CEO Heiko von Tschischwitz knows: IT is the future of energy
Smart Energy – IT Is the Key
IT has an important role to play in the energy transition and the future business models of energy companies. With its unique ‘SchwarmDirigent’ cluster management IT platform, LichtBlick is a trailblazer in smart business processes and the networking of distributed energy. LichtBlick CEO Heiko von Tschischwitz in a conversation with Timm Krägenow, editor-in-chief of the specialist publication Energie & Management.
IT Is Our Core Line of Business
E&M: Mr. von Tschischwitz, what do you make of the urgent advice given to many energy providers that they should begin outsourcing their IT as soon as possible?
von Tschischwitz: We have a completely different take on this issue. The second employee we hired in 1999 is now our Head of IT. Even back then, we said that an increasingly distributed energy industry wouldn’t be possible without IT. As far as I’m concerned, energy providers who currently believe that IT is not their core line of business and therefore outsource it are like the Telekom managers who said 30 years ago that IT is not a core line of business for telecommunications. These days, it’s all IT – and the energy industry will follow that same path.
E&M: What was it like at LichtBlick?
About the IT platform swarm Conductor Lichtblick controls all business processes from the virtual power plant to billing with the end customer
von Tschischwitz: When we got started in 1999, we were looking for an IT service provider that could offer us the level of flexibility we required. I think we’re very lucky that we never found one. Our Head of IT, a friend of mine from college, said to me back then: “We can do all of that ourselves.” I didn’t take him seriously at the beginning and told him that we think IT is important, but we’re still an energy company.
He came back a week later and shared his vision in detail with me. Then we sat down together, weighed the benefits with the risks and came to the realization that we didn’t really have an alternative if we wanted to achieve what we had set out to do. For instance, the existing systems only recognized meters, but we wanted to portray customers, some of whom have several delivery points, as well as interested parties.
Software Developers Are Involved in New Business Models from the Very Start
E&M: Didn’t you think that was a bit ambitious?
von Tschischwitz: We said that IT isn’t wizardry as long as you take all of your plans seriously and prioritize them accordingly from the beginning. The key advantage we have over software companies is that we’ve taken the energy industry, meaning the industry business, just as seriously as IT.
As an energy provider, it’s in our interest to offer our customers as much flexibility as possible and, at the same time, make the business processes as efficient as possible. We involve the software developers, who make a major contribution with great responsibility, from the moment we begin thinking about new business models. And it goes without saying that the IT staff is also responsible for the business processes. We develop the software for our core line of business, which is why it’s in our interest to optimize it.
E&M: How do you approach the issue of outsourcing?
von Tschischwitz: The only things we outsource are very standard, such as weather forecasts. We portray all of the systems for managing our private and corporate customers ourselves and program our own virtual power plant with ‘SchwarmDirigent.’ It goes without saying that we directly implement all of the regulatory guidelines, which come from the Federal Network Agency, for instance. From the very start, we’ve always used high-performance, flexible platform solutions, many of which we developed ourselves. We’re confident that the end customer market, which is managed by conventional supplier processes and is the standard form of supplying electricity and gas to household and corporate customers, and the market currently referred to as the virtual power plant will become one.
Consumers Become Producers: the Old and the New Energy Market Unite
E&M: How do you imagine that exactly?
von Tschischwitz: In the future, every electricity customer will be part of the overall system, as an operator of a solar panel, a CHP station, an electric car or a stationary battery. More and more customers will leave the old market, which only comprised consumers, and enter the new one, in which they become producers. If an energy provider feels threatened by this type of development and informs customers they can no longer be considered a standard customer, the whole system will stop functioning and the provider will face an existential problem. As a provider, you’re only equipped for the future if you’ve built your business on processes – and this applies in particular to IT systems and organizational structures that facilitate a seamless switch to the market of distributed energy producers/consumers.
E&M: What approach would you suggest to a company that doesn’t have IT yet or is thinking about a replacement investment?
von Tschischwitz: It’s important to think about customer requirements and the business processes that are needed for this before you choose an IT system. It’s about defining business processes that allow you to implement complicated distributed products and illustrate them to the customers.
Take for instance tenant electricity: half of the electricity is produced in the customers’ roof or in the cellar and the rest is purchased. This electricity mix is then offered to the tenants. The two supply sources – roof/cellar and public grid/wholesale – have to be kept separate in the tenant’s invoice, as they pay grid fees, concession levies and other fees associated with the electricity they purchase but not for the electricity produced on-site. Most of the business processes and IT solutions today are not equipped to cope with the challenge they now face, as classic energy companies and the IT systems they use always assume a clear-cut division in segments.
We’ve Always Thought About Things From the Customer’s Point of View
E&M: What challenges will an IT system have to overcome in the future?
von Tschischwitz: The standard approach is to make one system for power plants, one for grids and then a customer relationship management system for sales. But in the future, it will really be a matter of combining these systems across segments. Our business processes and IT can do all of that because we’ve never thought in terms of segments but always from the customer’s perspective.
We have employees who are specialists in the energy industry, who understand comprehensive business processes, have direct access to our IT systems and interfaces, and can very quickly and flexibly adapt these accordingly. Established standard software cannot be adapted nearly as flexibly or quickly. What’s more, you often have to coordinate with several software manufacturers and consultants. That’s a complex, lengthy process that can slow things down significantly in quickly changing markets.
E&M: And your system can do more?
von Tschischwitz: Another very simple example, from the “old” system even: We said that we wanted to be able to provide our customers with a bonus. They had the choice of free kilowatt hours, cash credits or a donation to non-profit organizations with a donation receipt. Our processes and IT are able to do that, and have been for 15 years. I’m not aware of any other systems that can claim the same.
LichtBlick Employs More IT Staff than Energy Traders
E&M: So, will LichtBlick be an IT company in the future?
von Tschischwitz: There’s no question about it. That’s just the way it is. LichtBlick has 400 employees, including 100 IT specialists and just 50 energy economists. So from that perspective we are more an IT company than an energy company. Ever since we became aware of the magnitude of the problems our market partners face with their IT systems, we’ve seriously toyed with the idea of offering IT services alongside our energy supply services, which already require IT as a core area of expertise anyway. We can imagine offering our skills as a service to other energy companies, and are involved in concrete discussions on the issue.
E&M: Would you recommend developing comprehensive IT expertise in-house to smaller providers?
von Tschischwitz: No, that’s not possible. Because if I outsource my IT, I still need to bear in mind that IT is the cornerstone of my core line of business. Before anything else, you should think about your internal business processes. If you want to be able to participate in the energy industry in the future, you need an IT system that spans segments and boasts a much higher level of complexity than those of today.
As a small public utility, it would be wrong to say, ‘I’m going to develop the expertise now so I can do it all by myself.’ Outsourcing is therefore the right solution – but not in the sense that ‘it’s not my core line of business,’ but with the knowledge that it’s a key factor for the future. I need to find a partner who can do that kind of thing. And I need to maintain internal expertise, so that I can continue managing the processes.
Interview published with the kind approval of Energie & Management