How the evolution of technology is enabling a revolution in the world of energy supply

Geoff childs cropby Geoff Childs, Business Development Director

As an energy industry person through and through, and as one who has joined a technology company relatively recently, I’m able to give a view of the industry from ‘the other side of the fence’.

There is no doubt that we’re on the cusp on an energy revolution. Over the past five years we’ve gone from 20 domestic energy suppliers in 2012 to 54 active market participants in December 2016 – and even more have joined since then. Many of these new suppliers are offering new, digitally led propositions.

That leads me to ask – what has enabled this energy revolution and with it the massive increase in competition in the domestic energy market?

Turn the clock back 10 years and the UK energy supply market was dominated by the ‘big 6’ and the industry seemed closed to new entrants. The biggest blocker to entry was investment and the cost of set up. 10 years ago you needed custom built and expensive back end systems to cope with the complexity of the UK energy market. You didn’t buy a ‘billing’ or ‘customer information’ system, you bought a platform on which you could build what you needed. There were a few large providers who had a monopoly in the sector and the software eco-system was incredibly limited. Not only did you need to have the large up-front funding, you also had to go through a painful customised implementation project in order to fully set up the ‘product’, tying up large numbers of staff at great expense.

So what’s changed? We’re all used to the pace of change accelerating in the technology we use at home. And with the iPhone celebrating its 10th birthday, who could have foreseen the rapid pace of change we’ve seen since then? The proliferation of apps that do everything from controlling your heating, to allowing you to check in for flights, the cloud, new hardware – the face of consumer technology has changed completely and become far more accessible.

The same can be said for large scale enterprise level technology. Gone are the days when energy suppliers have to go through large scale customised software implementations before they can launch their products to paying customers. The market has moved towards significantly lower cost, productised, off-the-shelf offerings which are designed specifically for the market in which they operate. There is no longer the question of whether a product can be customised to meet a business need – people are happy to look for an other-the-shelf product that does the job.

Having worked in ‘big six’ and new entrant energy suppliers alike, I always find it amazing when a salesman says that their product is fully customisable and can do anything the client desires. I am fully convinced that if I were to ask to turn the moon pink, I would be told it was possible – at a cost of course – because with greater customisation comes greater complexity and cost.

Traditionally, Board level IT or Operations directors are used to operating in environments where IT implementations are complex, and that brings a level of comfort. Unless an IT project costs tens of millions of pounds, and has at least a 2 year project plan, then it can’t be the right solution for the business.

Times have changed however. I firmly believe the days of fully customised, complex and costly infrastructure implementations are gone. Instead of customisation, we’re now seeing productisation, and for businesses that can keep up with this software revolution, there are measurable business benefits.

What we’ve seen over the past 12 months is a new breed of entrepreneurial minded business who, not tainted with the legacy of large difficult software implementations, are looking a product to meet their requirements. They’ve asked the question – there must be another way – and are reaping the benefits.