Nine steps towards a digital municipal utility

Press release, February 10th, 2017

Geisenheim, 08-02-2017. Those who want to persist as municipal utility or regional supplier have to become digital and adjust their processes, products and services to current challenges. The magic word is 'change'. But how can David keep up with Goliath? Markus Rücker of Insentis management consulting knows how digitalization succeeds. His credo: Progress methodically and step by step and take the employees along while keeping a holistic approach. Rather finish second than fail as first mover. A guideline for municipal utilities and regional suppliers on the road to a successful digital strategy.

The energy sector is under pressure. And it is in motion. And not least it is in motion because it is under pressure. With increasing digitalization, municipal utilities and municipal suppliers suddenly find themselves in direct competition not only with inter-regional energy suppliers but also with players from completely different areas. And while the top players, well-equipped in terms of finances and personnel, devise digitalization strategies and develop and test tools, municipal and regional suppliers' limited latitude forces them into a corset: Location, employees and business model defne the framework for investments in digitalization.

But does this have to be a drawback? Can one not even benefit from leaving digital testing and implementing, experimenting and discarding to the big players in order to then embark on promising approaches once the time has come? Markus Rücker of Insentis management consulting answers this question with a clear 'yes'. According to the digitalization expert Rücker, a 'second-mover approach' is the right and often only feasible approach for the mostly small and medium suppliers. It is important to employ one's resources in a thoroughly optimized way. Thus the first step is to lay the technical, procedural and organizational foundation in order to prepare the change. His approach for small and medium municipal and regional suppliers in nine steps:

  1. Understanding digitalization
    Digitalization fundamentally changes business processes, products and services in the energy industry. But exactly which impact does this have? If the company strives to profit from these transformations, it must radically put itself to the test. Only a holistic approach reveals all aspects of digitalization. It makes sure that sustainable foundations are laid and priorities clearly recognized. Thus, the supplier quickly reacts to relevant trends.

  2. Defining targets
    Digitalization is no end in itself. But which target is being pursued by ways of digitalization? The municipal utility is caught between security of supply and profit expectations, between status quo and expansion. Wherein shall the digitalization of the company result? This phase of definition is probably the most difficult – and the most crucial, since strategic decisions are made. It is crucial to give the digitalization of processes, products and services a suitable priority – with respect to finances and personnel. This applies in particular to the management level without which no successful change is possible.

  3. Setting the stage
    Based on the targets defined a prioritized roadmap should be generated which then drives the digital initiatives and provides a common framework. The basics, which should be dealt with first, include various elements. In order to embrace digitalization, each company needs a clean data basis. This is the prerequisite both for a targeted customer approach and communication as well as for new services and products. Customer Relationship Management (CRM) systems have become indispensible in order to provide service quality comparable to the large suppliers. Also, a digital and customer-oriented mindset has to be embedded in processes and organization. This is the most protracted and complicated task. Here in particular it is important to act based on priority and on no account to attempt doing everything at once.

  4. Monitoring the market, deliberating, deciding
    Municipal and regional suppliers should closely monitor the market and scan promising approaches. Own pilots should only be started after thorough costing. These then form the basis to swiftly decide whether it is worthwhile to roll out a project. Rather be a successful second mover in the market than pay yourself for costly mistakes.

  5. Integrating partners
    The market for IT solutions is extremely differentiated. From choosing the suitable CRM system to commissioning app developers – energy suppliers need partners which are tailored to their size and demands. Here as well, digitalization provides an opportunity. Thanks to scalable systems, tools can be used which have so far been available only to large players. By now, most CRM providers offer own modules for advanced analytics and even interfaces for artificial intelligence.

  6. Attracting employees
    Municipal and regional suppliers are moving in a tight personnel market and vie with international enterprises for IT experts. They have to assert themselves despite a sometimes uninviting location and a rather conservative image of the energy industry. In this context it is useful to build on strengths such as job security and to increase attractiveness by dealing with interesting topics and creating appropriate degrees of freedom.

  7. Retaiing and developing employees
    No digitalization without humans. Qualified experts are the prerequisite for a successful digital strategy. It is important to retain IT experts in the company and to apply their knowledge. Only he who treats his employees as a valuable asset will retain them in the company. A coaching approach by the partners can be expedient here. In this way, employees are involved in the solution from the start and at the same time knowledge building takes place which otherwise would be hard to achieve. This increases acceptance and spurs cultural change.

  8. Productively working in teams
    Success or failure of a company depends far less on the performance of individuals than on functioning teams. Project management today means teamwork. Only when teams are enabled to act productively and freely, they have the environment needed to achieve great things. Here as well, digitalization in form of Collaboration provides new opportunities.

  9. Building up and sharing knowledge
    Knowledge building is one of the decisive factors of successful digitalization. Expert knowledge of departing employees must under no circumstances leave the company. The company has to take adequate precaution; modern knowledge management systems support it in the process.

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