© 2013 IBM Corporation
Digital Front Office
Energy and Utilities Industry Point of View
Michael Valocchi
Global Industry L...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
The emergence of big data, soci...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
These digital forces reset cust...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
…and are fueling an explosion o...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
73% of
CEOs
are prioritizing in...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation5 25 September
Agenda
1.
Digital...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation6
25 September
2013
FORCES
IMPLI...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation7
25 September
2013
This new Dig...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation8
25 September
2013
The Energy a...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation9
25 September
2013
Capabilities...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation10
25 September
2013
Consumer
Ex...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
“A new era of computing is upon...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation12 25 September
Agenda
1.
Digita...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation13
25 September
2013
 Engage wi...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation14
25 September
2013
 Easy to u...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation15
25 September
2013
SolarCity p...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation16 25 September
Agenda
1.
Digita...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
Key Innovations
Watson Engageme...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation18 25 September
The roadmap is d...
© 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation19 25 September
IBM Contacts
Mic...
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T keynote 845_valoochi

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T keynote 845_valoochi

  1. 1. © 2013 IBM Corporation Digital Front Office Energy and Utilities Industry Point of View Michael Valocchi Global Industry Leader, IBM Energy and Utilities Industry September 2013
  2. 2. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation The emergence of big data, social, mobile, cloud and analytics are fundamentally changing how we live, work and interact Pervasive connectivity Big data Social Analytics Mobile Cloud Digital transformation forces 67% of global consumers want to use mobile devices to check out 18% of Africa’s GDP is expected to be handled through mobile money transfers by 2015 1 out of every 7 minutes spent online is spent on Facebook 40% of people socialize more online than they do face-to-face 80% of new apps will be distributed or deployed via the cloud 1/3 of consumer data will be stored in the cloud by 2016
  3. 3. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation These digital forces reset customers’ expectations, requiring enterprises to rethink the end-to-end customer experience… Instant access to information, products and services Increasingly, customers expect… To be engaged as individuals, on their own terms—anytime and anywhere Seamless experiences that match product and service quality Trusted, mutually beneficial relationships that go beyond one-time transactions Transparency from the companies they interact with
  4. 4. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation …and are fueling an explosion of data—a new economic asset that has become the basis of significant opportunity We are here Sensors and Devices Social Media VoIP Enterprise Data 2013 In just two days we now generate as much data as was generated in total through 2003 80% of all data is unstructured and growing 15 times the rate of structured data Over 1 billion tweets are sent every 3 days 5 million trade events are clocked every day 2015 Percentage of uncertain data
  5. 5. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation 73% of CEOs are prioritizing investments in customer insights 82% of CMOs Plan to increase the use of social media 74% of CIOs say mobile solutions are part of their vision for increasing competitiveness 70% of COOs Identify supply chain visibility as the top challenge in delivering on their agendas As a result, leaders are redefining their agendas and reprioritizing investments focused on reshaping the “Front Office”
  6. 6. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation5 25 September Agenda 1. Digital front office in the Energy and Utilities industry 2. New market entrant innovation examples 3. IBM’s approach
  7. 7. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation6 25 September 2013 FORCES IMPLICATIONS IN 10 YRS Challenges and Opportunities The traditional utility business model is upended; new business models and alliances will be required to sustain revenue growth Consumers Consumers want the same high level of service from energy providers as from other consumer-oriented companies Threats to Revenue Energy efficiency, slower economic growth, and new entrants negatively affect historical patterns of demand Information Utilities now have to manage a huge volume, veracity, velocity and variety of data from both external and internal sources Data and analytics move from a back-office competency to a critical profit enabler, requiring innovation in the front office “Innovate, partner, or die” becomes an unspoken mandate as new entrants reach out directly to consumers and bypass energy provider Key forces are driving the need for new customer interactions, analytics and innovation
  8. 8. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation7 25 September 2013 This new Digital Front Office delivers compelling customer experiences that create new pathways for revenue growth …the sum of activities, people, platforms, and processes that interact with the consumer(s) across all touchpoints and that are transitioning from analog to digital …reimagining everything about the way people connect, transact and engage with companies, institutions and governments—and how they create mutual value The Digital Front Office is… What is the Digital Front Office? A digital front office should ….  Engage, listen and nurture open relationships with energy consumers  Extract and apply actionable insights to interactions and processes – determine the next best action for consumers  Embrace collaboration and partnerships within the energy ecosystem to innovate products, services and industry business models themselves  Be integrated internally and externally, across operational components and functions and into the daily life of consumers
  9. 9. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation8 25 September 2013 The Energy and Utilities Industry in 2023… Smart appliances become ubiquitous Electric vehicles are affordable, and utility-sponsored purchasing programs are available Home energy management systems are inexpensive and prevalent Consumer-owned generation is affordable for the average household Microgrids emerge where existing infrastructure is insufficient Consumers can easily sell surplus energy to the grid or contract with a third party Battery technology will become increasingly available Regulatory environment allows new business opportunities for energy providers Digital Future
  10. 10. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation9 25 September 2013 Capabilities and Gaps Recommendations Description The digital front office will require energy providers to... Personalize engagement to extend brand reach beyond the meter  Understand your customers and speak to them in their own words  Use social media analytics as a source of innovative inspiration and positive brand reputation  Improve customer responsiveness through automation Create a core competency in data management and analytics  Be first to market by seeking explosive growth in analytics capabilities  Deeply understand the nature of the data you already have and will have and use this to create breakthrough innovation for new products and services  Invest in people and technology to harness the power of analytics Evaluate threats to core revenue; plan defensive and growth-oriented business model innovation strategies  Find the quickest path to innovative business models whether it be  in-house innovation, partnerships, or co-creation vehicles  Re-imagine partnership beyond the obvious; unfamiliar combinations will be successful at meeting real consumer needs  Use recognition of the threats from new competitors to engage in constructive dialogue on regulatory change
  11. 11. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation10 25 September 2013 Consumer Experience Analytical Insights This digital front office transformation yields essential business benefits ▲Diversify revenue base as load growth flattens ▲Increased overall customer revenue and profitability ▲Increased EBIT and ROE through higher customer satisfaction levels ▲Improved customer satisfaction ▲Reduced regulatory or legal impediments ▲Find target segments for attractive products/services ▲Optimize partnership revenue and profits Operational Flexibility ▼Use attractive, relevant product/service tie-ins to create switching costs in competitive regions and improve retention ▼Predict and prevent outages ▼Reduced marketing spend through optimized marketing performance Create transformational “beyond the meter” relationships with consumers Use data to improve system health, consumer segmentation, and partner ecosystem benefits Benefits ▼Lower restoration, repair, and liability costs from severe events ▼Decreased churn from dissatisfied customers ▼Avoidance of penalties from governments/localities Instill confidence and trust that the electricity system can adapt to a variety of threats ▲Minimize revenue losses due to long outages ▲Foster image of “reliable and trusted provider” that carries over to other products/services BenefitsOpportunities Impact on:
  12. 12. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation “A new era of computing is upon us … it is defined by computing moving to the front office." - Ginni Rometty, Chairman and chief executive officer of IBM; Investor Day, May 9, 2012 The convergence of all of this change is transforming the front office—the systems, processes and people that touch the customer. Back office Channels Empowered consumer Physical Web Social Mobile Call Center Broadcast Enterprise resource planning (ERP) systems Legacy applications Data warehouses Front office digitization Increase business partner and supplier visibility Optimize supply and demand to changing consumer needs Create best- in-class marketing capabilities Engage based on deeper, more actionable customer insights Innovate business models, products and services Define a unified cross- channel vision for customer engagement Capabilities
  13. 13. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation12 25 September Agenda 1. Digital front office in the Energy and Utilities industry 2. New market entrant innovation examples 3. IBM’s approach
  14. 14. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation13 25 September 2013  Engage with customers in a simple and fun way  Use gamification to inspire customer participation in utility company programs, e.g. Biggest Energy Saver  Enable utilities to play a leading role in the customer relationship SimpleEnergy helps utilities engage with customers through gamification  Competitive landscape is strong and barriers to entry low  Market is immature, fragmented and slow moving  A firm value proposition has not yet been established  Customer concerns about privacy still exist  Fewer than 5% of households today take advantage of energy efficiency programs Energy providers could play a strong role in this business model if they are able to white label customer communications Sources: utilities.simpleenergy.com, http://biggestenergysaver.com/ Digitization:Challenges: Results: Simple Energy’s Customer Engagement Platform supports utility smart grid, energy efficiency and demand response programs by making them social, fun, and simple. DFO Leaders
  15. 15. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation14 25 September 2013  Easy to use device interface for thermostat and user application  User trains the device to adjust to their needs and preferences  Active online community for heralding energy savings builds consumer preference Nest offers a smart thermostat for promoting energy efficiency and enabling usage comparison with friends and family  Market is immature, fragmented and slow moving  Many large players have exited market due to poor product sales – e.g. Google, Microsoft  Direct to consumer business model does not involve utility  A winning entry point and value proposition is not defined; companies that were not competing before are now competitors, e.g. OPower Sources: www.nest.com, http://gigaom.com/2013/05/08/how-nest-and-opower-quietly-morphed-into-competitors Energy providers could benefit from collaborative business partnerships to keep them at the center of the energy ecosystem Digitization:Challenges: Results: Nest produces a learning thermostat/application that manages energy usage based on homeowner behavior. The company also offers energy service providers demand response and energy efficiency services. It purchased the startup, MyEnergy that allows consumers to compare their usage with friends and family. DFO Leaders
  16. 16. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation15 25 September 2013 SolarCity provides a comprehensive platform for low cost energy generation  Fragmented and competitive solar market with a variety of customer focused business models; no winning value proposition yet defined  Supply still outweighs demand with the global solar market growing at 14%; some countries/ states/ regions are growing at much faster rates of demand – NA growing at 70+% Sources: www.solarcity.com, Solar Voltaic Industry – Columbia University, Investopedia This company’s business model makes them a direct competitor with traditional energy providers.  Provides solar energy with free installation and charge for usage just like a utility  Supplies customer monitoring system through SolarGuard application so customers can monitor their system, energy consumption and solar system output  Guarantees system will produce electricity for 20 years and that the prices are less than local utility Digitization:Challenges: Results: Founded in 2006, SolarCity is the leading solar provider in the United States providing full- service solar system design, financing, installation and monitoring. Customers include homeowners, schools, government and corporate clients including eBay, Intel and Wal-Mart. DFO Leaders
  17. 17. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation16 25 September Agenda 1. Digital front office in the Energy and Utilities industry 2. Innovation and leading examples 3. IBM’s approach 2. New market entrant innovation examples
  18. 18. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation Key Innovations Watson Engagement Advisor Next Best Action Social Data Accelerator  Provides intelligent but automated channels for customer support which increases customer satisfaction and lowers cost to serve by empowering customers to take action in an intuitive, fast, accurate, and consistent fashion  Enables analysis of big, unstructured data from social media sources and integration with enterprise information  Deliver the most appropriate action at the right time across channels using real-time analytics to anticipate customer needs Smarter Marketing Smarter Analytics Social businessSmarter Commerce™ Leveraging Big Data and Analytics
  19. 19. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation18 25 September The roadmap is different for each client – you must first understand your customers’ journey to identify which capabilities to enable IBM’s Approach 1 2 3 Envision Evaluate Enable
  20. 20. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation19 25 September IBM Contacts Michael Valocchi Global Industry Leader, VP and Partner mvalocchi@us.ibm.com 610-212-9763 Global Energy and Utilities leader North America Chris Lilley Energy and Utilities Industry Leader, Partner chris.lilley@us.ibm.com 484-319-7511 EMEA Ricardo Klatovsky Vice President Ricardo.klatovsky@es.ibm.com +34-91 397 73 95 Asia Pacific Andrew Weekes GMU GBS Energy and Utilities Leader, Partner aweekes@au1.ibm.com +61-409070366 Regional Energy and Utilities Leaders Center of Competency Global Lead James Strapp Global CoC Leader, Partner IBM Energy and Utilities Industry jstrapp@us.ibm.com 415-478-3187 Global Contacts
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