Bord Gáis is a State-owned dual-fuel energy company with around 1m customers, split between 650,000 gas users and 350,000 electricity consumers. The company has its headquarters in Cork and employs 1,000 staff.
The company wanted to conduct a forensic analysis of the business to understand which markets were profitable by modelling every activity carried out across each department within the business. More recently, it had grown its customer base by 300,000 as a result of its “Big Switch” campaign in the electricity market but it became concerned that this growth could have an adverse impact on operational efficiency and resource optimisation.
Bord Gáis wanted to use business modelling techniques based on the balanced scorecard methodology. An initial attempt in 2000 was unsuccessful, due in large part to a lack of buy-in at senior-management level. That changed and the next attempt was initiated by the CEO – which says was the key to its success, says Will Roche, group director of strategy and regulation at Bord Gáis. “It takes awhile for a tool like this to become embedded into an organisation. It’s very difficult to grow a balanced scorecard approach from the middle of an organisation. This was driven by the CEO as his strategic management tool,” he says.
The Dublin-based firm StaffBalance was brought in to help Bord Gáis manage its costs and improve operational efficiencies.
StaffBalance uses the approach pioneered by the noted business thinker Prof Robert Kaplan, who developed the time-driven activity-based costing (TD-ABC) methodology. Using business modelling software, the StaffBalance team developed an ongoing methodology for optimising Bord Gáis’ resources. The aim was to ‘right size’ teams in order to meet business objectives, to prioritise workloads in order to maximise customer service, and to seek out opportunities to improve operational efficiency. Going through this process gave Bord Gáis a key understanding of process, cost and profitability: the cost to acquire and to serve customers. “The forensic evaluation that was done is vital to our business,” says Roche.
Bord Gáis placed a lot of focus into improving its sales team, which is divided between an internal direct sales team, outsourced field sales and telesales teams. In addition, Bord Gáis gained insights into a range of areas, including the cost per bill for each market it operates in and the true transaction cost for 11 payment types it receives.
The ongoing use of these business models allows Bord Gáis to prioritise spend on process improvements and automation while providing an ability to make decisions on the outsourcing of non-core business activities.
The aim of the project was to reduce costs by ensuring the right number of people are available to deliver a quality service on an ongoing basis. In the case of Bord Gáis, operational efficiencies achieved through working with StaffBalance resulted in cost savings of more than €400,000 because the company was able to identify costs associated with non-core activities. The work on its sales team led to the company changing its processes, automating certain activities and reallocating non-sales activities to ensure that its sales teams could maximise their time with customers. It also led to the introduction of a ‘save team’, which has led to significant reduction in customer churn. By having a better handle on its costs, Bord Gáis was able to make greater use of video conferencing, resulting in a 25pc cost saving. Other business processes have improved by 18pc. “Unless you have the data, you can’t act. This project has given us the data,” comments Roche.
Bord Gáis has derived “significant benefit” from the balanced scorecard, says Roche, who says the scorecard’s one-page snapshot view of the business is “immensely valuable”. This approach has the added advantage of being an internationally supported framework, he adds, and consulting services are widely available.
Bord Gáis was the first Irish company to be accepted into the Balanced scorecard hall of fame two years ago for its work in this area. Now, every new manager that is appointed within the company receives training on the balanced scorecard. “No learning initiative has delivered more value to the business than the scorecard,” Roche concludes. “This is really efficient, it has been low cost and has given us high outcomes and it’s valued at all levels of the organisation.”