With the U.S. economy growing slowly and the pains of the Great Recession still not too far in the rearview mirror, many businesses are keeping a close eye on budgets. In fact, a Deloitte study of executives at Fortune 1000 companies last spring found that 88% of companies expected to pursue cost reductions over the following two years, regardless of whether revenues rise or fall.
The Risk of the Unknown
Even with companies scrutinizing expenses, well-crafted plans are still subject to the risk of the unknown. From manufacturing errors that cause production budgets to explode to mechanical failures that cause maintenance costs to exceed expectations, many unexpected events can ruin a well-crafted budget.
With better data and analytics, however, companies can reduce the risk of the unknown, even for volatile categories like energy expenses.
By using energy diagnostics tools such as energy analytics software (EAS), businesses gain the benefit of real-time data and budget planning to minimize surprises.
Start with an Accurate Budget
The fact that unexpected expenses occur does not mean that budgets cannot be accurate. On the contrary, it’s important to design a budget based on sound energy diagnostics in an attempt to account for and minimize the risk of the unknown.
Using EAS, businesses can create a data-backed budget that takes into account historical usage, current charges from utilities and projected budget busters. Considering that there are 18,300 electric rate classes and 95,000 tariff pages for commercial and institutional utility customers, there are a lot of factors that affect budgets beyond the actual amount of energy consumption. So, by securing optimal rates and being able to track tariffs and credits as well as expected changes in pricing along the way, businesses can ideally have both more accurate budgets and lower overall costs by applying energy diagnostics.
Companies can also use EAS to create weather-normalized budgets so that they gain a more accurate sense of their energy costs absent the weather that is out of their control. Just as a business wouldn’t want to create first quarter sales forecasts based solely on fourth quarter holiday sales, companies do not want to be build a budget based on weather anomalies.
Be Prepared to Change Course
Real-time energy diagnostics tools give businesses an opportunity to make adjustments. When the unexpected does happen, such as a heat wave in the Northeast in March, companies can find ways to stay within budget for the month. And rather than guessing at what they need to do to stay on track, EAS provides insights into actual costs, so businesses can see when they put energy diagnostics into action whether they are making the right adjustments to stay within budget.
Additionally, businesses should look at their energy budgets within the larger picture of their operating costs. A faulty piece of equipment can result not only in higher energy costs, but also increased maintenance costs. With real time energy diagnostics, smart operators should be ready to make adjustments between different budgets. On the other hand, if a company purchases a new heating system, which runs more efficiently, for instance, that expense can be factored in by reducing energy and maintenance budgets.
This level of accuracy and flexibility in budget planning is much easier to attain when your business can take advantage of energy diagnostics tools like EAS.
Request a complimentary energy efficiency assessment to find out how Artis Energy’s RTIS® energy analytics platform can provide you with the visibility and insight to transform energy from a fixed cost into a distinct competitive advantage.