by RichardGardiner | Jun 26, 2012 | Energy
There has been much debate recently about the sell-off of State Owned Enterprises – both in the media and across boardroom tables. However in the public arena, debate has not focused much on the fact that privately owned companies are already growing at the expense of public power companies and have been doing so for quite some time.
This is mainly due to the fact that private power companies like TrustPower and Contact Energy are able to make decisions on a purely commercial basis unhampered by political restraint. This makes them more responsive to the changing market and consumer needs.
When seen in this context, much of the emotion is taken out of the debate around the SOE sell off. Most Kiwis, myself included, feel strongly about keeping our national assets, but the cold hard reality of life is that the SOE sell off is going ahead. We could miss a trick if we get too wrapped up in debating whether or not the assets should be sold – and fail to look closely at the parameters that are set to govern the sale process.
I would have no problem with selling 25%-30% of these SOE’s but would like to see us keeping at least 70% locally owned. In Australia, politicians have limited the sale of strategic state assets to any one foreign owner to 25%. This pragmatic arrangement works well with Qantas and could surely do the same for our SOE’s.
by DavidSpratt | Jun 7, 2012 | ICT
Zespri has just bucked the trend. At a time when New Zealand companies of all sizes are being hit by rising fixed costs and sinking profits, the kiwi fruit marketing business has managed to push their phone, data and networking costs down by almost a third. But surprisingly, this cost reduction hasn’t been the best outcome of their recent contract negotiations according to Zespri Information Systems Manager, Andrew Goodin. Lynn Wrightson goes down the line to find out what could possibly top that?
Running a global supply chain that markets and delivers New Zealand’s flagship fruit to four corners of the planet all year round is a complicated business and one that relies heavily on the latest telecommunications solutions to connect growers to their markets.
“The big challenge for us was to find a way to improve our use of ICT while managing the associated costs,” said Andrew Goodin. “The technological environment moves so quickly that plans operating well for us three years ago were no longer valid by the time we hit the contract expiry date. Both the technology available and the way in which we were using it had changed.”
“When our contract came up for renewal, we needed to gain a clear understanding around how and why our telecoms usage patterns had changed. We also needed to question and analyse what benefit that change was bringing to our growers. As a management team, we can’t make sound decisions without that sort of detailed information.”
Due to the complexity of Zespri’s requirements – which include international networking, mobile phone and mobile data worth around $2.4 million over a three year period – getting the structure and scope of the RFP right was critical. The company needed to identify the Cinderella among its supply options. There was only one glass slipper – the fit had to be right.
“Procurement is a specialist discipline,” said Andrew Goodin. “Having an in-depth understanding of all the different contract terms was crucial when we were making this very strategic decision. Knowing what break points to embed in the final agreement could prevent us from getting locked into a contract that we would quickly out-grow. We needed to factor in what the penalties would be if we had to change the terms of our contract before it was due for re-negotiation.” (more…)
by Jonathan Gardiner | May 21, 2012 | Energy
Renegotiate your gas contracts within the next 12 months or risk being tied into contracts based on higher unit costs – that’s the advice from specialist power, gas and ICT procurement specialists, Total Utilities Management Group.
Gas customers have been enjoying favourable pricing since 2009 as a result of ‘Take or Pay contracts’ in place between gas-based electricity generators and their wholesale gas suppliers. These contracts commit energy/gas retailers to buying a certain amount of gas at a set rate, irrespective of the amount sold on. This has periodically resulted in retailers looking for a good home for their excess gas – with near wholesale prices being offered to some retail customers as a consequence. But be aware, these ‘Take or Pay’ contracts are due to expire within the next 12 months as we understand it.
Prior to 2009 the trend of rising gas prices caused an increase in the size of the recoverable reserves in the Maui Gas Field. This also had a dampening effect on the market rate – all good news for consumers. However, the pockets of gas from Maui are now becoming less reliable – the first reserves extracted were graded P85 (85% probability of successful extraction) but we’re now moving towards P50 reserves (50% probability) and this leads to increased retailer uncertainty which means that more risk, and therefore more cost, is built into customer contracts.
These two trends add up to a strong indication that the clock is ticking for this period of low natural gas pricing. Unless something significant changes, we believe that the current period of low pricing will last for less than 12 months. TUMG is currently bringing forward our client’s major natural gas negotiations so that we can lock in the low pricing for the next three years.
Our most recent bulk gas tender, completed in March this year covered a diverse range of customers, large and small, and achieved savings averaging $53,900 per customer over a three-year period for 19 of the 22 customers. Five customers cut their gas costs by between 22% and 36%. If you’d like advice or support in any utilities contract negotiation, just give us a call on 09 576 2107 or email jonathan@tumg.co.nz
by DavidSpratt | Apr 23, 2012 | ICT
In the final part in a series of three articles on cloud computing, David Spratt, ICT specialist at Total Utilities Management Group (TUMG) answers the question: Does cloud computing genuinely offer benefits to New Zealand businesses or is it another example of ICT answers looking for a problem?
Cloud services (especially Software as a Service) is an ICT revolution unfolding before our eyes. It is crucial that all businesses plan and execute change in order to take advantage of the rise of web based services if they are to continue to be competitive.
A bold statement but one which I believe is backed up by four recent reports around global online buying behaviour. Although it may not commonly be recognised as such, online shopping is the cloud service with which we are all most familiar.
- A recent Pew Centre report noted that, for the first time, more consumers owned smart phones than ordinary mobiles in the USA. This shows that even if not everyone is using their smart phones to access web services they are certainly now able to do so.
- Forbes noted that the last Thanksgiving sales in the USA (our equivalent of the Boxing Day madness) generated more revenue from online sales than from those at retail stores
- David Jones, the major department store operator in Australia, announced major, permanent reductions in the price of all its designer brand offerings because its sales were being so severely eroded by the impact of on line shopping.
- A major camera store operator in Melbourne now charges $50 to customers wanting to try cameras in store before buying them. Why? Because these customers were now trying in store and buying on line!
The most common question I am asked by executives across all industries is ‘How do I position myself for cloud services and what are the issues that I face when I do so?’ These same executives are often faced with contradictory feedback from various departments some of whom are desperate to take advantage of the latest new software offerings available in the cloud (Software as a Service) while others take a more conservative approach in the face of potential expense and complex changes to an existing system. (more…)
by DavidSpratt | Apr 23, 2012 | ICT
Cloud services have emerged as a genuine threat to established hardware and software providers as well as to the livelihoods of the many thousands of IT professionals who have made their living selling and supporting these products over the last twenty or more years.
This threat makes ICT investment decisions by businesses particularly challenging as we are encouraged by one group to stick with the tried and true and by another to throw away the old and bring in the new.
This three part series assesses the importance of cloud services to business by looking at whether a particular service reduces costs and/or improves businesses performance when compared to the existing way of doing things.
Part One of this series addressed Infrastructure as a Service – where traditional ICT services such as storage and processing power are provided.
Part Two addresses Software as a Service – where organisations access software tools via the internet.
Software as a Service represents the single biggest game changer in business IT since the personal computer made mainframes and mini computers a part of history. (more…)
by DavidSpratt | Feb 27, 2012 | ICT
Cloud services have emerged as a genuine threat to established hardware and software providers as well as to the many thousands of IT professionals who have made their living selling and supporting these products over the last twenty or more years.
This threat makes ICT investment decisions by businesses particularly challenging as we are encouraged by one group to stick with the tried and true and by another to throw away the old and bring in the new.
How can the average business customer judge the importance of a new technology or the continued relevance of existing technology choices to their business?
While the answer to this question can often be complex, at its heart is a simple challenge “What is the purpose of this technology?”
This three part series assesses the importance of cloud services to business by looking at whether a particular service reduces costs and/or improves businesses performance when compared to the existing way of doing things.
Part One of this series addresses Infrastructure as a Service – where traditional ICT services such as storage and processing power are provided.
Parts Two and Three will address:
Platform as a Service – where organisations can purchase the toolkit necessary to build and operate their own software
Software as a Service – where organisations can access software such as email or office productivity tools. (more…)
