Eskom Enterprises (EE) Transformation Project Lambda Portfolio Committee on Public Enterprises Presentation and Feedback 03 September 2003
Today’s Objectives • To present a brief context of Eskom Enterprises’ transformation • To present the positive implications of Eskom Enterprises’s new, chosen strategic direction • To review the critical success factors of the new business case for Eskom Enterprises • To provide feedback which should respond on the queries of the Portfolio Committee on the status of Eskom Enterprsises • To highlight key challenges facing Eskom Enterprises Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 2 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Setting the Context 3
EE Background • Established in 1999 to carry out the non-regulated activities of Eskom inside and outside of Africa. • Inherited numerous “businesses” and capabilities from Eskom, including aircraft, land surveying technologies, IT, telecommunications, primus stove manufacturing, engineering and construction, fleets of vehicles, etc. In total, 48 businesses and divisions! • Core line of business include: – Infrastructure development – Energy business operations – Specialised energy services – Pursuit of key opportunities in related or strategy business (IT, Telecoms) • Outside of South Africa. . . Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 4 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Tunisia co roc Mo Western Sahara Algeria Libya Egypt Mauritania Ethiopia n m al ia frica al A c entrepubli C R Rwanda Gabon Democratic Republic of the Congo a nd a Ug Kenya Burundi Tanzania Completed Projects Zim Namibia Ongoing Projects Prospects & Ongoing Projects Malawi e qu bi am Zambia e bw ba oz M Botswana Republic of South Africa Zanzibar Mad Angola Seychelles r oo n er Equatorial Guinea m Benin Ca Togo Djibouti So Nigeria Gha na D’ Côt Iv e oir e Liberia Sudan Chad kina Buraso F Guinea Sierra Leone Eritrea Niger sca Mali The Gambia Guinea. Bissau aga Senegal Mauritius Swaziland Lesotho Prospects Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 5 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
EE in the World • Transmission network design and engineering in – Vietnam – India – China. • • Possible O&M of Generation Utilities in Sri Lanka Invitations to participate in: – Mexico – Brazil – United Kingdom • In sum, a full plate. Management and resources were stretched! Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 6 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
E E structure diagram Board of Directors Eskom supplied services: — Internal Audit — Treasury — Confidential Investigations — Safety Esk Ent Africa EE Africa: Regions # Investment # Venture Development * TSI Consulting Electricity Africa Rotek Industries * Rotek Engineering Equity Management Manager Co. Secr/ Legal Roshcon * PBMR * Gvt Liaison Primary Energy * Coal Roshcon Division Golang Coal Commercial Sapphire Exec Air ALS * Telecomms * EE~KOM SDCT Bonesa Amazing Amanzi EON Solutions FBC RVS Dormant TSI Operating Eskom Energie Manantali Lunsemfwa (Zambia) GESCO PTM Natural Gas Roshprop Dormant ELGAS HEM~KOM SKI Waste Energy #: Co-ordination, Marketing, Deal Making, Funding Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved * : Execution 7 IT Services * Arivia. kom ESI~TEL TEL~ENG Roshprop Division EE Global West Africa Ltd (Nigeria) Committees of the Board: — Management — Audit — Remuneration — Investment & Procurement — Finance H/R Finance Manager RVS Division Trans Afr Projects EE Marketing H/O Mountain Comm’s Tele-Com Lesotho Media 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 22/1/2002 3/16/2018 2: 26 PM e-Commerce
R’ millions EE Financial Performance Revenue: 2001 – R 2 370 m 2002 – R 2 906 m The Chinese describe “crisis” as a time of great danger and a time of great opportunity. We truly have the opportunity to take EE into the future. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 8 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Current analysis shows net EVA “loss” 2002 Results Rotek Roshcon Manantali EON Enerweb Eskom Head Office PTN Mountain Comms Sapphire Exec Air & Helicopter TSI ALS Rest of BU’s Rotek and Roshcon are the primary value creators while head office and the telecomms businesses alone destroy more value than is created. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 9 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Transformation for Sustainability Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 10 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
We have now reached the end of the business analysis and transformation design phase Business Analysis and Transformation Design (12 weeks) Scoping Weeks 1 Implementation Planning Analysing 2 3 4 5 6 7 8 9 10 11 12 Corporate Strategy Business Unit Strategy EVA Analysis Value Analysis Business Case Organisation Design and Development Org Design Scoping Mgmt Profiling Scoping Bal. Scorecard Draft Transform. Enablement Comms baseline & readiness Organisation Design Management Profiling Balanced Scorecard Development (Level 1 – 3) Ongoing Communications Roll-out Project Management MIS EE Initiative Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 11 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM 13
The implementation will require effort and focus for the next 12 -18 months Analysis & Design (12 Weeks) • • • Implementation (12 -18 Months) • Strategy Analysis: – Corporate – Business Unit – Focus on core business – Develop business unit strategies – Realise divest opportunities Value Analysis • Organisational Implementation: • Transformation Enablement Organisation Impact: – Organisation Design – Management Skills • Strategy Implementation: Enablers: – Balanced Scorecard – Comms & Mobs – (MIS) – – – – – Populate new structure Develop / align key business processes Build new functions (NED&M, Globalisation) Restructure corporate services Develop required competencies and HR processes Measurement and tracking – BSC implementation Enabling infrastructure Systems support Communication & Mobilisation We are here Business Case Realisation Business Case for Change Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 12 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Strategy: Implications of EE’s chosen strategic direction 13
We have agreed some key principles by which to define EE’s strategic focus Key Principles • Eskom Enterprises must critically evaluate its core business and build focus around this • The design, build, operation and maintenance of Generation, Transmission and Distribution infrastructure is currently EE’s core business • We will focus on business segments where Eskom Enterprises can build strong strategic positions in attractive markets Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 14 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Going forward, EE should focus on core activities, and operate primarily within SADC, Africa and Middle East Core, 2 nd Priority, 3 rd Priority Core Business Focus SADC Diversified at er en G SA / Eskom n io Electricity Allied Core SADC Priority 1 Africa Priority 2 ROW Priority 3 How should EE treat non-core businesses going forward? Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 15 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM Maintain Operate n Eskom io ut rib st Build on Di Design si is sm an Tr Electricity
Analysis has shown that the further we stray from our core, the less likely we are to create value Other Services vs. Markets Energy Related Positive EVA Energy Negative EVA Eskom South Africa ROW Despite investment attractiveness or performance, should we divest out of non-core assets? Metra Consulting (Pty) Ltd segments; 2. An EVA calculation has not been performed for the SNO; 3. An operating profit has been used to size Enerweb and Note: 1. EVAs repeated across regions and not across is an independent consulting 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence from Cap Gemini arivia. kom. 3/16/2018 2: 26 PM 16 © 2003 Cap Gemini - All rights reserved
Meeting full potential in the core 17
The SADC capacity expansion presents a huge opportunity for EE but highlights timing and capability issues The capacity expansion opportunity • The portion prior to 2010 First wave of the capacity expansion is estimated to be worth R 113 bn • Approximately R 19 bn will be spent prior to 2010 Metra Consulting (Pty) Ltd is an independent consulting The portion that is attractive to EE • R 7, 7 bn of this is relevant to EE’s current business and clearly attractive adjacent subsegments The portion EE can currently do • EE is currently positioned to perform about R 4 bn worth of this work 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence Budget Gemini Source: Generation & Transmission Expansion Plan –from Cap for Pre-feasibility and Feasibility studies – Bain Mc. Intyre; Focus Interview with Steve Lennon & Andrew Etzinger. 3/16/2018 2: 26 PM 18 © 2003 Cap Gemini - All rights reserved Note: An exchange rate of R 8 to $1 has been used to estimate the cost of each project.
The upcoming capacity expansion could result in massive growth of EE’s defined core business First Wave of Capacity Build Projects The first wave of the capacity expansion will result in build and refurbishment projects worth R 113 bn. EE can potentially benefit from feasibility studies, design and project management relating to new builds and parallel refurbishment activity. Metra Consulting (Pty) Ltd is an independent consulting 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under Plan – Budget for Pre-feasibility and Feasibility studies – Bain Mc. Intyre; Focus Interview with Steve Lennon & Andrew Etzinger. Source: Generation & Transmission Expansion licence from Cap Gemini 3/16/2018 2: 26 PM 19 © 2003 Cap Gemini - All rights reserved Note: An exchange rate of R 8 to $1 has been used to estimate the cost of each project.
EE currently enjoys strong market share positions in many of its core markets Market Share (%) Market Size (Rm) Market Size and Share in SADC - 2002 Generation Transmission Distribution Can EE maintain these market shares as new players enter the market during the capacity expansion ? Metra Consulting (Pty) Ltd is an independent consulting 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM company trading under licence from Cap Gemini Source: Gemini Analysis; Focus Interviews with Generation, Transmission, Distribution Procurement Managers. 20 © 2003 Cap Gemini - All rights reserved Core businesses contribute 62% of EEs current revenues
EE’s current weak position in generation design and build means we may not fully benefit from the SADC capacity expansion Percentage of Activity Offered, Percentage Share of ER Procurement in Offered Activities Distribution Transmission Generation Design Build Operate Maintain & Refurbish Turbines, not boilers and auxiliary % of the segment we’re active in Rotek does all turbine maintenance % share of the segment we’re active in Manage small parts of grid Transformers, not controls & instrumentation, not live line % of the segment we’re active in Competitors and ER internal Mostly done internal to ER Rotek dominates % share of the segment we’re active in EE can do all Dx design EE sub-contracts civils Revenue enhancement, some network management Transformers, lines % of the segment we’re active in EE wins most of this work but sometimes subcontracts outside of EE Lots of BEE players Roshcon does 56% of ER work % share of the segment we’re active in Pre-feasibility, 1 st-level design – not detailed design Only project management TSI does 50% of ER work EE has lost most specialist expertise TAP can do all Tx design Only project management ER does some internally Sales & marketing, waste management, EE uses ER resources for power station run contracts Low barriers to entry, difficult to diferentiate The challenge is to identify the attractive services in the generation design and build segments and to build or buy required capability and capacity. Metra Consulting (Pty) Ltd is an independent consulting Source: Gemini Analysis; Focus Interviews with Generation, Transmission, Distribution Procurement Managers and interviews with TSI, Rotek, Roshcon and TAP management. 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 21 3/16/2018 2: 26 PM
EE’s ability to grow is limited by a shortage of some critical skills Ability to respond to the expansion programme • • Ability to grow in other segments EE specialises mainly in coal • EE has limited expertise in gas, fluidised-bed combustion and hydroelectric domains EE focuses on turbine maintenance – it does not participate in the maintenance of boilers and auxiliaries • EE have limited skills in controls and instrumentation • EE is reliant on ER resources for all business in the Operate segment • EE does not have the skills to extend its preliminary design work to detailed design • In the build segment, EE has construction skills in Distribution only – not in Transmission or Generation • EE has limited project management skills in Generation Not all service areas are necessarily attractive – EE must focus on adjacencies to current offerings and substantial, sustainable profit pools. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 22 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The phasing of these projects has implications for resource planning and our ability to commit to international projects Phasing of Additional Capacity Expansion Projects Start of construction of CCG 1 & 2 projects Start of construction of Braamhoek, Steelpoort and FBC projects After 2010, further growth will result from the Mepunda Uncua and Western Corridor projects. The core BUs will need to start ramping up capacity now to position themselves for the future, and sell any surplus capacity both within SA and internationally. Metra Consulting (Pty) Ltd is an independent consulting 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence from Cap Gemini Source: Generation & Transmission Expansion Plan – Budget for Pre-feasibility and Feasibility studies – Bain Mc. Intyre; Focus Interview with Steve Lennon & Andrew Etzinger. 3/16/2018 2: 26 PM 23 © 2003 Cap Gemini - All rights reserved Note: An exchange rate of R 8 to $1 has been used to estimate the cost of each project.
Feasibility studies, preliminary design, and project management are worth R 7, 7 bn of the pre-2010 expansion Spend in Sub-Segments and Adjacencies to EE’s Current Focus Detailed design at 2% of the project costs equates to approx. R 2. 6 bn within the same time period These activities are closest to EE’s current capabilities and should be investigated for potential expansion. Metra Consulting (Pty) Ltd is an independent consulting 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence from Cap Gemini Source: Generation & Transmission Expansion Plan – Budget for Pre-feasibility and Feasibility studies – Bain Mc. Intyre; Focus Interview with Steve Lennon & Andrew Etzinger. 3/16/2018 2: 26 PM 24 © 2003 Cap Gemini - All rights reserved Note: An exchange rate of R 8 to $1 has been used to estimate the cost of each project.
EE’s potential future revenue is made up of work covered by ER’s current level of operational expenditure and new project spend Sources of EE’s Future Revenues (2004 -2010) Revenues R 3, 7 bn R 4 bn R 3, 8 bn R 6, 5 bn Capacity expansion spend EE’s potential expansion areas Capacity expansion spend in EE’s current capability areas Planned refurbishment and expansion ER operational spend with EE 1 Sources Metra Consulting (Pty) Ltd is an independent consulting 1. Based on current spend values, astrading under licence. Tx & Dx Procurement, with no annual growth. company obtained from Gx, from Cap Gemini 25 © 2003 Cap Gemini - All rights reserved 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Meeting the full potential 26
The SADC capacity expansion represents a major opportunity for the support services business of Eskom Enterprises Opportunities • Maintain market share within a rapidly growing market: Recommendations • Understand the potential growth relevent to each BU, and how to position ourselves to take advantage of that growth • Improve service levels and secure preferential contract for capacity expansion • Understand build vs buy options / implications for entry opportunities • Identify pockets of relevant non-regulated expertise within the regulated business and review options • Identify a global partner to assist in managing capacity spikes and troughs and expertise gaps • Understand areas where EE does not have current capability that are worth entering – Pre-feasibility and feasibility assessment – Up-front design – Project management – Maintenance services Challenges • • • Current skilled resources are already stretched Timing of demand will be volatile Building expertise internally will take time What to build internally vs. outsource How to utilise surplus capacity in the short term while preserving long-term capacity Build business unit strategies describing basis for differentiation and capability implications Building a strong global partnership could dramatically strengthen EE’s position. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 27 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
International projects should be pursued to cover excess capacity in the short-term, allowing us to build expertise ahead of the curve Rationale for international expansion • International sales of design, build and maintain services • • Allows EE to scale up prior to the capacity expansion Allows EE to sell excess capacity resulting from fluctuations in SADC demand Allows EE to exploit potential cost-base advantages it has over hard-currency based competitors Allows EE employees to gain knowledge of other markets and technologies Margins may be higher than in SADC Managing the impact on SADC business • These contracts require large investments to fund business development – potentially including the setup of local offices • Business development requires local knowledge of customers EE is already short of key management and expert resources – international sales stretch existing resources • We must scale up while maintaining market share Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 28 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
EE must take efficient central control of key business portfolio decisions for an interim period It should be referred to the EE Executive Committee If the expenditure / action will … • Result in expansion into a non-core area of business: • Principles: – Decisions must be driven by business cases and resource availability – Outside the ‘design, build, operate, maintain’ value chain – Outside SADC – Core business must take priority (SADC design, build, operate and maintain; West Africa, and Middle East) AND • – Adjacency to the core business must be a key deciding factor: Result in a contractual obligation of greater than 6 months: Extent of leverage of existing resources and customer relationships – Including new joint venture agreements / strategic partnerships – All business cases must include appropriate risk assessment OR • – The decision making process time should be driven by due process and not act as a bottleneck Result in cash outflows (investment or operational) of a sum greater than R 500 000 OR • Together with any related expenditure or action will result in one of the above Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 29 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Business Case – Core Business 30
Under these assumptions, core Support Services revenue will double by 2010 Support Services Revenues 2003 -2010 2003 2010 % Growth Rotek R 596 m R 1, 271 m 113% Roshcon E&I R 397 m R 559 m 41% TSI R 607 m R 1, 182 m 95% TAP R 70 m R 154 m 120% Gesco R 102 m R 188 m 89% 4, 000 Rand Millions 3, 500 3, 000 Gesco 1 TAP TSI Roshcon Rotek 2, 500 2, 000 1, 50 0 1, 000 500 2003 2004 2005 2006 2007 2008 2009 2010 Metra Consulting (Pty) Ltd is an independent consulting 1. 50% in 2003, 100% thereafter. under licence from Cap Gemini company trading © 2003 Cap Gemini - All rights reserved 31 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Implications of strategic focus for Globalisation 32
Strategy: ‘globalise’ in SADC countries in the short to medium term, West Africa and Middle East in the medium-long term Rationale for international expansion Globalisation (operate segment) • Operate contracts result in annuity-type revenues • Operate contracts often entrench Eskom, resulting in sales of other services Managing the impact • • • These contracts require large investments to fund business development Business development requires local knowledge of customers Concessions require large up-front capital Risks are higher outside South Africa Power station operate contracts require resourcing from Eskom Regulated EE can potentially support the capacity expansion programme by securing strategic interconnected ‘operate’ contracts. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 33 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Implications of strategic focus on the non-core portfolio 34
Different strategies need to be adopted based on BU / segments performance and their fit with the EE portfolio Strategic Options: Core Invest and grow • Fix, and invest in building capabilities • • Turnaround strategy Critical Non-Core • Option to move back to Eskom Regulated or operate as cost centre on their behalf • • • Keep with no further EE / EH investment • Close Outsource with strong SLAs Sell (with strong SLAs in place) where multiple suppliers exist in market Performing Metra Consulting (Pty) Ltd is an independent consulting Non-Performing 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence from Cap Gemini Note: Performance has been determined by an EVA calculation, where no EVA has been done net operating profit has been used to determine performance. 3/16/2018 2: 26 PM 35 © 2003 Cap Gemini - All rights reserved
For each business identified as a potential ‘sale’ opportunity, we followed a process to arrive at a range of realisable values Underst and current financia ls • Turnover • EBITDA • Net profit • Asset base • DCF value (excluding debt) Estimate ‘possible ’ values 1 Identify external data • External • Multiple of • Previous offers • Multiple of net • Industry PE • Value based on valuation made ratios • Contractual EBITDA earnings assets Deter mine range of realisa ble values Unders tand limitati ons / implica tions commitments (penalty clauses) • Political commitments • Best case • Worst case • Estimate based on current information available • Previous offers • External valuation 1. Value benchmarks are Consulting (Pty) Ltd on percentage ownership. Metra calculated based is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 36 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Business Case Summary 37
Eskom Group has agreed to a capitalisation number for EE as a whole, based on key assumptions within each of the pillars Support Services Non-core Portfolio (NED&M) Globalisation • Support Services • EE will focus its • EE will continue to takes advantage of major opportunities presented by ER build programme • EE will divest from • Critical non-core globalisation efforts within SADC most non-core businesses operate the projects already signed • Additional capability is required: services will be operated as cost centres (no cash effect) – Develop internally – Buy-in • Head Office costs are controlled and are assumed to be a fixed percentage of Support Services revenue • No investments in – JV / strategic partnerships Capital required to fund growth in short term Head Office Overheads new business will be made + Capital required for new projects - Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved Capital released through divestments 38 Capitalisation Requirements + Cash required to operate 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM = R
Cash generated by core businesses and sale of non-core assets will be used to fund Globalisation growth Total EE Projected Cash Flow – Base Case Including Proceeds for Sale of Asset (Base Case) Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 39 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Organisational Implications 40
The 3 pillars were defined in line with strategic developments and are supported by key corporate functions CEO Corporate/ internal services Support Services Globalisation NED & M • Finance • HR • Strategy & Transformation • Legal & Compliance • To provide support services for the Energy Supply Industry • To identify potential • Identify “new” • To manage the • To initiate and incubate opportunities for developing Eskom product and service offering internationally operation of these projects once they are operational Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved opportunities that leverage existing technologies, capabilities or assets the venture start-up for future handover or sale 41 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
We have agreed to move towards a single Support Services (Pty) Ltd. The business model of Support Services will need to be aligned to serving Eskom as the primary customer. Support Services (Pty) Ltd. TSI (Division) Rotek Engineering (Division) Roshcon (Division) (RVS) • Focus on core business • Clean out non-core activities • Locate activities where they best belong • Support the ER build program This implies that non-core activities will need to be cleaned out, and other activities repositioned within Support Services. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 42 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM (Roshprop)
This Support Services structure needs to move away from traditional Business Unit lines and towards an integrated service offering EE Support Services (Pty) Ltd. Engineering Consulting (TSI) Internal Services Maintenance (Rotek Engineering) Implementation implications: • Determine the strategic focus of Support Services, and stick to it Construction (Roshcon) R&D (TSI) • Conduct a complete review of policies and terms of employment for both EE and Rotek • Clearly define criteria by which investment / selling decisions are made: • Strip out non-core business and position it where it belongs • Change board composition at Rotek to enable greater strategic direction and input from EE • Collapse the dual board structure within Rotek (if Roshcon is to remain within Rotek) Renegotiate long term enabling agreements with ER for guaranteed baseload • Appoint the ED to act as a single point of control over all support services and take responsibility for the strategic relationship with ER • Design and implement mechanisms for monitoring customer satisfaction and implementing corrective action • • Review limits of authority and board mandates to ensure adequate control from EE • Implement standardised reporting to enable measurement and alignment Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved – Which products and services to which markets? 43 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Globalisation will further the international aspirations of the Group, primarily focusing on the SADC region Globalisation Market intelligence and IP management • Market intelligence management Marketing and relationship building • Focused business development Opportunity identification • Primarily driven by EH needs • Coordinate and Opportunity analysis • High level assessment • Detailed business case: Deal Operational structuring oversight & closure • Coordinate the deal team with support from finance – Coordinate multidisciplinary teams with necessary expertise manage intellectual property • Document ‘Eskom Way’ and customise for other countries Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 44 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM • Develop operating methodology for target countries (e. g. tax, legal, HR, etc. ) • Maintain operational oversight of projects
The high level structure for Globalisation is defined however it’s size will be determined by the Globalisation strategy and focus areas Globalisation Intellectual Property and Market Intelligence Manager Regional Business Development Manager Operations Oversight Manager Implementation implications: • • The detailed Globalisation structure will be populated when the Globalisation strategy has been formulated and the business processes required to support the function have been defined Given the processes and the volume of work, the size of the team will evolve Key processes to support this function will include: – Resource allocation – Business case – Opportunity identification and identification These process will be designed as part of the implementation Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 45 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Other associated or adjacent business opportunities will be pursued by NED&M on a project basis, driven by Group opportunities and needs New Enterprise Development & Management Market Intelligence input from Globalisation Opportunity identification • New ventures which leverage existing capabilities, assets and / or technologies Opportunity analysis • Initial high level assessment and business case • Assess the opportunity with multi-disciplinary team New ventures should be developed primarily for sale or handover to other areas of the business Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 46 Deal structuring & closure • Coordinate the deal team with support from finance • Identify and develop potential JVs and strategic partnerships Portfolio management • Incubate new ventures • Manage assets for value as part of a balanced portfolio • Implement investment / divestment decisions 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Both Globalisation and NED&M will need strong corporate finance support in the structuring of new deals and projects Corporate Finance Globalisation Market intelligence and IP management Marketing and relationship building Opportunity identification Opportunity analysis Deal Operational structuring oversight & closure New Enterprise Development & Management Market Intelligence input Opportunit Deal y structuring analysis & closure • Deal structuring • Negotiation • Risk assessment • Business case Opportunity identification development and assessment • Funding • Tax implications Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 47 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM Portfolio manage ment
Therefore a strong CFO function is recommended to provide traditional finance as well as a corporate finance capability Chief Financial Officer (CFO) Finance & Control • Financial and management accounting • Risk management • Tax and audit • Pension and provident administration • Financial reporting Corporate Finance • Business case-based opportunity assessment • Risk assessment and management • Deal structuring • Deal negotiation and closure Treasury / Funding Other functions • Third party relationship management • Financial system management Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 48 Some of these skills will be accessed externally and coordinated by this office due to the specialised, deal specific resources needed 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
We recommend a clear differentiation of Corporate and Operational services CEO Support Services Globalisation NED & M Finance & Services HR Legal & Compliance Strategy and Transformation * Corporate Services Internal Services Head Office Operational Services Trust and service orientation provide the foundation for the new operating environment. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 49 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Balanced Scorecard (BSC) 50
Scorecards have been defined, and will continue to be updated as the strategy is clarified Progress: • Financial Level 1: CEO – Vision, strategic intent and objectives defined – Measures identified Customer Vision & Strategy Internal Business Process – Will be reviewed to align with Visioning workshop output • Level 2: Support Services, Globalisation, NED&M, CFO – Draft vision, strategic intent and objectives defined Learning & Growth – Being validated in line with defined structure • Level 3: Support Services: – Generic scorecard for a business unit defined – Work with interim manager to develop and validate The focus can now shift to operationalising the scorecard framework in the business. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 51 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The Level 1 Scorecard will evolve in line with the strategic recommendations Strategic Intents To achieve maximum EE enterprise value through the value-adding development and management of the EE portfolio of businesses Internal Processes To maximise the life-time value of key customers, as well as grow the customer base, through the development of a global brand corporate identity To leverage technology and intellectual capital through best-practice processes that enable value-adding business decisions and efficient operations Learning & Growth To maximise value for the Group and our customer s through the provision of total solutions across the energy industry valuechain Customers & Financial Market EE Level 1: To attract and retain the right people for an entrepreneurial and performance driven organisation Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 52 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Measures have been articulated and are in the process of being populated with data Financial / Stakeholder Code Measure Customer A Status Code Measure A Status Customer satisfaction index . . 1 F 1 Gross profit margin . . 1 C 1 F 2 Actual costs vs budget . . 1 C 2 Num. of unsolicited enquiries (Brand awareness and value) . . 1 F 3 Operating profit . . 1 C 3 % of new (<1 year old) customers vs total customer base . . 1 F 4 % revenue growth . . 1 C 4 Market share (of addressable markets) … 1 F 5 RONA . . 1 C 5 … 1 F 6 EVA … 1 . . 1 C 6 F 7 . . 1 C 7 F 8 . . 1 C 8 F 9 … 1 C 9 F 10 … 1 C 10 A Status Code A number of measures are … completely new and … measurement thereof will … need to start as soon as accountabilities … are allocated … F 11 Internal Business Processes Code Measure 1 1 People, Learning & Growth A Status IP 1 Re-use of intellectual property . . 1 P 1 Employee satisfaction index Measure . . 1 IP 2 Process audit red flags . . 1 P 2 Training days versus budget . . 1 IP 3 Number of submissions to knowledge base . . 1 P 3 Equity compliance (BEE, racial, gender etc. ) . . 1 IP 4 Number of products & services <1 yr old (new) . . 1 P 4 Days positions unfilled (Preferred employer) … 1 IP 5 ISO compliance … 1 P 5 Suggestions received, converted ( Innovation) … 1 IP 6 Innovation (time spent as a % of total) … 1 P 6 Compliance to performance management system … 1 IP 7 … … 1 P 7 % of succession plans in place … 1 IP 8 … … 1 P 8 Disabling injury incident rate (DIIR) … 1 IP 9 … … 1 P 9 Staff turnover (Unplanned) … 1 IP 10 … … 1 P 10 … 1 Review meetings around these measures can now be initiated. Metra Consulting (Pty) Ltd is an independent consulting 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 53 3/16/2018 2: 26 PM
With the appointment of interim managers, Exco meetings incorporating BSC disciplines can now be initiated + ‘Measures’ ‘Accountability’ Financial RACI Customer Vision Roles & Responsibilities Processes + People Plan ‘Disciplines’ Plan-Do-Review (PDR) Process Do Review Implementing a cycle of review meetings with clear accountability is essential to the success of the BSC process. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 54 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Communication and Mobilisation 55
We have completed Phase 1 with comprehensive communication to management Activities and Achievements • • Launched project to the Executive at the Saxon Presented Project Lambda Overview to the executive Produced & displayed poster describing Transformation phases EE of the Future Set up Suggestion Boxes across EE with a suggestion management process Conducted Top 100 Drumming Workshop Advertised and conducted overview presentations and Brown Paper Fairs at: – – TSI Rotek • Sent out regular communiqués on key issues: – – • • Summary of project approach Announcement of interim managers Announcement of intention to communicate Announcement of interim reporting lines Produced and distributed E-Band Info Pack Set up walkabouts at TSI and Rotek and HO Held Team Building event for Project Lambda team Published Transformation Newsletter Published summary Newsflash at project end Distributed Project Overview letter to Bargaining Unit staff in partnership with the Unions Commenced Bargaining Unit Roadshow for: – – Witbank Head Office Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved TSI Rotek Witbank Head Office 56 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The Poster Campaign has helped the organisation understand the Phased approach as well as the high level vision for transformation You may well have seen these posters around the EE offices. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 57 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The Suggestion Boxes have closed the feedback loop and a process has been established to ensure feedback to the organisation It is vital that employees feel they have an opportunity to be heard. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 58 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
We have also established the platform for successful union engagement during the implementation Agreed Terms of Reference Objective of Transformation Committee • To comply with the recognition agreement • Receive and distribute information • To ensure that Bargaining Unit employees are fully informed of the transformation process and decisions that affect bargaining unit staff • Way Forward • Make recommendations to NEEF Rollout of Overview presentation with Unions • • Observe confidentiality of information Monthly Transformation Committee meetings • • Respect current participative structures • Joint coordination of roadshows and communication sessions Decisions related to investment / divestment and changes to conditions of service to be discussed at NEEF The Communications stream worked with HR to ensure the correct protocol was followed. This has ensured harmonious relationships on all fronts. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 59 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
There has been a significant improvement in Communications awareness but there is still uncertainty surrounding the vision Comparison of Survey Ratings • Employees feel substantially more informed about the project • They also feel that there has been a substantial improvement in the quality of project communications • However, employees are still uncertain about the vision as reflected in the declining rating for question 1 Key to graph 1. 2. 3. 4. 5. 1 = poor 10 = good How well do you think you understand EE’s vision? How well do you understand the goals of the transformation? Do you feel there’s been enough communication about the vision? Do you feel that you are sufficiently informed about the project? How would you rate the communications that you have been exposed to so far about the project? Metra Consulting (Pty) Ltd is an independent consulting Sample size 29 company survey andlicence from Cap Gemini in first trading under 38 in second, randomly selected © 2003 Cap Gemini - All rights reserved 60 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The challenge moving forward is to communicate the right messages at the right time …and their key questions What people know… • • Transformation effort is underway • Three pillar structure is being implemented • There will be changes When will we know what’s going to change? • • • What is the corporate strategy? • The analysis and design phase is almost complete • Will people lose their jobs “Focus”, what does this mean? How will you communicate to those below ED level? The key question is, “what’s in it for me? ” Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 61 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Implementing the Transformation 62
Objectives of the Implementation • To realise the strategic objectives of Eskom Enterprises: – Optimise shareholder value – Focus on core business and support the ER build program – Provide support to EH strategy through expansion into SADC countries • To implement an organisation structure that will support the strategy: – Operationalise the 3 pillars – Develop appropriate skills • To design and implement supporting processes: – HR (performance management, job analysis, succession planning etc. ) – Financial (business case, risk management) – Business development (sales focus and coordination, team-based selling) • To implement revised governance structures and processes: – Board structure and mandates – Balanced scorecard (BSC) – Management forums • To mobilise the organisation around the way forward: – Behavioural and culture change Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 63 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
A typical transformation moves through 3 distinct stages Phase 1: Analysis & Design Phase 2: Implementation 8 – 12 weeks • Analysis driven Phase 3: Sustainability 12 – 18 months • • • Ongoing • Building momentum Transferring ownership • Building skills Centrally driven Realising benefits Transformation Project Line driven and monitored Audit reviews to ensure sustainability Managing the Transformed Organisation We have now reached the end of Phase 1. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 64 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
To achieve successful transformation EE needs an implementation project structured around six key areas Months Stream Governance and Business Management Process 1 2 3 Implement interim governance structures 4 5 6 7 Refine governance: 8 9 10 11 Track effectiveness - Board structures - Mandates Embed scorecard Define / revise detailed BSC Ongoing implementation Realise invest / divest decisions (NED&M) Analysis Strategy Realisation Follow through Execution Business unit strategy (meeting ER needs) - Clean-out ‘core’ businesses - Build vs buy - Competitive positioning - Globalisation strategy Implementation Business Case Validation & Realisation Service optimisation within Support Services Detailed Design Org. implications Organisation and Process Alignment Pilot Track effectiveness and customer service levels Implement Design & implement key business processes Design Pilot Implement structure Internal services alignment Integration of Support Services Roll out and tracking Implement Track effectiveness and customer service levels Update performance contracts and ongoing performance management Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 65 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM 12
Three streams will support the core of the implementation Stream 1 2 3 Compile mgmt. dev. plan 4 Months 6 7 5 Skills development interventions 8 9 10 11 Ongoing development and monitoring Job Analysis Human Asset Optimisation Plan, train, pilot Reposition HR Implement across business Design key HR processes Refine & implement Pilot Embed and track effectiveness Leadership development Systems Alignment Ongoing development and monitoring Align systems to business strategy and processes Implementation Ongoing communication Transformati on Enablement Strategic mobilisation Pilot Roll-out Project management Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 66 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM 12
The implementation will cover every aspect of the business Governance and BMP • Implement interim governance structures (operational) – Exco – Finance / risk management committee • Develop long-term governance: – Board structures – Board mandates – Operational forums • BSC implementation: – PDR / RACI Strategy Realisation Organisation and Process Alignment • Optimise internal services within Support Services: • Realise invest / divest decisions – Review options, detailed design and implications – Agree functions, structure and SLA’s – Detailed analysis – Execution • Design and implement key business processes, including organisational implications: • Develop Business Unit – – – strategy: – Clean up (focus on core) – Understand implications of build program per BU – Determine options to address capability gap (build vs buy) – Define differentiation Develop strategy for Globalisation – which markets / products, EH goals • Implement Internal Services (includes Finance and HR): • EH / EE relationship building: – Build commitment and agree SLAs – Negotiate long term contracts – Agree preferential sourcing – Review non-regulated expertise within the regulated business – – Define processes Define detailed structure, roles, functionality and SLAs Define standard formats (business case, financial reporting) Revise budgets / targets / cost centres • Integration of Support Services: – Detailed analysis of terms and conditions, and migration plan to normalise – Review legal , tax, brand implicaitons of single (Pty) Ltd structure – Detailed analysis within each division • Business case validation: – Recognise the financial impact of the project on the business – Review / update capitalisation requirements Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved Resource allocation Opportunity identification and analysis Business case development Market intelligence and IP management New business incubation 67 Organisational implication of focus strategy – Implement legal and reporting structure – Renegotiate contracts, performance measures, targets and budgets – Co-ordinate sales development effort 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The implementation will cover every aspect of the business (cont. ) Human Asset Optimisation • Complete assessment of M- band managers • Develop a plan and implement interventions to address generic and change management skills gaps • Conduct job analysis of key job families to meet EH needs – Conduct pilot – Roll out across the business • Define key HR processes to support required behavioural change e. g. – Performance management – Reward and recognition – Succession planning • Determine process for staff redeployment and possible exit: – Negotiate, agree, implement • Leadership development (after permanent appointments): – Team building Systems Alignment Transformation Enablement • Align systems to business strategy and • Strategic mobilisation: processes • Understand information and reporting requirements between Eskom Holdings, Eskom Enterprises, Support Services (Pty) Ltd, Globalisation and New Enterprise Development • Understand current EE systems and ability to support required operational decision making and reporting requirements • Understand consolidation options e. g. – Building commitment to EE of the future • Continued communication • Input to Transformation Committee • Project management – All onto one new segment? – All onto one existing system? • Understand migration options for different areas of EE (e. g. Support Services vs businesses being divested) • Understand competence and governance implications of system changes: – People and skills – Policies and procedures (and link to EH) • Management of migration: – RFI, RFP – Contracting – Implementation Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 68 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The Management Challenge 69
The challenge for EE is to harness the potential and skills of individuals and convert them into business performance Translating Potential into Performance Barriers / Facilitators • Training & development • Experience • Individual interest & career needs • Opportunity to develop • Accurate person job matching • Structure • • Potential Individuals’ inherent talent to learn certain skills or display certain competencies Incentives Culture Leadership style Self-motivation Skills Competence Performance Potential already translated into skill through training and experience The job-related activities successfully completed by the individual based on his / her skill and potential The level to which the individual leverages his / her competence to achieve jobrelated KPI’s As individuals perform, so the overall business performance improves. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 70 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The cultural legacy in EE hampers optimal performance Some cultural symbols Possible interpretation by employee Possible business implications • Cautious participation in initiatives Promotions based on implicit knowledge and politics rather than explicit knowledge and objective performance data Huge sums of money lost without individual accountability High and low performers get similar performance ratings and rewards Eskom do not retrench people Perceived incompetence of certain senior leaders due to lack of trust “This is an unfair, biased environment. I have to watch my back” “Poor performance will be tolerated” “It is not worth my while to put in the extra effort” “I’m safe here once I’m in” “I’m not learning in this environment. This company is going down the tubes” • Slow responsiveness to external environment • Focus on political positioning rather than job performance Slow sharing of knowledge • • Attrition of high flyers • Embedding of ‘dead wood’ • Financial losses • Low motivation levels • Sub-optimal application of • competence Sub-optimal business performance • Unethical behaviour The culture is firmly entrenched. Average length of service for E-bands is 16 years. • Attrition of high flyers • Embedding of ‘dead wood’ The lack of accountability and effective performance management damages the business on a daily basis. Metra Consulting Week is an 2 Focus Interviews. Source: Face-to-Face feedback with E-bands. (Pty) Ltd 1 andindependent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 71 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
HR processes are not currently driving the effective use of our human capital Job Analysis Selection & Placement • Incomplete • Subjective • Poor job / competence matching • No rigorous interviewing methodology Within technical firms people management remains a challenge. Line often abdicate their HR management responsibilities Performance Management Supporting Systems Strategic HR • No common database • No skills database • Need to reposition HR as a strategic business partner • Need for strategic HR planning due to resource constraints Career and Succession Planning • Only at senior levels • Promotions perceived to be ‘political’ • Subjective and inconsistent • Everyone ‘average or better’ • No audit to ensure calibration Reward & Recognition Training & Development • Must be aligned to business needs • Don’t understand what we’ve got • Limited return on training investment Metra Consulting (Pty) Ltd is an independent consulting Source: HR Process Review Workshop. company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 72 • Inconsistent link between performance and reward 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
In order to build on strengths and optimise the capacity of senior management we need to implement supporting people processes Stop Start • Appointing instead of selecting • Investing in training unrelated to skills needs or the individual’s career path • Ignoring unethical and uncommercial behaviour • Disempowering employees through management style and bureaucracy Continue • Doing careful strategic HR planning • Job analysis • Knowing your Human Assets: (and acting on this knowledge) – Career needs – Potential – Skills • Rewarding the right behaviour publicly • Identifying successors • Mentoring for high-potential, high -performers • Proactive retention strategy • Developing the ‘soft’ skills of transformation leadership • Incentivising competencies where we have shortages • Making and implementing bold decisions • Investing in training and development – but align with business needs • Involving line in HR planning • Measuring performance • Communicating the strategy continuously • Involving M-bands in deciding the business’ future • Building on the existing HR processes foundation • Implementing the HR scorecard • Focussing heavily on communication and mobilisation as a change management strategy Aggressive performance management and optimal person-job matches are critical to sustainable business success. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 73 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
The Way Forward 74
The path ahead will be challenging, and will require commitment and focus for success Critical Success Factors: • Leadership commitment to the stated strategic direction • Commitment and support from Eskom Holdings and agreement on • • • service contracts Competent EE management to drive the growth strategy Transparent and fair process Concerted effort to get the business involved Eskom Holdings commitment to EE as a centre of excellence for design, build, refurbish and globalisation Alignment of performance management, rewards and incentives with required behaviours and outputs We already have the talent identified at the senior management level. Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 75 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Challenges facing Eskom Enterprises’ success Transformation Challenges: • The SNO – If not established by year end, EE must impair more than R 1 billion of value • Timely disposal of non-core businesses • Ability to plough back proceeds from non-core disposals into business Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 76 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
Project Lambda has been set up to manage the transformation process. The name stresses our aim to achieve “Resonance” in EE S = f na tio era Op c tegi Stra l Transformation is the business Are we on the same Wavelength? Metra Consulting (Pty) Ltd is an independent consulting company trading under licence from Cap Gemini © 2003 Cap Gemini - All rights reserved 77 0134_EE_EH_Business. Plan. Input_16 Jul 03_SVDrv 3/16/2018 2: 26 PM
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