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1、November, 2001,Business Consulting Providing Management Consulting Services to the Power Industry in China,1,Agenda,Section I. The Situation in China and the Challlenges for Power Companies II. The Opportunities for Improvement II. Implementing BPR and ERP,2,I. The Situation in China and the Challle
2、nges for Power Companies,3,The major stakeholders evident in other power markets are yet to fully develop in China,Utility,Government,Customers,Employees,Environment,Shareholders,Captive customers cannot choose their supplier of power Low expectations of service Low consumption per capita,Employees
3、are captive with little choice to move between employers Staff Turnover 1% in most companies,The PRC government is yet to enforce major environmental regulations as are evident in most other deregulated markets,Few power companies are fully privatised No provincial utilities privatised,Plans for ref
4、orm have been spoken of, but no concrete decision yet made,Regulators,Effective “self regulation” through SPCC No independent regulatory body,4,From our work with a number of provincial utilities, we observe a number of areas where opportunities exist to significantly improve operating performance,I
5、nability to accurately account for different functional segments (Generation,Transmission, Distribution and Retail) Lack of quality financial information generally and inadequate management reporting Management to technical KPIs and some financial ones, but a broad group of performance measures not
6、used Excessive duplication of effort between business units (eg. accounting, purchasing conducted at multiple locations) Duplication of data entry through lack of integration of technology Excessive manual processing of major transactional tasks, and some areas completely lacking any form of technol
7、ogy (ie. paper-based records) Non-standard processes (driven by differing uses of technology within the same organisation) Remuneration based on standard national salary scales impacting ability to reward employees based on performance,5,III. The Opportunities for Improvement,6,What is a “World Clas
8、s” or “Best Practice” utility?,The transition to becoming a “Best Practice” power company is an “evolution” driven, in most cases, by the deregulation of the market and the introduction of competition The evolution starts with operational excellence, and develops into innovation and a customer focus
9、, to a focus on creating value from multiple business activities,Operational Excellence,Focus on Shareholder Value,Innovation and Customer Focus,Obligation to Serve,Monopoly,Competitive,STATE OF DEREGULATION,MANAGEMENT FOCUS,7,From.,To.,Functional Management Manage business functions as defined by r
10、egulatory accounting categories to comply with authorised expense budgets.,Process Management Develop and manage business processes linked directly to the utilitys outputs to focus resource allocation priorities, improve quality, and control cost.,Budget Control Negotiate costs with government and t
11、hen conrol expenditures to achieve authorised earnings.,Strategic Resource Allocation Aplly capital and operational, and non-financial resources to achieve competitive advantage consistent with strategic objectives.,There are a number of shifts in general management practices required to meet “Best
12、Practice”,Booking financial performance or contribution to government Achieve earnings targets as required by government revenue contribution needs.,Creating Shareholder Value Increase cash flow, reduce risk, and retain or pay out cash based on available investment opportunities.,8,There are a numbe
13、r of shifts in general management practices required to meet “Best Practice”,Regulatory Accounting Collect and report information primarily to comply with regulatory controls and government accounting standards.,Management Reporting Collect analyse and report information necessary to support managem
14、ent decision making and performance tracking.,Monopoly Development Develop geographic territory by promoting load growth.,Business Development Develop profitable new markets or services that leverage of existing business assets and core competencies.,Employee administration Encourage comparability o
15、f compensation among employees, maximise company experience through seniority, and avoid labour relations-based service interruptions.,Human resources development Develop and maintain a focused, agile and effective workforce operating in a culture that supports continued competitiveness.,From.,To.,9
16、,Below we have provided a high-level summary of Best Practices that Andersen sees employed in leading utilities,Best practice utilities are: Focussing on Asset Management practices that optimize capital and operational expenditure by better understanding customer requirements and applying more rigorous planning methodologies Focusing Finance activities on adding value to the business, and putting non-core services into a Shared Services model to improve service delivery
