Total Cost of Ownership | Blog

By redeploying valuable capital from low-performing assets to your company’s core business in an effort to improve the bottom line, we can do a lot to help make your company more successful.

For over 20 years, we have been responding to customer requests to help them become more energy resilient, have higher levels of reliability, and manage portions of their business where they may not have the expertise or resources. Customers appreciate having a company they can trust to do this work for them while working together as a team.

Here are a few real-world situations to illustrate our success with existing clients.

Co-location Data Centers

In a very competitive market, obtaining and retaining customers is challenging and competition is intense. Making a profit in this space has never been easy and it is getting tougher as larger players exert their power to drive down costs. Having the best servers, software and network access is critical to success. Fire protection systems, cooling, power distribution equipment and emergency power are necessary, but it’s best to keep these costs down so you can continue to offer state-of-the-art computer power. Each project is unique, but each job begins with providing and managing emergency backup power, UPS equipment, the switchgear and PDU units, chillers and chilled water distribution system, and then ultimately the server rack heat exchangers. For many of these solutions, we installs a monitoring system, which allows the client and our team to keep tabs on all critical points and know when attention is needed. In this market, and the following examples, we design, build, own, operate and maintain the equipment for a fixed monthly fee. Since this covers maintenance and repair, we put a great deal of emphasis on the maintenance, which is less costly than replacing major capital equipment that is damaged.

Medical Test Labs

Blood samples can play a vital part of managing and maintaining someone’s health. This is a just-in-time process and disruptions to the test equipment are not an option. Since electric utility companies cannot promise 100 percent continuity of power, having backup generators and UPS equipment is essential. However, this is not a core business function for test labs so they need a strategic partner that can manage this type of equipment. With many locations across the United States, the customer expects the same level of service at all locations. It is often the case that the scope of our support will expand over time to also provide services for their data centers.

Large Automotive Component Suppliers

As manufacturing sites grow their campus, it begins to look like a large university. With multiple buildings that vary in power and cooling requirements, there are economic reasons for taking on high-voltage delivery from a utility and owning your own transformers and distribution systems. Likewise, on the thermal side, there are economies of scale when heating and cooling are provided from a central utility plant. The question that senior management must ask is, “Where do we want to focus our capital to maximize profits?” We found numerous situations where we have the skills and expertise to own and manage a company’s support systems at a lower cost, freeing up capital to invest in new products and production machinery, thereby maximizing their shareholders’ returns.

Creating the Business Case and Providing a Solution

If a company knows that it needs to improve its energy power reliability, where should they begin to create a solid business case? First, they must ask, “Do we need it?” To do that they must calculate their cost of downtime and have a pretty good understanding of the probability that will occur. Contact us to assist your companies to do this analysis.

Another question the company should ask is, “How are we going to pay for the cost to upgrade the electrical or mechanical systems or add backup power?” This could be regarding substations, distribution lines, on-site generators, batteries, flywheels or possibly solar energy. All of these solutions will require upfront capital investments, ongoing maintenance and support. In addition, the company will either need a design with redundancy or assume that at some point equipment will fail and may have to be repaired or replaced. While conducting the company’s analysis, several scenarios should be looked at:

A.) Do nothing.
B.) Own and maintain internally.
C.) Own and pay a third party to maintain.
D.) Outsource to a third party and allow it to own and maintain.

As the company develops cost projections for each option, ask:

Is this the best use of my capital?
Do I have the personnel to operate this equipment?
Do I have the personnel to maintain this equipment?
Will I be able to quickly repair or replace equipment if it does fail?

If it is decided to use a third party to manage assets, ask:

How many years has it been in the business?
What are the depths of its resources?
What is its knowledge of and solutions for your type of business?
What is its ability to respond 24/7?
What are the number and size of projects it’s worked on?
What are its success stories and case studies?
Do they have a website?

Typically, here is how this analysis will turn out:

What is your company’s next step?

We can assist your company in conducting its own analysis. After hundreds of business cases for a wide variety of commercial and industrial customers, we can show how their managed services will provide your company with its lowest total cost of ownership.