Behind the result: Mercury gets "digitally ready" in bumper year

Behind the result: Mercury gets "digitally ready" in bumper year

Core SAP applications have been upgraded, migrated and extended with a focus on the customer

Kevin Angland (Mercury)

Kevin Angland (Mercury)

Credit: CIO New Zealand

Investors will have smiles on their dials after power company Mercury's results announcement, but under the covers the business also invested to build systems for the future.

Mercury reported bumper operating earnings of $561 million on Tuesday 21 August, up seven per cent for the year ended 30 June along with net profit after tax of $234 million, up 27 per cent.

That result was driven by hydro inflows so strong they increased New Zealand’s proportion of renewable electricity by more than two per cent.

While investors will be happy with the numbers, the company has also upgraded and extended core IT systems to support innovation, improve customer service and cut costs.

Mercury CEO Fraser Whineray said sustaining high levels of operational performance while executing a number of key strategic projects puts Mercury in a strong position for the year ahead.

Key projects during the year included "a major ICT systems upgrade" and the completion of Metrix’s meter data project upgrade, expanding Mercury's ability to provide certified half-hourly meter reads.

Hydro refurbishments at Aratiatia and Whakamaru stations are ongoing alongside major maintenance at geothermal stations.

But for general manager of digital services Kevin Angland, the last two years have been about building a platform to improve customer service, manage disruption and support innovation.

Angland told Reseller News that drive began in 2016 with a fifteen-month "technical upgrade" project for Mercury's core SAP software.

In the process, however, strategic changes were targeted, with the SAP applications shifted into the cloud with Amazon Web Services (AWS) and the rollout of SAP's Hana real-time data platform.

SAP and partner Soltius did the heavy lifting on the project, which has many similarities to one previously executed at Kiwifruit giant Zespri.

With the SAP upgrade under way, Angland and his team turned their attention to customer systems, implementing SAP's Hybris in Mercury's contact centre.

Mercury also rolled out Amazon Echo and Alexa Skill technologies via AWS to allow customers to access parts of their account data by voice command.

Furthermore, the business released its first smartphone app, Mercury Go, in June with the help of design agency Catch and IT services provider Datacom.

"We are utilising a lot of partners in respect of what we are doing," Angland said. "Most of the benefits will be felt in coming years."

The SAP upgrade, completed at the end of 2017, was about being "digitally ready" and the benefits so far are mostly internal.

"The industry is undergoing a fair bit of change and disruption," Angland added. "We are setting ourselves up to compete."

In addition, servicing and rewarding loyal customers is now a large part of that effort.

The Mercury brand maintained its trader churn (customer switching to an alternative retailer) advantage at 6.4 per cent compared to the rest of the market at 8.1 per cent.

“Retail market conditions remain very competitive, however our brand and customer service activity, focused on inspiring, rewarding and making things easy for our customers, continues to show strong results,” Whineray added.

"Stay-in-business" capital expenditure on hydro maintenance and ICT, remained elevated at $112 million, down slightly from $114 million in 2017 - that is expected to fall away during the current year, however, to around $95 million.

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