A new report from the water industry regulator says that better use of customer data is key to enabling Britain’s water sector deliver for its customers in the years ahead – but that currently none of the water companies is able to provide Ofwat with a copy of their data strategy.

‘Unlocking the value in customer data’, is intended to provide the water companies with a framework to help them unlock the “huge potential” of their customer data. Ofwat says that the better use of data can be used to drive greater customer service and satisfaction, improve efficiency and encourage smarter network management.

The report also encourages water companies to learn from businesses in other competitive retail markets which have successfully harnessed customer insight data to offer better services that are tailored to meet the needs of the customer.

Ofwat: water sector lags behind - we want to see it lead the way in using customer data

The research shows that while changes have been made by other sectors in terms of  innovation and the use of new technology the water sector is behind.

Ofwat wants the sector not only catch up with current good practice, it also wants to see the sector pushing boundaries and leading the way in how it uses customer data.

Ofwat Senior Director of Strategy and Planning John Russell said:

“In the years ahead, a key priority for Ofwat will be modernising Britain’s water sector to make it ever more responsive to the needs of the customer. Today’s report illustrates the potential of customer data in the water sector and how it can help water companies to provide a high quality service which is driven by a thorough understanding of the needs and expectations of the customer.”

Key issues covered in the report, together with a number of case studies, include:

• The role of customer data in the water sector
• Unlocking the value in customer data
• Data innovation
• Collaborative working
• Data strategy
• Data security

Data innovation: Ofwat wants to see sector make a step change 

On data innovation, the report says Ofwat wants to see the sector make a step change and start driving innovation through better use of data.

Examples the regulator hopes to see In the future include:

• the application of multiple sources of information layered with customer data to gain better insight and intelligence, for example, to target support to customers who need it most;
• companies making data available publically so that data innovators can help develop and expand the market, for example, through open data;
• using big data and data analytics to give better customer insight, for example, giving customers tips on how to save water based on their actual usage.

Beyond this, the report flags up a future where “cutting-edge ideas like blockchain, edge analytics or machine learning could be implemented in a water sector which proactively pushes towards dynamism and intelligent insight.”

Water trading across company boundaries is one example where blockchain technology, where records are held in a database which is not stored in one location, but distributed across multiple computers, allowing information to be open to many users who can view all updates to records in real time, Ofwat says could be used.

The report also highlights the potential for collaboration, sharing information and ideas and working with a range of organisations to gain new insights on how data can be used to drive better outcomes for customers.

The report suggests this could extend to commercial opportunities, for example, wholesalers and retailers finding ways to share data with third-party intermediaries to improve price transparency, encourage switching and enable customers to benefit from new services.

No company was able to provide a copy of its data strategy - "this is a concern to us"

However, the report has also flagged up the regulator's concerns about current practices in the sector, saying:

"When we asked companies for information on their data practices, some were able to provide us with examples of how customer data is being used more innovatively. However the majority were only able to provide us with information on how data is used to support customers who are in vulnerable circumstances and no company was able to provide us with a copy of its data strategy."

"This is a concern to us. Many companies are trying to improve their use of data but we found no evidence that any company had a clear strategy in place running through all levels, from the Board to front-line services."

The report says Ofwat expects all the water companies to have a data strategy in place which clearly sets out how the company will comply with all applicable legislation in the management of its data. In addition, When implementing their data strategies, the companies should assess the potential benefits of making more of their data ‘open’, to not only improve customer service, but to enable innovation from third-party services. 

However, the report also cautions that because many water companies outsource part of their service provision and make extensive use of others through the supply chain, they "need to consider carefully the data they collect" - a consideration which should also be given to supplier and contractor activities.

Ofwat expects companies to make changes now and will follow up in early 2018

The report also sets out the regulator’s expectations for how the water sector uses data in the run up to the forthcoming 2019 price review.

"One of our ongoing priorities is to modernise the sector. Companies can make better use of customer data to help to achieve this. While we expect to see evidence of how companies are making better use of customer data in their 2019 price review business plans, we also expect companies to begin to make changes now. We will follow up on the expectations in this report in early 2018."

Click here to download Unlocking the value in customer data

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