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Can SAEON still grow its business?

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“We believe that creating a national environmental monitoring service is a natural progression from the origins of SAEON. It is a legitimate way of increasing our financial resources, scope of operations, range of equipment and data holdings without compromising our fundamental purpose.” – Johan Pauw, Managing Director, SAEON

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Coastal oceanographic monitoring requires a research diving team and licensed skippers.

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All the nodes use volunteers on suitable projects.

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An education-outreach officer is mandatory for each of the nodes.

- Johan Pauw, Managing Director, SAEON

 

Nearly ten years after its creation in 2002, SAEON has reached the stage where we are operating six distributed nodes which are centrally coordinated and serviced by a national office. Four nodes have been operating for three years or longer, whereas the two youngest nodes were kick-started in January this year.

Sound financial management and generous funding have allowed SAEON to show a surplus each year until the present. It is therefore time to reflect on our financial status and operational future, always keeping in mind that SAEON is not a grant-making organisation but represents a large-scale national infrastructure for environmental observation, in alignment with the Johannesburg Plan of Implementation which followed the World Summit on Sustainable Development in 2002.

On average, each of the four long-standing SAEON nodes at present run on an R 2,5m annual budget  received from the Department of Science and Technology. As a matter of SAEON policy, nodes are allowed to generate some 20% additional funds, provided that the externally funded work is well aligned with SAEON’s primary objective of long-term monitoring and research on environmental change, as well as that SAEON gets to keep the data generated by the project.

There is a growing demand for SAEON’s environmental monitoring competency.

Demand for SAEON’s monitoring and data management competencies

Examples of companies that have, or still are, contracting SAEON for monitoring and research projects are Palabora Mining Company, PetroSA, Transnet National Ports Authority, iSimangaliso Authority, Working for Water and CIRAD, a French research centre working with developing countries to tackle international agricultural and development issues.

This illustrates that there is a growing demand for SAEON’s environmental monitoring competency. SAEON’s environmental monitoring services are backed up by state-of-the-art data management competencies and our technical reports are scientifically sound and non-judgemental.

However, many of the nodes’ contracts are in fact longer-term collaborative rather than short-term service delivery. This means that the nodes make very little profit on contracts and this is in line with the network character of SAEON. If nodes were expected to pursue profitable contracts, it would indeed become disruptive of the long-term objectives of SAEON, and hence the current policy of a ceiling of 20% for contractual income.

Node staff requirements

The main business of the nodes first of all requires a critical mass of field ecologists, and in due course socio-ecologists and human geographers. The scientists need field technicians and administrative support. Due to the labour intensity and maintenance requirements of some projects, manual labour is also required, either on a permanent or an ad hoc basis.

An education-outreach officer is mandatory for each of the nodes, but three of the nodes are currently unable to appoint those staff due to funding shortfalls. Data and information support may in due course be offered by centralised capacity, but this also needs additional funding. Coastal oceanographic monitoring requires a research diving team and licensed skippers.

All the nodes use volunteers on suitable projects from time to time, or if the technical requirements of a project are for skilled human resources when the node staff is already fully occupied, nodes would sub-contract external scientists.

Equipment requirements

Relatively speaking the nodes’ equipment requirements are modest. Due to the distribution of field sites and the challenges of rough terrain and conditions, off-road vehicles are compulsory. Boats and towing vehicles are required for coastal work; off-shore research requires ship’s time. Although field equipment may be relatively inexpensive, regular maintenance and replacement are required due to harsh environmental conditions, vandalism and theft.

This seems to indicate that equipment funding should be built into the budget allocated by government. There is scientific scope for expensive equipment such as flux towers, but this will require the appointment of even more field technicians, and all in all a much higher level of funding.

The long-term fundamentals of SAEON, the need for more and diverse personnel, the limited scope for profitable contracts and the need to be responsive to field equipment woes, create the understanding that SAEON is and will remain largely dependent on government support if we have to live up to our mandate.

Shortfall in current funding from government

At present, the average financial requirements of fully operational nodes are in the order of R 3,5 – R4 m, which indicates a real shortfall in current funding from government. The SAEON Advisory Board has therefore recently lodged an appeal to the powers that be for a review of SAEON’s annual budget allocation and we remain hopeful for a positive response.

National environmental monitoring service

Despite and (in part) because of the financial shortfall, SAEON hereby signals our strategic intent to grow our operations by establishing a national environmental monitoring service in conjunction with our current long-term environmental observation business.

The business model for creating a parallel-running business is informed by a number of considerations. In the first instance, scientifically sound in situ environmental monitoring and data management are core competencies of SAEON. In addition, SAEON has a distinct advantage in terms of the sweeping disciplinary scope of our science and the complementary geographic reach of our nodes.

Growing demand for environmental feedback

The budget SAEON receives from government is primarily intended for environmental research purposes and only indirectly for environmental management. There is already a growing demand by a range of organisations for ongoing scientifically sound and non-judgmental feedback that will inform decision making for environmental management purposes. This demand exists within private, international and government organisations, and is continually reinforced by the global movement for better planetary management.

The two parallel SAEON businesses will support each other in the sense that the monitoring and research unit will advise and evaluate the monitoring programmes of the environmental monitoring service, whereas the latter will add to SAEON’s data, equipment and financial resources.

However, the monitoring service would have to be financially sustainable and apart from receiving seed funding, it would need to generate sufficient income to allow it to grow in relation to the demand for its service. It is clear though that the profit margins for such a monitoring service will be low.

Service to society

Such an environmental monitoring service should not be seen as a consulting business. It is more of a social enterprise which would provide a service to society which the private sector is not able to offer due to low profitability. Equally so, such a service requires a business management orientation and is not in the mandate or competency of any government department.

As a publicly funded organisation, SAEON is acutely aware of the fundamental requirement that we must deliver public value. We believe that creating a national environmental monitoring service is a natural progression from the origins of SAEON. It is a legitimate way of increasing our financial resources, scope of operations, range of equipment and data holdings without compromising our fundamental purpose.

Ultimately, it is a sure way to increase the public value that SAEON offers.

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