Web sight

Utilities and traditionally heavy engineering-based firms pioneered 'business unbundling'. In utilities especially, we have seen the rise of asset owners, asset managers and service delivery experts, with the logic that slicing up activities results in an improvement in efficiency from specialisation.

But how many companies have unbundled the complex contracts and cross-company processes that typify the disaggregated utilities market? How can a modern utilities firm manage supplier relationships without having to micro-manage all of the detail behind contracts? How can the average utilities services firm manage the risk of business delivery failure? And most important, how can it prevent a serious breach of health and safety regulations by a subcontractor?

In general, utility firms consistently invest in information systems and processes for managing operational risk and checking on the skills of full-time employees. Despite this it is still extremely difficult to manage the complex supply chain of workers. More often than not it's the broader network of contracted workers, over whom the utilities firms have little day-to-day control, that carry out essential work. In many aspects they choose to have no control, but they do need visibility of activity undertaken, as in the light of business failure they are accountable.

Further, insurance firms are raising premiums, thereby heightening the imperative to improve communication, collaboration and consistency across all contract and subcontract arrangements.

Ironically, as utilities firms have striven for operational flexibility and innovation, they have developed stricter criteria and processes for using suppliers and temporary labour. Tight control and management, it is argued, cut costs and reduce the risk of rogue contractors and unaccredited players.

If you strip away the detail, all the outsourcing firm needs to do is act as the conductor of a large orchestra of suppliers. As long as the process is open and adheres to set criteria, the utility firm is assured of the accountability and health and safety accreditation.

Web feat
Web services are the latest development in the industry. These online technologies mimic the reality of free-flowing information, while providing a structure within which it can be controlled.

In the case of utilities, it can link together disparate contractors and buyers and make industry-wide knowledge freely available. If the parent organisation wanted to undertake more vigorous selection of suppliers and partners to negotiate better contract rates and payment schemes, web-based organisation of contractual agreements and criteria could automate this.

Tight control and management, it is argued, cut costs and reduce the risk of rogue contractors and unaccredited players

The systems even allow for more efficient scheduling, helping utilities firms to avoid fines for time delay. Many delays and errors are introduced when transferring data, such as booking information or time sheets to drive pay and billing systems. British industry is estimated to have spent over £1.5 billion processing time sheets in 2001. This could be substantially diminished by automation, and potentially eradicated by the improvements an end-to-end view of the process would enable.

Simply by automating the process a technology platform is required that enables all the process contributors to 'plumb' themselves in as utilities to the process. Such a platform would effectively offer e-business on demand as it accelerates deployment as well as providing the basis for end-to-end process automation.

Utilities firms could learn from an unlikely role model. Due to recent tragic events, railways have been forced to adopt this thinking. Until recently, it was difficult for senior managers on Britain's fragmented rail infrastructure to see what each contractor was doing at what cost, and to check that they all had the required qualifications and permits. The industry had a database of all registered contractors and their qualifications, plus details on agencies that acted on behalf of the contractors. Accessing and using this information was time consuming and difficult.

Following the development of an online booking and accreditation system, all players in this contractor supply chain have visibility over the working hours booked, all background knowledge is known, and the railways can allocate skilled track maintenance staff geographically, and to the point of need, much quicker. The risks and checks are managed more efficiently, and productivity gains are being seen very quickly because work can be booked, allocated and costed far more efficiently.

In the past, managing the risk and costs associated with outsourcing non-core operations has been difficult. But new technology can now link disparate information systems and processes together, often only with a browser. Firms can work towards getting a better sense of control over their disparate operations and greater reassurance that contracting processes are compliant.