the technology, but the use case. They then asked me to implement my report and be on the board.
“I’d been supply-side and when I was there I would look over to the user side and think it would be nice to see the benefits of the technology I develop. There will come a time when I will want to build products again, but the energy market is really interesting.”
CV: Bill Wilkins
February 2010 – present: chief information officer, First Utility
July 2009 – December 2010: founding partner, Adjoovo
January 2006 – August 2009: senior director, enterprise service platform,
July 2003 – January 2006: director, field engineering (EMEA), SeeBeyond
2002–2003: technical director, Wishstream
2000–2002: director, Xoology
1997–2000: chief technology officer, PROIV
1995–1997: technical marketing, McDonnell Douglas Information Systems
1988–1995: technical consultant, Sun