Expense Reduction Analysts

BUSINESS, CONSULTANCY

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The demands of companies for optimizing costs in the energy sector have increased by 1000%

March 31, 2022, 5:30:00 AM

The demands of companies for optimizing costs in the energy sector have increased by 1000%

Expense Reduction Analysts (ERA), one of the largest consulting companies specializing in cost management worldwide, registers an increased demand from Romanian companies that activate in the area of energy, gas, logistics, and transportation spending, sectors affected by the crisis. The experts of ERA Romania consider that in 2022 the tariffs on these segments will continue to increase, and the same will happen in the digitalization field. However, they point out that there are segments in which substantial savings can be made.


In 2021, ERA reported a turnover of 400,000 euros, aiming at the end of this year a 40% increase, respectively 560,000 euros, revenues from consulting projects. And 2022 started with intense activity because the global energy crisis has left companies confused about how they will manage their resources. And Romanian businesses are no exception.


”Primarily, the customers of ERA Romania requested cost optimizations in the electrical energy and natural gas field, where tariffs have increased significantly. This happened because of the closure of fossil fuel production facilities, low European gas storage levels, and the high price of carbon certificates, which on 04.02.2022 had reached a maximum of 96.43 euros", said Remus Hîrceagă, Partner Expense Reduction Analysts Romania, adding that in the energy sector, the demand for optimization has increased by over 1000%.


”To these causes were added the situation in Ukraine, the lack of electricity in the market, the decrease in the volume of liquefied natural gas delivered to the European Union, caused by the increased demand in Asia, the poor functioning of the infrastructure, severely affected by the pandemic, and gas supplies in small quantities from Russia”, added Remus Hîrceagă.


However, the energy sector is not the only one that impacted the local business environment, according to ERA data. Another segment that had a harsh impact on global business was transportation, where there was a 400% increase in demand for cost optimizations. In Romania, some companies have had to pay up to 5 times more in order to import goods. At the national level, challenges followed, along with another crisis in the field: that of professional drivers, which led employers to consider even importing labor force from Asia.


"In 2021, there has been an uttermost demand growth in the energy and transport industries, amid the pandemic and some crises in related fields, an increase that will continue this year. Another segment where, in 2022, companies will try to reduce costs will be the digital transformation, a reduction that ERA also offers as a solution to its partners in Romania", said Cristian Ionescu, Managing Partner Expense Reduction Analysts Romania.


The need to optimize digitalization costs comes as a consequence of the fact that the pandemic has forced companies to accelerate in just a few months a process that, under normal conditions, would have taken years. Thus, more than ever, businesses in various industries have relied on IT and telecommunications services for optimal information flow. However, many organizations do not do tariff analyses for these services.


Steps for optimal saving


In such an economic environment, the advantages offered by ERA to companies are multiple. The most attractive one is that its experts receive their payment after the client sees the results and leads the implementation process, unlike other business consulting companies, which charge the number of hours worked without waiting for the results to appear, offering only suggestions for implementation. Therefore, in such cases, the results become the clients' responsibility. ERA changes this paradigm, charging just after the client-company registers a profit following the implementation of the proposed solutions.


Upon requesting the services of ERA by a client, the first step is the diagnosis, which has two roles: to see if the optimization is possible and to find the most suitable solutions. In this first stage, ERA consultants analyze the company's acquisitions over the last 12 months and then propose the right segments for cost optimization.


"The client can validate these segments or not, but he can point out if he is concerned with a specific department. After agreeing on the sections in which we might get optimal results, we come to the client with 3 or 4 solutions, never just one. And these are better solutions than the ones he has already implemented before. Then there is a validation discussion with the client when he chooses which option he wants ", added Cristian Ionescu.


The next step in the transition from loss to profit is the implementation of efficiency solutions. In this stage, ERA provides training for the employees of the client-company for them to adopt the measures, but also constant assistance. Once the implementation takes place, the last stage of the process begins. The monitoring is done monthly and lasts for up to 24 months. The project progress is measured based on the figures in the monthly Performance Reports.


"Once we obtain the report, the process becomes a comparative one. Initially, the company has a budget, and after implementing the ERA solutions, it will increase. The difference between the two amounts of money represents the basis of our remuneration. In practice, ERA takes over the financial risk of the consulting process, charging solely based on the results seeable in the account. It is a unique element in the local market because we take responsibility for implementation, so we do not just offer just solutions on paper. In other words, if there are no savings, we are not paid ", Cristian Ionescu also said.


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About Expense Reduction Analysts


Founded in 1992, Expense Reduction Analysts is one of the world's largest cost management consulting companies, present in over 37 countries. ERA optimizes business costs and finds innovative solutions to meet the needs of companies.


ERA entered the Romanian market in the fall of 2011, among its customers being ICME ECAB, Socar Romania, Heidi Chocolat, Decathlon, WorldClass, and many others.

Currently, 6 partners are active within ERA Romania. They are experts in energy, logistics and transport, insurance and financial services, real estate asset management, telecom, and digital transformation.