Partnerships can help utility firms drive long-term transformation

• 3 years ago (2021-01-04)
• Junior Isles

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By Craig Naylor-Smith , Managing Director, Parseq

UK utility firms continue to operate in a challenging environment.

Businesses have been under pressure to adapt to stiff market competition, higher rates of customer churn and the government’s ambitious net-zero targets. And, over the past nine months, they have faced into new headwinds posed by Covid-19.

On top of the day-to-day challenges of working in a highly regulated, highly competitive environment, the pandemic has heightened scrutiny from regulators, the media and the public when it comes to customer experience – particularly around support for vulnerable customers.

To remain ahead of the competition and continue to meet customer demands, it will be essential for utility firms – including those in the energy sector – to invest in their operations.

Here, transformation will be key for many. By rethinking and transforming inefficient business processes, businesses can develop stronger and more productive operations and free up funds to help them thrive in the year ahead.

The transformation agenda

Given this, it’s encouraging to see that transformation is already high on utility leaders’ agendas.

At Parseq, we recently surveyed more than 50 C-suite executives at some of the UK’s largest utility companies for our inaugural Big Business Efficiency Report to understand their plans for the next 12 months when it comes to transformation and efficiency.

Four in five (82 per cent) of those we spoke to are already planning to transform their business in the next year, and every executive is planning to make their business more efficient.

When it comes to transformation, leaders’ focus areas are diverse.

In the front office, sales (40 per cent), marketing (31 per cent) and customer experience (26 per cent) are executives’ top priorities. Meanwhile, in the back office, HR (31 per cent) and finance and administration (29 per cent) top the list.

To improve efficiency, more than a third of executives plan to outsource processes to a third party (35 per cent) in 2021, while a third (33 per cent) plan to digitise paper documentation.

A further third (31 per cent) will turn to learning & development for staff, introducing new workflow management software, improving governance and diversifying and rationalising supply chains.

When questioned on how they will use capital unlocked through efficiency gains in the coming year, almost half of leaders said they will improve customer experience (45 per cent) and more than a third will reinvest the capital in L&D for staff (37 per cent) and expansion within existing markets (37 per cent).

Energising progress

While it is clear that business transformation is already on the agenda for many utility executives, there are factors that could impede progress.

Executives in our survey pointed to a lack of time (31 per cent), regulation (29 per cent) and a reliance on legacy systems (27 per cent) as their biggest hurdles.

Our findings identified that many firms plan to use outsourcing partnerships in the year ahead, while 41 per cent have already turned to outsourcing partners since the UK first entered lockdown in March to make their businesses more efficient. However, just over a fifth (22 per cent) said a lack of awareness of available third-party support was holding them back.

Outsourcing partnerships can help firms tackle efficiency barriers like time and regulation and deliver significant cost savings, too. From our 40 years of experience at Parseq, we know that outsourcing can achieve permanent efficiency savings of at least 30 per cent.

But the benefits can extend far beyond evolutionary efficiency measures.

Through their insight, technology and experience, outsourcing partners can also play a central role in helping firms deliver long-term transformation in their operations.

As we look to the year ahead, utility firms that successfully manage to enhance their efficiency and transform their processes will be in a stronger position to adapt to whatever is to come.

Through transformation – and by making use of available third-party support – businesses can unlock the capital they need to bolster their resilience in a challenging, competitive, environment.