Alex Hill, Managing Director – ZTP
An odd question for the Managing Director of a consultancy to pose, I’ll grant you that… But the answer isn’t as clear cut as we would like it to be.
A better question for you to first ask is “What am I trying to achieve?”. With over a thousand Third Party Intermediaries (TPIs) in the UK energy market, there is a consultancy offering to meet almost every budget and service requirement, which can vary drastically from organisation to organisation. However, regardless of whether you are a micro entity or a global corporation, almost all organisations have or will soon have similar core requirements and responsibilities regarding energy. Some of these are outlined below:
- Purchasing Management – ensuring costs are reduced and budgets are protected while achieving any additional qualitative business requirements.
- Financial Auditing and Reporting – ensuring budgets are set, accruals are accurate, and bills are validated prior to payment.
- Consumption Monitoring, Reporting and Targeting – ensuring that the organisation can set, reach, and exceed consumption reduction targets.
- Carbon and Legislative Reporting – ensuring that constantly moving and improving reporting requirements are met accurately, to aid the organisation and wider global community to combat climate change.
- Data and Portfolio Management – ensuring that an accurate database of sites, meters, contracts, costs, consumption, and carbon data is maintained to enable all other functions to operate efficiently and accurately.
Whereas the above list is by no means exhaustive, it provides a baseline for discussion by enabling organisations to ask three important questions – Do I have the knowledge? Do I have the time? Do I have the tools to carry out these functions internally? It is also important to remember that these questions can be asked and answered independently for each of the functions listed, because engaging with a consultant is not an all or nothing decision.
As it is not a consultancy’s role to decide if an organisation needs their help, but the organisation itself who should have the power to make the decision, we have designed the below decision matrix to aid independent decision-making. The matrix is designed to identify strengths that would enable an organisation to manage their own energy affairs, and weaknesses that may require support from a third party. For the purpose of this article the matrix has been prefilled with answers from an example organisation. To use the matrix yourself, simply answer between 1 (Does not have Knowledge/Time/Tools) and 10 (Has Knowledge/Time/Tools). Any function with a score of lower than 5 may require a consultant’s assistance, those higher than 5 may be managed internally.
In the scenario provided we can see an organisation that has strong knowledge in purchasing, consumption monitoring and portfolio management, but lacks the systems for purchasing and the time to effectively monitor usage. Given access to the correct tools for purchasing, the limited time available to apply to this function could in fact be enough to carry it out internally, if the tools save time on processing and analysis. The organisation is close to being self-sufficient in terms of energy monitoring but may benefit from consultancy support with planning and implementing change.
Unfortunately, the organisation does not have strong enough knowledge, available time, or adequate tools for financial or carbon reporting to accurately perform the functions internally. For these functions the organisation would benefit from appointing an external consultant.
The social, environmental, and financial cost of energy management within any organisation is of critical importance, especially given the current period of rapid change in reporting requirements, technological advancements and charging structures. This can lead to organisations opting to outsource all energy-related functions to an external team that are seemingly better placed to mitigate these risks as they have more knowledge, time and better tools. However, this may not always be the best approach, as we can see in the scenario. Sometimes a hybrid approach may yield the best results, with the organisation taking more ownership of the functions where they are stronger and augmenting their team with consultants in areas where they are weaker. The benefits of this approach lie not only in reduced consultancy costs for the organisation, but from having in-house hands-on personnel who know the business, engaged in its energy management journey. Do you need a consultant? Possibly…but first consider your internal strengths and build from there.