Unfortunately, the economy is not bouncing back as quick as we would like. However, it has created some great sourcing opportunities in numerous categories including energy. Now is the time to source energy in deregulated markets.
The energy market can be volatile This is based on the simple economic principle of supply versus demand in relation to all of the elements involved in producing electricity and natural gas. When the economy is strong, new companies emerge, existing businesses hire more employees, increase production and ship more products. All of these things lead to increased demand for energy. When the economy is weak, companies go out of business, remaining businesses reduce their workforces, slow production and shut down facilities. All of these things reduce consumption causing a surplus of energy.
Traditionally, savings opportunities only materialize when a company isn’t locked into an energy contract and is open to switch supplier. However, today’s market is so weak that we recently found better pricing netting a 20% savings for a client who was under contract until the end of the year. The savings were offered by a new supplier so will begin when the existing contract expires. However, in other cases we have been able to renegotiate contract pricing with existing suppliers, based on the current market conditions so that the savings start immediately! In either case, the savings were stimulated by the current economic climate. Today’s market is ripe for savings, even if you are currently locked into a contract!
Cameron Shaw
VP Energy Management
By Cynthia Batty, Global Competency Lead, Service Management, TPI
Most of my clients have built their new service management and governance organizations using the people who were in the lead roles before the outsourcing. There are good reasons for doing this: these are the people who understand the business process, technology, and needs of the business, and generally are the people who helped to develop the services statements of work and evaluate the service providers. Who better to manage the service provider than this team?
However, managing service providers is a very different type of work than managing in-house employees. Working through a third party requires a different skillset; the people in this role need to be good managers, achieve results through influence, understand contracts and how to turn contractual language into results for their business stakeholders, how and when to negotiate with service providers – in a firm but fair manner, support and palliate internal stakeholders, and still, with all this, understand the services for which they are responsible and accountable. I often tell my client’s service delivery managers that they have the hardest job in the company!
TPI’s research has shown some clear issues in this area:
Of clients’ staff initially assigned to manage an outsourcing transaction, 60% had no prior experience with outsourcing
40% of clients surveyed said they did not provide any initial training for the team assigned to manage the agreement
Only 20% of clients surveyed feel they provide enough training for their staff
So, if the individuals in the jobs before the outsourcing have no prior experience, and have not had any training to help them understand this new world, is it any wonder that there are challenges in the sourcing engagement? And we continue to find that well into the sourcing delivery lifecycle there are often gaps in skills and knowledge on the client side that are contributors to less than excellent service delivery.
Learning about managing third parties doing your work is a long-term activity; it takes consistent and conscious application. At any point in the sourcing lifecycle it makes sense to step back and look again at the skills and capabilities of the service delivery team. We help clients frequently at this point in time, to continue maturing their skills.
Are you having this experience? How does it manifest for you? What are you doing to ensure that your service delivery team continues to grow and mature? What do you find is getting in the way of this maturing process? I’m very interested in hearing from you.
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