The traditional utilities business model, which has been around for about 100 years, is running out of steam.
Largely decentralized energy markets with new unpredictable market players mean energy enterprises should think about transforming their customers into prosumers.
This will allow them to both promote decentralized regenerative energy production, whilst reducing greenhouse gas emissions. More importantly, they will be able to sustainably transform their current business model, capturing new business areas and increasing customer loyalty on their journey to becoming an energy service company.
As one of our focus innovations, the digital prosumer was a hot topic at the 2018 International Utilities Conference that took place in Lisbon, April 17-19.
What are the characteristics of a digital prosumer?
A digital prosumer is multi-faceted.
I would describe them as follows: Environmentally aware, innovative, 32 – 58 years old, wanting to gain independence from traditional suppliers, wanting to produce their own regenerative energy, invest or participate in decentralized, regenerative power production or communities. Someone who demands sustainable mobility, and is willing to pay more for it.
What equipment does a digital prosumer have?
Solar panels, local battery storage, and electric vehicles are typical basic equipment required by a digital prosumer.
Whilst continuously evolving and gradually becoming a new digital customer, the digital prosumer will constantly identify new service requirements.
However, to motivate traditional consumers to become prosumers, utilities companies need to identify and apply the right strategies to tackle this transformation.
What’s in store for utilities companies?
One thing is clear: When shifting to a new business model, utilities are well advised to move away from simply focussing on meter readings and instead concentrating on real customer relationships.
In addition to traditional questions such as – “how can we use existing customer relations to drive new business opportunities” and “how might we develop new business areas by substituting conventional energy sources with renewables” – utilities now also need to answer the following questions:
- What are we doing to reach out to customers wherever they are?
- What are we doing to provide insights and recommendations?
- What are we doing to engage and delight customers?
- What are we doing to differentiate ourselves from the competition?
- Source: bidgely.com
The answer to these questions and the key to really winning the customer loyalty is to constantly look for ways to transform this customer into a digital prosumer.
This provides new business opportunities, increases customer retention, and transforms the utilities company into an (energy) service company.
SAP believes this is a four-step process: Win, onboard, operate, and upsell products and services when turning the traditional customer into a prosumer.
How can SAP support this transformation?
As an enhancement to the traditional offer-to-cash process, which mainly consists of SAP’s Digital Core (S/4HANA) and the Customer Experience (SAP Hybris) portfolio, the digital prosumer processes also leverages other components in SAP’s complementary portfolio for the Intelligent Enterprise: Mainly our Leonardo Digital Innovation portfolio, the workforce engagement portfolio, and the supplier collaboration portfolio.
Win and onboard the prosumer
If you want to persuade a traditional customer to become a prosumer, the first thing you should do is provide insights.
This could involve analysing the energy consumption of a customer and comparing it to their peer group (SAP Cloud for Energy & Energy Analysis App).
Let’s assume the utilities company detects that a customer consumes 12,3 % more energy, they would probably be delighted, if you proactively contacted them using their preferred communication channel (SAP Hybris Marketing).
The next step would be to recommend the next steps.
This could be a free energy consultation by a third-party provider from your companies’ business network (SAP Cloud for Customer & SAP Fieldglass).
To provide a seamless customer experience, the scheduling process should be completed by confirming the appointment and sending it to the customer (SAP Hybris Commerce).
During the inspection, an energy consultant detects that the old heat pump is the biggest consumer on site and should be replaced immediately.
The exchange of old heat pumps is part of the new energy efficiency program offered by the utilities company and is even subsidised by the local community.
This is an obvious no-brainer for the customer, they sign the contract and installation can be scheduled immediately at the customer location (SAP Leonardo & SAP Ariba).
The benefits of exchanging the pump are immediately apparent on the next bill (SAP Hybris Billing). The customer is hooked, because the utilities company is actively managing their energy streams and bill reduction.
The next step could involve asking them if they want to become a prosumer (SAP Hybris Self-Service).
Here is an example of combining our solution portfolio for the intelligent enterprise to win and onboard the Digital Prosumer .
Operate the prosumer
New prosumers should be constantly monitored and any issues with technical installations or energy streams need to be addressed to provide a timely response and suitable product recommendations.
It is our vision that in future more and more machines will act on our behalf empowered by the huge amount of data IT systems will be collecting from us.
Actual and historical data in combination with machine learning algorithms and customer patterns will allow machines to propose the next best action.
We can imagine installing a local intelligence (Edge) in every machine or object, be it a house, a vehicle, or a piece of infrastructure like a charging spot.
This Digital Energy Controller (DEC) then for instance uses sensors to detect when the solar energy production falls below a certain threshold and automatically sends a maintenance order to the energy service company (utilities company).
The utilities company has an app that constantly checks the overall status of all communities (S/4 HANA).
The system automatically detects that the maintenance service is delayed for some prosumer households that require solar panel maintenance.
However, the supervisor at the utilities company can rely on a digital assistant that supports a bidding process for external vendors (SAP Leonardo CoPilot & SAP Ariba).
The bid reaches a smaller number of companies working for the utilities company’s business network that are connected by the companies’ cloud solutions.
The utilities company is informed about who has won the bid and when the service can be performed.
The service company can use the utilities’ augmented reality extension to the maintenance process (S/4 HANA & SAP Leonardo).
In keeping with the principle of providing a seamless customer experience, the prosumer is informed by the utilities company that maintenance has been performed and the installation is working properly again (SAP Hybris Marketing).
Based on the energy production report from the past 3 months, the system has created a new customer segment targeted towards special offers and automatically transferred these into a campaign (S/4 HANA, SAP Cloud 4 Energy, SAP Hybris Marketing).
The marketing manager of the utilities company receives a notification and lets the system propose the next best product.
Prosumers receive this information via the customer app that runs on any device, be it the Digital Energy Controller (DEC), the smartphone, or even within the electric vehicle.
The app shows that other services are available, which are a perfect match for the prosumer’s current and personal situation and services. The information pushed to the customer via the app also explains the business case including the return on investment time (SAP Hybris).
As an example – in this case the next best product or service proposal is an additional storage solution for the surplus energy generated. It comes in a bundle with an additional charging pad for the extra parking space in front of the prosumer’s house.
As soon as the prosumer selects this new service, the installation process of the bundled package takes place seamlessly without any further customer interaction (SAP Hybris, SAP Ariba, S/4 HANA).
After completion of the installation the new service appears in the prosumer app and the connected services can be controlled from there.
This story shows that not only the number of services, but also the amount of installations at customer sites requiring operation and maintenance are increasing. This infrastructure of course needs to be integrated into the overall prosumer setup.
In our future vision, the new electric vehicle charging pad can be made available to EV drivers for bookings. Making the pad publicly available also increases the number of public charging spots in an area.
This provides the prosumer with an additional source of income for a sound return on their asset investment (S/4 HANA, SAP Connected Goods, Blockchain, SAP Hybris).
Mobility as a service
As mentioned above, once the energy service company has gained the trust of the prosumer, when the prosumer identifies additional needs, they will seek collaboration to overcome those and buy additional assets and services.
Mobility as a service (MaaS) is currently a hot topic generally, and is a focus topic within the automotive industry.
MaaS can represent a new line of business for an energy service company.
Such complex services cannot be offered by a single enterprise, but would require an entire business network of service providers to implement.
If the prosumer suddenly needs to get to a remote office location, they need a vehicle to get there.
This could also be offered as an on-demand service in the prosumer app.
MaaS, including self-driving cars is coming soon.
Health and safety and disaster recovery
Mobility scenarios are also important in smart city environments, transforming public and private transportation into a new sustainable mobility sector, which contains a combination of autonomous, connected, shared, and electrified multi-modal mobility and logistics infrastructure.
This infrastructure is particularly critical when cities need to evacuate inhabitants and visitors before, during, and after a natural disaster – such as a thunderstorm in combination with flooding, which is becoming increasingly frequent due to global warming.
We are currently looking at how our technology and applications can be used to set up the type of scenario described above.