Outsourcing utility services in Germany


By Dirk Briese

While general competition progresses slowly, the cost pressures are increasing in all levels of the value chain. As the margins in areas not dependent on the grid – such as power generation, energy trading and distribution – have been decreasing steadily over the last few years, it has become necessary to develop new areas or to outsource some of these. For service providers this opens the opportunity to position themselves with new, innovative solutions in the billing market.

Since the start of deregulation, the mid-size and large energy suppliers have been converting their business processes and IT systems in order to align themselves with the new conditions of the market. New, expandable billing, customer relationship, trading and energy data management systems have been implemented, making it possible to determine accurately which costs can be allocated to the respective customers and what profit margins each customer produces.

In the IT segment in particular the cost-optimal support of the change processes has become a crucial factor for competition in the energy industry. However, the historical processes and the manner of operation of IT systems are tending not to satisfy the increasing demands of the deregulated market. The standardised automation of business processes for distribution, service, billing and grid processes, efficient customer service, the reform of the value chain and scope of services, and the assurance of cost optimisations are the new challenges for the energy industry. Energy suppliers are having to face up to questions such as what the actual core competence of their company is and what can be outsourced in order to optimise costs.

The study “Outsourcing in consumption billing” by trend:research determines which billing processes are being partially or completely outsourced by German energy suppliers. Sixty percent of the suppliers queried use outsourcing within the billing processes. In some areas, such as billing IT and print/mailing and dispatch, these in most cases are completely outsourced, while the other areas are mainly partially outsourced. In particular processes with a high degree of standardisation and low strategic relevance tend to be outsourced.

In the course of unbundling and regulation, it is a requirement for energy suppliers in Germany to analyse and evaluate their own added value regarding inefficient business processes, services and products, and to review their scope of services as well as core competences. To achieve cost optimisation and to survive under tightened competitive conditions, it can be strategically correct to assign selected sub-services, functions or processes to external service providers, while concentrating on and further developing one’s own core business.