Exploiting the power of data and algorithms
Roland Berger's experts in Advanced Analytics help companies secure lasting competitive advantage by exploiting the power of data
Today's energy companies are facing hitherto unseen levels of competition. In the fight to retain market share, the chief weapon in their armory is increasing efficiency across all areas of operations, from pricing and demand prediction to customer intelligence that can be used along the whole value chain. But doing so requires deep expertise in Advanced Analytics (AA), an area where many established players are still feeling their way. Roland Berger has a dedicated, wide-ranging team of experts with deep expertise in AA disciplines such as Machine Learning, Visual Analytics, Econometrics and Operations Research. Roland Berger's expertise in Advanced Analytics and years of experience in change management projects and strategy can help clients generate value from data, and so secure lasting competitive advantage.
Challenges and opportunities
The pressure on players in the energy and utilities sector comes from all sides. Many countries have liberalized their energy markets in recent years, opening the door to new competitors, be they data-savvy digital corporations such as Amazon or established players in previously uninvolved industries such as automotive. This growing competitive pressure is leading to a commoditization of the energy sales business. Consumers are also exerting greater pressure on energy companies, as their expectations increase with regard to customer experience. These trends are accompanied by a number of other factors outside the control of energy companies, such as climate change, more volatile load profiles due to the rise of renewables and growing electromobility, and the challenge of integrating decentralized power generation into the existing grid structure.
These challenges come hand-in-hand with great opportunities, however. Smart grids and meters are now generating huge amounts of data that can be of untold value to companies, or at least those that have the knowledge and techniques to deal with it effectively. New markets are emerging as electromobility and energy-intensive IT infrastructures become increasingly pervasive. In short, the fundamental changes that are taking place in the energy sector give companies a once-in-a-lifetime opportunity to reposition themselves with an eye to the future.
Impact on business
For energy companies the choice is simple: disrupt or be disrupted. New market players are already using Advanced Analytics in an aggressive fashion to realize competitive advantages. Traditional companies must keep up or they will see their current lead quickly evaporate.
The good news is that energy players already have access to large amounts of data as a result of digitization. Used correctly, that data can be invaluable for improving existing business models and developing lucrative new ones. Energy companies need to build modern data infrastructures that exploit data efficiently. At the same time, they must ensure that they handle it in a trustworthy and secure manner. Any slip-ups here will jeopardize customer trust.
Capturing the full value of data requires new competencies. Companies should not underestimate the challenge of building data-savvy teams: They will need to create entirely new employee profiles to ensure the necessary skills and expertise are embedded within their organization.
Roland Berger guides clients through the entire process of designing and implementing an Advanced Analytics strategy. We can also help you develop a comprehensive data strategy, including state-of-the-art data infrastructure to ensure that data is shared, usable secure and optimized for AA. In addition, we can help you build expert data teams and establish data-driven decision-making processes within your company.
Our team is able to quickly identify and implement lighthouse use cases for Advanced Analytics in your organization – applications that have a fast, measurable and sustainable positive impact on your business (see illustration for examples). We use rapid prototyping to demonstrate the many opportunities for exploiting data. We can also develop data-driven tools that are easy to use and fully integrated into your business processes. And rather than just providing assistance from outside, we help you build Advanced Analytics units within your organization so that you can identify and implement use cases on your own, securing lasting competitive advantages for your business.
We developed an Advanced Analytics strategy for a European energy utility company that wanted to make better use of its existing data pools in its day-to-day operations. Together with the client, we designed an inhouse Advanced Analytics unit, developing a target operating model for the unit and determining how it should be integrated into the organization. At the same time, we identified, evaluated and prioritized several high-value Advanced Analytics use cases. With the help of prototypes, we were able to prove the feasibility and immediate benefits of these use cases for the business. The utility company is currently in the process of implementing the new strategy.
We worked with a major energy merchant to further develop and refine its tools for predicting electricity demand. Our improved forecasting model, which incorporates key drivers of demand from large B2B electricity customers and uses machine-learning, enables the client to purchase energy on the electricity market more accurately and thus more cheaply than in the past. The model also features a simple user interface. Thanks to continuous knowledge transfer and our regular coaching sessions with employees, the client is now able to implement further use cases on its own.
For the Sales and Service unit of an energy company, we optimized the customer interaction process and used the company's own data to further individualize the customer approach with the help of sophisticated segmentation algorithms. As a result of the project, the Sales and Service unit now has a much deeper understanding of its customers and can address them more effectively through its existing CRM system. The unit now tailors individual offers to the customer's willingness to pay (leading to higher sales margins), pays more attention to individual customer needs when developing products (such as "smart home" products) and has improved its marketing by addressing customers in a targeted fashion.