Comprehensive IT strategy for utility conglomerate

In a deregulated market environment, one of the largest private utility companies drove their business towards growth and efficiency with the clear objective of becoming number-one worldwide in terms of size and profitability. The company comprised approximately 20 regional energy providers across Europe, a power plant unit of approximately 35 nuclear and fossil stations, and a few centralized business units, such as trading, key account management, and high voltage grid responsibility.

Although the company spent $1 billion a year for IT, the application and infrastructure landscape were fragmented and outdated, and delivery units were unconsolidated and many poorly performing - IT was hindering realization of the company’s ambitious growth and profitability targets.

Challenge
A.T. Kearney was engaged to develop an IT strategy for the entire conglomerate, across Europe. The strategy included all value-added stages: generation, grid management, trading, sales, and G&A.

The project pursued four primary objectives:

1. Harmonized and innovative application landscape to support group-wide business process efficiency and revenue increase
2. Standardized IT infrastructure in terms of front ends, server, databases, operation systems, etc. to reduce IT costs and increase flexibility
3. Consolidated IT delivery units with a new delivery organization
4. New IT Governance model

Approach
The balance of business and IT needs was a recognized critical success factor for the project. From the start, A.T. Kearney supported this integrated project approach, including the CEO mandate for a mixed business and IT team, who were responsible for achieving the expected project results.

The project team, including client experts and A.T. Kearney consultants, followed a structured approach to deliver robust results:

• Evaluated key business objectives for the future direction of the company, related to their relevance for IT
• Developed business and IT requirements, enriched by best practices across industries (provided by A.T. Kearney)
• Clustered and prioritized IT mega topics, by their potential to enhance revenue and reduce business process cost
• Created an Innovation Roadmap, containing business cases and transformation plans for the IT mega topics
• Recommended a consolidated IT delivery unit to deploy and maintain the future IT landscape
• Established an appropriate, European-wide IT governance model

Results
The companywide IT strategy was the basis for complexity reduction projects for over 100 sub-systems / components and 19 assembly processes. Tangible results included significant savings:

• Over $110 million in annual business process cost savings by using latest technology
• Nearly $200 million additional revenue through new sales and customer care applications
• Over $ 90 million in annual IT cost savings from infrastructure standardization and delivery consolidation

In addition, the teams developed a stable and well functioning IT governance model, which ensures significant business impact on IT steering and further development of the IT strategy.