The chief future officer – RWE npower’s digital evolution

30 July 2015

In 2013, RWE npower committed to a wholesale transformation of the company and its services. Two years on, Greg Noone talks to Jens Madrian about what it takes to be the chief financial officer of one of the UK’s biggest energy suppliers as it invests in its digital future.

At times, RWE npower's Jens Madrian seems more of a 'future' than a 'financial' officer. Far from embodying the bean-counting persona of yesteryear, this CFO is more in tune with the potential of technology, particularly all things digital.

This is hardly surprising, given the considerable investments RWE npower has been making in its digital estate. From reforms to online billing, to the roll-out of 'smart' meters and new engagement tools that allow consumers to compare their energy use with that of similar properties, npower is futureproofing itself for an increasingly digitised energy market.

Madrian is quick to point out that cost savings and efficiency gains were not the only motive. "When we're talking about digitising the company, we can't let ourselves focus solely on the potentials in cost reduction," he says. "You can't ignore cost - and I don't ignore costs - but our move to digital is about much more than that.

"First and foremost, we want to offer a service that the customer trusts and can engage with, but if this can be done in better, smarter ways that lower our costs and allow us to pass on those savings to customers as well, everybody wins."

Since being taken over by the German power conglomerate, RWE, in 2002, the firm has grown steadily, augmenting its services and, today, npower employs nearly 7,500 staff in locations across the UK to cater for the needs of over five million customer accounts. The task of helping to steer this juggernaut through what is an increasingly unpredictable energy market is not something that particularly fazes its CFO.

Madrian has worked at npower since 2005 in a number of roles, first building the 'Risk Controlling' function, leading the commercial division, and optimising wholesale positions for retail and power generation. He turned the large customer business around from loss to healthy profit, before returning to the controlling and finance areas he heads today as npower CFO.

"As CFO, you cannot afford to have no opinion on strategy, market movements or innovation. These are the leading elements that will let organisations evolve to deliver the most value to customers and shareholders."

"It has been immensely useful to work on the operational level as well as within finance, risk and M&A, to see how everything works from the coalface and know how this interacts with the numbers," says Madrian. Such a diverse portfolio of responsibilities continues to inform his attitudes toward corporate governance. "I would say in today's business climate, the CFO just has to have had a degree of operational and commercial experience," he explains

"If, as a CFO, you want to drive operational performance through cost-cutting and growth in a sustainable way, you need to understand your operational performance ahead of the numbers."

Future vision

It's an attitude that has prepared him for his greatest challenge yet at npower: equipping the energy supplier for a marketplace no longer tethered to a paper billing system. "The energy industry hasn't been leading when it comes to digital," Madrian admits. "npower, however, sees itself as a front-runner in trying to provide customers with the kind of seamless online experience that they increasingly demand, and we are getting better and better. Don't believe me, log on to and see for yourself."

Having grown from privatisation from a number of old regional electricity companies with separate systems and offices, it was a priority for npower to have a standardised approach to billing, where there was a single version of the truth for customers. Customer engagement has become a key differentiator for utility companies, where ratings and customer satisfaction scores mean everything.

The change to digital billing has been a multiyear programme, and it hasn't all gone smoothly. "In aiming to become the UK's most digitalised energy supplier, npower has had to engage with its customers in ways that are radically different from how it has done so in the past," says Madrian. "Therefore, it has been working on ways to allow customers to use compelling tools and online services that go beyond a pure bill."

Since 2013, this has included the phased transfer of the company's five million customers to a unified, SAP-based billing system, aptly termed 'Project Atlas'. Although the transfer process experienced real difficulties, the migration process is complete, still issues remain that will take more time to fix.

Already, over 40% of npower's customers are registered for online billing and services, a considerable logistical feat when one bears in mind that the company issues 22 million bills annually.

At a time when switching energy providers has never been so simple, npower has also gone to great lengths to map the individual 'journeys' customers take at every stage of their affiliation with their provider. "By charting these processes in this way, say with the 'I Pay,' or 'I Join' or 'I Move' journeys, npower's focus is rooted in the viewpoint of the customer, and not locked in the cycle of trial and error that come by tinkering with internal processes," says Madrian. "If you follow that through, you begin to really shape a unique customer experience that is seamless, efficient and, in the long run, boosts customer satisfaction."

This emphasis is carried over in the company's approach towards its website analytics. "Npower is not yet at the stage where it can say it is taking full advantage of all the data it handles every day, but we are making progress," says Madrian. "For example, a lot of information is being carried online through the customer base. Roughly speaking, the company's homepage has around 80,000 visits a day. We get invaluable information through tracking the types of interactions that customers are having online, combined with customer feedback from other areas, so we can continually improve services we offer. This can then be fed back to customers, such as the improved mobile app, which will be released later this year."

Driving business performance

While Madrian talks with passion about npower's digital future, he's also keen to talk about the bigger picture of driving npower's business performance. Part of this is achieved by cooperating closely with npower's parent company, RWE. "Systems and processes are being standardised and automated across the RWE Group for simple scalable transactions: it's something best achieved by working closely with RWE's offshore service centres," explains Madrian.

"The energy industry hasn’t been leading when it comes to digital. Npower sees itself as a front-runner in trying to provide customers with the kind of seamless online experience they demand."

"The qualitative element of working with our shared service centre contributes to the entire future of RWE, and the savings aren't negligible either, which enables npower to offer its customers good prices, and to reinvest in research and development."

This enthusiasm on the part of the company to merge these operations with RWE's assets in Europe has fed concerns among energy market observers that the firm is prioritising cost-cutting over customer experience. For Madrian, however, the reality he confronts as the company's CFO is that the two are interrelated, to the point where any refusal to make the tough decisions on optimisation now ultimately runs the risk that the company will be left behind.

"Ultimately, that's the stance I choose to take as npower's CFO," he explains. "We look hard for efficiencies so we can reinvest in areas like digitalisation, which are key to our strategy and future. Frankly, as a CFO, you cannot afford to have no opinion on strategy, market movements or innovation.

"These are the leading elements that will let your organisation evolve to deliver the most value to customers and shareholders alike. For me, that's what future-proofing really means."

Turning the finance pyramind on its head

According to KPMG, as the role of finance functions is being redefined, CFOs are challenged to drastically change their traditional finance processes and operational support models in an effort to deliver faster, more accurate and more insightful analysis and reporting -- while at the same time managing risk and reducing cost (see diagram, right).

Historically, finance teams devoted the bulk of their time and attention to 'the basics' -- their traditional transaction processing and bookkeeping roles - and less time to the more strategic, value-adding finance activities. Finance function transformation, including the deployment of lean finance principles and shared services centres, have allowed finance teams to manage their basic finance operations much more efficiently and effectively. In the pyramid's middle layer, financial reporting and control activities are enhanced by concentrating specialised skills and knowledge within centres of excellence for financial reporting, tax, treasury and other more complex finance areas. Changes like these free up scarce finance resources to devote more energy and time to decision support activities for the business, In short, the goal of finance function transformation is to turn the pyramid on its head (while making it smaller at the same time).

Jens Madrian was the keynote speaker at a recent FDE dinner briefing entitled 'The chief future officer: what's your 2020 vision?'. Click here to read the event review.

Jens Madrian, CFO, RWE npower.
Madrian addresses attendees at the recent FDE dinner.
Source: KPMG International