Enterprise technology helps Ireland’s Bord Gáis capitalize on energy deregulation.
by Tony Kontzer, May 2011
Famed microbiologist Louis Pasteur once said that “chance favors only the prepared mind.” And while the management of Irish energy provider Bord Gáis may not have been thinking of the French scientist’s formula for luck when energy deregulation came to Ireland, it certainly was ready to match market opportunity with IT preparation.
Ireland’s electricity market opened to broad competition in 2005 after years of government control, allowing customers to change energy providers on demand. This introduced competitive pressure and created a whole new market. Bord Gáis was a major single-fuel gas player in this market, and as deregulation unfolded, the management of Bord Gáis initiated a complete IT overhaul to deliver better integration of customer service and billing for the company’s 650,000 gas customers and to equip the company to also supply electricity, offering a complete suite of energy services to Ireland’s 4.5 million residents and numerous industries.
Today, due to a cocktail of planning and opportunity that would make Pasteur proud, Bord Gáis serves more than 1 million gas and electricity customers. “We needed a new platform to allow us to launch into that market,” says Bord Gáis CIO Ashling Cunningham. “We launched a massive marketing campaign, leveraging social as well as traditional media,” explains Cunningham. “We called it ‘The Big Switch,’ and we embraced that kind of reinvention message within our technology organization. Today you wouldn’t recognize our core energy systems compared to what we were using a few years ago.”
Indeed, Bord Gáis’ multiyear IT transformation, based on Oracle technology, allowed the power supplier’s business leaders to improve operational efficiencies for the existing gas business, comply with new regulatory mandates, and provide excellent customer service for 425,000 new residential electricity customers—even as the energy market made its dramatic shifts from public to private ownership. These were all major developments that Bord Gáis’ legacy systems could not have sustained.
“It was high-wire stuff,” says David Bunworth, who as managing director of Bord Gáis’ energy business oversaw the business side of the billing systems transformation project before retiring last December. “If we had switched without going on the Oracle system,” Bunworth adds, “I think the old system would’ve blown up.”
Deregulation Breeds Complexity
The path to opening up Ireland’s energy market can be traced to a directive from the European Union in the 1990s that Ireland end the monopoly of the state-run electricity supplier. In 1999, Ireland formed the Commission for Energy Regulation to oversee this process, and six years later the residential electricity market opened to competition, with new competitors free to set their own prices while the incumbent supplier’s prices would be set by the commission. That advantage ceased in April 2011 when the commission released the price controls and allowed all market players to start setting their own electricity pricing, introducing new competitors to the market.
In other words, management at Bord Gáis, which embarked on its IT transformation path in large part to take advantage of the opening up of the electricity market, must now fend off the formerly state-run Electricity Supply Board (ESB) from whom Bord Gáis has been working so hard to lure customers. “There was no doubt this would be a challenge,” says Cunningham. “So within IT, one of our goals was to create systems that would really allow us to engage with our customers very differently. We know that someday very soon we are going to have to compete—not just on price but with our ability to deliver excellent, friendly, and pervasive services internally and externally to our customers.”
Additionally, Bord Gáis must comply with an EU directive to separate its networks business (which develops, operates, and maintains gas transmission and distribution networks) from the energy supply business to ensure fair competition. It has also had to meet a deregulation requirement to send and receive XML messages that alert networks and suppliers to actions such as meter readings and customers switching suppliers. Meanwhile, Bord Gáis, which also performs home service calls, must preserve its hold on gas customers in an increasingly competitive market.
Given all of this, it’s mission critical that the Bord Gáis executives be able to count on a modernized IT environment to meet new business requirements. Just a few years ago, Bord Gáis still relied on its “integrated utility system,” a legacy billing platform that was rife with limitations. The initial wave of deregulation allowed Bord Gáis to provide electricity for the first time, but only to a small number of large commercial customers, the scale of which didn’t necessitate a systems overhaul.
But that overhaul would become very necessary a few years later, as the company prepared to take advantage of the opening up of Ireland’s residential electricity market to competition—an opportunity too big to let pass. The green-screen legacy system was unable to handle billing of residential customers for both gas and electricity. Call center staff providing customer service via phone had to navigate multiple screens to complete the most-basic transactions—transactions that could take at least three minutes each to process. The complexity made training of new employees a drawn-out eight-week ordeal that often ended with trainees leaving before the process was complete, requiring the company to start the eight-week cycle again.
If Bord Gáis was going to effectively move into the consumer electricity market before it was crowded with other new players, management determined it had until 2008 to prepare a new IT system. In the fall of 2005, IT staff and the business started evaluating new options, selecting a utilities billing platform from SPL WorldGroup (acquired later that year by Oracle) to replace the legacy IT environment.
It was work that was long overdue.
“The old technology was an extremely slow and cumbersome system with a lot of patchwork quilt around it,” says Bunworth. “It had been going for 25 years, with fixes every three or four months to modify it. It served its purpose well, but really had gone well past its sell-by date.”
The Deployment Path
By the fall of 2006, Bord Gáis started the implementation. The Oracle Utilities customer care and billing solution was being installed, database schemes were being built to match Bord Gáis’ billing processes to the technology, and Bord Gáis’ development team was feverishly building customizations. The initial plan was to have the new Oracle system up and running by November 2007.
But by November 2007, it was becoming clear that the project was off to a false start. According to Bunworth, the company’s customer billing database simply wasn’t clean enough to ensure a good installation, and there were quality issues with the software.
Bord Gáis management made the difficult decision to halt the project completely and begin again with a rebuilt database. It would delay the project several months, yet it turned out to be exactly the right move (see “ When to Restart an IT Project”).
In February 2008, Bord Gáis executives signed off on a clean, stable billing system that was ready to be built upon. Over the following nine months, the project team focused its efforts on another 20 to 30 customizations that were needed—some still in design, others in development, and a handful in testing. Most of the development was completed by August 2008, with the remaining months devoted to acceptance processes.
The deployment of the Oracle Utilities customer care and billing solution went live in November 2008 with Bord Gáis’ residential gas customers, who were moved into the new system in batches until all 650,000 customers had been migrated.
Over the ensuing three months, the project team worked feverishly again to ensure that the system’s electricity billing functionality was ready to take on new customers. In February 2009, Bord Gáis entered the deregulated residential electricity market, marking the beginning of what the company states has been the most successful utility switching campaign in history.
It started small, as the company tested the system by establishing its 1,100 employees as the first electricity customers. With that success, Bord Gáis started marketing to existing gas customers, promoting a process that would allow them to switch from their existing electricity provider in a few clicks online.
The program was then extended to new customers. Cunningham says management expected to add 80,000 electricity customers in the first year but reached that number in less than six weeks. “From an IT perspective, we weren’t anticipating these numbers,” says Cunningham. “We had to ramp up really quickly, both in IT and in the business, to deal with the volumes of customers that we were taking on.”
All told, Bord Gáis has now accumulated some 425,000 residential electricity customers to date, more than adequately delivering the core capability on which all the hard work had been focused. “We exceeded our forecasts by a significant multiple and in doing so developed a system in which we have exceptional confidence,” says Cunningham. “Our system delivers business value right from the executive level to the individual call center team member.”
The final piece of the billing system migration came in September 2009, when Bord Gáis added its “complex” gas customers. These mostly commercial customers are large-scale users who are billed in 15-minute intervals, and as such the billing requirements related to their accounts are much more data intensive. The company has since started offering complex electricity service as well.
But it’s not just the ability to support dual utility billing that the Oracle system has brought to Bord Gáis. The company has realized a wide range of capabilities and benefits that wouldn’t have been possible no matter how much updating it might have done to its old legacy system.
One of the most critical of these capabilities has enabled Bord Gáis to comply with a regulatory requirement that utilities providers separate their energy supply businesses from the networks they use to transmit critical customer data such as new service orders, switches in providers, and meter readings. The idea is to prevent the competitive imbalance of having a provider that’s in control of the network competing against one that’s not. The information is now sent as XML messages, per regulations, and Bord Gáis is sending and receiving 50,000 such messages a day via the new billing system.
The company was also able to build in real-time messaging with the suppliers who manage home service visits. Those messages are delivered directly to mobile devices carried by the engineers who conduct the visits, which can be for such things as energy usage consultations and boiler servicing. Engineers then update the system after finishing a visit, and if the customer follows up via phone to provide feedback, the customer service rep has all the information on the service call.
“There is no way we would have been able to build that off the legacy system,” says Alexandra Gillies, who was the lead architect on the project for Oracle, and who later joined Bord Gáis as energy systems IT manager. “It was great to have a foundation in place that we could leverage.”
In terms of more-measurable benefits, the eight-week call center training cycle has been shortened to just three weeks, resulting in lower training costs and less turnover of call center staff. And many of those simple transactions that took three minutes or longer to complete are now done in less than a minute.
Customer satisfaction is on the rise, too, as gas and electricity users can now use a Web-based interface to do everything from starting service to accessing their bills and arranging a service call. And the company is readying what Bunworth says is Ireland’s first iPhone utilities app, which will make all of this information available to customers on the go.
Call center staff also are empowered with more information at their fingertips. The system is easily configurable, allowing staff to populate their screens with the kinds of information most customers are calling about—from what their balance is to when their next bill is due and when their meter was last read. With the old legacy system, there was only one standard configuration, and employees had to scroll through multiple DOS-like screens to get to such information. It was confounding for a call center staff that’s increasingly young and has grown up in the point-and-click internet era; the new system falls much more in these employees’ comfort zone.
“They were configuring their own screens within weeks,” says Tony Bridgeman, who as business transformation manager in Bord Gáis’ energy business answered directly to Bunworth and was the person charged with delivering the new billing system.
The Oracle platform also has enabled Bord Gáis to start delving into customer segmentation for the first time. The old legacy system provided almost no insight into customers, preventing the company from analyzing its interactions with customers based on their relative value. A customer that spent €20,000 a year was treated no differently than one who spent €4,000. Now, the company can offer customers tailored services and rewards.
The company plans to build on its newfound customer relationship management (CRM) foundation by bolstering the system to take its relationship with customers to another level. Last year, Bunworth and Bridgeman attended the Oracle OpenWorld conference and were impressed by new functionality that’s likely to spur Bord Gáis to upgrade the system in another 12 to 18 months so they can take advantage of new customer-facing capabilities. As Bunworth notes, Bord Gáis is essentially a billing company, and utility bills aren’t exactly tools for forging bonds with customers. But new Web-based features soon to be introduced will enable the company to leverage its emerging online interface to do exactly that.
“It’s about getting them to be able to manage their energy and to interact with them more than to say, ‘You owe us €2,147.37,’” Bunworth says. “It’s about the whole management of that relationship with the customer. What we now know we have is an accurate on-time billing system, but it will develop into a more CRM-based one.”
CEO John Mullins, to whom Cunningham reports, says such insight is critical if Bord Gáis is to maintain its hold on electricity customers and remain competitive for the long term, especially now that the ESB is free to set its own prices.
“I’d like to understand why Mrs. Smith in Dublin or Mrs. Jones in Galway doesn’t want to stay with us,” he says. “I can only do that in the context of transactions on the billing site. I need intelligence. I need a system to effectively tell me a lot more about my customer.”
What’s more, Mullins wants to be able to tap that insight to reach out to customers in new and innovative ways.
Future success in the utility market won’t be achieved simply through efficient energy service and billing. Utilities like Bord Gáis are also preparing for an onslaught of customer data about energy use, sharing that data with customers via the internet and mobile devices, and billing in smaller-than-ever increments.
With Bord Gáis moving beyond a decades-old legacy system, management is now in a position to deliver next-generation service that can compete for more-informed, and thus more-demanding, customers.
The years-long effort to update its billing and customer care platform to a modern, Web-friendly system has done more than allow Bord Gáis to capitalize on a deregulated residential electricity market. Managers are providing modern products and services, including smart meters, remote energy management, and interval billing.
Bord Gáis’ experiments with smart meters have been limited to fewer than 20,000 of its 1 million customers, but feedback suggests potential for a wide acceptance of the new technology. The company has run two pilots—one for residential gas customers and a smaller one for its fast-growing roster of residential electricity customers. With the new billing system in place, the company is already capable of calling data from and sending it to smart meters with pinpoint accuracy, and that’s allowing it to display energy usage data in new ways using the internet.
“The feedback has been very positive,” says Cunningham. “People love the graphics, and they love being able to see the day-by-day consumption and where the demand is during the day.”
Meanwhile, Bord Gáis is charging steadily ahead in an effort to provide interval billing and remote energy management. Cunningham says Bord Gáis’ new billing system is fully capable of billing residential customers’ energy usage in 15- or 30-minute increments, much like the company has been doing for complex commercial customers—thus allowing for more-precise charges and more-granular use of energy. It’s an approach to consumption that’s increasingly of interest to customers and is expected to become common practice over the next several years.
Additionally, Bunworth says a prototype product that enables remote management of energy resources—for instance, being able to adjust your home’s heating while away on vacation—should be ready for use within the next year.
With so many unrealized benefits on the horizon for Bord Gáis, that Pasteur quote needs an update if it’s still to apply: “Chance favors only the prepared—and visionary—mind.”
Customers: Approximately 1.1 million (650,000 gas and 425,000 electricity)
Revenue: €1.3 billion in 2009
Oracle products: Oracle Utilities customer care and billing solution; Oracle E-Business Suite, including Oracle iProcurement and Oracle Time and Labor; Oracle Hyperion Financial Management; Oracle User Productivity Kit; Oracle WebLogic Suite; Oracle SOA Suite for Oracle Middleware for Oracle Applications; Oracle Discoverer 11g; Oracle Database 10g