4 Considerations For Selecting a Utility Expense Management Provider

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The modern landscape for utility expense management can be daunting for many enterprises. There’s much to consider when managing an enterprise’s utility expenses. Consequently, enterprise expense management leaders today recognize the need to consider additional third-party support for helping manage their utility estate.  

This article will cover some critical areas for those considering partnering with a utility expense management provider. 

Utility Expense Management & Present-Day Challenges

Many larger enterprises deal with significant volumes of utility invoicing across multiple locations that are difficult to manage and would benefit from centralized management.  

Enterprise in-house expense management leaders also increasingly recognize the need for a powerful modern technology platform to manage all corresponding utility services and bill data for effective operations and cost management. 

There is also increasing awareness that more control and effectiveness can be imparted to a utility expense management program by acquiring and maintaining the right amount of experienced utility management personnel. These folks will have the requisite expertise to help manage utility expense management program systems.  

Expense management leaders, i.e., directors and managers on the front line of utility expense management, continue to show a desire to increase their capabilities to scale their utility expense management program more effectively throughout the entire utility expense management lifecycle. 

It’s not just about yesterday, today, but tomorrow, and nine months from now, it’s a continual and forward-looking process. 

Is it Time to Partner with a Utility Expense Management Provider?

All these considerations often lead to some basic questions: Does it make sense for our organization to partner with a utility expense management provider going forward? Will the partnership be genuinely fruitful, addressing our support needs at fair costs and guaranteeing a positive return on investment (ROI)? 

If these concerns resonate with you as a utility expense management leader, we’d like to highlight four essential areas to consider when conducting utility expense management program discovery sessions.  

Many expense management providers today manage utility services for their enterprise customers. Each will have its technology platform, core capabilities, depth of experience, and skilled expertise.  

During the evaluation process, let’s examine four central areas for a potential utility expense management partner.

4 Utility Expense Management Provider Areas for Evaluation

1. SaaS technology platform capabilities should be strong and highly configurable

A robust and centralized database is a cornerstone of success in the complicated realm of utility expense management.

The need for a centralized system capable of adeptly handling extensive utility data mirrors challenges in managing traditional fixed telecom or mobile device services, albeit with a heightened complexity due to the substantial invoicing volumes inherent in the utility industry. 

A robust technology platform becomes the linchpin for exceptional inventory management, pivotal in tasks such as invoice auditing and storing vital contractual information essential to the utility lifecycle management process. This encompasses contractual rate data, contract copies, commitment tracking, and pertinent vendor information. 

Configurability is another highly essential feature that facilitates tailored workflow automation. Choosing a utility expense management provider capable of automating processes like accounts payable functions, invoice audits, and variance reviews becomes instrumental, bringing significant efficiency gains in core finance activities and utility invoice management. 

The detailed tracking of inventory and assets emerges as another critical aspect. A holistic approach to data management, which includes reconciling inventory data with invoices and leveraging features like inventory queues, substantially contributes to the streamlined operation of a utility expense management program. 

The reporting capabilities of an expense management platform become the lens through which visibility into utility expense management is achieved. Highly detailed dashboards and real-time reporting empower users with insights on varying time scales, supporting close usage monitoring and scheduled business reviews, thus empowering long-term strategic decision-making. 

The platform’s alert and email functionality must also be strong to facilitate effective team communication. A modern expense management platform excels in sending automated alerts and email notifications, ensuring seamless communication that aligns with organizational needs. 

SaaS platform takeaway: Modern-day enterprise utility expense management programs benefit tremendously from a robust and capable platform to house and parse all utility data. This facilitates centralized utility services management and gives high visibility and control over the organization’s utility services, usage management, and spending.

2. Service offerings should be comprehensive, and subject-matter expertise should be demonstrable

A reputable utility expense management provider will provide a wide array of supporting services to address all your organization’s utility expense management needs. Different providers may use slightly different naming conventions, but central areas of support are as follows: 

Utility bill management: This subset of UEM focuses on timely bill reviews/financial invoice accuracy and payments, dispute resolution support, facilitating cost allocation activities, and providing operational continuity by avoiding late fees and unintended service disruptions. This is a foundational service within a utility expense management program. 

Other common areas of support within a utility expense management program include: 

Invoice audits and optimization: Deeper dive audit and optimization analyses will help to confirm that active services are billed correctly per contract terms and whether they are needed at all.  

Rate audits help to monitor service rate compliance, while purpose audits help verify services are working as intended or even needed. 

Optimization reviews identify energy services and plans that may serve operational needs at lower costs.  

Energy regulatory compliance management:  A competent provider will be able to assist in ensuring that the enterprise is aligning with all needed regulatory requirements per accepted industry standards. Where necessary, they will help implement system safeguards and processes to maintain compliance and provide notification when any deviation(s) may occur. 

Utility vendor management: An experienced utility expense management provider will have significant experience managing utility services vendors. They will be able to facilitate and expedite communications with vendors to keep essential lines of communications open, whether involving dispute resolution support or work involving contract negotiations. 

Usage management for utilities helps to monitor usage behavior: Comprehensive usage data and reporting strengthen forecasting and budgeting activities. And it’s essential to monitor usage data very closely to avoid overconsumption. 

Sourcing and procurement support: Rate negotiation services are essential to effectively managing utility costs from the start of the utility expense management lifecycle. Many reputable utility expense management providers will offer this service. Still, you will want to inquire specifically with each under consideration about the level of support they can offer, as this can be an involved process. 

Utility lifecycle management services takeaway: A reputable UEM provider will provide all essential support services within the utility expense management lifecycle, from procurement to decommissioning of services. A related article covers more detailed information regarding many of these services. 

Services offerings takeaway: When evaluating utility expense management providers, it’s crucial to have comprehensive conversations around core services in need. Different providers will have slightly different approaches and depth of experience, so it’s prudent to be thorough during the discovery process and worry about speed later once you are confident about your partner selection. 

3. Pricing options should be clear and transparent, with performance guarantees included

Different utility expense management providers will have different ways to price services based on your organization’s needs. Here are some common ways of pricing that utility expense management providers offer.  

Percentage of utility spending:  This will be based on a percentage of the utility spend under management. A large enterprise company may have millions in annual utility spending. Given overall volume, a global enterprise like this would expect to pay closer to around 1% of the total spending under management. In contrast, a much smaller enterprise could pay up to 5% of its annual utility expenditures.  

Flat rate for utility bill management: Some firms may offer a flat rate option for bill management services. This option usually includes audit and optimization services, and the scope will include all invoices and the total amount of utility spend.  

 Some management teams like the model because of its simplicity and because it avoids variable costs that can be difficult to predict and manage, especially over the long term. The overall pricing may be cheaper in some circumstances than in a gain-share pricing model.  

 The caveat is that some providers may not be as strongly incentivized to recover savings as they would be in the gain-share model, where the potential financial upside can be more significant. 

Utility gain share model: Under this model, the utility provider absorbs all risk relative to the labor performed on behalf of its enterprise client. With this compensation model, the firm receives a percentage of realized savings for audit and optimization work that their services delivered to their client. For example, the percentages vary widely based on circumstances, from 20% to 50%.

Other pricing: Some utility expense management firms will also offer pricing options based on the total number of accounts under management or the total number of invoices processed. There may also be adjusted pricing based on electronic data interchanges (EDI) distribution vs. paper invoicing.

Pricing takeaway: Given your organization’s unique needs, each utility expense management provider will have its takes on pricing and its recommendations. Conversely, in-house enterprise expense management teams will have their preferences. 

Have direct and honest conversations around essential services and pricing options for these services. Be careful, keep an open mind to the big picture, and avoid the natural urge to opt for the cheapest price offering reflexively. The cheapest option(s) may work, but a slightly more expensive option will often work much better over the long term.

Finally, you may ask the provider whether they provide an ROI and satisfaction guarantee.

Some providers may not offer these, but it’s worth inquiring about. Tellennium makes these guarantees available to all our expense management customers (e.g., UEM, TEM, MMS). 

4. Success stories should communicate competence, and customer references should be enthusiastic

It’s wise to check on relevant success stories with utility expense management providers under consideration. Do they have experience with utility vendors within your industry?  

Checking references is naturally another vital area to inquire about.  

References takeaway: Customers will know best and tend to tell the truth. Any utility expense management provider that you are strongly considering partnering with should be able to demonstrate competence via case studies and great references.

Closing Thoughts on Selecting a Utility Expense Management Provider

Taking your time with the utility expense management discovery process is best. Be clear about where your organization sits and where you want to go. What are your organization’s pain points and challenges? What does success look like once we address all our problems? 

Once you start researching and speaking to UEM providers, it’s most effective to be direct about your top challenges and let them speak directly about how they can help. Proceeding patiently to ensure your organization is in full command of all pertinent solutions and pricing information before lurching ahead too quickly is recommended. 

Lastly, try to conceptualize your utility expense management partner choice as one that considers multiple key variables: Each will have its technology platform, core capabilities, depth of experience, skilled expertise, and pricing options. The right decision will give proper weight to each of these variables. If so, your organization will be well served and be satisfied with your UEM provider choice. 

If you’d like to include Tellennium in your utility expense management comparisons, contact us to schedule a brief demo of our solution. 

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