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Eskom is in the news again, this time with reference to the new Integrated Resource Plan which has been devised in order to allow for diversified power sources, reduced operational expenditure within Eskom, and a general restructuring of Eskom divisions.

You may be thinking “Yes, they’re idiots, but that has nothing to do with our operations – our business has their sh*t together!”

You may be right, but with a general trend toward reducing operational expenditure and channelling it toward more profitable, controllable, and eco-friendly initiatives, business on a global scale appears to be in the same boat.

So how does Eskom reflect the requirement of business worldwide?

First: They have a plan. A very well-thought-out, in-depth, expansive one, in fact. The chaos and corruption that has shaken Eskom to its cash-strapped core has triggered an operational analysis and re-structuring that many businesses should be doing regularly, but often don’t.

This plan addresses a diversified power supply that can provide South Africa – and South African business – with the power it requires to support economic growth and domestic electricity usage.

This plan also considers the ways in which operational expenditure can be redirected to achieve the specific goals outlined within.

Let’s take a look at the main points, and see how they correlate with general business OPEX planning in South Africa to date:

Where Eskom’s IRP plan can inspire you to improve your OPEX planning, budgeting, forecasting, and reporting:

There are many influences on South African business’ operational expenditure, and even more impacts from outside sources. As with Eskom, so with other businesses, the need to reduce unnecessary costs and optimise spend in more urgent areas is constant.

 

  1. Start here, with the Carbon Emissions goals:Eskom’s new plan aims to address the CO2 Emissions reduction that was outlined at 2015’s Paris climate change conference. If your business relies on combustion technologies, fuel usage, or environmental interaction, your goals should be the same. Maersk has released a study showing that achieving net-zero on your carbon emissions is less a CAPEX challenge than an OPEX commitment – You can read the article here. Having an embedded solution to track, adjust, and analyse your expenditure will help you to reroute the funds to areas that really need them.”
  2. Identify and combat corruption, theft, loss, and other legal challenges.While Eskom’s problems stemmed from a very deep-rooted corruption and toxic culture, your business may suffer from the kind of operational loss that is only caused by theft, fraud, inappropriate spending, or improper management of funds. Either way, your operational expenditure will suffer, whether covering up the rot or recouping losses – it’ll hit your balance sheet hard.An OPEX plan to make your expenditure transparent and consistent will help you to gauge where your business stands, root out the rot, and ensure a better foundation moving forward.
  3. Move with the timesWhile Eskom aims to bring in new power technologies and use renewable sources, any business in this day and age needs to direct OPEX to the uptake of new technologies which help to save money in the long run, reduce time spent on tasks, and improve efficiency throughout the business. ProLabs recently unveiled a technology that allows its networking and connectivity service providers to simplify on-site set up while saving costs and time to deploy new services.Your business will need to do the same. Finding the funds, forecasting spend, and doing cost vs. benefit analyses will be critical in the uptake of these new tools and technologies.
  4. Financing and Investment – a new way of thinkingFinding the investment and finance to achieve any goal is a process. Eskom needs to improve its credit rating in order to get investment and financing for any future endeavours: while your business may not be up the creek without a paddle, you need to have a firm and accurate grasp of how you acquire finance, how your operations drives better margins, and how you can ensure a return for your investors.The SANDF is doing just that – read more here.
  5. Changing your focus of operational expenditure with the demand.The rule of thumb always states that in supply and demand, the customer is always right. IN terms of energy supply in South Africa, we’re finally seeing an acknowledgement of our need for renewable sources. Telkom has adjusted their operational expenditure to support the new drive toward mobile telecommunications within their business.Your business, too, will be driven by consumer demand, and your operations will be dictated by where your consumer interest lies. An integrated OPEX solution ensures that you see these trends and ride them before you’re left behind like the competition.
  6. Managing what you put out based on the needs of the many.“The needs of the many outweigh the needs of the you” – this bastardisation links directly to the requirement of solar, reduced emissions, and old processes that just need to retire already.Eskom is finding ways to effectively retire their coal-fired power stations in favour of renewables and implementing programs to preserve employment while they decommission these dinosaurs.In the car industry, we’re seeing a decided move toward smaller, more economical models. However, vehicle manufacturers are pushing dealers to keep stock of outmoded and unpopular models, in the vague hope that the economy will magically repair the public’s relationship with the muscle car. For distributors and dealers alike, this is a completely avoidable and unnecessary operational cost and should be put aside. OPEX analysis and reporting MUST show you these unwarranted costs and allow you to make better decisions through accurate and transparent planning and budgeting processes.
  7. Acknowledge and manage obsolescence instead of spending excessively on outdated tools and processes.The use of coal-fired plants is being flagged within Eskom’s IRP as a cumbersome, expensive factor in their fight against bankruptcy. A process has been established to decommission these plants, replace them with renewable power sources, and ensure that the employees at these plants are reimbursed, redeployed, and taken care of.Likewise, in your business, your operational expenditure should show where your profitability and capacity are being weighed down by Jurassic tools and machinery, and steps must be taken to move forward and leave the relics in the past.

Does your business already have this much thought going into the optimisation of operational expenditure? It should.

Find Out More about OPEX with IBM and Cortell

Contact Cortell to discuss implementing an embedded OPEX solution in your business, to take the guesswork, risk, and error out of Operational Expenditure planning, budgeting, forecasting, and analysis.