The Corporate Power Perspective: Evaluating Strategic Energy

09 June 2017

The focus of the recent Energy Management Association of New Zealand (EMANZ) conference held in Wellington centered on disruptive technologies and how this would impact the traditional models of the energy supply chain. While presentations focused mainly on generators, distributors and retailers, customers also need to consider how emerging technology can drive strategic decision making when it comes to the consumption of energy.

The installation of smart metering over the last few years throughout New Zealand has assisted mainly companies that generate, distribute and retail energy with very little benefit being delivered to customers. In the retail space we are starting to see the application of time based pricing for SME customers but retail pricing products in this space remain in their infancy as the attitude of traditional suppliers appears to be a wait and see approach.

One thing is for certain, data will play a massive role in the future structure of energy supply and customers who control their data will be steps ahead of those that don’t. We truly believe that customers who take a proactive strategic approach to measuring consumption beyond the data available on their invoices (whether it be energy, ICT or waste) will have a competitive advantage in their market place compared with businesses who don’t.

The below article was written by Jon Rabinowitz, Head of Marketing – ‎Panoramic Power, while US-centric there are strong commonalities that apply to the market in NZ. If your business would like to discuss how energy can become a strategic lever for competitive advantage, Total Utilities would welcome the opportunity to meet with you. Contact us here. 

It goes without saying that all industries need energy to function. It also goes without saying that energy can be a costly burden. However, this doesn’t mean that companies can’t take control. All it takes is a thorough understanding of how energy is used in order to reel it in and turn it into a strategic and perpetual resource.

In today’s world of smart technologies and interconnected devices, companies looking to up their game and improve their outcomes can relatively easily turn to data to reveal otherwise hidden operational wastes and points of friction. Strategic energy management technologies, in particular, shine a light in these once-dark corners, plotting a clear map for operational enhancements and cost reduction.

To gain a better handle on how professionals across all sectors relate to the role energy plays within their operations, we surveyed managers from the retail, manufacturing, commercial building and healthcare industries. In doing this, we wanted to understand how business men and women see the impact energy spend has on their organizations now, where they think it’s headed, and if their companies are beginning to adopt more energy-enlightened policies.

Constructive or Destructive, the Effects of Disruption Depend on You

Duly applied energy insights provide businesses with the power to maximize assets, comply with regulations, expand production capabilities and control costs in ways that weren’t fathomable just a few years ago. For many industries, this profound but non-flashy shakeup of logistics and management best practices will constitute the digital disruption the market’s been on the lookout for. When approached through a digital lens, energy purchasing, distribution, monitoring and management can propel companies forward and past their competitors.

As the benefits of digitizing energy for strategic advantage become clearer and its practice more commonplace, managers understand that they, at minimum, need to brace themselves for the changing tide. More than half of managers surveyed – 53%  – understand that digital disruption will impact their business, somehow, in a significant way, and 40% have a plan in place to deal with it. Meaning that those 13% who know enough to be concerned but have no plan in place are consciously setting themselves up for failure.

Since energy runs through every critical asset at work, there’s no better way to digitally map your operation than by studying the flow of electrons. The 40% of energy-aware companies planning for disruption are the ones that will seize the moment and secure a competitive advantage for themselves.

In which ways can a company put itself ahead with an EMS?

The Smart Money’s on Strategic Energy

Most companies are still spending a large portion of their budgets on energy bills – about 60% of companies are shelling out more than 5% of their total overhead on energy, while 24% report spending more than 15%, a mind-boggling six or seven-figure expenditure. These numbers show no sign of going down, either, with less than 10% of respondents seeing a downward trend in energy overhead.

Beyond the straight-forward waste-reducing, money-saving use of a strategic energy management system, smart businesses are increasingly leveraging the deep insight potential of energy analysis within their broader asset performance management (APM) strategy. Despite the huge benefits, our survey found that a majority of companies – 57% – have no tools or systems in place to guide their asset performance management strategies, let alone those that incorporate energy management systems.

There is a clear operational advantage for companies that not just implement EMS and APM, but that set these systems up to inform upon each other and work as a comprehensive operations management tool.

Half of companies with such EMS-based APM strategies in place manage to keep their maintenance and repair costs below 10% of total overhead. Conversely, only 27% of those without EMS-based APM can claim the same. That means that almost a quarter of survey respondents are missing an easy opportunity to reduce their maintenance costs using strategic energy insights to schedule smart, predictive maintenance rather than wasting money and disrupting operations with reactive or preventative regimens.

Powering Profits Now and into the Future

In this age of corporate upheaval, the companies that come out on top will be those that use energy data to improve their core operations and boost their brand – positioning themselves dually as the belle of the balance sheet ball and the quintessence of corporate social responsibility.

Interestingly, while 70% of companies have PR programs and 68% report that environmental policies have affected their operations in some way, only 52% have Corporate Social Responsibility (CSR) initiatives in place. That means that close to 20% of companies aren’t using what they’re already doing to advance their PR agenda.

Looking at the results, our survey confirmed the notion that most business leaders believe their industry is on the cusp of dramatic change. Still, many are struggling to identify and prepare for the changes ahead.

Some are successfully using EMS to reduce wasteful spending and some are using APM to improve their production process. Few are using both systems to bolster and complement their combined function. Those that are, are running at a level of efficiency well ahead of their corporate peers.

By collecting data from the equipment you already use on a daily basis, you’ll identify opportunities to control costs, maximize assets and achieve unprecedented operational efficiency. The result is a win for everyone in the organization – from the COO, to the machine operators held back by a broken machine, to the PR professionals who can use these efforts to promote your company. With a healthy, progressive perspective on energy and operations, the opportunities to improve and excel are truly endless.