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Key principles of utility management in the corporate space


Johannesburg, 20 May 2016

The attributes that define a utility (for example, telephony, electricity and water) are few, as these services tend to be homogenous, with simple performance metrics such as cost, availability and measurable quality.

With management's need to focus on core business activities, these metrics should be readily available in a simplistic form to enable management's understanding of their performance against these metrics.

Unfortunately, there are many challenges that undermine this potential for simplicity, such as covering a broad field of technologies, with very different profiles of suppliers and solutions supported.

In trying to summarise some of these common factors, one should take note of the following:

* Usage is under the control of the customer, making it vital that information be available to identify the user or device which is consuming the service.

* Despite the availability of itemised usage, the alignment of this data to business needs is generally lacking, as there needs to be a means to incorporate additional data to get a true reflection of the value this itemised data has on business.

* There is relatively little opportunity to negotiate rates. In the case of electricity, for example, the customer usually has no choice of supplier and often no cost-effective alternative to a specific tariff plan.

* For services where competition exists, there is still infrequent opportunity to negotiate rates, or to truly understand the impact of the negotiation, making it vital to have specialised preparation for these occasions.

* There is a variety of technology alternatives to be used, each with their own effects on business. Each affects either costs of service or costs associated with quality, especially being experienced in voice communications, with the migration from tradition telephony solutions towards VOIP or SIP. While the fundamental service can be substantially comparable, the ability of the customer to determine the true cost of the alternatives is easily qualified upfront.

* The current rates war has now resulted in suppliers attempting to differentiate their offerings further through a variety of billing methodologies to maximise their profitability. This is being done by changing metering periods, reshaping costs with higher fixed costs and introducing no usage charges, once again undermining consumer's ability to understand and manage its costs.

* With the introduction of alternative technologies, understanding and measuring the effect quality has on the business is further complicating the costs associated with the service. Here, effects associated with loss of business and connectivity re-establishment needs to be understood.

* Risk costs associate with supplier risk where committing to a supplier can result in escalation in costs associated from supplier inefficiency to floating supplier sustainability.

* The costs associated with internal resources investments in these areas. Not only from an operation cost point, but also from the cost of skilling and the cost of loss of opportunity due to lack of focus on the opportunity costs. Like own electricity generation through solar PV technology.

To therefore support the management of utility costs and consumption, it is critical that the quality of information and the unpacking of this data by subject matter specialist is necessary to achieve the optimal cost profile.

In looking at the actual range of information needed to unpack this area, one becomes reliant on supplier billing, the corporate infrastructure/technology, usage profiling and commercial commitments. This extends to gathering data from every utility service at its point of entry and distribution (such as a PBX, router, or distribution board). Collecting and integrating the different data sources adds significantly to the quality of information produced, and in so doing, increases business intelligence.

The available data needs to be integrated and presented in ways that directly support the variety of different management functions such as finance, risk, contractual, operations, customer interaction and HR.

At the centre of these various data sources, though, needs to be a comprehensive information system which can support the full range of views to support utility management. Such as:

* The true cost of service, ultimately expressed in terms of rate per unit consumed rather than the cost of resources.
* The true cost of a user or devices.
* Benchmarking supplier.
* Benchmarking users/devices.
* Supplier contractual measurements.
* Comparative views between different suppliers.
* Dispute management.
* Capacity management.

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Editorial contacts

Deon Munn
TelesaComms
DeonM@telesacomms.co.za