South East Water is working towards significant operational cost savings with help from enterprise performance optimisation specialist, ALG Software. Activity Analysis, ALG's web-based activity-based costing (ABC) application, will enable South East Water to assess the efficiency of its operational processes and produce accurate reports to comply with Ofwat (Office of Water Services), the economic regulator for water and sewerage services in England and Wales .
Over the next five years, South East Water aims to reach the highest standards set by Ofwat, a target requiring a 1.8 per cent saving in operating costs. Phase one of the Activity Analysis implementation will enable South East Water to accurately cost its core business activity of supplying drinking water to help make better business decisions.
Euan Cameron, financial strategy manager at South East Water comments, "To produce regulatory reports was an extremely laborious exercise made up of complex spreadsheets with no audit trail. We needed a system that could help us break down each of our activities to see where savings could be made, whilst making reporting more visible for us and the regulator. Even in these early stages, we are already saving over a weeks worth of reporting time using ALG. "
As well as improving operational efficiency, South East Water needs to maintain service levels to score highly on Ofwat's overall performance assessment. Activity Analysis will enable South East Water to benchmark against other companies and model risk with its powerful 'what-if?' scenario planning model. For example, South East Water can model the effect of repairing versus replacing old infrastructure, such as pipes. This ensures the most informed decisions are taken to reduce the levels of capital expenditure.Looking towards phase two, South East Water will use Activity Analysis to enhance its budgeting process and kick-start the transition towards a driver-based budgeting approach.
