Fact sheets - Standardise, Optimise & Simplify –
the Back2Basics programme

A message from the chairman – Mpho Makwana

Eighteen months ago, we had no financial model. We now have a detailed, agreed, seven-year funding plan, for the most intensive capital expansion project in South Africa’s history.

A milestone in the funding effort has been the issuing of a bond in the international market in the past few months. Although government guarantees were available, this issue was particularly significant as Eskom was able to issue this bond directly off its balance sheet, indicating its ability to obtain funding independently. The bond issuance generated bids to the value of USD3.9 billion. An amount of USD1.75 billion was taken up by Eskom. The over-subscription demonstrates the confidence that international investors have in Eskom’s ability to manage its affairs in a sustainable and profitable manner.

In addition, we have issued our first ever interim results. Our credit rating outlook is sound and we are fully operational again, with a finance director who has just completed his first year in Eskom’s service – after we were without a finance director for 18 months. We believe that the immediate financial future has now been secured, allowing us to concentrate fully on the enormously challenging capital expenditure programme underway.

This re-tooling of the managerial process, as we see it, has been an essential step in preparing us for the new phase we have entered in Eskom’s rich history. A short review of our recent performance – elaborated on in the 2011 integrated report – reflects the momentous nature of the previous year.

Eskom is organising itself to deliver on its mandate for the decades ahead. We believe we have now positioned the organisation’s three major components – its managerial infrastructure and plans, its people, and the necessary financial resources – to help build South Africa and southern Africa’s exciting future.

A message from the chief executive – Brian Dames

 

We have embarked on a review of our entire strategy. We must become a high-performance organisation, keep the lights on while reducing our carbon footprint, secure future resources and ensure financial sustainability. We are working with our shareholder to finalise the new strategy and corporate plan.

In 2010, Eskom began transforming its performance, using improved controls and greater organisational discipline. In line with the requirements set out in the shareholder compact by the Department of Public Enterprises, we are making excellent progress in setting up an enterprise performance management system to continually measure performance across the organisation. For example, the chief executive and chairman “dashboards” now provide real-time information on key performance areas, and show true operational performance. Key performance indicators have been identified and aligned throughout the business. Simply put, everyone at Eskom knows what is required of them, and their role in meeting our strategic objectives.

This “line of sight” will allow management to take immediate and targeted action to fix problems. The project can be seen as part of the greater “Back2Basics” programme. The safety and wellbeing of our staff, contractors and the public is paramount, and we need to immediately improve our performance in this area.

 

Standardise and optimise with Back2Basics



 

The Back2Basics programme was initiated early in 2010 to drive efficiencies by applying standard business processes and using uniform systems across Eskom.

Back2Basics has designed standard work processes, efficient standard transaction processing and standard reporting for the finance, procurement and human resources processes. These processes have been documented in process and control manuals. This is a major step towards achieving an Eskom that follows one process.

The Eskom strategic review programme initiated in 2010 extended the Back2Basics scope to include the engineering, projects, outage management, maintenance and operations processes. These are also being standardised, optimised and simplified to create standard work processes, efficient standard transaction processing, with standard controls, standard policies and procedures and standard reporting.

The Back2Basics programme also focuses on Eskom’s ability to accurately measure business performance. To meet this need, an enterprise performance management unit was created to establish a standardised business reporting methodology that includes the standardisation and data integrity of key performance indicators used in business reporting. The unit will give Eskom access to analytical and intuitive dashboards and scorecards.

The automation of processes is critical for efficiencies and data integrity. Eskom has standardised on SAP, Oracle/P6 (large capital projects), Intergraph (engineering), CC+B (customer and billing) and MAXIMO (distribution maintenance) as the key systems of choice. To facilitate an effective deployment of these key systems, Eskom has adopted the high-performance utility model as depicted below. This will enable Eskom to benchmark its capabilities and processes against best practice.

Change management and training are critical if the benefits of the programme are to be realised. The Back2Basics training will empower participants to understand where they fit into the overall Eskom business value chain, understand the end-to-end processes and give them the necessary systems training and support.

Contact information

Telephone     Websites
 
Eskom head office +27 11 800 8111   Eskom website
www.eskom.co.za
Eskom Group Communications +27 11 800 2323   Eskom integrated report www.eskom.co.za/annreport11/
Eskom Development Foundation +27 11 800 8111   Eskom Development Foundation http://www.eskom.co.za/c/46/csi/
Investor relations +27 11 800 2277      
Ethics office advisory service +27 11 800 2791/3187   Email  
Confidential fax line +27 11 507 6358   Eskom contact@eskom.co.za
      Investor relations investor.relations@eskom.co.za
      Eskom environmental envhelp@eskom.co.za
      Ethics office advisory service ethics@eskom.co.za
      Promotion of access to Information Act PAIA@eskom.co.za
         
Physical address
Eskom
Megawatt Park
2 Maxwell Drive
Sunninghill
Sandton
2157
    Postal address
Eskom
PO Box 1091
Johannesburg
2000
 
         
Eskom Holdings Secretariat
Bongiwe Mbomvu (Company secretary)
PO Box 1091
Johannesburg
2000
    Company registration number:
2002/015527/06