Tuesday 9 September 2014

Don’t own a cafeteria: get a food company to do it. Don’t run a print shop: Let a printing company do that. It’s understanding where your real value added is and putting your best people and resources behind that. Back rooms by definition will never be able to attract your best. We converted ours into someone else’s front room and insisted on getting their best. That worked for us so many times. That is what outsourcing is all about.


Jack Welch
Chairman and CEO, GE, 1981-2001


The idea of outsourcing non-core activities is well accepted and its use is increasing in many aspects of business due to:

  • increased competitive pressures
  • reduced product cycle times
  • investor demands for results
  • achievement of significant improvements in operating and financial performance.

Despite the increase in outsourcing in areas such as Facilities Management, IT and Telecommunications many organizations still own and operate their own energy assets. At a time when energy and energy management is becoming more specialized, and we need to increase investment in upgrading energy infrastructure to make it more efficient, the idea of fully outsourcing energy services needs to be properly considered by senior management.


Some energy management functions – notably energy procurement – are outsourced but there has only been a slow growth in fully outsourced solutions. Third party financing of energy efficiency investment is a form of outsourcing and will usually involve some kind of kind of energy service company and performance guarantees. Organizations considering third party financed solutions should consider how far they want to go in energy outsourcing and in particular assess the total costs of energy and utility systems, not just operations and maintenance or energy costs but also compliance costs and future capital needs – and all of the risks around utility supply. A systems approach is needed.


In my career I have been involved in various energy outsourcing deals which have come in several forms. In 2007 I published my first book, “Outsourcing Energy Management”, which summarized the reasons why management would consider energy outsourcing and how to go about it. It drew heavily on my experience of developing and implementing innovative energy outsourcing projects for Diageo, Sainsbury’s and other corporates and was conceived as a “how to do it” guide for management. Although the market has moved on it is still a useful guide for anyone considering what to do about the long-term future of their energy system.


The book can be purchased at:








There is 1 comment on “Outsourcing Energy Management”:

  • Business Process Outsourcing: Focus on Your Expertise on January 27th, 2015 at 6:58 pm said:

    […] elegant. As famed former General Electric CEO Jack Welch once put it, BPO is ultimately about “understanding where your real value added is and putting your best people and resources behind […]

Dr Steven Fawkes

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Energy Efficiency by Steven Fawkes

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Outsourcing Energy Management

Outsourcing Energy Management by Steven Fawkes

My book Outsourcing Energy Management is available to buy now

Only Eleven Percent