Wonderkid: building the foundations of the utility of the future
This young Kenyan company helps African water utilities embrace Open Innovation
Wonderkid is helping build the water utility of the future from Parklands, a Nairobi suburb. The company supplies software solutions for African water utilities. The software is used to manage customer meter reading, billing, payments and complaints. The trick is that they do not stop at selling the software. They actively help their utility customers by providing useful, pertinent analysis. In the afternoon I visited them a data analyst was preparing a report for the weekly senior management meeting of the utility. It identified customer complaints that have been pending for a long time. It also identified employees who had the best performance in solving these problems.
Data will drive the business of the utilities in the future. Across the world, utilities are already installing smart meters. Smart meters are electronic devices that measure the amount of water (or energy) consumed by a customer. The meters send the information to the utility’s central system for monitoring and billing. This helps water utilities reduce “non-revenue” water: water that is produced but “lost” before it reaches the customer. The loss can be because of leaking pipes or because of theft. “Non-revenue” water prevents utilities in developing countries to become financially viable. They cannot expand coverage and providing universal access to safe and affordable drinking water. The loss of water risks the developing countries response to respond to water shortages in a climate-stressed world.
Daniel Kamiri, the CEO of Wonderkid believes that water utilities will not be able to take advantage of this data revolution merely by installing smart meters. He believes that companies like his can run the technology for water utilities to maximize their revenue. That is the bet that he and his team are taking.
It all started when three young kids met at a hackathon organized by the World Bank in 2011 in Nairobi. The Water Hackathon brought software developers to develop solutions faced by the water sector. The problem was to develop a way for consumers to raise complaints with the water utility (Nairobi Water). and provide the regulator (WASREB) a way to monitor their resolution. The solution developed by the young team of Daniel Kamiri, Dickson Marira and Halima Murunga won the first prize. They were then given a contract to develop the solution for Nairobi Water. In six months they had a beta version ready.
Even as a young team the company followed the best practices of software product development. They worked closely with customer teams to identify requirements. They then released a configurable product that can be tailored to suit specific teams. To understand customer needs, the team held workshops in the 11 municipalities that Nairobi Water operated in. The main challenge was that customer complaints were not being consistently captured. The utility did not have the ability to report intelligent data back to the regulator. The municipalities had Standard Operating Procedures (SOPs) but they were only inconsistently followed. The team had to first study the SOPs and work with customers to understand how they could be practically implemented. They then can came up with Maji Voice, a customer complaint tracking system. Majo Voice was released by the Water Regulator as an Open Source software. It can be used by all organizations to manage the “citizen interface”.
Wonderkid actively worked with Nairobi Water to take advantage of Maji Voice. There were inevitable pockets of resistance. The number of customer issues that were being tracked jumped more than ten-fold as the software got implemented. But it also helped the utility management understand workloads and bottlenecks. It helped frontline managers be more responsive to the customers. The team at Wonderkid is very clear that Nairobi Water would never be successful with the software without the utility’s senior management commitment. The company had decided to increase revenues by engaging with customers. The management made it clear that using the software was a key part of the transformation.
The utility made strong efforts to increase customer satisfaction and turn it into revenues. Customers would receive SMS messages both when a complaint was recorded and when it was resolved. If she was not happy with the resolution they could escalate the problem. As customers became more confident that their issues would be resolved, rates of payment default went down. The mobile started to become the main mode of communication between the customer and utility. This allowed customers to make the utility payments using mobile money as well. Increasing revenues and controlling costs also provided confidence to the Nairobi Water management.
As Wonderkid worked with Nairobi Water, it realized that customer issues were mainly around meter reading. The problem was that the process of meter reading, recording and billing was cumbersome. Meter readers jotted down readings. Nairobi Water had about 100 data loggers. But they were relatively expensive at USD 1500 each. Most of the other water utilities in Kenya could not afford data loggers. Even for Nairobi Water, data entered into the data logger was not automatically updated in the billing system (the data formats were different).
In 2014, Wonderkid developed a web-based system which for meter readers. They could download the itinerary on their mobile phones. As they moved from one location to another, they could take pictures of the meters, geotag them and relay the readings to a central system. The technology solution was simple but led to the uncovering of more serious problems. For many customers, current readings were very different from historical readings. The management had to step in to convince meter readers to be accountable for accurate meter readings. Management decided to allow them to adjust their working habits over a couple of months. Soon revenues of the utility doubled, without changing tariffs. Meter readers were offered better pay and incentives from this increased revenue. Their working hours also
became more flexible. They could log in from their smartphone while on the field. It was important to show that they would not lose in this new paradigm.
From 2011 to 2014, Wonderkid worked with one customer — Nairobi Water — innovating around the customer’s problems. In 2015, Wonderkid integrated these solutions and offered it to the utilities in Kakamega, Kisumu, Malindi and Murang’a. Seeing the success of these implementations, four more water utilities signed up. By 2018, Wonderkid had already signed up 36 water utilities and expanded to Malawi, Mozambique, Liberia and Nigeria.
There are numerous lessons to be learnt from the young team at Wonderkid. They incorporated the best in class practices of software development. They designed the software in a manner that allows rapid configuration and deployment. At the same time, they offered customers flexibility. This has allowed them to service a rapid expansion of its customer base. Equally importantly, they consulted customers. The consulting helped manage the incredible changes in these conventional large organizations. Managing the change was key to driving technology adoption.
As energy and water markets transform, they will have to embrace the principles of Open Innovation: The New Imperative for Creating and Profiting from Technology, as described by Henry Chesbrough. Utilities will have to actively partner with start-ups to identify and test solutions. They will have to develop a management strategy to implement technology solutions. And they must back these solutions with the necessary management commitment. The question is how will these technology solutions be financed? Henry Chesbrough observed the key role played by the venture capital industry. Startup companies could access funds to develop the products that larger companies can use. In emerging markets and particularly in areas dominated by water and energy utilities, venture capital is absent. This is where public funds are crucial in supporting innovation. The Wonderkid team was supported by a World Bank contract as it developed the beta version from the project idea in the hackathon. In 2015, it was supported by the GSMA Mobile for Development Utilities Innovation Fund. The GSMA Fund was supported by the UK Government and the Scaling Off-Grid Energy Grand Challenge for Development. The GSMA Fund provided grants to technology companies that partnered with utilities. The utilities of Kakamega, Kisumu, Malindi and Murang’a were partners with Wonderkid in the GSMA grant application. It also helps that the Kenya regulator WASREB publishes and Impact Report that ranks utilities. The African Utility week brings African utilities together. It helps create the word of mouth publicity for companies like Wonderkid.
Key resources such as energy and water in emerging countries are delivered by public utilities. Incentives need to be placed to help them embrace emerging technologies. Younger companies need to have access to funds that help them build and test solutions. These are the two areas where public policy should focus on.
This blog was written in collaboration with Helene Smertnik. I have had the privilege of working closely with the GSMA Mobile for Development (M4D) Utilities team. To read my interview with Ilana Cohen, the Market Engagement Director please click here.
