Ensures predictable water supply with Futuresense Solutions

“HSF provides us with a realistic view of where we will be and what operating conditions we will encounter in the future, depending on the current values entered. We are then able to calculate our future costs and find the tariff we need to charge now to meet those financial obligations." James Barnard, financial manager of Mhlathuze Water

Xhead = About Mhlathuze Water

One of the functions of the various water service providers in South Africa is to ensure that a constant supply of clean or potable water is delivered to citizens in their provisioning areas. In addition, the utilities also have to ensure they can meet the growing demand for water in previously un-serviced areas and can continue supplying this precious resource to future generations.

Mhlathuze Water, in KwaZulu-Natal, is one of the leading water utilities in South Africa. To deal with the pressures of a continually growing supply and demand for services, the organisation turned to Futuresense and Hyperion Strategic Finance (HSF) to assist with more effective management of its current and future business and cash flows.

Mhlathuze Water's area of supply covers 37 000 square kilometres, stretching from the Thukela River in the south, up the coast to the Mozambique and Swaziland borders, around Vryheid and back down to the Thukela River. Within this region, Mhlathuze Water has built and operates an inter-basin transfer, water treatment plants, an offshore waste water disposal pipeline, and it operates treatment and sewerage plants on an agency basis for local municipalities.

"The goal of Mhlathuze Water is to deliver a world-class service to its customers, providing safe and dependable services," says James Barnard, financial manager of Mhlathuze Water. "As a component of the Department of Water Affairs and Forestry's commitment to service delivery, we have an obligation that commits us far into the future."

Xhead = Business requirement

Legislation demands that water utilities not only provide the department with annual forecasts and financial information, but also a regular income statement detailing financial affairs for the next five years. Furthermore, this information needs to be extrapolated for up to 20 years to ensure that the utility can meet its delivery obligations well into the future.

To continually provide services where they are needed, Mhlathuze Water must ensure all the infrastructural components are in place and functioning. This requires financial outlays and since the utility is self-funding, it needs forward cost projections to be able to determine what price it must charge for services today, to be able to pay for expansion projects tomorrow.

"This is where Futuresense comes into the picture," says Steven Hyslop, CEO of Futuresense. "Futuresense supplied Mhlathuze Water with HSF to assist management in the efficient running of the organisation's financial implications and to provide them with the ability to make measured assumptions about the utility's future operations, costs and delivery capabilities."

Xhead = Powerful platform

HSF is a financial modelling tool that provides a powerful platform to evaluate the impact of changes in one or more business units or on the entire organisation. Futuresense customised HSF to the utility's requirements, taking variables such as volume of water sold, cost per volume and types of water supplied, and created a set of models of Mhlathuze Water's business.

"Every quarter we update the model with the latest information and run scenarios to assist us in our management planning and reporting sessions," notes Barnard. "HSF provides us with a realistic view of where we will be and what operating conditions we will encounter in the future, depending on the current values entered. We are then able to calculate our future costs and find the tariff we need to charge now to meet those financial obligations.

"Even though we may be meeting all our goals at the moment with capacity and resources to spare, the Hyperion product provides us with a glimpse into the future. Through the modelling capabilities of HSF, we can prepare for work that needs to be done next year or the year afterwards well in advance, thus ensuring we meet the requirements of our customers as well as our reporting responsibilities."

"HSF can be customised to any industry and any business," Hyslop adds. "It is intuitive to use and can be deployed at many levels in an organisation. Being modular, the product easily enables new business units to be plugged into or removed from the consolidation structure."