products & services - amazon s3 · 2016-09-28 · ey products & services overview – eei...

Products & Services

EY Landscape Overview

September 2016

Introductions

Nancy Korman

Senior Manager

P&U Customer & Strategy Practice

Simon Watson

Executive Director

P&U Customer & Strategy Practice

EY Products & Services Overview – EEI Strategic Issues Roundtable

Agenda

► Retail Market Developments

► Product & Service Outlook

► Critical Utility Challenges

► Closing Remarks


Market Overview


Emerging energy value chain

Legacy value chain

Distributed energy resources

Storage Products, software and analytics

Generation Transmission Distribution Retail Beyond the meter

Growth opportunities Risk management Utility shareholder value proposition

Generation Transmission Distribution Retail

Customers are changing


Technological

developments

Better experiences are being

made possible

Expectations are being set by

other industries

Gen Z has the highest

expectations yet

Social Integration

Cross Industry

Standards Demographic Shifts

Internet of Everything Cloud Computing

Big Data and

prediction

Artificial

Intelligence

Virtual

Reality

Technological and digital developments are

evolving the art of the possible and enabling

new approaches to customer engagement

Customers now expect the same

experience from their utility as they

receive from some of the world’s

most advanced digital organizations

Virtual assistants

Mobile Payments

Personalized Recommendations

Gen Z wants omni-channel interactions

and purposeful experiences tailored to

their needs. They want to communicate

and interact with content using their own

platforms on their own time.

+$75B Purchasing Power

25% of US population

Customer Empowerment


Tech savvy 1 Customer

power 3

Trust 2

Development of IoT and smart is enabling

the convenient customer

Always online multi-channel and platform

access

Aging baby-boomer and an increasing number of

people ‘born digital’

Increased focus on and need for cyber-security

Data connectivity now considered a ‘given’

Developing market growth leading to new

consumers with different needs

Increased global connection, both online and

physically

Transparency and clarity a must-have

‘Cultural’ differences with different

buying habits

‘Net-izen’ customers that are networked and

share experiences online

Highly informed and quick to compare

through online sources

Demand pro-active solutions and do not like

reactive solutions

Appreciate value through the total customer

experience over price

Prefer self-service options when

looking for help

Desire consistent and

complimentary service through an

omni-channel experience

Increasingly expect control as

other service providers give

them control

Rewards for loyalty

Better education with higher expectations and greater

availability of real-time information

Products & Services Landscape


1

2

3

4

Energy Efficiency & Demand Response


Software and analytics controlling and monitoring energy usage and

services providing information, recommendations and incentives for end

consumers to manage their consumption

Focused on utilities Utilities and other providers

Demand response Energy efficiency and

personalized tips Energy comparison Customer engagement

EE/DR software and analytics vendors Utility DR 2 1

Usage monitoring

software

(e.g., appliance-level

disaggregation)

User interface &

application

(e.g., mobile app)

Energy

Provider

(e.g., electricity

retailer)

Control device

(e.g., Smart

Thermostat)

EE and DR services are increasingly focusing on customer

experience and engagement through customer facing technology and

transparent energy usage visualization

Customer engagement

EE and DR provide another channel to create customer engagement

and bundle with other products and services such as connected

home and distributed energy

Route to bundling

Outside of regulatory cost recovery or improved customer

satisfaction, it is unclear whether EE and DR have significant

earnings potential as standalone services

Customer value

EE and DR programs are becoming more appealing to customers

through personalized data (e.g., appliance-level energy data) and

automation

Maturing technology

EE is no longer the exclusive role of utilities as shown by the

acquisition of Energy Hub by Alarm.com and Comcast’s integration of

EcoFactor’s services

Diversification

1

2

3

4

5

Home Services


Home services sell equipment and provide installation, maintenance and

repair services for appliances in the home, including heating and cooling,

electrical and water

Home services providers vary in terms of available services, who can subscribe,

how technicians are deployed, and payment method options

Value Chain

Sell Install Manufacture Finance Service Maintain

Utility and standalone service providers

Utilities with home service units Standalone home services providers

Home services provide significant EBIT per customer opportunities in

a relatively mature market, yet fragmented with a variety of players

and business models

Fragmented yet mature market

Many different successful business models exist with several paths to

scalable success

No one-size fits all model

A number of core customer interactions (Move calls / start service)

provide low cost and effective acquisition channels to extend footprint

in the home

Customer interactions

Effective service delivery is a key enabler to successful upselling

across the customer lifecycle

High quality delivery

The strength of local brand and existing customer relationships is key

in geographical expansion and can be accomplished by partnering

with existing utilities and third parties

Leverage the bill, brand, and channel

1

2

3

4

5

Connected Home


While traditional thermostats comprise the majority of the thermostat market, smart thermostats are

rapidly gaining popularity as consumers seek more convenient and cost efficient ways to manage home

energy use

Smart thermostat growth is steady and estimated to peak at 13% of all thermostats globally by 2020

Functions

► Connects to home area networks

► Learns behaviors

► Signals cloud-based services (utility pricing)

► Controls temperature

► Automates temperature

► Accesses remotely

Target Market

► HVAC installers

► Utilities

► Individual homeowners

► Residential builders

Drivers of Market Growth

► Increased environmental awareness

► Regulatory encouraging energy efficiency

► Effective marketing programs

► Rising energy costs

Barriers to Market Growth

► Higher comparative cost

► Utilities cautious/uncertain about

deployments

► Consumer indifference ► Global smart thermostat (ST) revenue growth estimated from $1.4m in

2014 to $2.3 bn by 2020

► North American ST penetration expected to grow to 16 million by 2020

Distributed Generation


Growth Indicators:

► Continued reductions in distributed solar system costs will result

in solar PV reaching parity with utility rates in the near-term.

► Cumulative PV installations are expected to total 41 gigawatts

nationwide by the end of 2016

► Microgrid capacity is expected to more than double – growing

from 1,283 megawatts in 2015 to 2,855 megawatts by 2020

Accelerating forces include:

► ITC extension through 2020 and near term bonus depreciation

► EPA Clean Power Plan (CPP)

► Policies, incentives, priorities by jurisdiction

► New market entrants positioning for growth

► Growth of storage – the “holy grail”

Projected annual sales of storage technologies expected to more than double between 2015 and 2020, to $5.9B

Cumulative U.S. PV Installed Capacity, 2007-2016E

Source: GTM Research/SEIA's U.S. Solar Market Insight

http://www.greentechmedia.com/research/subscription/u.s.-solar-market-insight

Driving Innovation


Disruptive Innovation

New products, resources, and processes ► Brings capabilities together in an innovative way to enter new markets

and/or target new customers

► Typically addresses new business issues, with new solutions,

business models, delivery approaches, economic models, and

technology capabilities

Adjacent Innovation

Major shifts in products, resources, and processes ► Aims to reinvent an already existing space

► Focuses on identifying and delivering competitive shifts in services

currently offered

Sustaining Innovation

Incremental updates to products, resources, and processes ► Keeps capabilities relevant

► Includes incremental updates to existing platforms, competencies and

offerings to keep them actual to changing customer needs

Critical challenges


Get leadership buy in – to deliver success, the leadership team needs to support both regulated and

unregulated channels to ensure coordination and effective performance management

Strategic alignment – to ensure the right level of focus and priority across the organization, products and

services growth through all channels needs to align to strategic objectives

Innovation culture – to build an effective product development lifecycle and inbound sales channel, the

culture of the organization needs to move to a customer culture

Coordinated operations – to successfully generate an inbound sales channel, internal processes need to

be designed and enabled with the customer’s experience as the primary focus

Effective performance management – to manage performance and improve product uptake, performance

metrics, targets and governance structure need to be in place and effective

Embrace product disruption – when facing fundamental disruption to the products and services available to

customers it is impossible to stop. Failure to embrace it will only set you further back

Work with the regulator to align objectives – to deliver true change to benefit the customer experience, work

with the regulator to align objectives and embrace change

Test ideas with customers – don’t be afraid to fail. Develop ideas, create pilots and test them with

customers and employees to get them right

Inward facing: Adopt a customer

focused mindset underpinned by a

governance structure and culture

that allows for sustainable long term

change.

Outward facing: Be aware of

changing customers, use data to

understand them and embrace

evolution

Discussion


1

2

3

4 If Google had access to this level of customer data & engagement – what would they do?

EY’s P&U Customer Strategy Team


EY’s P&U Customer team supports clients across the utility value chain to deliver long-term sustainable impacts to

growth, cost efficiencies and customer satisfaction.

Technology

enablement Designing the technology

strategy and IT roadmap

Strategy Helping define the long-term

strategic direction and

support performance

improvement

Insight and

analytics Improving data and analytics

infrastructure and operational

capabilities

Operational

excellence Designing and implementing

operational improvement

initiatives to improve

efficiency and reduce cost

Culture Transforming organizational

culture and defining purpose

to improve long-term

performance

Customer

experience

Improving customer

experience and satisfaction


THANK YOU

EY | Assurance | Tax | Transactions | Advisory

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and

quality services we deliver help build trust and confidence in the capital markets and in

economies the world over. We develop outstanding leaders who team to deliver on our

promises to all of our stakeholders. In so doing, we play a critical role in building a better

working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of

Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young

Global Limited, a UK company limited by guarantee, does not provide services to clients.

For more information about our organization, please visit ey.com.

Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited

operating in the US.

© 2016 Ernst & Young LLP

All Rights Reserved.

This material has been prepared for general informational purposes only and is not intended

to be relied upon as accounting, tax, or other professional advice. Please refer to your

advisors for specific advice.

BSC no. 1608-2016399

ED None


products & services - amazon s3 · 2016-09-28 · ey products & services overview – eei...

Documents