The new utility business model?

Corner Image Curved
Home » The new utility business model?

As more and more new businesses enter the Utility market, changes are happening thick and fast within the sector. These businesses are lean, often launching with minimal funding, quick to react to market changes and focused on delivering a ‘new’ kind of supplier to customers.

But what makes them so different – and how can they keep prices so low whilst building their businesses, all whilst avoiding the well documented ‘growing pains’ that have befallen other suppliers who have tried to grow at pace.

There are a few trends that I’ve noticed that indicate how the industry is changing….

1. Utilising software as a service to reduce start-up costs and overheads

Most of these start ups have made good use of the growing number of system providers who utilities a ‘Software as a Service’ model. This helps to keep start up costs as low as possible with no big capital expenditure on hardware, and if they choose to host externally as well, very little upfront infrastructure costs. These new billing and backend systems are far more ‘out of the box’ than their predecessors which means suppliers can get to market more quickly, and require less headcount to operate, helping to keep ongoing overheads low. The software providers are also often doing their own R & D, meaning that systems are staying up to date with industry regulatory change without big internal project costs, and that the systems are constantly under development to reflect changes such as customer service via social media or other channel developments.

2. Outsourcing – finally getting beyond it’s ‘offshore’ image?

Many of the big six went through high profile offshore outsourcing programmes in the early 2000’s – moving both back-end and customer facing operations to India and the Philippines in order to cut costs. These programmes often ended badly, with suppliers hurriedly rolling back services to UK based call centres (often in-house) within a few years, with accompanying drops in customer service rankings.

The new suppliers however, are making use of the new breed of Outsource providers. These new partners are customer service experts, and often can advise from start-up stage – bringing external customer service expertise to entrepreneurs who may not have experience in this area. If brought in right at the beginning they can utilities their previous energy industry experience to help map processes, data flows and resource planning – so there are fewer surprises as the business grow. They also have the experience and expertise to flex and scale at pace – so can help support suppliers through aggressive periods of growth.

Of course, there is an intrinsic risk that outsourcing such a vital part of the business may cause issues – so suppliers should make sure that they do their due-diligence before agreeing a partnership with any BPO provider.

3. The power of the interim

I’ve blogged about the growth of the interim before – but I firmly believe it’s the reason why so many of the new suppliers are proving successful. We’re moving away from the need to recruit a permanent team of senior leaders who will stick with the business over a number of years, and to a more flexible model of bringing in the skills you need, when you need them. By having access to a pool of highly skilled interims with a range of skill sets –from industry processes, customer service, debt recovery and credit management to trading and hedging and everything else in between, businesses can bring in the resources they need at the right stage of business growth, without having to worry that those skills will become redundant in 6 months’ time. By taking a flexible approach to their senior leadership teams, these businesses are able to access the best in experience and expertise, when they need it.

These are just a few of the big shifts I’ve noticed over the past few years – which is reflected in how the industry is changing as a whole. What are you seeing – what do you think has brought about the pace of change that we’re seeing in the industry?


Ready to find your perfect job?