Energy Solutions - You're Looking at it Wrong

In the years that I’ve been talking to customers and vendors alike about energy conservation and sustainability, at least 75% of the time, the discussion quickly devolves to “Cost Savings”. I also notice that a combination of wrong assumptions, lack of perspective, and in some cases desperation leads to the incorrect correlation between the price of a service and the value to an organization. One could reasonably argue that the internet has a lot to do with this. Without an ability to talk with a prospect, to let them examine the merchandise (so to speak), it does focus on price only – and we, as consumers accept this. That attitude bleeds over into the procurement world of B2B sales and services.

Recently, before I even had a chance to evaluate what a company MIGHT need from energy services, they immediately wanted to skip the diagnosis and jump right into the treatment/price. I had to stop the discussion and explain to the customer “You’re looking at it wrong.”

I’m a believer in humor and analogies – so here’s a moment of humor. A game show “blooper” from Catchphrase – a show where you have to guess a popular phrase with an incomplete view. As you will see, in some circumstances it’s almost impossible to NOT see it wrong. 

One thing that I try to work through with my customers is what actual value and benefit will a customer receive if they follow our suggestions? I don’t include intangible benefits either. If I’m not willing to do the work of helping identify and apply an “intangible benefit”, chances are my customer won’t either. If they don’t see the “benefit” and can’t “feel” any impact; it’s not really a “benefit”, is it? In addition to describing and applying a perceived/possible benefit – it’s our job as the seller….as the expert….as the “partner”….to quantify that benefit and provide the means to validate the claim later. (Those of you in energy will see where this is headed in setting up Measurement & Verification).

Let’s focus for a moment on cost savings only. In this example, a combination of energy projects in a facility is projected to save 5% of the energy spend. If today’s spend = $3.00 per square foot, that equals a savings of $.15/sq ft in the facility. That’s not exactly staggering, is it? Even if we have 5M square feet under roof, we usually guess there should be something more effective given the effort/disruption that will be required.

This is why procurement organizations aren’t jumping all over themselves to run out and spend money for a series of projects that have no relation or connection to each other than:

1. the Vendor on a Purchase Order and,
2. most of the "solution" focuses on the movement of electrons.

If the discussion stops there, it usually stops despite the best intentions and lip service to “the environment”. People who buy a Bow-Flex© at 3 a.m. from an infomercial have good intentions and offer lots of verbal commitment. Both will experience the same results: Stasis (no change).

Without a clear vision, a roadmap, assigning resources (internal or external/hired) and constantly measuring progress; without the commitment to see it through – all of it is wasted energy and wasted effort. That’s why we believe there is room for discussion and new approaches on how we define “best practice” when it comes to the optimization of energy by enterprise organizations.

Today we’ll introduce one of our Benefit Points, an area where we differentiate ourselves by focusing on identifying and quantifying benefits to an organization – and how to distinguish Value from Cost. Today we introduce the 3-30-300 Rule. 

The 3-30-300 Rule

The 3-30-300 Rule works like this. The average domestic organization spends:

a.       $3.00 per square foot in Utilities

b.      $30.00 per square foot in Facilities (Rent, etc)

c.       $300 per square foot in Payroll

Using our 5% energy savings example above, the energy projects will deliver a savings of $.15 per square foot, BUT....there is a correlation between utility cost per square food and "Facility". 

1.  A properly designed and functioning "Energy Management System" may show that a planned capital purchase to expand cooling capacity is unneeded due to excess capacity already in the system.
2. Reducing the usage of the system reduces wear and tear, which reduces expenditures related to facilities.

The list of “projects” that will provide value to the organization is long - Daylight harvesting, replacing multiple RTUs with a centralized plant, generating onsite power, etc – all of these provide value outside of “reducing fixed costs”. And the exponential or multiplier relationship between utility cost and facility cost means that the $.15 savings could result in an additional $1.50 in value – whether through productivity gains, avoided capital expense projects, etc.

The next correlation – of Facilities to Payroll – involves efficiency of operations, the satisfaction of employees who decide to stay, who are healthier, who are happier and more productive. By connecting energy savings to sustainability and sustainability to corporate culture, and by truly following through with an effective strategy and policy that engages H.R., management and employees – the benefits that can be achieved could well exceed the $15/sq ft over time. That sort of positive and transformational change within an organization can lead to publicity, to engagement opportunities with customers, with the public. All of that…stemming from deciding to do more than change light bulbs.

When Telamon decided to enter the energy services space, we spent the “Time & Treasure” to design an enterprise-focuses solution that is:

1. Complete – Our end-to-end solution is ready to go and it was designed that way from the beginning. We don’t make commitments to our customers and then hope we can “figure it out” later. We do not present unnecessary risks to your credibility and capital. 
2. Standards-based Architecture – compatible with existing & legacy investments to reduce implementation AND integration costs
3.  Flexible – We customize around your needs and processes, not ours.

Transforming your business and culture is not an easy task. In our increasingly competitive global economy, I believe it is necessary and can make the difference as to whether a company survives or collapses. Telamon has a unique strength and advantage through the diversified services offered by the different business units. These services and solutions can be combined and customized, magnifying the original value proposition into something that is truly unique and distinguishes you from everyone else. It is part of our “One Telamon” vision and we would love to share that vision with you.  

-Mark Brown 

Sales Manager

Energy Solutions - Telamon Corporation