Don Anderson – Lion of Australian Energy Deregulation
I was in Australia last September and I was fortunate to meet with Don Anderson, the former Head of Customer Service, EnergyAustralia. I worked for and with Don in those days. He is a veteran of electricity deregulation and one of my work heroes. Don is now a consultant with Catalyste, a management consulting firm. I asked him to share some of his experience from those early days.
However, first some background information: EnergyAustralia is the former brand name for AusGrid, the NSW state government owned electric mainly covering the Sydney central metro area north to Newcastle and the Hunter region.
EnergyAustralia experienced full retail competition around 2000 in Australia. In 2012, the retailing business was sold to China Light and Power (CLP), who owned TruEnergy in Australia. That business took the brand name and is now known as EnergyAustralia. Confused? It was an unusual step, but CLP did research and decided EnergyAustralia was a stronger brand and with half the new customer base under this brand it made sense to prefer it.
I asked Don how he tackled those early days at EnergyAustralia, when the mass market opened to competition. He had this to say:
“Back in 1999 we were roughly in the same position as Japan in 2014. We considered so many possibilities for the Retail business. What will competition be like? What products should we sell?
However, we had a very basic product called the ‘energy contract’.
Getting the processes right was key and competition creates market transactions and it can be very difficult. You need very flexible data structures because processes change a lot.
Retailing gas was very easy. The marketing, selling and billing is the same as electricity.
However, the wholesaling of gas was quite difficult. The process is quite different to electricity. The gas wholesale market required specialists.
One key thing we did right was to focus zealously on the data. I asked that SAP be configured to accept only sensible data. Before you could have a contract ending before the start and many things like that.
We also promoted our people to ‘get it right the first time’. I did not want data reworking.
It was very important to get the customer standing data correct. This is name, address, phone, etc. Data migration was really key to our success. The more effort spent getting the migration right, the bigger the pay-off later.
Another “right move” we made was to build a shared services team that served both the grid business and the retail business. This saved us enormous expenses even though we had made a big mistake with the billing system. We had used the same instance to support the retail and network business rather than have two systems.
The problem is that we tied the bills together and we got many problems as a result.
We also had problems with access arrangements after ring-fencing (separation of retail and network) was brought in. Fortunately, SAP is brilliant at managing access, it just required our company to implement it as a process.
Similarly, we had a lot of problems with renewing contracts and eventually we got the legal people and the marketing people together and we developed “evergreen” contracts. Where if the customer did nothing we could continue indefinitely.”
I asked Don to reflect on his general experience with SAP. He says:
“If I could change some things one would be not to do any customization of SAP. The call center people were more adaptable than we realize. It was their managers that create the problems.
It would be better to manage the stakeholders better rather than accept a lot of IT changes. That was a big mistake.
Although implementing SAP was so difficult for us as part of the move to deregulation, I realized this had become one of our greatest strengths.
When we were in the process of selling the business and discussing our business with various suitors, we had to understand all of our performance indicators.
It was during this process of preparing for the sale and our discussions with the various suitors that I realized that EnergyAustralia had achieved the lowest cost to serve in the Australian industry.
This had been a 12 year journey in IT and process starting with the opening of the market and the implementation of SAP.”
Regrettably, I only had one hour to spend with Don and this is all I could wring from him writing as fast as I could. It was great for me to catch up and hear him recount these experiences which I shared from my own perspective working in those days.
Me (right) catching up with Don Anderson (left)