by RichardGardiner | Sep 14, 2012 | Energy
Coping with the worst recession in living memory has forced businesses to leave no stone unturned in the quest to improve their bottom line. Electricity is one cost that impacts on everyone and businesses impacted by the deregulated NZ energy markets fall into two basic categories:
1. Non-time of Use customers
Businesses with energy usage per ICP (Installation Connection Point) below approximately 200000 kWh per year (the actual figure varies dependent on the local lines company) are likely to be supplied on a non-time of use basis. These sites will have a standard non-TOU meter and be billed per kWh used and days supplied. This billing approach is similar to the metering of residential customers, although business electricity rates are generally significantly better.
2. Time of Use customers (TOU)
Businesses with energy usage per site above the 200000 kWh threshold will most likely be TOU customers. TOU rates are typically split into either 48-rate pricing (4 energy rates per month) or 144-rate pricing (12 rates per month). TOU pricing is customer specific although it is heavily impacted by prevailing market conditions when going out to tender. (more…)
by RichardGardiner | Sep 3, 2012 | Energy, ICT, Waste
The TUMG Team
Marc Wendelborn looks at why negotiating new utilities contracts doesn’t have to be a painful process.
Negotiating supply contracts for electricity, natural gas, waste, and telecommunications is no fun. You have to do your homework, have meetings with potential suppliers, negotiate a mine-field of small print, and possibly still not get the best deal available.
This is where a utilities broker can be useful. A broker can provide unbiased, expert advice on the services and pricing across all suppliers, answering questions such as which retailer you should buy from, how to compare confusing contract offers and how to negotiate the right contract terms.
Analysts take your utilities needs to market through an Request For Proposal process and come back with a clear and concise range of contract options with the aim of minimising cost on a ‘like for like’ pricing analysis of all offers. They also look to benefit you tactically by advising and negotiating supply agreements that expire at the best time of the year.
For telecommunications, a utilities broker looks to find the best supplier to meet the current and future requirements of the business. Analysts should follow a transparent selection process with measureable criteria that takes into account reliability of service provider, reduced costs and any other specific business needs.
And for waste services, minimising costs and maximising the proportion of waste that is recycled are the markers of a good utilities broker.
We looked at four businesses using the services of utilities broker Total Utilities Management Group (TUMG) to see how well they’d been served by a broker.
The Textile Centre
The Textile Centre is home to some of the city’s high flying technology, public relations, advertising companies and other businesses. The commercial property business owns properties covering 27,000msq.
Chief Executive, John Morgan, used TUMG to investigate power savings.
“We felt that they would be able to get better market information than we could access on our own. We grew up with Mercury and Vector and felt TUMG would be able to research the whole market independently, rather than us spending time and energy going out and doing the job ourselves.”
“There were no issues around small print at all and the contracts were presented on a like for like basis. All the contracts came back with prices based on between three and five years’ supply. Four companies offered comparative quotes, one of which was dismissed pretty quickly, and our existing supplier actually won back the right to continue to supply the company.”
“We saved about $140,000.”
“The process was very smooth. It’s probably one of the best examples I’ve seen. It was done promptly and there was a visit here to me. We had to provide two or three months indicative billing so they could get the number of kilowatts that had been used and the money paid. Armed with that information they did their research, went out to the suppliers and they were back to me within a fortnight.”
Swimtastic
Swimtastic is a learn-to-swim school running structured lessons for pre-schoolers, school age children and adults in a purpose built facility in the Eastern suburbs of Auckland.
“We use a lot of gas and electricity,” says Swimtastic’s founder and director Mark Bone, “and we felt that a utilities broker could seek out the best deal for us, allowing our company to focus on its core operation.”
“The utilities broker talked me through all the contract small print, reducing any misunderstanding and focusing on the best deal.”
“The broker sought out and negotiated the best deal on our behalf. The process was smooth and hassle free. Savings have been significant. It was a fantastic experience.”
Mamaku Blueberries
Mamaku Blueberries grows about 30 tonnes of blueberries per year for wines, liqueurs, pure juices, jams, sauces, chocolates and real fruit ice cream in addition to offering farm and winery tours.
“We were looking to cut costs and thought we’d give TUMG a try,” says Harry Frost of Mamaku Blueberries.
“Their analyst came back to us with four options, showed us they compared and the savings each offered per year – the best was $4000 a year. That sounded like a fair bit to me.”
“He went through everything pretty carefully, the different situations, rules and regulations, the fine print, which was very helpful as it cut through the technical jargon.”
“Because we were so impressed, we were able to refer them onto other small businesses in the area like dairy farms and so on.”
Galvanising Services
Onehunga company Galvanising Services Ltd. applies molten zinc as a protective coating to industrial steel to prevent corrosion.
Manager Andrew Lonsdale Cooper says that prior to contacting TUMG he spent a lot of time messing around with different companies and getting the run around.
“TUMG came along and offered me a the chance to join a bulk tender that looked pretty good, because I could jump on board with a whole lot of other small manufacturers like ourselves and take advantage of some economies of scale.
“They negotiated gas and power contracts for us, and the best part was the convenience – it saved me a hell of a lot of time dealing with people in areas outside of my expertise.”
“The process was smooth. The contracts were presented to us in a report that made it easy for me to compare the various offers on the table. There were no problems with small print and ultimately it’s saved me thousands of dollars.”
“Overall, it’s a pretty efficient, effective, reasonable service to have.”
As published in NZ Business Magazine September, 2012
by DavidSpratt | Aug 2, 2012 | ICT
Who owns your data if it resides in the cloud somewhere? Let’s say that you are using a cloud based CRM system and the company delivering it goes into receivership. What happens to your data? Can the receiver sell it to a competitor? Can they even demand that you buy it back from them under threat of refusal to give you access to it? Even worse (if that’s possible) they could just decide to blank the disk storage and sell it for scrap to recover funds.
Microsoft’s announcement last week that it will collaborate with NZ hosting company Revera to provide its public cloud systems on Revera’s private cloud infrastructure goes a long way towards addressing this issue for New Zealand businesses
The alliance will create a hybrid cloud service that Revera has called ‘Homeland Collaboration’. In real terms what this means is that cloud computing services – originally developed for the retail/consumer market driven mainly by US companies – are now more aligned to the needs of the New Zealand businesses adopting them.
Data sovereignty relates to the Laws under which cloud services operate. These Laws are usually focused on the physical location of the servers that deliver the service. Prior to this new hybrid cloud service, a New Zealand user could end up subject to US Law or the Law of one of its States in the event of any dispute. This is potentially confusing, complex and very, very expensive. Put simply, the hybrid cloud service brings New Zealand businesses back under the jurisdiction of New Zealand law.
Hat’s off to Revera – a fantastic example of a Kiwi company seeing the gap and taking the initiative to fill it – to the benefit of all. But don’t be lulled into a false sense of security, data ownership is still covered by the contract in place with the service provider (eg Microsoft, Rackspace or Salesforce.com) so READ THE SMALLPRINT carefully and make sure that you know how they deal with data ownership before you sign up.
by DavidSpratt | Jul 16, 2012 | ICT
In the 36 hours since Vodafone announced its intention to acquire TelstraClear there has been a flurry of conflicting opinions regarding the potential impact on the NZ telecoms market. Pundits’ opinion on the consumer impact of this move has ranged from there being a ‘limited’ impact to predicted price decreases and Consumer NZ’s view that a beefed up Vodafone offering could actually act to drive Telecom’s prices up.
So, while the decision whether or not to let the sale go ahead sits with the New Zealand Commerce Commission, Overseas Investment Office and the Ministry of Business, Innovation and Employment – it’s worth considering the other impacts that this potential duopoly could have on our telecoms market?
What does it mean for smaller niche players trying to break into emerging markets? How can they compete with a couple of monsters who can bundle services in a way that a niche player’s offering can’t possibly match? This is how Microsoft destroyed web browser providers in the 1990’s (whatever happened to Netscape and its Navigator product?)
Having another full service provider in the market could certainly make things simpler for the consumer. It’s convenient to get all your bills from one supplier, have one customer service department to deal with and have one other competitive price offer to benchmark your bills against.
However, if we step back and look at it from a wider perspective, what impact will this acquisition have on the speed of new products and innovation in the NZ market? A market that’s a cosy duopoly with no agile innovators nipping at the big players’ heels could become sluggish and complacent.
A final thought. Now that Vodafone has such a powerful set of services and all the cash that comes with being a global multinational – will we come to regret the concerted efforts by Government to clip Telecom’s wings?
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…)
Coping with the worst recession in living memory has forced businesses to leave no stone unturned in the quest to improve their bottom line. Electricity is one cost that impacts on everyone and businesses impacted by the deregulated NZ energy markets fall into two basic categories:
