1. © 2013 IBM Corporation
Digital Front Office
Energy and Utilities Industry Point of View
Michael Valocchi
Global Industry Leader, IBM Energy and Utilities Industry
September 2013

2. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
The emergence of big data, social, mobile, cloud and analytics
are fundamentally changing how we live, work and interact
Pervasive
connectivity
Big data
Social
Analytics
Mobile Cloud
Digital transformation forces 67% of global
consumers
want to use mobile devices to
check out
18% of
Africa’s GDP
is expected to be handled
through mobile money transfers
by 2015
1 out of
every 7
minutes spent online is spent
on Facebook
40% of
people
socialize more online than they
do face-to-face
80% of
new apps
will be distributed or deployed
via the cloud
1/3 of
consumer data
will be stored in the cloud
by 2016

3. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
These digital forces reset customers’ expectations, requiring
enterprises to rethink the end-to-end customer experience…
Instant access to
information, products
and services
Increasingly, customers expect…
To be engaged as
individuals, on their
own terms—anytime
and anywhere
Seamless experiences
that match product and
service quality
Trusted, mutually beneficial
relationships that go beyond
one-time transactions
Transparency from the
companies they interact with

4. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
…and are fueling an explosion of data—a new economic asset
that has become the basis of significant opportunity
We are here
Sensors
and Devices
Social
Media
VoIP
Enterprise
Data
2013
In just
two days
we now generate as much data
as was generated in total
through 2003
80% of all data
is unstructured and growing 15
times the rate of structured data
Over 1 billion
tweets
are sent every 3 days
5 million
trade events
are clocked every day
2015
Percentage of
uncertain data

5. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
73% of
CEOs
are prioritizing investments
in customer insights
82% of
CMOs
Plan to increase the use
of social media
74% of
CIOs
say mobile solutions are
part of their vision for
increasing competitiveness
70% of
COOs
Identify supply chain visibility
as the top challenge in
delivering on their agendas
As a result, leaders are redefining their agendas and reprioritizing
investments focused on reshaping the “Front Office”

6. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation5 25 September
Agenda
1.
Digital front office in the
Energy and Utilities
industry
2.
New market entrant
innovation examples
3.
IBM’s approach

7. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation6
25 September
2013
FORCES
IMPLICATIONS IN 10 YRS
Challenges and Opportunities
The traditional utility business
model is upended; new
business models and alliances
will be required to sustain
revenue growth
Consumers
Consumers want the same
high level of service from
energy providers as from other
consumer-oriented companies
Threats to Revenue
Energy efficiency, slower
economic growth, and new
entrants negatively affect
historical patterns of demand
Information
Utilities now have to manage a
huge volume, veracity, velocity
and variety of data from both
external and internal sources
Data and analytics move from
a back-office competency to a
critical profit enabler, requiring
innovation in the front office
“Innovate, partner, or die”
becomes an unspoken
mandate as new entrants
reach out directly to
consumers and bypass energy
provider
Key forces are driving the need for new customer interactions,
analytics and innovation

8. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation7
25 September
2013
This new Digital Front Office delivers compelling customer
experiences that create new pathways for revenue growth
…the sum of activities, people, platforms, and processes that interact with the
consumer(s) across all touchpoints and that are transitioning from analog to
digital
…reimagining everything about the way people connect, transact and engage
with companies, institutions and governments—and how they create mutual
value
The Digital Front Office is…
What is the Digital Front Office?
A digital front office should ….
 Engage, listen and nurture open relationships with energy consumers
 Extract and apply actionable insights to interactions and processes –
determine the next best action for consumers
 Embrace collaboration and partnerships within the energy ecosystem to
innovate products, services and industry business models themselves
 Be integrated internally and externally, across operational components and
functions and into the daily life of consumers

9. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation8
25 September
2013
The Energy and Utilities Industry in 2023…
Smart appliances become
ubiquitous
Electric vehicles are affordable,
and utility-sponsored purchasing
programs are available
Home energy management
systems are inexpensive
and prevalent
Consumer-owned
generation is affordable for
the average household
Microgrids emerge where
existing infrastructure is
insufficient
Consumers can easily sell
surplus energy to the grid or
contract with a third party
Battery technology will become
increasingly available
Regulatory environment allows
new business opportunities for
energy providers
Digital Future

10. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation9
25 September
2013
Capabilities and Gaps
Recommendations Description
The digital front office will require energy providers to...
Personalize engagement
to extend brand reach
beyond the meter
 Understand your customers and speak to them in their own words
 Use social media analytics as a source of innovative inspiration and
positive brand reputation
 Improve customer responsiveness through automation
Create a core competency
in data management and
analytics
 Be first to market by seeking explosive growth in analytics
capabilities
 Deeply understand the nature of the data you already have and will have
and use this to create breakthrough innovation for new products and
services
 Invest in people and technology to harness the power of analytics
Evaluate threats to core
revenue; plan defensive
and growth-oriented
business model
innovation strategies
 Find the quickest path to innovative business models whether it be
 in-house innovation, partnerships, or co-creation vehicles
 Re-imagine partnership beyond the obvious; unfamiliar combinations
will be successful at meeting real consumer needs
 Use recognition of the threats from new competitors to engage in
constructive dialogue on regulatory change

11. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation10
25 September
2013
Consumer
Experience
Analytical
Insights
This digital front office transformation yields essential business benefits
▲Diversify revenue base as load
growth flattens
▲Increased overall customer
revenue and profitability
▲Increased EBIT and ROE
through higher customer
satisfaction levels
▲Improved customer satisfaction
▲Reduced regulatory or legal
impediments
▲Find target segments for
attractive products/services
▲Optimize partnership revenue
and profits
Operational
Flexibility
▼Use attractive, relevant
product/service tie-ins to
create switching costs in
competitive regions and
improve retention
▼Predict and prevent outages
▼Reduced marketing spend
through optimized marketing
performance
Create transformational
“beyond the meter”
relationships with
consumers
Use data to improve
system health,
consumer segmentation,
and partner ecosystem
benefits
Benefits
▼Lower restoration, repair,
and liability costs from
severe events
▼Decreased churn from
dissatisfied customers
▼Avoidance of penalties from
governments/localities
Instill confidence and
trust that the electricity
system can adapt to a
variety of threats
▲Minimize revenue losses
due to long outages
▲Foster image of “reliable
and trusted provider” that
carries over to other
products/services
BenefitsOpportunities
Impact on:

12. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
“A new era of computing is upon us … it is defined by computing moving to the front office."
- Ginni Rometty, Chairman and chief executive officer of IBM; Investor Day, May 9, 2012
The convergence of all of this change is transforming the front
office—the systems, processes and people that touch the customer.
Back office
Channels
Empowered
consumer
Physical Web Social Mobile Call Center Broadcast
Enterprise resource planning
(ERP) systems
Legacy applications Data warehouses
Front office digitization
Increase business partner
and supplier visibility
Optimize supply and demand
to changing consumer needs
Create best- in-class
marketing capabilities
Engage based on deeper,
more actionable customer
insights
Innovate business models,
products and services
Define a unified cross-
channel vision for customer
engagement
Capabilities

13. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation12 25 September
Agenda
1.
Digital front office in the
Energy and Utilities
industry
2.
New market entrant
innovation examples
3.
IBM’s approach

14. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation13
25 September
2013
 Engage with customers in a simple and fun
way
 Use gamification to inspire customer
participation in utility company programs, e.g.
Biggest Energy Saver
 Enable utilities to play a leading role in the
customer relationship
SimpleEnergy helps utilities engage with customers through
gamification
 Competitive landscape is
strong and barriers to
entry low
 Market is immature,
fragmented and slow
moving
 A firm value proposition
has not yet been
established
 Customer concerns about
privacy still exist
 Fewer than 5% of
households today take
advantage of energy
efficiency programs
Energy providers could play a strong
role in this business model if they are
able to white label customer
communications
Sources: utilities.simpleenergy.com, http://biggestenergysaver.com/
Digitization:Challenges:
Results:
Simple Energy’s
Customer Engagement
Platform supports utility
smart grid, energy
efficiency and demand
response programs by
making them social, fun,
and simple.
DFO Leaders

15. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation14
25 September
2013
 Easy to use device interface for
thermostat and user application
 User trains the device to adjust to their
needs and preferences
 Active online community for heralding
energy savings builds consumer
preference
Nest offers a smart thermostat for promoting energy efficiency and
enabling usage comparison with friends and family
 Market is immature,
fragmented and slow
moving
 Many large players have
exited market due to poor
product sales – e.g.
Google, Microsoft
 Direct to consumer
business model does not
involve utility
 A winning entry point and
value proposition is not
defined; companies that
were not competing
before are now
competitors, e.g. OPower
Sources: www.nest.com, http://gigaom.com/2013/05/08/how-nest-and-opower-quietly-morphed-into-competitors
Energy providers could benefit from
collaborative business partnerships
to keep them at the center of the
energy ecosystem
Digitization:Challenges:
Results:
Nest produces a learning
thermostat/application that
manages energy usage
based on homeowner
behavior. The company also
offers energy service
providers demand response
and energy efficiency
services. It purchased the
startup, MyEnergy that
allows consumers to
compare their usage with
friends and family.
DFO Leaders

16. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation15
25 September
2013
SolarCity provides a comprehensive platform for low cost energy
generation
 Fragmented and
competitive solar market
with a variety of customer
focused business models;
no winning value
proposition yet defined
 Supply still outweighs
demand with the global
solar market growing at
14%; some countries/
states/ regions are
growing at much faster
rates of demand – NA
growing at 70+%
Sources: www.solarcity.com, Solar Voltaic Industry – Columbia University, Investopedia
This company’s business model makes
them a direct competitor with traditional
energy providers.
 Provides solar energy with free installation and
charge for usage just like a utility
 Supplies customer monitoring system through
SolarGuard application so customers can
monitor their system, energy consumption and
solar system output
 Guarantees system will produce electricity for
20 years and that the prices are less than local
utility
Digitization:Challenges:
Results:
Founded in 2006, SolarCity
is the leading solar
provider in the United
States providing full-
service solar system
design, financing,
installation and monitoring.
Customers include
homeowners, schools,
government and corporate
clients including eBay, Intel
and Wal-Mart.
DFO Leaders

17. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation16 25 September
Agenda
1.
Digital front office in the
Energy and Utilities
industry
2.
Innovation and leading
examples
3.
IBM’s approach
2.
New market entrant
innovation examples

18. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation
Key Innovations
Watson Engagement Advisor Next Best Action Social Data Accelerator
 Provides intelligent but
automated channels for
customer support which
increases customer satisfaction
and lowers cost to serve by
empowering customers to take
action in an intuitive, fast,
accurate, and consistent fashion
 Enables analysis of big,
unstructured data from
social media sources and
integration with enterprise
information
 Deliver the most
appropriate action at the
right time across
channels using real-time
analytics to anticipate
customer needs
Smarter Marketing Smarter Analytics Social businessSmarter Commerce™
Leveraging Big Data and Analytics

19. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation18 25 September
The roadmap is different for each client – you must first understand
your customers’ journey to identify which capabilities to enable
IBM’s Approach
1
2
3
Envision
Evaluate
Enable

20. © 2013 IBM CorporationIBM Institute for Business Value and GBS Strategy and Transformation19 25 September
IBM Contacts
Michael Valocchi
Global Industry Leader, VP and Partner
mvalocchi@us.ibm.com
610-212-9763
Global Energy and Utilities leader
North America
Chris Lilley
Energy and Utilities Industry Leader, Partner
chris.lilley@us.ibm.com
484-319-7511
EMEA
Ricardo Klatovsky
Vice President
Ricardo.klatovsky@es.ibm.com
+34-91 397 73 95
Asia Pacific
Andrew Weekes
GMU GBS Energy and Utilities Leader, Partner
aweekes@au1.ibm.com
+61-409070366
Regional Energy and Utilities Leaders
Center of Competency Global Lead
James Strapp
Global CoC Leader, Partner
IBM Energy and Utilities Industry
jstrapp@us.ibm.com
415-478-3187
Global Contacts