Energy: Why Pay More Than You Need To Pay?

The more I have the opportunity to see how companies are (or aren't) strategically sourcing indirect goods and services, the more I recognize that there are still huge benefits to be captured even in those categories of spend where companies have traditionally developed expert capabilities, whether they be internal or external.

Take energy, for example. Most companies have a dedicated expert who works to ensure that the appropriate hedging strategy is in place. Most of those folks were in for a rough ride the past few years and I know of a few casualties and early retirements that resulted.
But you no longer have to expose your company to excessive financial risk associated with Energy buying ... especially in today's de-regulated markets. Twenty-four states have currently de-regulated electricity and the same number have de-regulated or allow partial choice for natural gas. This has resulted in a substantial lessening of regulations, producing a higher level of competitiveness with higher productivity and overall lower prices. It captures the essence of the good attributes associated with the free market.

And herein lies the question: If you are located in an area that is de-regulated, why would you pay more than you need to pay? After keenly observing traditional "experts" at work, one thing I've noticed is that some use their expertise as a type of shield that protects them from change, whether it is process, technology, or a combination of both. And I'm not talking just about the energy category--but all spend types. I understand why they do this; they're protecting their "expert designation" in a very fast, changing, and competitive world. It's about holding onto power. It reminds me of when the Wizard in The Wizard of Oz said, "Pay no attention to the man behind the curtain."

Regardless of market conditions, I am quite confident there's a lot of money to be saved these days, especially in the de-regulated energy markets. Wildfire Commerce has been working for some time (full disclosure) with a highly successful Energy managed service provider called Co-eXprise, that leverages next-generation technology with deep domain expertise to drive incremental savings over best practice energy buying. Sound impossible? We thought so too, until we saw the results of a number of Co-eXprise's recent client projects.

Here's what is different. The Co-eXprise Energy MarketPlace has developed a strategic energy procurement process, enabled by their proprietary software that delivers significantly better prices for electricity and natural gas than current best practices. The advantages are many, and include energy cost reductions of up to 20 percent from the default rate and 4-10 percent savings beyond the paper quotation process.

This process also creates budget certainty and is completely supplier neutral, and the best part is that Co-eXprise gets paid by the awarded supplier, not the buyer. They really do have a proven strategic sourcing process coupled with state-of-the-art online negotiation/auction technology. This results in best market price every time.

What's really cool is that they do all the work for you! Your energy team can very quickly evaluate the competitiveness of suppliers and favorable market trends. Just ask your energy folks how many times they didn't or couldn't act fast enough to capture favorable pricing fluctuations.

As I previously stated, I firmly believe that there is still much savings to be had in all categories of Indirect spend by taking advantage of new strategic sourcing techniques and new technology solutions. This one is really a no brainer. I have just witnessed the success that two of our consulting clients had using the Co-eXprise solution. I know I'm impressed.

Greg Brandyberry

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