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British Gas Transformation Transcript

Mark Clare Managing Director, British Gas

British Gas Strategy

I. Introduction

Stockley Park is the home of the central team of British Gas. We have been here for about a year and here we have the management teams, the marketing functions, the sales functions, operations, and customer services, as well as the support functions like finance and HR. Our aim this afternoon is to literally immerse you in the transformation programme of British Gas to show you the work in progress – which you will see in the presentations and demonstration areas – to ensure that you go away from here with a full understanding of the benefits that we are intending to deliver from this programme and, most importantly, to meet the people who are responsible for delivering this transformation programme for British Gas.

The key people who will be presenting are Nick Smith, the Marketing Director; Paul Bysouth, the Operations Director; Joe Dyer, who is our new Customer Service Director – he has just joined us from Capital One in North America and you will spot the accent – and Paul Bowtell, our Finance Director. In addition, Simon Waugh is in the audience. Simon is the Deputy Managing Director of British Gas but, more importantly I think for today, he is the Group Marketing Director for Centrica.

As Phil has said, we are trying to keep this moving at quite a pace this afternoon so the presentations are very short. There are two live demonstrations of the system and there are a number of Q&A sessions. What we are intending to do is to split you in the two demonstration areas so you will get to see some of the other things that are going on in British Gas that support the transformation programme here. Then we will finish with a final wrap up and Q&A.

I am going to kick off against the agenda. I am going to start by putting the British Gas plans into the context of Centrica's overall strategy and then take you through our key areas of focus to deliver the transformation programme for British Gas.

II. Strategic Objectives

Roy and Phil have already taken you through Centrica's strategic objectives. The British Gas plans, in short, deliver against this. Our key areas of focus that will come through this afternoon are using customer insight to deepen relationships with our customers, to drive product personalisation and deliver cross sell, to deliver enhanced service levels to support the brand and, importantly, to reduce churn. A major part of our transformation, I guess, could be labelled CRM and it has been in the past but what you will see this afternoon is a programme that goes far further than just CRM. Within the Group, not surprisingly given the investments going into the programmes in British Gas, we are in the lead in terms of delivering CRM but there is already substantial sharing across the Group to deliver CRM programmes as the other businesses embark on their programmes as well.

To achieve the Centrica vision, we are talking about transformation. It touches literally every part of British Gas. It would be easy to use a shotgun approach towards this so what we have had to do is to ensure that we focus on the key value areas for British Gas. So what you see on the slide here is our internal plan. This is the plan we use for communication and for monitoring the progress of the various plans. If it is not on this plan of work, then we should not be delivering it and that is the clear control processes that we have around our transformation programme.

III. Focus Areas

We recognise that we have the biggest brand in the energy market in the British Gas brand. This needs continual investment and you will see a little bit of that in the demonstration areas. We also have a unique home service relationship. We currently have 8,000 engineers, 1,400 of whom are in the process of training through the Academy. We have a massive recruitment programme to lift that number substantially further to facilitate growth of that business. Of course, that unique capability, certainly when measured against those competitors who do not have access to service engineers, provides a real point in differentiation in terms of the propositions that we offer and we are starting to use that very actively.

We have an enormous data asset, of course, based on our customer relationships with 16 million households and, used correctly, we understand fully how that can enhance the relationship we have with those customers and enable us to provide better service to those customers. These really are the key strengths of British Gas and I can tell you that we intend to exploit every one of those strengths to the limit and this transformation programme is very much geared around that. Through product innovation and driving improved service, we are also focusing on creating an improved quality of customer experience. Again, we know that that is a true differentiator – customers choosing on service and not just price. That is key issue for the industry and one where we expect to take an absolute leadership position.

This will delivered through process improvement, through enhanced systems, but most importantly through great people because without the people, a lot of the benefits associated with the transformation just cannot be delivered. Of course, that drives the need for investment to deliver the right tools for our frontline staff, hence the need to build new capabilities. Our systems – the systems that you will see later – are of course a major part of the investment necessary to deliver. Also, the investment in recruiting engineers and the Academy is on show in one of the demonstration areas. This goes together with a relentless focus on empowering our people to deliver to our customers.

Now the systems investment that we are making as part of what was the CRM programme underpins our ability to deliver efficiently, to re–engineer our processes and deliver a truly customer–centric organisation, which will in turn enable us to deliver a lower cost to serve for our customers and to enhance the service levels.

Last, but by no means least, is a focus on growing value as part of the overall Centrica strategy. Our key area of focus is to take the relationships we currently have with our customers and grow them by selling other products to those customers. That will be driven by real growth in home services, facilitated by the 5000 engineers that we have committed to recruit over the five–year period. This includes telecommunications, where the regulatory picture is now becoming substantially clearer, and in electricity where our focus in on continuing to grow deeper relationships by taking our gas customers through to dual fuel customers.

IV. Agenda

This afternoon's agenda is very much around how the transformation will be delivered. We know the task is very challenging. There are many examples of companies that have embarked on this sort of programme who have failed, probably because their focus has been on delivering the IT systems rather than focusing on the organisation, on process, and most importantly on people. I am certain this afternoon you will draw comfort from the comprehensiveness of the programme that we will lay out in front of you, from the progress that we are already making – and that will become clear from the presentations and from talking to my colleagues in the various breaks – and also the quality of the people that are delivering this transformation. It is absolutely critical.

Before I hand over to Nick Smith, for those of you who think that I have forgotten something, Paul Bowtell will finish the session today by focusing on the benefits that we are committed to delivering. He will take you through the robustness of those benefits and how we have calculated them and the assurance that we have put in place to ensure that we deliver our commitment and deliver those benefits. In your packs there is a Q&A session now. I am not intending to use that now because I doubt there are many questions from the introduction. What I would now like to do is hand over to Nick Smith, who will move to the second item on the agenda and focus on data. At the end of Nick's session, we will then have a Q&A session.