Articles

  • Mirka Karra

3 reasons why energy retailers should outsource vs. develop in-house energy disaggregation solutions

Energy companies around the globe are shifting their approaches towards developing new business models and adding new services to better serve their customers. This energy market moves towards ‘Energy As A Service’ solutions following the adoption of energy insights and energy disaggregation solutions. However, it’s challenging for energy companies to implement all types of innovation in the field by themselves, mainly due to the high investment costs involved, the in-depth expertise needed and the time required. Instead, outsourcing such services isn’t anything new and many big energy players like E.ON Germany and EDP are strategically opting to outsource their energy insights solutions. Below, we present 3 reasons why it’s best for energy companies to outsource their energy insights solutions as opposed to developing them in-house.


1. Decreased costs and faster go-to-market time


One of the reasons why energy retailers might go for an in-house energy insights solution is because they consider it as a way of having better control of their operations and services. However, building an energy insights solution inside the organization is not an easy game. Firstly, it translates into large upfront costs for staff, infrastructure, as well as, developing, owning, maintaining, hosting and innovating everything in-house. This means that they have to invest a considerable amount of resources to develop and maintain the service, taking away from resources that could have been focusing on how to best make use of the service. B2B energy disaggregation providers have devoted years to developing energy disaggregation solutions, sharpening accuracy and improving their products with machine learning and algorithms which are continuously trained. At the same time, an outsourced provider always aspires to decrease the required costs to be more competitive and innovative, plus, fast time of deployment is a very important priority.


2. The experts know best


Energy solution providers usually choose to address specific technical industry challenges and focus their expertise and resources on them. For such providers, it is a core area of their business to implement the best know-how in developing and improving an energy insights solution. Churn management, customer engagement, customer retention and acquisition are common pain points in deregulated energy markets. Successful solution providers deal with such challenges on a daily basis and are well informed and prepared to tackle them and can also share best practices from the field.

According to Forbes, ‘’a business whose core is not building software, should not invest time and resources in creating software’’. Indeed, energy retailers' core competencies are not developing software or hardware, but instead serving their customers by helping them reduce energy costs via a digital user experience, reducing the cost to serve, and finding ways to deliver the new energy services. Similarly, Antonio Coutinho, CEO of EDP Innovation highlights that: ‘’We need to separate invention from adoption. You need to allocate a lot of resources just to think of how you can leverage existing technology in the relationship with your customers. Just doing that it’s a lot.’’


3. Invest in building a rich ecosystem of partners


The energy industry goes through its own transformation. Data democratization allows for more and more players to join the race, facilitating increased competition. Energy retailers will be able to better serve their customers and future-proof their business if they are joined by credible partners who are capable of providing guidance and solutions to a wide array of challenges and offer their skillset and experience where needed. According to Antonio Coutinho:

‘’The world is extremely complex to try and do everything on your own. When you are working on Innovation you know that this isn’t the right way of doing things. The right way to do things is to work collaboratively with more people, not fewer people. I think that in the energy sector, the winners will be the ones who have the widest ecosystem and the best collaborative approach to that ecosystem. The ones that are able to integrate their ecosystem and deliver an integrated service to their customers are the ones who are going to win the customer.’’


Check the short video with EDP Innovation CEO Antonio Coutinho on why energy retailers should outsource instead of developing in-house energy disaggregation solutions.