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In the past six months, Eneco Energie has done what many companies in this tumultuous industry would love to do -- gotten to know customers better and increased market share. The way the company accomplished that somewhat daunting task was through business intelligence tools and a solid focus on Eneco's business goals.
Last July, Eneco faced a great challenge -- and a great opportunity. For it was on the first of that month in 2004 that the Dutch energy market (gas and electricity) would become a free market. On that date, businesses and institutions, as well as households became free to choose their own energy providers. Previously, consumers were signed up to an energy company according to location.
That new freedom has forced energy companies in the Netherlands to pay attention to getting their operations in order. Recently, the segment has seen its share of mergers and acquisition activity. A report last summer issued by Boer & Croon, a Dutch business consultancy, noted: "The major energy companies are currently still facing post-merger issues. They neglected to timely invest in integrating their ICT [information and communication technology] systems. Their internal administrative systems need to be improved." So, while a free market means more customers, it also means more customers to track – and more competition. The market liberalization has meant facing up to administrative challenges and understanding the importance of understanding what really makes your customers tick, says Ton van der Dungen, Eneco Energie's manager for business intelligence and control. Understanding which customers offered Eneco the most value – and were therefore profitable – would provide the company with information on which customers would be kept, and which type of consumer it should attempt to attract. That would be a powerful competitive advantage.
In preparation for the July 1 date, Eneco started to research its customer base. That customer value segmentation process led to the formation of discrete questions the company knew needed to be answered, such as: Who are our customers? What Eneco Energy products do they take advantage of? How many times do customers phone the call center (which is an expense to Eneco)? How many customers pay late (another expense to the company)?
At the time, Eneco was running a SQL Server database, but it was difficult for the company to gain a clear understanding of the information it was gleaning. "Data doesn't tell you anything unless you can build on it and organize it," acknowledges van der Dungen. In order to "slice and dice" the data more effectively, Eneco launched a pilot program in 2003, running Cognos tools on top of the SQL database.
Today, managers and heads of departments use Cognos ReportNet for reporting. The company created a department called the BI Intelligence Center through which data is released. Through the business intelligence data that is collected, Eneco was able to manage its customer turn successfully, and, at a time when customers were in flux, moving from one provider to another, even gain one percent market share. Van der Dungen notes that for Eneco, and others, the key to success for implementing a BI project is maintaining a business point of view. "Nine out of 10 BI projects that don't work are IT projects only. [The] business needs to know where it wants to go," he advises. "Alignment is necessary between business and IT. Clear goals must be established....you build a solid data process out of that. Otherwise, it is 'garbage in, garbage out.'"