Jeff Heggedahl, CEO of AdvantageIQ, discusses his company’s shift from helping companies pay their energy bills to also becoming a reliable energy saving strategist.
|Ben Lack:||Jeff, your company recently cut a deal with the Cintas Corporation to have it use your energy and sustainability management solutions. I’d like to know what their problems were and why you approached them or they approached you to come up with the way to help them solve their issues.|
|Jeff Heggedahl:||Cintas is not that different than a lot of the 550 or so companies that we work with nationwide. The first thing they were looking to do was increase visibility into their energy consumption with the tool sets that we provide them. By gathering the bills and gathering the data running it through our proprietary and patented analytics, we give them visibility they wouldn’t have had before they used our solution. Additionally, they wanted that visibility to figure out where their best opportunities were to reduce the cost of their energy as well as the consumption, and then overall to come up with a better plan and strategy around what they could do to really become market leaders in their industry in energy conservation and sustainability.|
|Ben Lack:||When they send you the bills, number one, are the bills the only thing they send you? And then as a follow up, based on what they send you, what information are you pulling and then puts together your analytics?|
|Jeff Heggedahl:||In today’s world, they’re not a client that were doing any of the real-time building monitoring which is a new business that we’re in. So, today the primary data does come from their bills. Literally, we pull everything off of the bills that you could imagine. With a company as big as they are in the number of locations across the country they’ll literally work with thousands of utilities with different formats. What our solution allows us to do is take those different formats from the utilities across the country and find a common way to look at the different variables, so that when we apply the analytics we can get an apples to apples comparison between the different facilities and figure out which buildings are optimized, which ones are not and what their priorities should be for their focus. The primary input though does come from something that seems as simple but is really complex, it’s their bills.|
|Ben Lack:||Are they the ones that provide you those bills or do you establish a relationship with those utilities to get it directly from the utility?|
|Jeff Heggedahl:||The way that we do that, we now work with over a half a million buildings across the country—more than anybody else in our industry—and for all of those buildings, including all the Cintas buildings, it’s as simple as the addresses changed from the bill going to either their central location or to their specific facility to come to us. Then we run it through our analytics and of course pay the bills, but then the real work and the real gem are the opportunities we find within the data that comes from those bills. So, they literally switch them to come into our operation.|
|Ben Lack:||Is there a recommendation engine that’s part of the proprietary software? It’s one thing to have everything clean so that you can take a look at it, but then the next step is trying to take this data and put together a list of projects that you would ultimately want to begin to lower that consumption. Is that kind of the path you’re taking Cintas and other clients down?|
|Jeff Heggedahl:||Yes. Because we work with so many different clients—I think our most recent counter is 154 of the Fortune 1000 companies use us for solutions like this—our benchmarking capability is unlike anybody else’s. What we are able to do for Cintas and for all their facilities is easily find outliers: both outliers in performance benchmarked against themselves in similar operations whether normalized in all the things that you’d want to do, but then also benchmarked against other companies that they would consider to be in their peer group or having similar operations to what they have.|
|Ben Lack:||Obviously, data is a big driver for ultimately making decisions on ways to lower energy use. What would you say, if you just kind of had to take a big picture snapshot, of what large Fortune 100 or Fortune 1000 companies you’re doing? What kind of a grade would you give them as far as their understanding for what their energy consumption really is and how responsible they are about trying to lower that number?|
|Jeff Heggedahl:||Like any other classroom, the grades are going to vary all across the individuals that are in the classroom. Some have gotten incredibly sophisticated and then some are in their earlier stages. We work with companies all across those spectrums. One of the great things about our business is that we service so many companies in each of these specific verticals that we can take a look at, for example, supermarkets. We work with some of the biggest supermarkets in the country and we can actually benchmark those supermarkets against their peers and say, real candidly, here’s what an A graded national supermarket chain is doing and the results that they’re seeing and the savings, the cost or the consumption savings they’ve got and here’s where you’re at and here are some steps that we might recommend to improve your grade.
Additionally, I’m always impressed that a lot of the Fortune 1000 companies we work with have energy teams—three or four people trying to tackle a top four category expense on something so strategic that the CEO usually has opinions about their objectives for sustainability, but they need help and they need a bigger team. So, in effect what we become an extension of their energy management team. When I first got to the company, I was amazed. I was at a meeting at a top three bank and when I walked in to this meeting, I looked around the room I couldn’t tell who was working for Wells Fargo and who was working for us. We’re sitting around a boardroom table and we’re talking about their energy consumption—we had just done their budgeting and strategy for their energy—and it was just amazing that I would see that much integration. So, in effect, I’m surprised, but also it’s the opportunity for us that most of these organizations don’t have teams big enough to execute on all the opportunities they’ve got for energy conservation and we become that extension to them.
|Ben Lack:||As we look down the next couple of months and really towards the rest of the year, aside from releasing a new carbon tool, what’s next for Advantage IQ?|
|Jeff Heggedahl:||For us, if you look back just three years ago, over 95% of what we did was around paying energy bills, but where our transformation has happened is that we’re increasingly we’re taking responsibility for what we’re seeing in those bills, what we are analyzing so that we can take action on behalf of or with our clients and execute on that cost or consumption reduction. This year will be the first year that we actually have more of our business in the action we’re taking based on the data that we see as compared to in the past that we were really kind of the ones that were actually paying these bills. Cintas is an example of this; it wanted to go with a company that could be that total energy management and sustainability company and give it the visibility, but then help reduce costs, impact consumption and then help with overall energy planning. So, you will see us increasingly investing in tools for our customers to take action on what we are seeing.|
|Ben Lack:||But you’re not going to go as far as becoming an ESCO, or are you?|
|Jeff Heggedahl:||Probably not, although we are working with our most recent acquisition—a company that’s in the business of real-time building management. We like that space because it has enormous potential: the results are tremendous, where we can take consumption down by 10-15 percent when we’re actively remotely managing buildings on behalf of our customers. I think you could expect that we’ll continue to invest in that space to ensure we have the tools our customers need, so we can actively get energy consumption down for these 500,000+ buildings across the country. We’re looking to be the company that helps organizations with the visibility, the cost, reducing the consumption and then helping to make sure that they know where to prioritize. When you look at big organizations that have 10,000 plus stores across the country, they can’t take action on 10,000 stores at one time. We help them figure out which are the first 100 or 200 they should take action on, help them actually take the action, but then on the backend measure whether we were successful or not.|
|Ben Lack:||Why are you in the business and why have you chosen to spend your time working with Advantage IQ and on these issues?|
|Jeff Heggedahl:||That’s a great question and thanks for asking it. I’ve been in two other industries before this, but there’s a personal part for me in this industry in that the problem is enormous and we’re not as efficient as we need to be in our energy management nationwide. I think there’s a lot we can do and because of that, it creates a great business opportunity for us and that business opportunity helps us work with some of the best companies in the country; for 150 of the Fortune 1000 companies energy spend is usually a top five budget item and we get to help them in a significant way. Sometimes they don’t even realize how much opportunity they’ve got and when we help them there’s a tremendous impact on the environment which is great. I like that the problem is big, we’re working with fantastic clients and there’s an impact on the environment and then kind of foundationally, if you knew the 900 employees I get to work with everyday. We have just the best of the best in this space and I’m just privileged to be able to work with them.|