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Architects of the As-a-Service EconomyTM

HfS Blueprint Report

Utilities BPO Excerpt for Accenture December 2015

Reetika Joshi Research Director, Operations & Analytics Strategies, HfS Research [email protected]

mailto:[email protected]

Proprietary │ © 2015 HfS Research Ltd. Excerpt for Accenture

TOPIC PAGE

Executive Summary 3

Key Market Dynamics 9

Research Methodology 22

Blueprint Grid 30

Service Provider Profile 34

Market Direction & Recommendations 36

About the Author 40

Table of Contents

Executive Summary


Introduction to the HfS 2015 Blueprint Report: Utilities BPO

The HfS 2015 Utilities BPO Blueprint is the first application of the HfS Blueprint methodology in the utilities BPO market. Along with traditional BPO services, this report also highlights the use of As-a-Service platforms and commercial models as well as robotic process automation (RPA) and analytics in service delivery.

Unlike other quadrants and matrices, the HfS Blueprint identifies relevant differentials between service providers across a number of facets under two main categories: innovation and execution.

The report focuses on core utilities BPO services such as meter-to-cash, high value services such as analytics, and horizontal business services support such as finance and accounting for this vertical.

HfS Blueprint Report ratings are dependent on a broad range of stakeholders with specific weightings based on 1,100+ crowd-sourced responses, including:

• Enterprise Service Buyers • Service Providers • Industry Influencers (sourcing advisors and management consultants) • HfS Sourcing Executive Council Members • HfS Research Analysts


Utilities BPO Value Chain BPO and Platform-Based Business Services for Utilities Services Buyers

Customer Service

• Customer acquisition to retention services

• Customer care - voice • Customer care - non-

voice • Customer care - social

media support

Meter-to-Cash

• Billing and collections • Debt collection • Field service operations • Smart metering

services • Exception management

Asset Management

• Consumption and billing verification analytics

• Utilities health and safety

• Geographical information services

• Remote management and reporting

Business Services

• Finance and accounting • Supply chain

management and procurement

• Human resources • Legal services • Marketing and sales • Document and print

ops

Analytics

• Marketing analytics • Customer analytics • Asset analytics • Supply chain decision

services • Service contract

analytics • Energy-trading risk

management

ENABLING TECHNOLOGIES

Digitization & Robotic Automation Analytics Mobility Social Media Cognitive Computing Artificial Intelligence

OPERATING MODELS, METHODOLOGIES AND PLATFORMS

Outsourcing Shared Services GBS COEs BPaaS/SaaS/IaaS Design Thinking

HfS Value Chain Definition: Value chain refers to the series of departments which carry out value-creating activities to design, produce, market, deliver, and support a company’s product or service. In this usage, we refer to the range of primary processes and support services that providers offer to their clients.

For this Blueprint, Utilities BPO contracts must encompass the management of at least one of the above value chain of services, with TCV >$1M. For the scope of this study, the term “utilities” describes a collection of specific services provided by public and private organizations and identifies the institutions that make up the industry. The products or services provided by the utilities industries include electrical energy, natural gas, water, and sanitation, broadly classified into Public-Owned and Investor-Owned segments.


Key Highlights: State of the Utilities BPO Market “Old industry, old habits” challenged by disruption and creating a need for As-a-Service: HfS sees utilities services buyers starting to realize that they need to fundamentally rethink their business models and operations, spurred by industry disruption.

Being asset-laden and capex-intensive traditionally makes it an extremely challenging environment for driving internal change. It will thus take this vertical longer to write off legacy and execute on strategic priorities that are being set now. Service providers have been instrumental in writing off legacy from a technology and consulting perspective. They have seized the opportunity to help utilities gain agility and speed to market on new product development and deriving value from smart meter and advanced metering infrastructure deployments. BPO operations are now a derivative opportunity for modernization after system upgrades. In some cases, service providers like TCS and Accenture that have a long history of working with utilities have taken big leaps in bringing in automation and analytics in meter-to-cash, asset management and horizontal processes. Others that are domain experts in customer experience are taking utilities along the journey to customer centricity similar to other retail verticals. We are still hearing about interest in traditional BPO service delivery built on labor arbitrage and process consolidation, as a section of the utilities market is still new to outsourcing and risk-averse. However, we expect this model to change in the medium to long term as As-a-Service components make their way into the mainstream. Overall, we see a growing appetite for change with utilities services buyers, but execution will be entrusted gradually to domain/geographic experts.


Key Highlights: State of the Utilities BPO Market

Winner’s Circle Rewards Innovators: The HfS Winner’s Circle For Utilities BPO features service providers that have invested heavily in vertical-specific innovation in the last couple years. These include:

• Accenture — demonstrating an advanced

capability for utilities As-a-Service spanning platforms, automation and analytics

• EXL — a partner willing to invest and evolve with utilities clients towards Smart operations

• TCS — one of the largest meter-to-cash service providers pushing RPA to the forefront of utilities operations

The High Performers in this Blueprint — Capgemini, WNS and Vertex — all have over a decade of experience in running BPO operations for utilities clients.

Eight Ideals of the As-a-Service Economy: use of operating models, enabling technologies and talent to drive business outcomes through sourcing. The focus is on what matters to the end consumer. HfS uses the word “economy” to emphasize that the next phase of sourcing is a new way of engaging and managing resources to deliver services. The 8 Ideals are: 1. Writing Off Legacy 2. Design Thinking 3. Brokers of Capability 4. Intelligent Automation 5. Collaborative Engagement 6. Accessible & Actionable Data 7. Holistic Security 8. Plug & Play Business Services

http://www.hfsresearch.com/The%20Ten%20Key%20Tenets%20of%20the%20Emerging%20As-a-Service%20Economy






Key Highlights: State of the Utilities BPO Market Capgemini, WNS and Vertex: These High Performers Need More Consistency In Weaving In As-a-

Service Components.

They have varying concentrations of geographical experience, across continental Europe, UK and the US respectively.

HfS observed some inconsistencies with the way that utilities clients are perceiving and engaging these service providers. Some are being exposed to great examples of analytics-enabled decision making, social engagement strategies and automation opportunities, while others have not been approached.

Capgemini and WNS will need to work toward a greater maturity of their verticalized utilities practices to develop thought leadership in BPO that can be accessed by more clients.

All three of the High Performers will also need to invest significantly to evolve their brand as going beyond just traditional meter-to-cash or customer care, towards becoming utilities As-a-Service delivery providers with platforms, analytics and automation capabilities to match.

We see the potential for differentiation with all three, with Capgemini’s thought leadership on smart grid and AMI technology that needs to be better integrated with BPO, WNS’ customer journey frameworks that utilities are finding to be extremely relevant, and Vertex’s evolution from a customer care BPO brand to an As-a-Service provider with its new customer interaction platform, VertexOne. It will take these service providers some time to bring scale to these advances in their utilities BPO portfolios, and we expect significant competition exerted by them to the Winner’s Circle providers in the near future, depending on the client geographies being targeted.

Key Market Dynamics


A Burning Platform For Change In Utilities

Innovation to grow top lines

• New energy sources towards a post-carbon world with renewables, off-the-grid energy installations and distributed power systems

• Changing business models with mainstreaming of battery technology and electric cars • Organizational carve-outs to separate energy generation from distribution • New breed of competitors ranging from internet companies to cable providers • Proliferation of smart grids and meters • Greater deregulation leading to competitive environment vs. monopolies

Customer centricity to differentiate

• Consumerization that has driven customer interactions onto digital channels • Expectations in line with other consumer-facing industries that are far more advanced • Greater customer churn as options increase • Changing preferences with rising environmentalism and technology advances • More ownership, control and interest in energy types, sources and efficiencies

Operational efficiency to manage bottom lines

• Global decline in power demand, greater energy efficiency • Constant debate in regulations over environmental and market policy measures • Ageing assets that need to be maintained and retired • New asset acquisitions • Legacy systems, internal structures • Outdated operational environments (e.g., field forces)

Utilities today need to address three sets of disruptive forces:


Utilities BPO Engagements Have Fulfilled Very Traditional Needs In The Last 15 Years Standardized, consolidated processes, particularly in revenue cycle management: Utilities

have leveraged third party service providers predominantly to administrate their meter-to-cash operations. These volume-based activities required processing power for growing customer bases, and service providers filled the gaps well, from customer acquisition, contract processing, account maintenance to billing and cash collection.

Most of the back office transactions were executed from low cost countries that offered cost savings through labor arbitrage, consolidation and standardization of processes. In some cases where utilities had unionized workforces, operations continued to be run out of the home state/provinces.

Voice and email customer service to manage the cost of interactions: A large part of the work outsourced involved intensive inbound call handling for support services such as debt collections, onboarding, complaints, inquiries, outage reports, etc.

Other horizontal services: Cost pressures led utilities to move beyond meter-to-cash processes and further outsource ITO, supply chain and procurement, payroll management and accounting services.


Today, Utilities Engagements Are Gradually Changing Due To Industry Disruption As dynamic changes are underway in the regulatory and competitive environment of the

utilities sector, the pressure on service providers is equally evolving. They can no longer stay contained within one particular type of service, but work towards providing holistic solutions that serve the best in the “As-a-Service” Economy.

In the last two years, we see a heightened focus from leading service providers on enabling service delivery for true value creation — away from labor arbitrage, where large deals primarily constituted re-badging of FTEs, selecting basic SLAs and lift-and-shift of processes to the service provider. Service providers such as EXL and Accenture are playing a greater role in core utilities operations such as field force management and support using predictive modeling and forecasting to optimize labor effort.

The emphasis is shifting to service providers having more innovative capabilities, such as the use of digital technologies including automation, analytics, mobility, and cloud. Moreover, the quality and availability of talent that service providers are developing to help their clients transform their processes and operations and achieve real value beyond cost has become a major differentiator.

These engagements are very gradually transitioning towards business-outcome focused, insight-driven, and technology-enabled “As-a-Service" advances that are directly enhancing employee, partner and consumer effectiveness within utilities in different geographies of all sizes. For example, TCS runs a meter-to-cash operation for a UK utility where using invoice ageing analytics, it reduced the amount of aged debt value by £22.4M a quarter, and was paid on a gain-sharing agreement.

© 2015 HfS Research Ltd. Excerpt for Accenture

Fixed Assets Leveraged Assets

2 Design

Thinking

3 Brokers of Capability

1 Write Off

Legacy

4 Collaborative Engagement

7 Holistic Security

5 Intelligent

Automation 6

Accessible & Actionable

Data

8 Plug & Play

Digital Services

SOLUTION Ideals

LEGACY

ECONOMY

AS-A-SERVICE

ECONOMY CHANGE MGMT Ideals

Moving into the As-a-Service Economy means changing the nature and focus of engagement between Enterprise Buyers, Service Providers, and Advisors

“As-a-Service” unleashes people talent to drive new value through smarter technology and automation

Journey to the As-a-Service Enterprise


The Eight Ideals of the As-a-Service Economy

LEGACY OUTSOURCING AS-A-SERVICE ECONOMY Simplification

Legacy technology investments which limit agility and create masses of exceptions addressed

through adding internal and external FTEs

1. Write Off Legacy

Using platform based solutions, DevOps, and API ecosystems for more agile, less exception oriented systems

Resolving problems by looking first at the process as the source of the solution

2. Design Thinking

Understanding the business context to reimagine processes aligned with meeting client needs

Focusing governance staff on managing to the letter of the contract and the decimal points of

service levels

3. Brokers of Capability

Orienting governance to source expertise from all available sources, both internally and externally, to address capability gaps

Evaluating relationships on baselines of cost, effort, and labor

4. Collaborative Engagement

Ensuring relationships are contracted to drive sustained expertise and defined outcomes

Operating fragmented processes across multiple technologies with significant manual

interventions

5. Intelligent Automation

Using of automation and cognitive computing to blend analytics, talent, and technology

Performing ad-hoc analysis on unstructured data with little integration or business context

6. Actionable &Accessible Data

Applying analytics models, techniques and insights from big data, real-time

Responding with post-event fixes. Little focus on end-to-end process value chains.

7. Holistic Security

Proactively managing digital data across service chain of people, systems & processes

Undertaking complex, painful technology transitions to reach steady state

8. Plug & Play Digital Business Services

Plugging into “ready to go” business-outcome focused, people / process / technology solutions with security measures


Utilities Engagements Are Just Beginning To Explore The Ideals of the As-a-Service Economy

IDEAL NON EXISTENT INITIAL EXPANSIVE EXTENSIVE ALL

PERVASIVE

Write Off Legacy 2014 2016

Design Thinking 2014 2016

Brokers of Capability 2014 2016

Collaborative Engagement

2014 2016

Intelligent Automation 2014 2016

Accessible & Actionable Data 2014 2016

Holistic Security 2014 2016

Plug & Play Business Services 2014 2016


The global utilities industry arguably has one of the largest customer bases and spread for basic utility services. And yet, the examples of customer experience transformation, investments in infrastructure and IT overhauls and customer service operations are lagging the rest of the consumer-focused verticals. Recent research by Accenture suggests that customers spend a grand total of ~9 minutes interacting with their utility provider annually, which makes a good customer experience all the more critical to creating a lasting impression.

Customers need more personalized, contextually informed and digitally enabled utilities interactions for key events such as outages and extreme weather, home moves, customer care, rate changes and billing. They also seek greater control over their energy usage, making it an imperative for utilities to provide interfaces and infrastructure to support this consumer shift.

We see a few bright spots where services buyers are trying to bring in change in their clients’ internal cultures to become more customer oriented and away from becoming commodity providers. One of WNS’ utilities clients mentioned that the service provider is partnering with them on customer journey mapping, including where call center interactions, correspondence, back office exceptions and processes plug in, and how to design and embed actionable insights and outcomes around them.

Bringing Customer Centricity To Utilities Clients Is A Key Focus Area For Service Providers

http://www.utilitydive.com/news/opower-research-by-leveraging-moments-that-matter-utilities-can-drive-sa/381677/


Service providers provided the strongest demonstrations of capability and experience in this category, using cross-industry experience to help utilities clients:

• design and implement digital channels and self-serve • design and implement loyalty programs and discount schemes • enable customers to reduce energy consumption

Read more about this topic in our HfS Soundbite: Can Utilities Energize Their Operations With More Customer Centricity?

Bringing Customer Centricity To Utilities Clients Is A Key Focus Area For Service Providers

http://www.hfsresearch.com/sb/can-utilities-energize-their-operations-more-customer-centricity

http://www.hfsresearch.com/sb/can-utilities-energize-their-operations-more-customer-centricity


Demand For Smart Services On The Rise; Capabilities Still Nascent Smart meters are gradually being rolled out across client markets in the US, UK, continental

Europe and ANZ. Beyond the smart meter is utilities’ investments in integrated networks of meters, communication systems and data management, leading into advanced metering infrastructure (AMI). These modernizing infrastructure upgrades offer significant opportunities for improving operations, reducing costs, speeding up and automating data-related transactions and customer service.

However, as utilities roll out smart meters, they are challenged in modifying their day-to-day processes and broader products and services portfolio in line with the new technology.

Only a few service providers have experience in working on smart meter implementations from a BPO standpoint. Thus, providers that have built specific offerings around this industry trend have a differentiated value proposition. Services include:

• Smart metering analytics for behavioral analysis pre and post smart meter implementation, meter data asset reconciliation, fraud identification, consumption patterns using half hourly electricity read data

• Back office functions including smart exception management and complex billing • Front office functions including inquiries and technical support • EXL has developed a dedicated Customer Advocacy function to best leverage smart

offerings including providing customers with consumption advice, and more consultative support on tariff design, real time pricing and loyalty program design services.


Standalone analytics services have been a high growth area for service providers working with utility clients. Offerings include customer profitability and lifetime value analytics, marketing analytics, asset maintenance analytics, supply chain optimization and spend analytics. Opportunities are now opening up from the data explosion with smart meters and grids, such as unbilled consumption analysis and grid fraud and theft analysis.

HfS sees a greater degree of analytical insights being embedded within utilities BPO processes towards better decision making at the agent-level. Especially for utilities services buyers that are mature users of outsourcing and are on their third or fourth generation of contracts, analytics is emerging as a core expectation from leading service providers. Industry leading examples from our research include:

• WNS used its ‘Social Media In a Box’ sentiment analysis offering to help utilities clients rapidly learn about and respond to emergency reports and outages as customers now take to social channels to communicate these instances.

• Accenture is providing Field Force Service and Control Tower for a large utility. It is embedding analytics to improve forecasting through field-force analytics, planning and scheduling optimization engines and field work optimization analytics (revisits, overtime, time to source, skills requirements, contractors’ performance, etc.) on a gainsharing model with this engagement.

Analytics Is A Differentiator Across Service Areas


HfS sees a relative lack of focus from service providers on bringing automation capabilities to utilities clients compared to other industry verticals. The industry is at a point where robotic process automation (RPA) tools have been used in pilot projects for other verticals, and use cases are now being developed for utilities, with only a handful of examples of next-generation automation beyond the macros and screen scraping tools of the past.

Accenture and TCS are leading the charge with Intelligent Automation in utilities at this point. Examples include:

• Accenture’s RPA program for the meter-to-cash process. For one client, the service provider deployed over 100 minibots that automatically process billing exceptions, handle complex switching tasks and prepopulate mailing templates. For another client, Accenture developed an automated tool for processing exceptions on customer accounts resulting in a savings of 25 FTEs and reduction in manual entry errors.

• TCS deployed RPA bots for a UK leading energy and gas supplier that was struggling with

huge spikes in exception volumes stemming from data mismatches in major ERP systems. Typically, these metering exceptions are caused when there is a change in customer address, and a distributor sends this information to the electricity supplier requiring a change. TCS’ solution resulted in an 80% reduction in staff, 99.99% process accuracy and 500K GBP savings per annum to its client, while positively impacting end customer satisfaction.

Few Examples Of Intelligent Automation Today

Research Methodology


Research Methodology

Data Summary

Data was collected in Q3-Q4 2015, covering buyers, service providers, and advisors/influencers of utilities operations.

This Report is Based On: Tales from the Trenches: Interviews were

conducted with buyers who have evaluated service providers and experienced their services. Some were supplied by service providers, but many interviews were conducted by HfS Executive Council members and participants in our extensive market research.

Sell-Side Executive Briefings: Structured discussions with service providers were intended to collect data necessary to evaluate their innovation, execution and market share, and deal counts.

HfS “State of Outsourcing” Survey: The industry’s largest quantitative survey, conducted with the support of KPMG, covering the views, intentions, and dynamics of 1,100+ buyers, providers, and influencers of outsourcing.

Publicly Available Information: Financial data, website information, presentations given by senior executives, and other marketing collateral were evaluated.

7 Service Providers Covered:


Key Factors Driving the HfS Blueprint

Evaluation Criteria

Two major factors were evaluated:

• Execution, which represents service providers’ ability to deliver services. It includes:

– Solutions in the Real World – Quality of Customer Relationships – Flexibility

• Innovation, which represents service providers’ ability to improve services. It includes:

– Vision for End-to-End Process Lifecycle

– Delivering Value Beyond Cost – Leveraging External Drivers

Criteria Weighting

Criteria are weighed by crowdsourcing weightings from the following groups:

• Enterprise Buyers (revenues >$5B) (20%) • Buyers (20%) • Service Providers (30%) • HfS Research Analysts Team (20%) • Advisors, Consultants, and Industry

Stakeholders (10%)

Weightings from this report come from HfS’s 2014 State of Outsourcing Study


EXECUTION 52.69% Quality of Customer Relationships 22.70%

Quality of Account Management Team 9.60% How Service Providers Engage Customers and Develop Communities 6.00% How Service Providers Incorporate Customer Feedback 7.00%

Real-World Delivery Solutions 21.45% Actual Delivery of Services for Each Sub-Process 10.75% Geographic Footprint and Scale 3.20% Usefulness of Services to Specific Client Needs of All Sizes 6.50%

Flexibility to Deliver End-to-End Solutions and Point Solutions 4.20% Experience Delivering Industry Specific Solutions 2.30%

Flexible Pricing Models Including Gain Sharing To Meet Customer Needs 8.54%

INNOVATION 47.31% Vision for Process Lifecycle 15.10%

Concrete Plans to Deliver Value Beyond Cost and Investment in Future Capabilities 5.00%

Integration of As A Service Capabilities Into Utilities BPO 8.00% Continuous Improvement Methodology and Capability 2.10%

Vision for Industry-specific Processes 14.86% Ability to Leverage External Value Drivers 17.35%

Integrated Analytics and Insights Into Delivery 6.48% Incorporation of Alliances and Partnerships 5.37% Integration of Intelligent Automation Technologies 5.50%

TOTAL 100.00%

HfS Blueprint Scoring Percentage Breakdown


Execution Definitions EXECUTION How well does the provider execute on its contractual agreement and how well does the

provider manage the client/provider relationship?

Quality of Customer Relationships How engaged are providers in managing the client relationship based on the following metrics: quality of account management, service provider / client engagement, and incorporation of feedback?

Quality of Account Management Team What is the quality level of professional skills in the account management team?

How Service Providers Engage Customers and Develop Communities

How well does the service provider engage clients and develop client communities?

How Service Providers Incorporate Customer Feedback

How have service providers taken feedback and incorporated that feedback into their product/solution?

Real-World Delivery Solutions Does the solution provided compare favorably to the service agreed upon when taking into account delivery of services for each sub-process and geographic footprint and scale?

Actual Delivery of Services for Each Sub-Process

Taking into account each sub-process and the entire macro process, does each sub-process sum to successful delivery of the service being provided? For example, in the Finance and Accounting macro process of Order to Cash, are all sub-processes being delivered upon successfully?

Geographic Footprint and Scale Specific to the category, to what degree do service providers have geographic locations that offer strategic value, and do they have scale?

Usefulness of Services to Specific Client Needs of All Sizes

How flexible and experienced are providers when tailoring solutions based on client size, location, and type of solution (end-to-end and single point)?

Flexibility to Deliver End-to-End Solutions and Point Solutions

How flexible are providers with delivering multi-process end-to-end solutions versus single point solutions?

Experience Delivering Industry Specific Solutions

How much experience do service providers have working on the services across the value chain to clients in a specific vertical?

Flexible Pricing Models to Meet Customer Needs How flexible are providers when determining the pricing of contracts? Are they willing to make investments into the client’s firm for long-term growth?


Innovation Definitions

INNOVATION Innovation is the combination of improving both services and business outcomes.

Vision for End-to-End Process Lifecycle The strategy for delivery of services to each part of the value chain of processes. For example, in Finance and Accounting, the components of the value chain may include order to cash, record to report, and procure to pay. In Customer Relationship Management, the components may include outbound service, inbound service, quality, training, workforce management, call routing, self service, and customer insights/analytics.

Concrete Plans to Deliver Value Beyond Cost and Investment in Future Capabilities

A clear understanding is present about what value levers exist and how the service provider will deliver that value. Examples of value may include labor arbitrage, technology, analytics, quality, revenue, global scale, and flexibility.

Integration of As A Service Capabilities Into Utilities BPO

How does the service provider articulate its vision for future delivery and engagement models, according to HfS’ outlined Eight Ideals of the As-a-Service Economy?

Continuous Improvement Methodology and Capability

How well does the provider execute on improving business process and capabilities of their solutions?

Vision for Industry-Specific Solutions Does the provider have a vision for services specific to certain industries?

Ability to Leverage External Value Drivers How well have providers integrated external value drivers into their services? Examples include cloud solutions, security enhancements, incorporation of regulatory changes, and use of new collaborative tools.

Integrated Analytics and Insights Into Delivery

How well does the provider integrate analytics and reporting into their solutions?

Incorporation of Alliances and Partnerships How well does the provider leverage a broader ecosystem of partnerships and alliances to put forward the most integrated solution for clients?

Integration of Intelligent Automation Technologies

How well does the provider integrate automation and autonomics technologies into their solutions?



Definitions of Types of Innovation Used By Service Providers

Operational

New to function or division, but achieved elsewhere in client’s company

Incremental

New to client, but achieved elsewhere in client’s industry

Breakthrough

New to client’s industry and fundamentally new to any industry

Radical

New to client’s industry, but achieved in other industries

Innovation Value Chain


Utilities BPO Value Chain BPO and Platform-Based Business Services for Utilities Services Buyers

Customer Service

• Customer acquisition to retention services

• Customer care - voice • Customer care - non-

voice • Customer care - social

media support

Meter-to-Cash

• Billing and collections • Debt collection • Field service operations • Smart metering

services • Exception management

Asset Management

• Consumption and billing verification analytics

• Utilities health and safety

• Geographical information services

• Remote management and reporting

Business Services

• Finance and accounting • Supply chain

management and procurement

• Human resources • Legal services • Marketing and sales • Document and print

ops

Analytics

• Marketing analytics • Customer analytics • Asset analytics • Supply chain decision

services • Service contract

analytics • Energy-trading risk

management

ENABLING TECHNOLOGIES

Digitization & Robotic Automation Analytics Mobility Social Media Cognitive Computing Artificial Intelligence

OPERATING MODELS, METHODOLOGIES AND PLATFORMS

Outsourcing Shared Services GBS COEs BPaaS/SaaS/IaaS Design Thinking

HfS Value Chain Definition: Value chain refers to the series of departments which carry out value-creating activities to design, produce, market, deliver, and support a company’s product or service. In this usage, we refer to the range of primary processes and support services that providers offer to their clients.

For this Blueprint, Utilities BPO contracts must encompasses the management of at least one of the above value chain of services, with TCV >$1M. For the scope of this study, the term “utilities” describes a collection of specific services provided by public and private organizations and identifies the institutions that make up the industry. The products or services provided by the utilities industries include electrical energy, natural gas, water, and sanitation, broadly classified into Public-Owned and Investor-Owned segments.

Service Provider Grid


WINNER'S CIRCLE: Organizations that demonstrate excellence in both execution and innovation.

• From an execution perspective, providers have developed strong relationships with clients, execute services beyond the scope of hitting green lights, and are highly flexible when meeting clients’ needs.

• From an innovation perspective, providers have a strong vision, concrete plans to invest in future capabilities, a healthy cross-section of vertical capabilities, and have illustrated a strong ability to leverage external drivers to increase value for their clients.

HIGH PERFORMERS: Organizations that demonstrate strong capabilities in both execution and innovation but are lacking in an innovative vision or execution against their vision.

• From an execution perspective, providers execute some of the following areas with excellence, but not all areas: high performers have developed worthwhile relationships with clients, execute their services and hit all of the green lights, and are very flexible when meeting clients’ needs.

• From an innovation perspective, providers typically execute some of the following areas with excellence, but not all areas: have a vision and demonstrated plans to invest in future capabilities, have experience delivering services over multiple vertical capabilities, and have illustrated a good ability to leverage external drivers to increase value for their clients.

To distinguish providers that have gone above and beyond within a particular line of delivery, HfS awards these providers a “Winner’s Circle” or “High Performer” designation. The below provides a brief description of the general characteristics of each designation:

Winner’s Circle and High Performers Methodology


HfS Blueprint 2015: Utilities BPO IN

NO

VATI

ON

EXECUTION

Winner’s Circle

High Performers Accenture

Aegis

Capgemini EXL

TCS

Vertex

WNS


Major Service Provider Dynamics – Highlights

EXECUTION

• Geographic Footprint and Scale: Utilities clients want to be able to access talent from a mix of onshore, nearshore and offshore locations, depending on the nature of work and regulatory oversight on processes and data. Capgemini and Accenture have developed scale in their utilities BPO practices, and have the most geographically diverse workforces in the competitive set.

• How Service Providers Engage Customers and Develop Communities: Utilities clients greatly value interacting with thought leaders, subject matter experts, startups and a broad ecosystem of peers and other industry professionals to help them navigate through industry disruption. Accenture emerged as the leader here, where clients state that it is constantly connecting them with peers and industry professionals to form networks of knowledge across its clients and even non-clients where it has relationships.

• Offering Flexible Pricing Models: Service providers that can help utilities clients create variable pricing models, away from legacy FTE-linked fixed costs, are being increasingly valued. TCS and WNS have the best examples of being adaptable, willing to put forward ideas and suggestions for flexible operating models, and offering outcome-based alternatives for utilities clients.

INNOVATION

• Vision for As-a-Service Capabilities: HfS notes that the Winner’s Circle and High Performers have all articulated certain aspects of As-a-Service as their anchors to engage with utilities clients in a more strategic way, depending on the part of the value chain they play in. Vertex and Accenture have As-a-Service platforms in place to help make the shift in terms of platform-based delivery of utilities BPO services.

• Leveraging External Value Drivers: While EXL, WNS and Capgemini are more focused on embedding analytical insights to improve operations, Accenture and TCS have more examples than the rest on RPA deployment. Apart from Accenture, most service providers need to balance and bring more options to the table for external value drivers in utilities engagements.

• Vision for Industry-Specific Processes: EXL and Accenture have the most progressive vision for industry-specific operations within utilities. Capgemini follows as a distant third, but it has yet to translate its thought leadership in utilities IT, infrastructure and consulting to its BPO practice.

Service Provider Profile


Accenture

Relevant Acquisitions and Partnerships Key Clients Global Operations Proprietary Technologies

Acquisitions: • 2015: The Structure Group to strengthen

capabilities in smart grid operations and energy trading and risk management services

Partnerships: • 2014: A joint venture with Siemens called

OMNETRIC Group to help utilities clients realize the benefits of a digital grid

• Fusion, Blue Prism, Jacada, Automation Anywhere, Verint and IPsoft for Intelligent Automation

• Siemens, ABB, Itron, General Electric, Schneider Electric and OSI for smart grid, grid operations and work and asset management

• BC Hydro • Enbridge • Endesa • Utility operating in Iberia,

UK, Latin America, and USA • Latin American Utility • Global utility operating in

South Europe

• Utilities BPO operations for 13 years

• Headcount: 3,400 FTEs • Locations: Delivery presence in 27+

locations including: • Canada and USA • Spain, Portugal, Italy, France and

Netherlands (onsite locations) • Utilities Offshore centers of Excellence

include: Philippines (Manila, Cebu) and India (Bangalore, Delhi, Chennai, Mumbai)

• Brazil (onsite) and Costa Rica (Digital delivery)

• Accenture Retail Platform-as-a-Service for Utilities: multichannel, content management, billing, CRM, case management, analytics

• Universal Platform for Enterprise Asset Management: asset and work management, field-force management, asset-planning functions, supply chain and logistics, maintenance processes and operational and asset analytics

• Accenture Enterprise Services Platform for Utilities: industrialization framework for ERP and related business services

• Accenture Smart Metering Platform: smart meters and metering data management supporting Advanced Metering and Grids BPO

• Connected Home Utilities Platform: for New Energy Products and Services and Growth BPO with usage analytics, demand-response capabilities and home automation

Strengths Challenges

• Progress on Embedding Analytics and Automation: Accenture demonstrated several examples of how it is redefining the scope and business outcomes impacted by BPO processes through these levers. In one case, by automating manual processes used to digitize, prioritize and assign work to customer care agents, Accenture increased case management productivity by 30% across billing, credit and collections, and payments while increasing accuracy and reporting reliability.

• Thought Leadership Influencing Utilities-Specific BPO Engagements: Accenture has consistently invested in R&D to understand the sea-shifts in the utilities industry, and its vision for the vertical resonates well with clients. In one example, Accenture worked with a client to implement a scalable, cloud-based IVR technology to handle increasing customer care call volumes.

• A Unique Approach on Writing Off Legacy with a Modular Platform Strategy: Accenture’s platform strategy for utilities enables a full write-off of legacy investments. The technology (e.g. Accenture Retail Platform-as-a-Service for Utilities) is scalable, flexible, secured and modular enough to adapt to different business scenarios to deliver platform-based BPO through an As-a-Service construct.

• Differentiated Analytics-Driven Offerings: Accenture’s utilities BPO services include solutions for digital-enabled customers, new products and service, smart meter and field force management. Analytics is at the heart of the offering, for example providing enhanced field productivity and control with forecasting analytics, combined with planning, scheduling and mobile capabilities.

• Willingness to Explore Flexible Contract Structures in this Market: The utilities market needs more flexibility on its journey to As-a-Service. Accenture is particularly challenged in dealing with regulations, and managing the expectations of unionized workforces.

• Smart Meter Services Strategy and Offering Development: Accenture’s IT, infrastructure and consulting practices have significant capabilities in the advanced metering market. Its key strength lies in delivering customer and smart grid operational transformation with a focus on business benefits. However, some of Accenture’s competitors have more experience running smart meter services for utilities clients from a BPO standpoint.

Outcome-focused advanced capability for utilities As-a-Service spanning platforms, automation and analytics

Blueprint Leading Highlights

EXECUTION • Experience Delivering Industry

Specific Solutions • Quality of Account Management

Team

INNOVATION • Integration of As-a-Service

Capabilities Into Utilities BPO • Integration of Intelligent

Automation Technologies

Path to As-a-Service

Accenture’s utilities practice is a great example of where consulting and digital thought leadership is impacting BPO performance, with the way it invests in moving it to As-a-Service delivery by Writing Off Legacy.

Winner’s Circle

Market Direction & Recommendations


What’s Next For Utilities Engagements

Utilities services buyers interviewed for this report had similar strategic priorities:

• becoming customer-centric and improving customer interfaces and interactions

• taking cost out of their businesses by becoming more efficient

• increasing agility to create and test new products and services in a rapidly changing marketplace

• continuing to deliver a safe, consistent utility service that provides the best value

We expect a significant competitive differentiation, particularly in deregulated markets, for utilities that are reorienting their operations around their customers, and undertaking the massive cultural and organizational changes needed to get there.

“We see aggressive new entrants to our market, which is our key challenge. We need to maintain market share in a difficult environment. Linked to that, controlling or reducing our cost base and having the agility to compete will be critical. All our suppliers in IT and BPO understand the need to innovate and the opportunity in the rollout of smart meters. We have that mandate but also need cost and value capture there, especially how we position ourselves on cost, agility and trust to operate and create value to change the relationships we have with our energy customers.”

Customer Service Director at an integrated energy company in the United Kingdom


What’s Next For Utilities Engagements

The strategic priorities that utilities service buyers have outlined resonate well with leading service providers that are increasingly aligning themselves to deliver on such outcomes through a range of offerings and partnerships to bring the best-of-breed technologies and services together for utilities clients.

To continue to add value, service providers will have to develop and demonstrate the following capabilities in the next few years:

• Significant expertise in various intelligent automation technologies to automate back-office processes and release FTEs in legacy contracts in meter-to-cash, F&A, and HR.

• Flexible commercial models, especially for new energy products and services where utilities require more variability to test market demand.

• Developing multi-channel customer interaction services in multiple geographies, particularly 24/7 support for critical interactions such as fault and emergencies.

• Continued evolution of smart service offerings as service providers get more hands-on experience with new deployments.

• Consultative support and collaboration tools such as design thinking methodology to orient utilities operations around the customer journey.


HfS Expects A Gradual Adoption of Ideals of the As-a-Service Economy by the Utilities Industry

IDEAL NON EXISTENT INITIAL EXPANSIVE EXTENSIVE ALL

PERVASIVE

Write Off Legacy 2014 2016 2018

Design Thinking 2014 2016 2018

Brokers of Capability 2014 2016 2018

Collaborative Engagement

2014 2016 2018

Intelligent Automation 2014 2016 2018

Accessible & Actionable Data 2014 2016 2018

Holistic Security 2014 2016 2018

Plug & Play Business Services 2014 2016 2018

About the Author


Overview • Tracks verticalized technology-enabled operations in insurance and retail • Tracks enterprise analytics services and marketing and digital customer experience

management services • Conducts Blueprint reports across service areas in global sourcing

Previous Experience • Project Manager in the sourcing research wing of the business research and consulting firm

ValueNotes, encompassing a range of responsibilities, including research product design and development for the outsourcing community, management of custom research engagements, and development of thought leadership through targeted content and community interaction

• Niche BPO and KPO coverage, including analytics, medical transcription, market research, and e-learning

• Bespoke engagements, including in-depth competitive intelligence studies, market and investment opportunity assessments, demand-side surveys, and marketing communication optimization for outsourcing buyers, providers, consultants, and investors

Education • Bachelor’s in Business Administration, Symbiosis International University, India • Master’s in Marketing Management with Beta Gamma Sigma honors, Aston Business

School, UK

Reetika Joshi Research Director, Operations & Analytics Strategies HfS Research: Cambridge, MA

[email protected] @joshireetika

mailto:[email protected]

https://twitter.com/joshireetika


About HfS Research We coined the As-a-Service Economy term because we see a profound change under way that is more all-encompassing than a simple business model or product line. It's a global shift that will leave few sectors of business or society untouched. To help our clients and the market get to the As-a-Service Economy, we serve the strategy needs of business operations and IT leaders across finance, supply chain, human resources, marketing, and core industry functions in organizations around the world. HfS provides insightful and meaningful analyst coverage of best business practices and innovations that impact successful business outcomes, such as the digital transformation of operations, cloud-based business platforms, services talent development strategies, process automation and outsourcing, mobility, analytics and social collaboration. HfS applies its acclaimed Blueprint Methodology to evaluate the performance of service and technology in terms of innovating and executing against those business outcomes. HfS educates and facilitates discussions among the world's largest knowledge community of enterprise services professionals, currently comprising 100,000+ subscribers and members. HfS Research facilitates the HfS Sourcing Executive Council, the acclaimed elite group of sourcing practitioners from leading organizations that meets bi-annually to share the future direction of the global services industry and to discuss the future enterprise operations framework. HfS provides sourcing executive council members with the HfS Governance Academy and Certification Program to help its clients improve the governance of their global business services and vendor relationships. HfS trailblazed the fremium research model. More than 75% of our published research requires just a few check boxes in our simple registration to download—no subscription, no hassles. See how we're revolutionizing the research business with the Four Pillars of HfS Research—our guiding principles. Learn more about our services.

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