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Case Study

The Background

SSE (formerly Scottish & Southern Energy), the second largest energy utility in the UK, was formed by the nil premium merger between Southern Electric and Scottish Hydro. SSE has 10m customers with a turnover of £32Bn, employing circa 20k staff and is recognised as one of the most valuable shares in the FTSE today.

The Problem

12 months after the initial merger little had been done to integrate the IT departments and the group was in danger of missing its synergy targets of £90m pa which had been published to the city.

The Approach

John Berney was appointed CIO by the then CEO, Jim Forbes, with the remit of ‘sorting out’ the IT department and getting the synergy targets back on track.

The Solution
A policy of Centralise, Simplify and Standardise (CSS) was put in place and the methodology of Integrated Operational Planning and Budgeting (IOPB) was born. Sometimes a project can be so large or daunting that it is difficult to know where, or more importantly how, to start.
IOPB starts with an analysis of ‘where you are’ and uses benchmarking techniques to determine ‘where you need to be’. A ‘step by step’ plan, based on experience, is then put in place to determine how the journey should be taken. Further details on IOPB can be obtained from our White Papers Section.
The Delivery
An IOPB was put in place to tackle all the known issues systematically which included:
  • A consolidated multi-brand/utility Billing and CRM system capable of scaling to accommodate 20m customers and supporting 6,000 users was developed.
  • 6 data centres were consolidated down to one, including a DR facility.
  • All process duplications were eliminated.
  • A major development contract was insourced.
  • Multiple IT departments were consolidated into one cohesive unit.
  • Thin client architecture was deployed to support the Billing and Call Centre staff.
  • Retail systems for 60 outlets were streamlined and a fully integrated profitable online shop was launched, accounting for 20% of turnover in the first year.
  • Operational productivity and financial reporting was reviewed and optimised resulting in vastly improved system performance and productivity levels, ensuring SSE achieved pre-eminence in a high volume low margin arena experiencing substantial churn.
The Outcome
The synergy target was substantially exceeded at £171m pa, directly attributable to the reduction in IT costs of 65%. Moreover, streamlining the IT operational processes led to a second wave of synergies within the business that included:
  • Best Customer Service in the Sector.
  • Best Network Performance in the Sector.
  • Lowest Cost to Serve in the Sector.
  • Sector Shareholder Value Award.
  • Best Billing Record in the Sector.
  • Recognised as the most Valuable Share in the FTSE.
  • An increase in share price from £4.30 to £10.30.
The performance of the IT consolidation far exceeded expectations resulting in SSE redefining the IT benchmark for the sector within the UK as a whole.
“We never could have achieved this without you.”

Jim Forbes, SSE CEO

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