Energy and Utilities

Energy & Utilities

BUSINESS PROCESSING

We offer energy and utilities organisations the opportunity to remove complexity across a full range of business processes. By unburdening themselves of back office functions which support their operation but are essentially peripheral to their vision and mission, we give these customers time and efficiency to focus on what they do best. The result is more flexibility and greater efficiency in the face of formidable challenges. Customers in this sector already trust us with risk management and finance and accounting processing. When required, we can also process payroll, learning and development, recruitment, and HR administration as well as offshoring services which can deliver advantages including speed to market, back office transformation, on-demand business, improved customer service and cost optimisation.

TECHNOLOGY

We offer extensive technology capabilities across a variety of industry sectors. In energy and utilities specifically, our solutions include providing hosting and network services for a UK-based multinational and delivering infrastructure management for one of the largest independent energy trading companies in the world. On the wider stage, our infrastructure team supports customers’ growth with cost effective, scalable and rapidly-deployed solutions. We also design, build and run the software that supports a range of business processing solutions. We embed our intellectual property (IP) to create a solution faster and more cost-effectively than our customers can themselves. We can also provide customers with Total IT Outsourcing (ITO) solutions – a single point of supply for an end-to-end managed service.

PROCUREMENT

We are experts in supporting procurement professionals with services including sourcing, spend management, procure to pay (P2P), system management and software solutions. We actively engage with the procurement community across industry sectors and look to provide thought leadership and develop strategies for creating added value procurement.


INDUSTRY OVERVIEW 

When Xchanging last provided an overview of the energy and utilities sector, our predominant theme was: "volatility". A better word to summarise the sector in the closing months of 2012 might be: "uncertainty".

Demand for energy mirrors prevailing levels of economic activity.

With that in mind, the current economic climate in many developed economies and the ongoing soverign debt crisis in the eurozone inevitably impacts on demand for energy in particular.

Conversely, the industrialisation of emerging nations like China and India is driven by a huge demand for oil and gas, creating new pressures on energy resources and the price the world at large finds itself paying for them.

This is an example of contrasting priorities - and contrasting responses.

In the economically challenged developed economies, pragmatic politicians are placing noticeably less emphasis on the "green" energy agenda as the more immediate need is for "affordable" energy.

As The Economist reports, some £200 billion needs to be spent on Britain's energy sector by 2020 to replace retiring coal and nuclear-fired power stations and meet difficult targets to cut greenhouse gas emissions. Differences on how to meet these needs and meet environmental policy commitments is a noticeable strain for the Coalition government1.

Meanwhile, as reported in The Financial Times, the International Energy Agency has predicted that 2012 would be the first year that developing countries buy more oil than industrialised ones2.

Of course, pure economics isn't the only the only force that will shape the energy sector over the next few years. Politics also exerts a major influence - particularly with continuing turbulence in the Middle East.

The Arab Spring uprisings beginning in May 2011 were largely motivated by a political objective: a desire for greater democracy. But they had an immediate economic impact for industrialised nations: the price of oil rose sharply in response to uncertainty over supplies

BP Group Chief Executive Bob Dudley sees open markets as the way forward through this period of disruption, pointing to the spur they provide for competition, innovation and growth3.

Those open markets may, however, prove particularly elusive if succesor regimes amongst the Arab Spring countries take a more nationalistic approach to their energy assets in the years ahead.

References:

http://econ.st/MNPMvw
2 http://on.ft.com/RwlONR
3 http://bit.ly/MrEjSP

Business Issues

The energy and utilities industry includes oil, gas, electricity, and water companies.

One of its major challenges can be summarised in a single word: Volatility.

Taking the price of oil as an example, this is not a new phenomenon: “After touching $147 a barrel in July 2008, the price of oil had fallen to $47 when the world economy was deep in recession. But before the end of 2009 the price was back to $75-$80 mainly because of the liberal cut in oil supplies by the OPEC and overbought position in oil futures1.” 

But price volatility gained renewed impact in the course of 2010 – 2011: “Oil prices are at it again. In June 2011 rates have dropped almost 20 percents from the $114 high that it touched 4 months earlier. Going by the current trades, oil prices are hovering slightly below $98 as we enter the third quarter of 2011. The media, scrambling for an explanation it seems, has been quick to attribute these rapid fluctuations in oil price to the unrest in the Middle East and natural calamities across the globe such as the Japanese earthquake and tsunami. But the Federal Trade Commission (FTC) begs to differ. In fact, extreme fluctuations in oil prices over the last few months have led the Federal Trade Commission to launch a full-fledge investigation into the oil and gas markets2.” 

For customers, such an unpredictable input represents a major risk.

Energy purchase ceases to be a simple procurement exercise and becomes instead a battle to minimise the impact of an uncontrolled cost on their business.

These fluctuations may be evened out in future years by the global drive to bring renewable energy sources on stream.

Although generally associated with the industry’s CSR obligations, these programmes are not driven solely by carbon reduction targets.

Energy and utilities companies themselves are acutely aware of the reputational damage they face unless they are seen to be actively addressing environmental issues – especially in the wake of high profile oils spills, a bad press for coal-fired power stations and mixed attitudes to nuclear energy.

In the face of these challenges, leadership teams within the industry must make a strategic decision on how to add value in their markets.

For some – Xchanging customers amongst them – that decision includes removing complexity from their operating models so they can focus on the things that really make a difference to their customers.

1 http://reut.rs/j0hMEc
2 http://bit.ly/qJu0Km
3 http://bit.ly/reOhoC

Case studies

Energising IT Performance
Technology Services
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Energising IT Performance

Technology Services

CHALLENGE

To achieve major savings through more efficient IT infrastructure management for one of the largest independent energy trading companies in the world

 

SOLUTION

01 Assess the requirement

02 Scope the impact that could be achieved through architectural change

03 Consolidate the customer’s application servers into selected data centres

04 Standardise the desktop across the organisation

05 Initiate a WAN optimisation exercise

 

RESULTS

1 We reduced data on WAN links by 75%

2 We gave the business visibility of its network capacity

3 We improved application performance

4 We cut the support overhead

5 We improved data backup and security

Data on WAN links reduced by
75%

A Sharper Competitive Edge Through IT
Technology Services
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A Sharper Competitive Edge Through IT

Technology Services

CHALLENGE

To help a well-known UK University become one of the country’s Top Ten by transforming its IT infrastructure

 

SOLUTION

01 Plan, design and implement a complete new infrastructure

02 Incorporate voice, data, wireless and security solutions

03 Ensure continuity through a five-year partnership with the customer

04 Provide ongoing support through lead engineers, management and Technical Design Authority

05 Initiate a WAN optimisation exercise

 

RESULTS

1 The customer’s infrastructure now supports its business strategy

2 We gave the customer visibility of its network 24x7

3 We delivered a 30% saving on telephony support costs

4 We instigated best practice operational management

Telephony support costs cut by
30%

Network visibility
24x7

Building a More Cost-Effective Real Estate Business
Managed Business Processes
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Building a More Cost-Effective Real Estate Business

Managed Business Processes

CHALLENGE

To support the client in its aim is to reduce operational costs and drive savings and at the same time free-up skilled in-house resources to focus on core business

 

SOLUTION

Xchanging leveraged its strong domain experience in the property/ real-estate industry to add value to the business through processes and technology interfaces which covered:

01 Service Charge Management (SCM), Reconciliations, Database Maintenance, Reporting, Insurance Claims process outsourced to Xchanging to reduce administrative burden on the client front facing teams.

02 Consolidated middle office administration activities with that of the back office to avoid duplication

03 Implemented X-Flow, our proprietary work flow management tool to streamline operations

 

RESULTS

1 Delivered reduced operational costs of £2mn and savings of £3mn over a period of 5 years

2 Reduced administrative time and effort for the client, resulting in more time to focus on their core real estate activities

3 The client realised better scalability and flexibility in operations

We give this customer

Over 5 years, reduced operational costs by £2mn & delivered £3mn in savings

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