In this article, we asked Kevin Young, Managing Director of Australia’s Sydney Water, to provide his perspective on customer centricity, asset management and the changing demands on today’s utility providers.
How do changes in customer behaviour and preferences influence the way you manage your infrastructure asset?
When I first graduated in engineering a long time ago, the focus was all about infrastructure and construction. After this I made my career in the asset management of infrastructure, driving the best lifecycle outcomes at agreed service levels. This drove tremendous change but on reflection, the service levels were set by the industry for customers because we believed that we knew better. In essence we had an engineering focused, paternalistic industry that had to change. And it has. The vision for our nations’ water association in Australia is “customer driven – enriching life”. We have entered the ‘age of the customer’ and it’s an exciting and compelling time.
Customers today are more informed and more connected than they have ever been. Customers are time-poor, and want to interact with a business at a time and using a channel that is convenient to them.
Many of our customers are financially constrained. Their water bills compete with many other utility services’ bills. Customers expect the services they get from Sydney Water to meet similar standards to other service providers they deal with.
So the biggest change for our business is to provide valued water services to our customers. That means products and services of the highest quality and reliability at a price that is affordable and represents fair value. It also means having the confidence and trust of our customers.
We as an organisation need to ensure we understand these changing customer expectations and needs. Sydney Water no longer sees itself as an organisation that manages infrastructure assets only – we are a customer-focused business that needs to understand what our customers value and are willing to pay for. Our work, which is paid for by customers, must simply meet their needs in engagement, in responsiveness and in service delivered by our assets.
What does ‘customer centricity’ mean in the utilities space? How does it influence asset decisions and management?
Customer centricity means taking the asset out of the center of our business and replacing it with the customer. Being a 125-year old water utility built on solid engineering principles, that is no easy feat.
Customer centricity is about having the right people, processes and systems in place to deliver great outcomes for our customers. It’s also about having the right amount of customer insight, and the ability to act upon it.
At the operational level it’s about understanding the ‘moments of truth’ in the customer experience. Successful, customer-centric organisations then focus on these moments of truth to deliver a great customer experience.
At the strategic decision making end of the business it’s about integrating the ‘voice of the customer’ into decision making, and being able to make good decisions for future generations based on the customer needs and aspirations of today.
Over the last 12 months we have undertaken a major operating model review which lead to a mandate to shift the entire organisation to a customer centric model. This focus means a new organisational structure, value chain (starting with the customer) and new accountabilities and decision rights. The shift means great efficiencies which allow lower bills for customers but also allows the ability to invest in new areas to drive customer value.
Why should utilities be focused on becoming more customer centric?
More than a ‘nice-to-have’, being a customer focused business is a ‘need-to-have’ in this day and age.
Being a customer focused organisation makes good commercial sense – and my call to action to the industry is the same call to action that I gave to my own business: We need to step-up and provide value to our customers in the products and services we provide, and at the best possible price.
We are living in a digital age where the rate of transformation is greater than it has ever been. Innovations in technology are not just impacting how organisations are run but also empowering customers to demand and expect more from service providers.
If we do not keep up with customer expectations around the value we provide then we will not continue to operate as a successful business – it’s all about building customer trust and organisational resilience.
How do you balance customer demands/preferences against the objectives of the organisation?
The core mission of our organisation is to provide essential water services to our customers – which includes water and wastewater, and in some areas stormwater and recycled water. In doing so we have three key objectives – to protect public health, protect the environment, while operating a successful business.
When we make decisions, whether it be capital prioritisation of sewer overflow infrastructure, treatment plant upgrades etc., it has to strike the right balance between meeting these three objectives, while keeping the customer at the heart of the decision making.
In customer experience design we balance customer demands/preferences against the objectives of the organisation by asking ourselves three questions – Firstly do customers want it (value it)? Secondly, is it technically feasible? And finally does it make good commercial sense?
We appreciate that there are balances to be achieved. My performance agreement as Managing Director of Sydney Water has four major metrics that measure my success (and that of the organisation). They are:
In your opinion, how will the need to monitor customer behaviour change the way assets are managed in the future? How will technology improve or facilitate that relationship?
In the future, we will need to be more proactive in how we manage our assets to deliver good customer outcomes. Technology will enable us to do this, but at the same time technology will empower customers to hold us to account.
Improvements in sensor technology, the internet of things, digital technology, advanced analytics and social media will all transform the way that we monitor customer behaviour and manage our asset operations. We will need to be smarter with how we use data, and make decisions and act in near-to-real time.
The role that customers and the community will play in shaping the future direction of our business will continue to increase. We will see greater public participation in decision making that will be enabled by online platforms and social media.
In parallel with this, we are seeing our infrastructure becoming smart with lower cost sensors and mass connectivity. Our future dream is that we know about problems before our customers do.
What might other infrastructure sectors learn from Sydney Water’s experience? What did you learn?
The message for other infrastructure sectors is that the shift to customer centricity is not an overnight one. It requires a continual and sustained process of change, with buy-in at every level of the organisation – from front-line and back-office staff – right through to the Executive and Board.
I have learned a lot along the way, but the most important lesson is the role of people in making change happen. Strategy is all about change – finding new and better ways of doing business – and this means having the right culture in the business and the right people with the right mindset.
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Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.