1. The transition from regulated tltdktto unregulated market · • Telephony • Mobile Pagina 8. The company is active in the following areas. Networks ... On AX 2012 Pagina 31.

1. The transition from regulated t l t d k tto unregulated market

P d f W b tPrepared for Webcom event30th May, CzechTeams & Rudolph

Situation in The NetherlandsSharp competition, lower marginsp p , g

Situation• Regulation started in 2001• Due to the deregulation new entrants entered the market• Many startups homed into a market in which they already where strong• The most competition is from resellers that supply a niche in the market

Complication• Pressure on the margins (already in CZ/SK)

Higher c stomer e pectations (coming in CZ/SK soon)• Higher customer expectations (coming in CZ/SK soon)• More product/services need to be introduced (starting in CZ/SK)

SolutionSolution• Find your strength in the Brand and Organization Excellence• Reduce cost of service by focusing on IT solutions for the future• Develop customer care and marketing skills with focus on efficiencyDevelop customer care and marketing skills with focus on efficiency

Pagina 2Pagina 2

Similarities to the CZ and SK marketPressing competition, high cost to serveg p , g

Situation • More then 300 registered suppliers• around >30 active

Complication• Same as in the Netherlands on margin etc.• Unbundling started five years ago. Competition started. Total unbundling is going to

be forced upon you (the 3rd package) Forcing all organizational departments to split: admin IT legal marketing etc etcadmin, IT, legal, marketing etc etc.

• In Slovak six years no compliance. Regulator is pushing hard.• During the split, focus goes to internal issues, giving opening externally to

competitioncompetition.

Solution• The way forward is by adopting a attitude that has flexibility.The way forward is by adopting a attitude that has flexibility.• People need to adopted and start to work with new marketing models• Supporting IT systems need to be standard in the core and flexible in the outer layer.

Pagina 3Pagina 3

Introduction

Pagina 5Pagina 5

Where is Delta located and active

Pagina 6

General highlights

Highlights• Started in 1919Started in 1919• Transition from Energy to Multi-Utility• DELTA is an independent company specializing in Production, Networks,

Transportation and Retail (and waste management)Transportation and Retail (and waste management)• Most of the shares are held by municipal authorities and the Province• DELTA employs over 3,000 people.

Key figures 2012 for Retail customers• 200.000 accounts with 1 million contracts.

C t t f P G E t TV I t t Ph t• Contracts for Power, Gas, Energy management, TV, Internet, Phone, etc• 95% market share for Energy & Gas• Every customer has on average > 5 different contracts with us• Turnover: 380 million• Net result from the core activities: € 28 million EBIT• This comes from Energy for 5 mill, Media 23 mill.

Pagina 7Pagina 7

Product and services DeltaOne customer, many contracts. So lock in, y

EnergyEnergy• Power• Gas• Boilers & Central heating boilers for rent• Boilers & Central heating boilers for rent• EPA Advice: Energy Efficiency Advice• Energy Management System

S l t ti h i• Solar rent or time sharing• Local Production/sales support

Multi Media• Television• Internet• Telephony• Mobile

Pagina 8Pagina 8

The company is active in the following areas.

Networks• DNWB is the network operatorDNWB is the network operator• Performs its statutory tasks autonomously within the DELTA organization.• Is responsible for managing the gas and electricity distribution networks. • These networks are constructed and maintained by DELTA-InfraThese networks are constructed and maintained by DELTA-Infra

Pagina 9Pagina 9

GeneratingDELTA generating capacityDELTA generating capacity

• EPZ (50% owned) Nuclear power station - Output: 512 MW (DELTA: 50%)Nuclear power station - Output: 512 MW (DELTA: 50%)

• Coal-fired power station Fuel: coal and biomass Output: 426 MW (DELTA: 50%)Fuel: coal and biomass - Output: 426 MW (DELTA: 50%)

• ELSTA (25% owned)F l O t t 420 MW (DELTA 50%)Fuel: gas - Output: 420 MW (DELTA: 50%)

• Sloe power station (50% owned)Fuel: gas - Output: 870 MW (DELTA: 50%)

• Biomass power station (50% owned)Fuel: chicken manure- Output: 36 MW (DELTA: 100%)

• Combined heat and power 80 engines

Pagina 10Pagina 10

p gTotal output: 60 MW (DELTA: 100%)

Wind farms74 turbines in 20 locations

Pagina 11Pagina 11

Waste management

Waste management• All the waste management operations have been brought together.All the waste management operations have been brought together.• Indaver works for the public sector (mainly in Belgium, the Netherlands and

Ireland) and private sector (North-West Europe). In the Netherlands, the company uses the DELTA brand name in the public-sector marketcompany uses the DELTA brand name in the public-sector market.

• Indaver processes over four million tonnes of waste a year, of which Belgium accounts for more than half Most of the waste is processed atBelgium accounts for more than half. Most of the waste is processed at Indaver’s own facilities.

Th l i t f t• The company employs a variety of waste processing techniques including recycling, biomass production and waste-to-energy

Pagina 13Pagina 13

Social responsibilityDELTA is very active adding to reduced churny g

Pagina 14

2 How did Delta – as a commercial organization –reacted on this transition and made a difference in the landscape?

Strategy – Management summaryCompetition, lower margin, new income from other

d t d dproducts needed DELTA Consumer market• Margins are good. • High customer satisfaction.• High market share• General strategy is to maintain the neutral line: 0% line as for number of customers.Th M k t

ContextThe Market• More and more competition. Both in number of competitors and the way they enter the

market: both price and services• The society as a whole wants to reduces energy consumption and being depended form

other countries and resources.

• We need a transparent vision on what the future will bring. This in order to move the team p gtowards efficient and proactive plans and implantation

• The hypotheses of the team is that the value chain will change and that the energy model will change

• If the model changes than it is the Marketing teams opinion that Marketing must lead of

Action needed

• Wich energy retail strategie gives the direction for the activities of Delta in order to position it lf f ll th l t ?

• If the model changes, than it is the Marketing teams opinion that Marketing must lead, of will be the only department that can lead that transition.

Pagina 16Pagina 16

16

Q itself succesfully on the long term?• Which (high level) energy retail proposition can Delta develop and introduce to give

substance to this new strategy?

Strategy – Main topicsThe home of the future is the direction we are taking. g

Home of the futureKey topics

Decentrale productie van groene energie

Interactie met

t kb

Energy managementFocus on less energy consumption

Key topicsDe-central production of green

energy Interaction

Plug in elektrische

netwerkbe-heerder, o.a. dynamische nettarieven

K

De-central productionFocus on sustainable energy

energy

Plug in Trade

Interaction with grid

etc

elektrische voertuigen

Slimme apparaten en

Koop en verkoop van energie met de buren

Energie-opslag modules Electric transport

gyproduction

Plug in electric cars

Batteries

Trade your

produced energy

energie management systemen met extra diensten

Real-time en groene prijssignalen leverancier

pFocus on efficiency and reduction of CO2

C ll ti

Batteries Smart energy management

gy

Real time energy data Collectives

Focus on sustainableFocus on low prices

data

Pagina 17Pagina 17

17

Focus the next years

Energy Management Electric trsanport

DecentralProduction Energy Saving advice

Pagina 1818

Positioning Delta in future scenario’sMoving toward the Full Energy Service Provider is the way f dforward

Positionering Delta

3. Full Energy Service 3. Full Energy Service ProviderProvider

• Focus on growth of new dStrategic A biti &Strategic A biti &

Drivers Strategic PositioningPositionering Delta

services and offerings• “One Stop Shop” for smart

home products and services

• Strong branding and

2. Smart Energy Provider2. Smart Energy Provider

• Focus on margin on R

equi

redAmbition &

GoalsAmbition & Goals

Vision of Market Evolution

Vision of Market Evolution positioning to be home

solution provider• Exploitation of smart

capabilities for operational cost savings and diff ti ti ll

1. Best Energy Provider1. Best Energy Provider

• Focus on cost to serve / t i iti &

optimisation / customer value management

• Customised and targeted offers – with differentiated customer propositionsE l it ti f tra

nsfo

rmat

io

Choice of Value PropositionChoice of Value Proposition

EvolutionEvolution

differentiation, as well as smart home solutions

• Evolving and expanding product and service offerings to drive revenue and margin

customer acquisition & retention

• Core energy provider, standardised low cost tariffs and productsCore operations are smart

• Exploitation of smart capabilities for differentiation and operational cost savings

• Advanced data analytics dri e c stomer segmentseg

ree

of T

ra

Capabilities vis-à-vis Competitors

Capabilities vis-à-vis Competitors

CustomerCustomer and margin• Utility as trusted energy

advisor• Advanced analytics to drive

segmentation, plus sophisticated product

• Core operations are smart meter enabled

• Core competencies-meter to cash focus

• Transactional relationships

drive customer segments and ability to better meet specific customer needs

• Potential use of partnerships to offer energy/home services

D

Economic ModelEconomic Model

Customer NeedsCustomer Needs

Pagina 19Pagina 19

19

sophisticated product management to drive growth

energy/home services

Increasing Scope and Capabilities

ModelModel

Strategy – Role in the value chainData and speed is key. IT needs to support this!

“New additional” value chain of Smart Energy

Product I ti Sales

Product & Maintain Data DeliveryServices

gy

Innovatie Sales & Installatio a Data Delivery

• Product Innovation

• Marketing

• Sales

• Hardware/ Software

• AdminSolar etc

• Maintenance

• Collect & Transport D t

• Service Delivery

Services

• Installatie Data

• Process & Analyse Data

• Customer Care

Focus Delta Focus Delta Focus Delta

Pagina 20Pagina 20

20

A new chain is developing and Delta needs to decide where of act

Matthijs & Team

Generation Trading Transmission & Distribution Sales Consumer

“Traditional” valuechain of the energy sector

g & Distribution

“New additional” value chain of Smart EnergygyProduct Innovation

SalesProduct & Installatio

nMaintain Data Service Consume

rServices Production

Balancing

• Product Innovatie

• Marketing

• Sales

• Hardware/ Software

• Installatie

• Diensten • Maintenance

• Collect & Transport Data

• Process & A l

• Service Delivery

• Customer Care

• Consumer

Pagina 21Pagina 21

Analyse Data

21

3. How does Delta succeed in keeping its head above water in a liberalized and more competitive market?

Five key element in our strategyStarting in 2011 the direction is clearg

The 5 points of the strategy

Customer relations

Customer experience

Innovation

Outside our area

Cost to ServePagina 23Pagina 23Bron: Operationeel Plan 2011-2013

Cost to Serve

Complex targetingIn 2010 no segmentation in 2013 six and moreg

Pagina 24

Limited money, focus on valuable customersBuying behavior now and in the futurey g

Needs

Low Midle High

Easy

V l f thUnderstandable

Segment 1

S t 2

Value of the Customer

Prize

Segement 2

Segment …

Behavior &Pagina 25

Behavior & Demografic

Customer value explainedIT needs to support this in a control frameworkpp

Digital Television

Spend

Digital Television

Digital Telephony

Internet

Multi Media

Energy

• Current RGU’s• Potential RGU’s

Campaign costs

Acquistion Costs

Service Products• Marketing material•Personnel •Training•Channels

CostsCustomer value

IT costs Acquistion Costs

Product costs

•Channels

• Initial costs• Transport costs• Installation costs• Life Cycle

Personnel costs

Service costRetention cost • Front Office

• Back Office• Channel• Conversion

Life Cycle

Usage costs

Cost of payment

Non financials

Social Respon.

ImageIT cost • Maintanance

• Changes

• Way of payment

• Data • Production cost

Pagina 27

Cost of payment

Customer satisfcation• Perid

The framework: which customer when…setting engagement rules, to optimize the contactg g g , p

Customer Contact Framework

Generiec and specifics rules determine when and how to contact the customer

Contact rules

customer

Contact history

Contactcalendar Calendar with

communicationcommunication during the life cycleOverview of who,

when and with what message

Pagina 28

4. Why did Delta opt for UMAX

We come from an IT landscape that looks like..

Pagina 30Pagina 30

Going to Supporting all products and servicesPower, Gas, Services, Television, Internet, , , , , ,

UMAXUMAXOn AX 2012

Pagina 31

What was the process and why UMAX?

Overall• Nasty process with the people form the ‘purchase departmentNasty process with the people form the purchase department• Requirements sessions then Long list, Short list, backwards and forwards

with those people

Corporate IT Considered • SAP, Oracle• Accenture was the system integrator• Accenture was the system integrator

Business and retail IT vision/positionMi ft AX l tf th t i fi bl• Microsoft AX as platform that can is configurable

• Flexible and future proof (not like Stonehenge)

Final reasons for UMAX• Scalable & Flexible• Good history with the BtoB department

Pagina 32Pagina 32

• Not too big, not too small• UMAX still greedy and has dedication and commitment

5. UMAX implementation project overview

With an standard program structure

Pagina 34

UMAX phasing

2009 2010 2011 2012 2013 2014

Fase 1B-to-BB-to-B

Fase 2RegulatoryB-to-C

Energy

Regulatory releases

FaseFase B-to-C Media

Pagina 35

Media

Lessons learned

Project management• Do not switch program managerDo not switch program manager• Define a clear scope• Agree on set business case and stick to it!

Supplier relationship• Clear roles and responsibilites right from day one: both for internal and

external reasonsexternal reasons• Take a company that understands or wants to understand your business• Clear project management from UMAX side

Delta/UMAX• Joint effort, symbolized in shared planning and deliverables

Pagina 36Pagina 36

Benefits

IT operation savings• On the IT department we expect to reduce form 62 fte to around 40 fte.On the IT department we expect to reduce form 62 fte to around 40 fte.

Customer care savings• From the 210 customer care FTE we have reduced 30fte and expect toFrom the 210 customer care FTE, we have reduced 30fte and expect to

reduce an additional 30 fte in 2014.

Time to market improvementTime to market improvement• To introduce a new product, we normally had to take approx. 10 tot 12

months for introduction. Now we expect to reduce this to approx. 2 months.S th i• So more months income

• Cross sell and up sell conversion increase, giving more revenue

Pagina 37Pagina 37