Business Plan


Cost to Serve Efficiency

Improvement programme summary

Our Cost to Serve Efficiency programme is targeted at driving down the cost of the core services that MOSL provides, as well as reducing the indirect costs of participating in the market. It helps us deliver on our commitment of making it ‘easier to do business’ in the market.

This programme helps enable longer term savings in MOSL by delivering change across three areas:

Automation of key processes that are currently more manual and time intensive – for example, the billing of market performance related charges
Rationalisation of our IT estate reducing the number of back office applications and systems to simplify our ways of working and reduce licences and support costs
Using technology to improve our team’s productivity – such as collaboration tools that support more remote working and knowledge management tools that remove duplication of effort by making it easier to access information.

Initiatives under this programme will be smaller scale and targeted on areas that provide a payback within one to two years. Whilst we will look to drive cost benefits as quickly as possible, we recognise that the benefits will primarily impact our core services delivery costs in 2022/23 and beyond.

Each investment will be subject to a robust business case and a gated approval process run by a newly formed governance group. This process will be appropriate for the size of MOSL’s operations, balancing agility in decision making with the need to ensure benefits are valid and delivered.

This programme also addresses indirect costs, recognising that these represent a substantial cost of participating in the market. The programme will drive targeted reductions in these costs by:

Enhancing our understanding of indirect costs and ability to model the key drivers and how we can influence these - This builds on the work performed in 2020/21 – for example, the impact of poor data quality on trading party people costs
Using this insight to target our wider improvement programmes on delivering sustainable reductions in indirect costs - This will take into account enabling activity required from trading parties, building on the approach of Bilateral Transactions Programme, which reviewed integration costs as part of the Full Business Case
Tracking of benefits – ensuring a robust and transparent process to track and validate benefits is in place, which helps further build trust in MOSL’s ability to deliver.
How trading parties and customers will benefit

Trading parties will benefit from a reduction in the overall costs of operating in the market – either through lower Market Operator (MO) charges or reduced indirect costs. Reducing the cost of trading parties participating in the market is also good for customers as it frees up investment in other areas which can improve customer service. Lower costs also make it easier for new entrants to join the market, enabling innovation, and improves the financial resilience of trading parties.

How the workstream builds on our current 2020/21 Business Plan 

We have made substantial progress in driving efficiency of our core services through 2020/21 - including through savings from more remote working, the insourcing of legal services and the renegotiation of our contract with CGI. Our plan builds on this during 2021/22 with further efficiencies enabling a reduction in the budget for core service delivery in 2021/22 of 2.6 per cent compared with the 2020/21 budget equivalent.

This improvement programme is focused on delivering the next phase of efficiency improvements so that we can build on this momentum – with the main impact being in 2022/23 and beyond.

For indirect costs, we have enhanced our understanding of some of the key drivers of inefficient cost in trading parties. In particular, from bilateral transaction processes, poor data quality and meter read costs which drain value from the market. During 2021/22 we will continue to develop this understanding, incorporating it into a model which links activity to indirect costs. This can then be used to target activity in our broader range of improvement programmes and track the benefits that they deliver.

Delivery for 2021/22 – milestones and outcomes
Cost to Serve Efficiency
Develop programme of smaller scale tactical investments that drive down future MOSL cost of core services with typical payback of one to two years – focus on automation, rationalisation, process improvement

Establish new governance group for gated review and approval of business cases that enable future cost to serve efficiency

Develop indirect cost model that links cost drivers to improvement programme activity

Use model in developing more detailed delivery plans for other improvement programmes – targeted at drivers of indirect costs
Efficiency improvement in delivery of MOSL core services – reducing related costs and MO charges – some benefit in 2021/22 but main delivery in later years

Other improvement programmes clearly show impact on indirect costs, with activity targeted on areas most able to be influenced.  Cost benefits able to be tracked in future years
Three-year delivery plan
Current year
Year one
Year two
Year three
Efficiency programme has delivered number of improvements in cost to serve

The understanding of indirect cost is improved in targeted areas
Programme of tactical investments developed to improve efficiency further – automation, rationalisation, process improvement

Governance group established for gated approval of programme

Indirect cost model in place – linking drivers to rest of improvement programme

Model used in development of more detailed delivery plans – enabling targeting of key indirect costs
Delivery of tactical investments with one to two-year payback – improved core service efficiency

Delivery of wider improvement programmes – tracking of impact on indirect costs for trading parties
Delivery of tactical investments with one to two-year payback – improved core service efficiency

Delivery of wider  improvement programmes – tracking of impact on indirect costs for trading parties
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