Does My Organization Need Utility Expense Management?

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Expense management leaders (e.g., CFOs, Directors, and Managers) for larger enterprises are asking this question more nowadays. And for good reason. There is increased pressure on organizations to serve energy needs more effectively. Utility costs are rising, and environmental and regulatory pressures are also increasing. 

This is occurring while modern workforce dynamics are more uncertain than has been the case in recent memory. For example, everyone is aware at this point how the labor pool has been reevaluating and renegotiating the terms of the relationship with traditional corporate culture and management post-Covid. This points to a scalability challenge:  

How do we get the right amount of the right talent to manage our universe of utility expenses effectively and sustainably over the long term? 

This article will explore utility expense management’s focus in more detail. We will also examine how you – as an expense management manager – can think of ways best to mitigate the challenges of modern-day utility expense management and serve your organization most effectively. 

What Exactly is Utility Expense Management?

Utility expense management is the discipline of implementing a purposeful and programmatic approach to comprehensively managing an organization’s utility expenses. It’s focused on a few central tenets: 

  1. What utility services are available to our organization that best serve our needs?

  2. How do we procure these services at the most competitive rates?

  3. How do we best manage our utility services to avoid unneeded overconsumption and waste while maintaining tight control over ongoing utility management operations? 

The bottom line is that it’s about the right utility services at the right costs, managed effectively now and sustainably into the future. 

 Reputable utility expense management vendors will provide a technology platform that is often SaaS-based to house and manage data, along with a wide array of supporting services to serve program operations and cost management goals.  

 It’s a partnership that leverages the technology and expertise of the utility expense management provider. Some expense management providers only manage utility expenses, while some traditional TEM providers, such as Tellennium, offer utility expense management services in addition to TEM and MMS expense management offerings.

Utility Expense Management and its Closely Related Cousins

Once distilled to its fundamental essence, it becomes easy to see the similarities between this focus and the like-minded focus of traditional telecom/technology expense management (TEM) and managed mobility services (MMS). These similarly situated enterprise disciplines embrace the same mindset to address the expense management challenges within their respective domains.  

It’s worth noting these similarities because most larger enterprises are wrestling with managing at least one of these expense management areas, if not all. More likely than not, this will resonate with many readers of this article. If so, much of which will be covered here is transferable, at least in general terms.  

Many particulars within each domain will differ, but the overarching concepts and mindset needed to deal with these expense management challenges are the same and worth being cognizant of. 

What Organizations Benefit From Utility Expense Management?

Large enterprises will most benefit from this service. In this case, large enterprises are defined as those that manage at least $50k in monthly utility charges and have multiple locations utilizing utility services throughout the country or world.

For larger enterprises, utility expenditures will often approximate around ten times the monthly spend for traditional telecom expenses. This is another reason the utility expense management service has gained popularity over the last ten years; now that greater capabilities exist to manage these areas like other expense management arenas noted above (e.g., TEM and MMS), enterprises have moved this up on the list of management priorities.

Additionally, a much larger number of invoices tends to inhabit the utility world than the telecom world, which adds to the need for more stringent management for organizations seeking to button up their utility expense management program.

Companies with sufficient size can scale their efforts more effectively by partnering with outside 3rd-party utility expense management expertise, and, as such, return on investment expectations will almost always be satisfied via a reputable program.

Managing utilities smartly is essential for all businesses – even small “mom and pop” businesses – but companies that will benefit most from 3rd-party utility expense management support are companies that meet this basic threshold in size ($50k monthly spend) and complexity (e.g., large number of locations and invoices).

Utility Expense Management – Technology & Services Value

A robust technology platform to manage data is foundational to a strong program: All the data related to utility services and corresponding charges must be housed within an application powerful enough to accommodate this data.

A robust technology platform will also be highly configurable to adjust to your organization’s needs, i.e., it may have automated workflows customized for processes designed to your organization’s requirements.

It will also provide insightful dashboard capabilities to monitor usage consumption and trending, along with all pertinent charge and billing information in a wide array of reporting; custom dashboard design and reporting capabilities will also be available.

A foundational aspect of all modern-day expense management providers – utility, TEM, MMS – is providing a robust SaaS that all support services leverage in corresponding analytical work provided by subject-matter experts in each area. This is a vital area to delve deeply into within discovery sessions with any utility expense management provider you are considering.

Different platforms will all have pros and cons. But be sure you are satisfied with the critical considerations noted here; life’s too short to go about expense management without a top-of-the-line technology platform.

Utility bill management is a weight-bearing core service for UEM: This support area is sometimes confused with utility expense management, but it is narrower in its service focus. It is a subset of UEM. Utility bill management focuses on the key activities relating to bill processing and on-time payments, initial bill verification and dispute resolution support, and supporting cost allocations to relevant business units.

Although bill management activities will also help to serve more comprehensive utility expense management needs such as usage monitoring or help inform strategies to save money over the long term, its primary objective is accounts payable centered and highly focused on paying bills on time and avoiding late fees and unwanted service disruptions.

A related article, What’s the Difference Between Utility Expense Management and Utility Bill Management, discusses the value of eight specific support areas within utility expense management in much greater detail.

For present purposes, we’ll give an overview of areas in utility expense management that can provide genuine benefit to your organization in terms of helping to manage your organization’s utility services comprehensively.

As noted earlier, utility expense management is centered on implementing a purposeful and programmatic approach to managing an organization’s utility expenses in total. This contains many support areas, including utility bill management.

14 Benefits of a Utility Expense Management Program

1. Savings are generated via bill auditing and resolution support: A component of utility bill management, front-end review, and processing of utility bills will help prevent overpayments and reduce utility costs. Additionally, subject-matter expert support for dispute resolution activities helps expedite the realization of savings in cases where overpayments were made due to vendor or validation errors.
A reputable utility management provider will leverage its technology platform, processes informed by best practices, and expertise to ensure accurate billing. 

2. Savings are generated via the elimination of late payment fees and unwanted service disconnections: This is another area of utility bill management. The centralization of invoice processing within one system of record, i.e., the technology platform, along with solid process enforcement and experienced invoice management practitioners, eliminates late fees and unplanned service disruptions. 
Late payment fees and unwanted service interruptions may seem like basic things to avoid, yet they are widespread in disorganized and decentralized organizations with many locations. For large enterprises, management missteps here cost some organizations thousands, if not hundreds of thousands of dollars over the course of a few years.  
Experienced support in this area proactively avoids these common but potentially costly mistakes.  

3. Savings are generated via utility procurement capabilities and optimization exercises: Experienced and skilled support in this area cannot be overstated. It’s critical that your organization get off to a strong start in its utility lifecycle management. This means procuring the utility services that your organization needs at the most competitive costs available.  
Organizations that do a poor job in this regard end up finding themselves behind the eight-ball from the get-go, and this is an absolute no-no. All utility expense management support after procurement should be focused on maintenance and refinement to operations and cost management.
If you start the utility management lifecycle by procuring the wrong or even the right services at excessive costs, you are in an uphill battle. So, getting the right services at competitive costs is essential at the beginning of the process.
A reputable utility expense management provider will also conduct proactive analyses of utility operations and costs to see if things can be performed more efficiently and at lower costs than active services. Market conditions are constantly in flux, so improvement opportunities should always be considered via optimization analyses.  
4. Savings are generated via bulk purchasing across multiple locations: This is related to the procurement capabilities noted above. When purchasing in higher volume, your organization can secure lower costs via more significant economies of scale. Negotiating power is enhanced and thereby not only facilitates lower per-unit costs but also helps to obtain more favorable and flexible contract terms, which is vital to long-term utility lifecycle management. 
Additionally, buying in bulk will reduce the number of vendors to manage, reducing the added labor and effort needed to manage more vendors than necessary.

5. Savings are generated via reduced labor costs: A partnership with a utility expense management provider will help your organization scale most effectively. This means applying the needed technological capabilities (e.g., technology platform) with proven processes and the right subject-matter expertise and headcount to address utility program needs.  
Scaling effectively is a tremendous challenge for enterprises today, so this is a significant source of value that such a partnership brings.

6. Digital transformation and automation eliminate most manual processes by automating processing: Automation is more important than ever. This is especially true for process workflows, which are highly amenable to automation. That which can be automated must be. Human labor is best reserved for managerial process oversight and higher-order business problems. Not rote tasks that can be programmed away.  
A reputable utility expense management provider will leverage its technology and expertise to implement automated workflows, reporting, and team alerts to drive organizational effectiveness and efficiency. 
7. Digital transformation and automation streamline accounts payable functions relating to cost allocations, payments, and reconciliations: The value of automation noted above is especially apparent within the accounts payable process. There is tremendous value generated here regarding time and labor savings, especially relating to allocation work, payment execution, and AP reconciliations. 
Technology and automation are evidenced by electronic data interchange (EDI), which allows your utility expense management provider to acquire pertinent vendor invoice data for processing most efficiently. Optical character recognition (OCR) capabilities allow quick and accurate data extraction from paper invoicing. 
Moreover, robotic process automation (RPA) technology allows for highly efficient data imports and data extraction from service provider portals where needed.  
These technologies and supporting automated process workflows implemented in tandem free your accounts payable team to focus on core oversight and management activities, not weighted down in tedious minutiae.
8. Digital transformation and automation help generate actionable and proactive reporting: A reputable utility expense management provider can provide highly insightful reporting capabilities.
The technology platform will have preconfigured reporting for each area of utility management. Nonetheless, nowadays, enterprises need to possess the ability to generate customized reporting where desired. A reputable utility expense management provider should have highly flexible custom capabilities to build system dashboards and reports to your organization’s needs.  
If dissatisfied with what you see in your discovery process, you will want to look elsewhere because excellent visibility into your utility expense management operations and costs is necessary. And it’s out there today, so this should be a non-negotiable item.

9. Digital transformation and automation facilitate tighter workflow monitoring and enhanced capabilities around auditing, validations, and dispute resolutions: Like all things with technology, where automation is possible it should be pursued. It’s about reserving human talent for that which it does best: creative problem solving and higher-order managerial oversight. 
As technological capabilities expand exponentially, the ability to develop more sophisticated automated workflows and system-generated routines is also exploding. Nowadays, the ability to automate work that had to be performed by human personnel just a few years ago is astounding. 
In any upcoming discovery sessions, ask about capabilities around auditing, validations, and dispute resolutions. What is the utility expense management provider doing in these areas? If they’ve got a lot to talk about, that’s great. It’s a good sign that they are reputable and competent. If not, you’ll want to meet with other providers because this area has expanded materially over the past few years.  
It’s now possible to put automation and system programming in place that can address many workflows relating to performing bill audits, validations, and streamlining the dispute resolution process for quicker realization of savings.  
Again, skilled human personnel will still be involved; they’ll just be deployed in ways that minimize their exposure to rote work and mind-numbing tasks that they would rather avoid.

10. Digital transformation and automation help consolidate bill payments: Another area relating to utility bill management. This is an excellent example of work that used to translate to “death by a thousand cuts.” As previously noted, this is the type of work best suited to computers that are not bothered with drudgery.  
As we’ve noted, making accurate and timely payments is essential; it can be extremely costly to get wrong, so the simple answer is that it can’t happen. Leveraging powerful technological capabilities for this type of work is a big win today. Performing this type of work manually was mightily painful in the days of paper processing and rudimentary technology. 
Nowadays, any prospective utility partner you are considering for this service should have highly automated bill consolidation capabilities.
11. Actionable insight is gained by viewing spend and usage by location: Great visibility, usage data granularity, and precise location data are critical for effective utility expense management. The better your key personnel and management team can view your utility data, the stronger your utility expense management program will be. 
A powerful technology platform that serves as one system of record for your organization’s utility data is critical to effective centralized utility management.

12. Actionable insights are gained by monitoring seasonal trends: It’s a recurring theme, but the technology platform’s importance cannot be overstated. Nowadays, a reputable utility expense management provider will be able to have its system generate highly detailed trending reports and information, especially relating to seasons, a factor highly relevant for utility management. 
13. Actionable insights are gained by closely monitoring usage: Usage monitoring is vital in utility management for obvious reasons. In discovery sessions, be sure to inquire deeply about usage monitoring capabilities. All reputable vendors should have sound reporting capabilities. Still, you will have your preferences, so do not gloss over this essential line-of-sight capability while evaluating potential utility expense management partners. 
14. Actionable insight helps guide budgeting and forecasting of future spending:  It’s important to always think about complete utility lifecycle management. This means constantly looking forward while attending to present utility management needs. 
A competent utility lifecycle management partner will possess the type of platform that is able to manage all utility data and produce reporting that helps management best prepare for the future. 

Closing Thoughts on Utility Expense Management

Utility expense management is a comprehensive endeavor. Utility bill management is a key service on offer within this service. Procuring the right utility services at competitive costs is where it starts.

After that, it’s about leveraging the right technology platform, best practices, and skilled expertise that a reputable utility expense management partner provides to manage ongoing service operations and costs vigilantly and in an ongoing manner.  

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

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