Origin Energy is one of Australia's leading energy companies, exploring, generating and retailing energy throughout Australia, New Zealand and the southern pacific region, with some 4,000 employees.
In 2008, Origin Energy's Retail business found itself at a crossroads. The company had certainly been growing over the past 10 years, primarily as a result of a series of acquisitions, to become one of the top utilities in the country with three million customers and some 1,400 employees and contractors. It had 20 percent market share and was the most profitable of Australia's energy retailers.
But, deregulation in the mid-1990s meant it was dealing with new competition and several years into a new century the utility was still employing a very traditional way of doing business with customers that included door-to-door sales calls. Origin's customer churn was significant; they were effectively replacing their customer base every four years, according to the Retail General Manager Phil Craig.
They recognized the need to grow organically, not through acquisition. That meant they needed to be more customer-centric and expand their product portfolio. In short, they needed to be a more entrepreneurial organization. Their strategic goals were to grow earnings, make Origin Australia's most respected brand, and assist their customers in reducing carbon emissions.
Previously the organization had launched a CRM upgrade to help them add more customers, products, and services – but the upgrade did not deliver all the capability required, causing tremendous organizational pain for another 18 months. Not only did this make it difficult internally for Origin's employees, it created poor customer service delivery and couldn't support innovation. Origin's management realized they either had to make continued investments in their existing system to fix it or look for another solution.
They opted for a new solution but also came to realize that hand-in-hand with that new solution they needed an organizational transformation that would align the new technology platform with a new operating model and together deliver the desired 'future mode of operation' they sought. Through an involved selection process, Origin chose Wipro to partner with them to achieve these goals.
Picking a Partner
Initially, Origin's management focused on a new system platform. "Three years ago, it occurred to us that we needed to do something about the technology architecture," recalls Craig. "Our systems didn't talk to each other, we had no single view of our customers in our call centers, and it was costing us money. We wanted to behave like a strong competitive retail business and we looked at our core competencies and realized we didn't have the actual resources to address sales, marketing, and customer management. We started looking at a new system platform but realized we had the cart before the horse and needed a partner."
According to Nazzareno La Gamba, Origin Retail's Strategy Executive, one of the reasons the company embraced Wipro was their focus on continuous improvement, innovation, and organizational cultural fit.
A partner who they could trust with the employees they would be transferring; a partner to challenge and evolve their thinking and enable their transformation; a partner to manage and deliver the systems platform.
Origin's search began in earnest in February 2008 and eventually they narrowed their choices to three providers, which led to WIPRO being selected as the successful partner and SAP as the technology solution. According to Nazzareno La Gamba, Origin Retail's Strategy Executive, one of the reasons the company embraced Wipro was their focus on continuous improvement, innovation, and organizational cultural fit.
The attraction of SAP was that their solution would provide an integrated platform, and as Felicia Brady, Origin Retail's Executive for Capability and Change, points out, "Our pain came from a lack of integration and SAP solved that problem."
But, even more important, say each of these executives, the choice of Wipro was the values and cultural fit. "We felt if things got tough, Wipro would want to negotiate with us and find a solution together," explains La Gamba. ‘It was more of a partnership type of arrangement we were looking for, instead of just a supplier. We felt we could work with them and it would be a mutual partnership in the long term that would benefit us."
Mark Sherratt, a Wipro partner for energy and utilities business transformation, has been the project's lead consultant and recalls that they also had a different approach to the bid than their competition. "We were prepared to go in and do transition work prior to doing the transformation," he notes. "Others wanted to do the transformation first but we wanted them to see some initial benefits as soon as possible. Our advantage is that, to us, transforming an organization when in a global model is not a big issue. We're already a globally distributed company." So shifting low-risk jobs first would give Origin immediate tangible benefits.
First, the Transition
The transition lifted about 30% of Origin Retail's base of 1,400 employees and contractors and transferred them to Wipro. These were primarily back office processing positions in billing and cash collection. Wipro now looks after account set-ups, billing and credit issues. The project came in on time and within budget.
"Our task for the first year was huge – to complete the transition seamlessly, locating the employees to locations in Adelaide and Melbourne," says Manoj Varier, Wipro's Account Director for the Origin account. "It's been very successful and is considered a huge achievement."
Craig agrees. "The process went very well, it was a smooth transition and we had external stakeholders here who hadn't realized we had outsourced, which is good," he says.
In fact, notes La Gamba, "We were worried about problems with unions and staff, but it went very smoothly. That gave us a lot of confidence that Wipro had the ability to deliver and we realize now that is one of their core strengths."
Then the Transformation
Essentially, Origin was taking two linked journeys. One was the IT project, the other was business transformation. With the transition underway, Sherratt led Origin's management through a series of workshops that challenged their thinking across business vision, brand and employee values, customer and product strategy, operational and service excellence drawing on best practices from their local competition, global best practices in energy retailing, and best practices in the telecom, retail and retail banking industries.
"Together we identified and prioritized 11 key capabilities for retail," Sherratt explains. "From there we agreed on an achievable set for them and jointly identified the competencies needed achieve those capabilities."
Some, he points out, were obvious. They needed to build on their continuous improvement activities, implementing a broader Six Sigma program. Origin needed a stronger focus upon credit risk management; and they needed deeper customer insight, differentiated service management, and improved customer advocacy so they could understand customer issues and solve them more effectively.
Additionally, the Wipro team worked with Origin to develop key metrics to drive the new operating model. The define phase of this process took about three months, followed by seven months of design integrated with the 'SAP blueprinting' activity on the systems project.
"The part of the work that Mark did in leading the design phase was valuable," says La Gamba, "because for the first time we were able to step back and tackle key strategic pieces. We realized we needed to change and Mark was the catalyst."
"We were an organization that was product-led and we needed to make a shift to being customer-led," La Gamba continues. "We would build products and find customers to sell to instead of identifying customer needs and building products to those needs."
So, he explains, customer segmentation has changed. It's now based on seven behavioral groups around which quantitative research is done on their needs today and in the future. Product development is now aligned with each segment. The segmentation has also helped Origin profile high-value customers to grow their share of the market in that base. These could be customers who are young families whose consumption would grow over time, customers with an interest in green products, and those who want premium services.
For Craig, the design workshop process was critical in that it forced management to stop and think deeply about what they were trying to achieve, instead of just writing out requirements and leaving it to Wipro to build them for them. "It's fed into marketing, sales, operations groups, and segment strategy," he says.