Energy Procurement Consultants – which type should I hire?

It seems quite reasonable from a buyer point of view to look for professional assistance for those categories that implies specialized knowledge. This is the spot for energy procurement consultants and the price paid for the energy components. Perhaps the first barrier to jump is convincing our boss about the necessity of that assistance, but more and more it is becoming easier, markets are getting complicated and very popular, are all over the news.

Once a buyer gets the go ahead, a complicated task start, look for the best possible partner.

Geographical Coverage

Perhaps start highlighting the fact markets do not end in our frontiers, all the opposite. Any consultant must be highly specialist to the local market at the same time that keeps a global vision. Additionally, is critical to explain clearly how the client takes decisions, management style, reporting, authority level between divisions, units, etc.

Somebody may think it is easy to be a partner, but it is not. We are 28 full right countries in the European Union, 25 share the “no frontiers” Schengen space and only 19 uses Euro as their currency. This the diversity we have in Europe that also applies to the markets, making almost impossible to get full inside of all of them. The key is being physically present in each market where a consultancy company wants to provide their services.

Magnus Commodities is conscious about the difficulty of providing services all over, not easy task, and in fact this is one of the first questions a buyer has to ask himself / herself: should I hire an international consultancy company? (a really reduced group to choose from) or on the other hand we take the best local company approach? As we could imagine, there is no a unique answer to that question, it will depend on the philosophy and priorities of each company. The best local company approach lets a buyer to have the most valuable help country per country and probably the individual result will be better, but what about the communication and management of all those inputs coming from different people? It could be a nightmare globally, as most of the international enterprises are used to think. Additionally, local consultants do not usually get to know the other markets, making more difficult the understanding of more advances strategies, due to the differences in markets maturity, and in the final stage not getting to a common approach.

In most of the cases we will face single country buyers; could seem easy situation from outside, but it is not. This type of buyer has also many aspects to base the decision: how close he/she feels the consultant or the language spoken could be key issues in the final choice.

And what about taking the best of both cases, where a company could have the knowledge of the best local consultants and global market outlook and the possibilities these can offer? No doubt, this would be the best possible option for the buyer.

Specialization

The Energy sector offers almost no ending opportunities of providing services or products, all of them related to Power, Gas, CO2, etc. In fact activities like carbon print vs. NLG gas contract negotiation have nothing in common, except both can be done for an energy consultant.

Specialization is like a little treasury, has to be kept and not falling in the temptations arising every day, new activities, new business that can take the attention apart from the core, the one representing the high value added. It is important to stay absolutely focused, getting attached to the strategy defined for the company, increasing the knowledge make us so valuable, that will be the key for future success.

From the buyer point of view, choosing a specialized consultancy assures the objective for which the experts were hired. It does not mean a generalist company cannot take the required knowledge, it is more difficult to manage and preserve, that’s all.

A Company Soul

When contracting a Consultant is essential to identify their Soul, how they behave and who is in the team. In many cases, companies very proudly have their values hanging on the wall but not always are reached; we see the reality in the daily performance.

A possible risk working with a consultant is related to a shareholder change; sometimes identity can be affected and adapted to the new owners. This situation happened many times due to M&A operations within energy companies.

Looking at some of the M&A operations in the last years, we can highlight the following:

A first and quite clear conclusion is the appetite for consultancy companies when the turnover is reasonable and went over the startup + consolidation stages. The buyer can be a fund, looking for quick return due to a fast growing period or energy companies looking for an increase in their portfolio paying for it.

Additionally to the traditional buyers, in the last years we have seen two more types of players, 1) Facility Management companies taking over the responsibility of controlling assets from the efficiency point of view in the past, including the procurement activity lately – this is the case of Utilyx acquired by Mitie in 2012 for $24 Million, and 2) big Firm Consultants with an Energy area where they develop certain type of analysis mostly related to the Economic side of the business. These companies realized about the opportunity to offer to their international clients procurement services – latest example is quite recent when Accenture acquired the UK consultant EnergyQuote last July, still no data released.

It became clear the attractiveness of Energy Procurement Consultants because of the high value of market expertise, but at the same time for the buyer responsible to select an energy partner, these operations make the task more difficult. A question has to be answered: will the new company be equal to the previous one? We spent many hours deciding for this company and now we have certain doubts. Is it also possible that with the shareholder change, we may run in the situation of losing specialization, something so valuable?.

What makes us so different and special

There are 2 key elements in a consultant company, 1) People teaming together and 2) Technology helping those consultants in every task they execute. It is quite usual focus on the people, in our case they are the product we offer to our clients, every time we spend time with a customer, responsibility is enormous. It is hard to select one characteristic, given the mix of details making a team successful, most of them are quite small but the majority has to be correct. Managers in companies take decisions at every moment, wrong in many cases, but at least we have to try being right on the real important ones.

Small details make us different and specials, in Magnus Commodities case we identify a few, we have to be Innovative, not rocket science concept, but highly important for us to know exactly what I means and being able to show it on a daily basis. There are consultants in our sector who perform quite well, we have to be aware there will always be somebody smarter than us, so the only option we have is behaving with humility and Learncontinuously from the best. To end with the third aspect, highlight the concept Make easy something Difficult, translating into an clear language all the concepts that so much time took us to understand, so the clients can take the best possible decisions.

It is quite difficult for a buyer to find out what makes a consultant different from the others, but it is a key issue to discover to build a relationship based on the trust. Perhaps the best way to find out is to ask, most of the times the simple method is what better works.

Hopefully the current post will help to answer the question: Energy Procurement Consultants – which type should I hire? For additional doubts, do not hesitate to give us a call….

Felipe Gracia | Magnus CEO