HOW ENERGY PROVIDERS WILL SUCCESSFULLY GROW BEYOND THE "TRADITIONAL" BUSINESS MODEL - IDC #EUR149042622 - Oracle
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HOW ENERGY PROVIDERS WILL
SUCCESSFULLY GROW BEYOND THE
"TRADITIONAL" BUSINESS MODEL
Author:
Gaia Gallotti
April 2022
An IDC Vendor Spotlight sponsored by Oracle
IDC #EUR149042622
How Energy Providers Will Successfully Grow
Beyond the "Traditional" Business Model
Energy-Related Products and Services Market Is the Future
Globally, utilities are shifting from their traditional
commodity business to the "beyond commodity" business, AT A GLANCE
aiming to derive more value from products and services
KEY STATS
beyond the traditional commodity.
» 85% of utilities aim to derive more than
According to a recent IDC survey carried out for Oracle, 10% of gross margin from "beyond
commodity" business in the next three
revenue growth — mainly through an increase in cross-sell years.
and upsell — is the number 1 strategic priority for utilities » 35% of utilities plan to achieve 20% of
across regions (see Key Stats). gross margin in the next three years.
» By 2031, Gen Z and millennials will make
This is especially true among younger generations. In an up most of the consumer population
Oracle Energy Consumer Survey conducted in 2021, 60% of globally (60%) — a significant opportunity
for energy suppliers.
millennials indicated that having a wide choice of products
and services from their energy supplier was important to WHAT'S IMPORTANT
them (versus 50% of all age groups). 47% of Gen Zs To achieve these goals, energy suppliers will
need to:
indicate they would turn to their energy supplier to
» Prioritize customer engagement
purchase solar panels and are twice as likely to invest in » Unify customer operations
renewables than their older generations. » Embed flexibility
This is a tremendous opportunity for utilities, as by 2031,
Gen Zs and millennials will make up the majority of the consumer population globally (60%).
As the market for energy-related products and services accelerates, so will the respective
competition. Competition is ramping up: Within the industry, suppliers are emerging selling
electricity at cost, electric vehicle and clean energy companies are entering the energy supply
business, and oil and gas giants are refocusing their strategies around electrification of transport
and heat.
How Utilities Can Step Up for Success
Incumbent energy suppliers around the world that want to tap into this value must evolve from
their traditional meter-to-cash business to a broader lead-to-cash process where the underlying
product can be anything from energy to connected appliances, photovoltaics, emobility,
appliance maintenance services, or even home security systems.
To transform into multiproduct and multiservice organizations, energy suppliers must:
• Embed customer engagement into the CX platform
• Unify customer service and sales
• Embrace flexibility
How Energy Providers Will Successfully Grow Beyond the "Traditional" Business Model
Drive New Revenue Streams, and Much More, with Convenient and Personalized Customer
Engagement
Customer engagement offers myriad benefits for energy suppliers beyond driving new revenue
streams, including improving customer satisfaction and net promoter scores (NPS), lowering
customer effort scores (CES), enhancing the overall customer lifetime value, and lowering the
cost to serve.
Until now though investments in customer engagement solutions have been made sporadically
and in a later phase of the overall customer experience transformation journey. While customer
experience has been on energy suppliers' agendas for several years, it was only in a recent IDC
Energy Insights survey conducted across European energy suppliers that investments in digital
customer engagement solutions ramped up (source: IDC #US47793421, September 2021).
Additionally, IDC Energy Insights predicts that globally "80% of energy suppliers will deploy digital
customer engagement solutions by 2026 to cater to the appetites of millennials and Gen Z, which
will be the majority of utilities' customer base" (source: IDC #US47075621, October 2021).
Digital customer engagement solutions have evolved significantly in the past five years, and
solutions now offer a growing portfolio of functionalities that support end-to-end omni-channel
customer engagement. Leveraging behavioral science and artificial intelligence, personalization
is surfaced to customers through behavioral nudges and intuitive user interfaces designed to
drive action and improved outcomes for customers and energy providers.
Embedding customer engagement into the CX platform is vital for energy suppliers that aim to
tap into new revenue streams coming from energy-related products and services and ward off
competition. It will also unleash significant benefits such as lower churn, improved customer
satisfaction, and improved customer effort scores.
Turn Customer Service into a Sales Opportunity by Streamlining Customer Operations
Processes and Consolidating Customer Data
When it comes to new energy products and services, energy suppliers start out with a significant
advantage as they already have abundant data on energy consumption. Energy suppliers should
make this data work for them, extracting key insights to offer customers highly personalized
recommendations at the right time, for the right price, and on the right channel. This cannot
efficiently happen without eliminating data silos and disparate customer systems and
harmonizing processes.
Having a single view of the customer is easier said than done. It requires a single source of truth
regardless of the type of business (commodity or beyond commodity), the communication
channels leveraged, and the property, and it must be able to cover the entire lifetime of all types
of customers (including non-domestic, landlords, and tenants). This requires a customer data
platform and 360-degree data approach that supports the complexity of the energy commodity
business and the flexibility and insights to fuel sales and marketing efforts. Energy suppliers
should bring the front and back offices together to turn each interaction into a sales opportunity.
IDC #EUR149042622 Page | 2
How Energy Providers Will Successfully Grow Beyond the "Traditional" Business Model
It is also fundamental for energy suppliers to keep their contact centers and account teams in
mind when implementing a single view of the customer. Giving agents full visibility into customer
data and customer journeys across channels should be considered table stakes. But insights into
how to drive the most value for, and from, the customer is a game changer. Agents should be
able to leverage insights for next best action recommendations quickly to resolve any issues the
customer is having (lowering the cost to serve), but also leverage energy insights to pivot the
conversation to make highly personalized recommendations on value-added energy products
and services (increasing the overall customer lifetime value).
This can only be achieved by harmonizing customer operations processes and orchestrating
customer data management across the company, which an increasing number of energy
suppliers are doing by investing in a customer data platform (CDP) — 45% of utilities have
invested in one of these in the past two years, according to a recent IDC survey — and investing
in tightening front and back offices (24% say they have already done so and a further 26% say
they are investing in an integrated platform). In fact, loosely connected front and back offices are
already creating issues for energy suppliers around the world, including issues with revenue
operations, customer service, and escalating IT costs (see Figure 1).
FIGURE 1
Integrated Platform Versus Composable Application Landscape
Q. Which of the following statements best describes your organization's front-office (e.g., CX, CRM, agent desktop) and back-
office (e.g., billing, payments, metering) systems?
n = 201 utilities
Source: IDC, Utilities Customer Experience Management Survey, carried out for Oracle, February 2022
Embracing Flexibility to Tackle Growing Complexities and Containing the Cost to Serve
The energy supply industry is facing significant disruption as its customer base evolves, its
portfolio of offerings diversifies, and competition grows. Energy suppliers' livelihoods depend on
their ability to adapt to these market changes. This requires companies to become flexible.
Flexibility can be increased by unifying the front and back offices, as customer-facing
IDC #EUR149042622 Page | 3
How Energy Providers Will Successfully Grow Beyond the "Traditional" Business Model
applications, such as customer engagement solutions, are fully integrated with the customer
experience management (CXM) solution.
Flexibility comes in many forms, but to succeed now and in the future, energy suppliers will need
to be flexible with communication channels, product/service offerings, and fulfillment. Energy
suppliers need to expand their more traditional communication channels, such as email, to
include channels that the younger but growing part of the customer base is eager to leverage,
namely SMS, mobile apps, social media, and instant messaging platforms. It is imperative for
digital channels to be contemplated and designed across the entire customer journey; social
media platforms, for instance, are not just for marketing activities but also for customer service
support.
Energy suppliers must also be flexible when it comes to the new energy products and services
they offer or plan to offer. They must adopt the tools, set up the processes, and attract the talent
to cover product ideation, design time, time to market, marketing activities, sales activities,
bundling and quoting of new products and services, and customer service support (across
different channels). It's not enough to have a great product: an offer needs to be timely;
competitively priced; supported by effective marketing, sales, and customer support; and reach
customers on their preferred channels. The pricing of the product/bundle needs to be attractive
to customers, but also be profitable. This requires energy suppliers to tap into more data than
they currently leverage — access to data is identified as one of the top 3 gaps when it comes to
new products and services by energy suppliers (source: IDC, Utilities Customer Experience
Management Survey, February 2022). It also requires flexibility across the entire sales and
marketing journey, and can be significantly improved by closely tying together the front and back
offices.
For energy suppliers to succeed in the "beyond commodity" business arena, they must also
become flexible in fulfillment and flexible in their ecosystem of partners and suppliers, especially
with the recent global supply chain disruptions. This is crucial, not only to mitigate any negative
effects that fulfillment issues might have on customer satisfaction, but also to quickly act on the
impacted workforce (both field agents and customer service agents). Awareness and
transparency on the customer-facing side with flexibility in fulfillment will only be possible with
tight integration of the front and back offices.
Considering Oracle
Oracle can be considered a holistic vendor in the energy and utility industries, with industry-
specific solutions covering all subindustries and most segments of the value chain, continuously
investing in new offerings and innovations. The company has been operating for over four
decades and serves energy customers around the globe.
It offers industry-specific billing and customer operations as well as a suite of industry-specific
service, sales, marketing, and customer engagement solutions through the Oracle CX for Utilities
platform.
IDC #EUR149042622 Page | 4How Energy Providers Will Successfully Grow Beyond the "Traditional" Business Model
• It offers a complete suite of solutions built to support the entire customer life cycle,
enabling omni-channel experiences for both customers and employees by integrating
customer care, digital self-service, and customer engagement. This industry-specific
platform includes CX capabilities for ecommerce, marketing, sales, and a configure, price,
quote (CPQ) engine.
• Oracle's customer platform is built to address energy industry use cases including alerts,
next best actions, energy management, efficiency, peak management, rates, and device
automation — offering over 20 engagement products, such as AMI Customer Education
Reports, Behavioral Load Shaping, Distributed Energy Resources Customer Engagement,
Peak Management: Behavioral Demand Response and Peak Time Rebates, and Points and
Rewards.
Oracle offers industry-specific best-of-breed applications enabling a lower total cost of
ownership for customer operations, customer experience, and customer engagement that are
pre-integrated and modular, ideal for incremental transitions and facilitating quick wins (see IDC
MarketScape: Worldwide Digital Customer Engagement Solutions for Utilities 2021 Vendor Assessment
[IDC #US46149620, June 2021] and IDC MarketScape: Worldwide Customer Experience Management
Solutions for Utilities 2021 Vendor Assessment [IDC #US46154220, June 2021]).
The Oracle CX for Utilities suite is enhanced by Oracle's data-driven and AI-powered intelligence
which drives Oracle's chatbot platform (known as Oracle Digital Assistant), providing
conversational access via text or speech to detect the user's intent and respond. This intelligence
can be activated through online and mobile channels to support self-service and aid marketing,
sales, customer service, field technician, and billing analyst roles. In parallel, Oracle solutions are
supported by Oracle Unity (Customer Data Platform), which is enhanced by an industry-specific
data model.
Challenges
Competition has been ramping up, particularly in the digital customer engagement solution
space. There has been significant consolidation in the market, including Oracle partners being
acquired by competitors. It is imperative that the company increases its focus on quick wins to
provide investing energy suppliers with fast return on investment.
Despite the pre-integrated nature of Oracle's front- and back-office capabilities, the
implementation of Oracle solutions often requires system integrator support, which may deter
budget-constrained energy suppliers.
Conclusion
By 2031 Gen Z and millennials will make up most of the consumer population globally (60%).
Accepting this, companies must prioritize what is important to these customers, namely
convenient, personalized, and value-adding relationships with their energy suppliers.
The combination of an evolving customer base and an evolving decarbonizing industry creates
the perfect environment for companies to fail or thrive (think Blockbuster, think Netflix).
IDC #EUR149042622 Page | 5How Energy Providers Will Successfully Grow Beyond the "Traditional" Business Model
The opportunities to derive value from energy-related products and services are immense, but
incumbent energy suppliers need to address some critical issues to make these new revenue
streams a reality:
• First is a focus on agility and flexibility at speed in all areas of customer interactions and
products and services.
• Second is removing the legacy silos of customer engagement and customer experience.
As the industry expands beyond the energy commodity, interactions with the diversifying
segments of customers will become more nuanced than the traditional definitions of
engagement and experience.
• Finally, to build a sustainable and profitable business, energy companies must streamline
their operations, customer journeys, and data across the enterprise by unifying
marketing, sales, and service.
Oracle's four-decade focus on the energy industry — with its comprehensive road map for
industry-specific CX product portfolios and investments in unifying siloed front- and back-office
data — enables the company to offer energy suppliers an opportunity for success in the "beyond
commodity" business.
Definitions
• Customer experience management software: IDC Energy Insights defines CXM
software as the suite of applications that manage and optimize end-to-end omni-channel
customer experience, from the moment a consumer becomes aware of the product or
service offered by the utility, to the point when they decide to buy, and to the process of
managing the customer's journey to improve satisfaction, loyalty, and advocacy. It offers
functionality supporting omni-channel marketing, sales, customer service, customer
engagement and commerce, campaign automation, quotation management, 360-degree
customer view, self-service, demand response management, commerce platforms, and CX
analytics for both B2B and B2C.
• Digital customer engagement solutions: IDC Energy Insights defines digital customer
engagement solutions for utilities as software and analytics enabling utilities to have rich,
personalized digital interactions with their customers designed to better inform them,
generate specific behavior around commodity usage, and generate value with new
products and services. This includes interactions falling into the five main categories of
descriptive, diagnostic, predictive, prescriptive, and ecosystem engagement, from usage
analytics and similar-home comparison, to leak detection, high bill alerts, personalized
saving advice, behavioral demand response, and behind-the-meter optimization.
IDC #EUR149042622 Page | 6How Energy Providers Will Successfully Grow Beyond the "Traditional" Business Model
MESSAGE FROM THE SPONSOR
Oracle Energy and Water: Powering the Future of CX
Establishing a deeper relationship with customers is not only key to successfully moving to a beyond-the-
commodity business model — it will also play a vital role in shaping the future of our energy and water resources.
That's why we created a connected suite of products to improve customer engagement in a simple and intuitive
way.
Oracle CX for Utilities provides the industry's only comprehensive set of applications to manage the entire
customer life cycle from product ideation to marketing to sales and service. The platform is supported by proven
operational technology purpose built for utilities including billing, rating, payment processing, collections,
advanced metering, and energy efficiency.
Oracle Energy and Water helps utilities improve engagement and deliver valuable experiences at every customer
touchpoint. It is the only vendor named as a leader by IDC in both recent MarketScapes for customer experience
management and customer engagement solutions.
About the Analyst
Gaia Gallotti, Associate Research Director, Europe
Gaia Gallotti leads IDC's Energy Insights: Worldwide Utilities Customer Experience
Strategies advisory service, designed to help utilities and energy retailers servicing
customers in competitive and regulated markets at the worldwide level (including
electricity, gas, and water). The service provides them with guidance to make the right IT
investments and meet corporate objectives around customer satisfaction, reduction of
cost to serve, and innovation. She joined IDC Energy Insights in 2007, after joining IDC in
2006, and has become a recognized independent industry analyst across Europe in the
utilities domain. Her area of expertise includes business and IT issues relevant to utilities,
as well as digital transformation, customer experience, customer engagement, customer
and energy analytics, and customer operations.
IDC #EUR149042622 Page | 7About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. IDC UK 5th Floor, Ealing Cross, 85 Uxbridge Road London W5 5TH, United Kingdom 44.208.987.7100 Twitter: @IDC idc-community.com www.uk.idc.com Global Headquarters 140 Kendrick Street, Building B Needham, MA 02494 +1.508.872.8200 www.idc.com Copyright and Restrictions Any IDC information or reference to IDC that is to be used in advertising, press releases, or promotional materials requires prior written approval from IDC. For permission requests contact the Custom Solutions information line at 508-988-7610 or permissions@idc.com. Translation and/or localization of this document require an additional license from IDC. For more information on IDC visit www.idc.com. For more information on IDC Custom Solutions, visit http://www.idc.com/prodserv/custom_solutions/index.jsp. Copyright 2022 IDC. Reproduction is forbidden unless authorized. All rights reserved.
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