Accenture, Bilfinger, Deloitte and IBM have following a competitive tender process won a mega deal with Thames Water, Britain’s biggest water and sewerage company. The total size of the contract, which spans a range of digital consultancy and technology services, is estimated at £380 million over the period to 2020.
Ever since the privatisation of the UK water industry in 1989, the water industry operates on five-yearly cycles, called Asset Management Plan (AMP) periods. The AMP periods provide the contours for policy and competition, and sets guidelines to drive continuous improvement in the quality of services and in the efficiency of internal operations. The Water Services Regulation Authority (WSRA), or Ofwat as it is more commonly known, is responsible for the economic regulation of the water and sewerage industry. The governing body, among others, sets prices at the beginning of each period, monitors conduct and works together with other government agencies in the water landscape*.
Ofwat’s current five-year strategy (‘Towards Water 2020’) for AMP6** consists of 10+ pillars across the water supply and sewage value chain, with each pillar providing UK’s 20+ water suppliers with a range of policy recommendations, financial targets and operating guidelines, aimed at making further strides in water quality improvement and operational expense effectiveness.
As part of realising the objectives for AMP6, Thames Water – with around 15 million customers UK’s largest player in the water industry – has developed its own five-year plan. Among the key objectives set are: reducing water leakage by 9% (Thames Water supplies an average of 2,600 million litres of drinking water per day), lowering the number of internal sewage overflows by 10% and reducing the number of water supply interruptions, as well as improving its ecological footprint. Besides providing water to consumers and businesses, the organisation treats an average of 4.4 billion litres of wastewater per day through its 350 sewage works located across the region. Thames Water has approximately 4,700 employees and generates a turnover of £1.9 billion.
To manage its up to £4 billion capital investment agenda, Thames Water last year established two massive alliances, ‘eight2O’ and the ‘infrastructure alliance’, to deliver the billions of pounds worth of work and services. The move, which was heralded by Thames Water Chief Executive Martin Baggs a “whole new era” for the water industry, saw more than 15 companies join forces as key delivery partners of the water and sewerage company. eight2O, a £2.0 - £2.5 billion alliance, comprises two design and build joint ventures – Costain, Veolia, Atkins and Skanska, MWH, Balfour Beatty, plus MWH as the programme manager and IBM as the partner facilitating technology and innovation. The infrastructure alliance, set up to deliver around £1.0 - £1.5 billion worth of water network and developer services over the AMP6 period, comprises two joint ventures – Agility (J Murphy & Sons and Morrison Utility Services) and KCD (Kier Services and Clancy Docwra).
In a bid to tap into the power of digital and a range of converging technologies – trends that are reshaping industries and most aspects of everyday life – Thames Water last week added a third alliance to its portfolio. The new ‘Technology and Transformation Alliance’ aims at boosting Thames Water’s technology strategy and infrastructure, and will sit alongside the existing alliances. Over the past months the water company ran a large procurement process to uncover the most suited partners, and, after a due diligence on the dozens of bids that come in, four partners came out on top as the preferred suppliers: Accenture, Bilfinger, Deloitte and IBM. Total fees to be reaped by the four consulting firms is estimated to be £380 million for the remaining AMP6 period.
“Creating this new approach to delivering our technology services and projects will help us meet challenging business objectives, achieve our wider transformation programmes, and, importantly, improve the service we offer our customers”, says Neil Clark, CIO of Thames Water, who joined the company in March this year from the British Airports Authority and Heathrow. He adds that each of the alliance members will bring their own skills, knowledge, capabilities and innovative thinking, which, combined with Thames Water’s own experience, is “set to create a totally new way of working and delivering technology services and projects.”
Besides providing the IT services for the business and projects, the move will provide Thames Water access to cutting edge insights in the latest technologies, including the likes of Internet of Things, cloud based utility offerings, smart meters, as well as data analytics and intelligent maintenance.
Commenting on the deal, Ian Notley, a Managing Director in Accenture’s UK and Ireland Resources Group, says he is “delighted” with the win, adding: “Through the alliance’s combined expertise, Thames Water will be able to drive value from technology in new ways, enabling digital interactions with a new generation of connected customers and equipping employees in the field with the technologies they need to do their jobs more efficiently."
Mark Lillie, a Partner at Deloitte, says the alliance marks a significant effort by Thames Water to “transform its technology platforms, services and projects”, a move which he believes will “deliver long-term value for Thames Water’s employees and their 15 million customers.”
Jon Bentley, Executive Partner at IBM Global Business Services in the UK and Ireland, says he “couldn't be more excited by the journey IBM is embarking on”, while Dave Pickles, Managing Director at Bilfinger, sees the joining of forces as an opportunity to establish a “game-changing approach” by bringing Internet of Things and Industry 4.0 together with operational technology.”
Accenture, Bilfinger, Deloitte and IBM will formally start their work in October 2016 following a period of preparation and transition.
* Other government agencies include the Consumer Council for Water (represent the interests of water consumers), the Drinking Water Inspectorate (safeguards the quality of drinking water) and the Environment Agency (controls the amount of water that is allowed to be taken out from the environment).
** AMP1 covers the period 1990-91 to 1994-95, AMP2 1995-96 to 1999-00, AMP3 2000-01 to 2004-05, AMP4 2005-06 to 2009-10 and AMP5 2010-11 to 2014-15. AMP6, the current cycle, runs from 2015-16 to 2020.