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Transformation of Eskom Enterprises. Presenter: JUSTICE MAVHUNGU:DIRECTOR ENERGY & TELECOMMUNICATIONS Venue : CAPE TOWN Date : 18 JUNE 2003 Time :. EE is facing significant challenges. R’ millions. Revenue: 2001 – R2 370 m 2002 – R 2 906 m.

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Transformation of Eskom Enterprises

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Transformation of eskom enterprises

Transformation of Eskom Enterprises

Presenter: JUSTICE MAVHUNGU:DIRECTOR ENERGY & TELECOMMUNICATIONS

Venue:CAPE TOWN

Date : 18 JUNE 2003

Time :


Transformation of eskom enterprises

EE is facing significant challenges

R’ millions

Revenue:

2001 – R2 370 m

2002 – R 2 906 m

* IBM report stated that EE would require cash in approx. 18 months

Our goal is to maximise value for the Group, and for our customers, through the provision of total solutions across the energy industry value chain.


Transformation of eskom enterprises

E E structure diagram

Board of Directors

Committees of the Board:

— Management

— Audit

— Remuneration

— Investment &

Procurement

— Finance

Eskom supplied

services:

— Internal Audit

— Treasury

— Confidential

Investigations

— Safety

H / O

H / R

Manager

Finance

Manager

Co. Secr/ Legal

Gvt Liaison

#

#

*

*

*

*

*

*

*

*

Esk Ent

Africa

TSI Consulting

Rotek

Industries

Primary Energy

Investment

Roshcon

PBMR

Commercial

Telecomms

IT Services

Coal

EE Africa: Regions

Sapphire Exec Air

Rotek Engineering

Venture Development

Roshcon Division

Electricity Africa

EE~KOM

Arivia.kom

Golang Coal

ESI~TEL

RVS Division

ALS

Trans Afr Projects

e-Commerce

TEL~ENG

Amazing Amanzi

Roshprop Division

EE Marketing

SDCT

Equity Management

EON Solutions

Bonesa

EE Global West Africa Ltd (Nigeria)

FBC

RVS

Dormant

Natural Gas

Mountain Comm’s

TSI Operating

PTM

Roshprop

Dormant

GESCO

ELGAS

Tele-Com Lesotho

HEM~KOM

Eskom Energie Manantali

Waste Energy

SKI

Lunsemfwa

(Zambia)

#:

Co-ordination, Marketing,

Deal Making,

Funding

: Execution

*


Transformation of eskom enterprises

Current analysis shows net EVA “loss”

2002 Results

Manantali

EON

Enerweb

Roshcon

Rotek

EskomHead 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.


Transformation of eskom enterprises

Project Lambda: Transformation Programme


Transformation of eskom enterprises

The challenge is to prepare Eskom Enterprises for the next stage of its evolution as a multi-business corporate

  • Initial objectives:

  • Formation

  • Exploration

  • Early growth

  • New challenges:

  • Consolidation

  • Transformation

  • Repositioning

EE Business Value

Time

1999 / 2000

Jan 2003

2006 & beyond

. . . where the key challenges for corporate & business strategy are consolidation, transformation and repositioning


Transformation of eskom enterprises

EE vision & strategy needs to be aligned to that of EH and ER, recognising key intra-group relationships

Eskom Holdings

Eskom Holdings -

focus on industry & external Stakeholder Management

  • Shareholder - Investment relationship

  • Principal - Agent relationship

Eskom Enterprises - focus on Asset & Value Management

Eskom Regulated - focus on Supply & Operations Management

Eskom Regulated

Eskom Enterprises

  • Customer - Supplier relationship


Transformation of eskom enterprises

Strategy analysis stream will develop corporate and Business Unit strategy

  • Objectives:

  • Develop a coherent and compelling business vision for EE

  • Develop the high level strategy for EE to achieve this vision:

    • At corporate level

    • At business unit level

  • Ensure the EE vision and strategy is integrated with the broader Eskom strategy (EH and ER)


Transformation of eskom enterprises

Three strategic themes defined for overall direction of EE

Provision of Support Services for the ESI

Development of a Globalisation capability to drive the growth of EE and Eskom as a whole

New Enterprise Development and Management


Transformation of eskom enterprises

The 3 pillar structure will allow us to focus on our different strategic objectives


Transformation of eskom enterprises

The transformation project will design and drive necessary changes

We have engaged Gemini Consulting to assist in the process.


Transformation of eskom enterprises

Strategic decisions will affect the portfolio and structure

The Strategy and Value Analysis streams will drive these decisions.


Transformation of eskom enterprises

Business Case translates transformation benefits into financial statements

Understanding the company’s financial levers

Focus stream efforts at points of greatest leverage

Profit & Loss Impacts

Revenue enhancement

Cost reduction

Cost avoidance

Capital reduction

Capital avoidanceInvestment required

Time to realise

Balance Sheet Impacts

Understanding the impact of identified benefits on company financials

Cash flow Implications

Gross benefit

Net benefit

Investments

The analysis will allow EE to weigh up the benefits of transformation versus the investment required.


Transformation of eskom enterprises

The result . . . a business case for EE’s future to be presented to the Board

Investment required

Go /

no go decision

Proposed Strategy

Impact on financial performance returns

Risk profile

Potential business benefits


Transformation of eskom enterprises

We are now in week 6 of the business analysis and transformation design phase

Business Analysis and Transformation Design (12 weeks)

Implementation Planning

Scoping

Analysing

Weeks

1

2

3

4

5

6

7

8

9

10

11

12

Vision and strategy overview

Developing corporate strategy

Validating and finalising corporate strategy

TSI strategy review

Business unit strategy review

Strategy

Value analysis – opportunities and enterprise value

EVA analysis

Org Design Scoping

Organisation Design

Organisation

Design and

Development

Mgmt Profiling Scoping

Management Profiling

Bal. Scorecard - draft

Balanced Scorecard Validation (Level 1 – 3)

Comms baseline & readiness

Ongoing Communications Roll-out

Transformation

Enablement

Business case development

Project management

Complete

We are here


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