The Era of ETRM in the Cloud

The Era of ETRM in the Cloud

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Commodity Technology Advisory (ComTech) has been tracking the rise of ETRM solutions delivered in the cloud over many years. While the potential benefits and cost savings associated with ETRM in the cloud have always appeared to be robust, uptake across the industry has proven to be quite slow until relatively recently. Although many other industries migrated to the cost efficiencies of the cloud, the energy industry lagged behind. The key concern quoted by the industry was usually data security, despite companies often having back-up and recovery procedures in place that result in trade and position data being stored off-site. Then, commodity prices collapsed generally, led by energy, and costs began to rise inexorably as new regulations progressively came into force. Margins were squeezed and structural changes have occurred across the industry so that profitable trades are a good deal harder to find.

While ETRM and other IT initiatives were put on hold or scaled back to reduce costs, rapid market changes necessitated ETRM functional changes – compelling energy companies to seek more cost effective ways to procure the right ETRM platform. As their ETRM and related solutions have quickly become outdated, these systems are effectively deadweight - holding those businesses back from responding to change and streamlining business processes. In this environment, ETRM in the cloud has become a popular alternative to “traditional” on-premises software given its low cost of entry, potential lower total cost of ownership and promise of cheaper maintenance and upgrades. Confirming this trend, a recent survey conducted by ComTech looking at trends in a lower energy price environment found that around 30% of surveyed European energy traders had an increased urgency to upgrade or replace their current ETRM, and that almost 50% would consider ETRM in the cloud as a way forward.

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Commodity Markets – A Headhunter’s View

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ComTechAdvisory: Given all of the turmoil in commodity markets this last year or so, how has the job market been impacted?

James Richmond: The markets have been slow in the past year in the prime locations (London and Geneva in particular). There has been a lot of divestment in the oil majors and energy utilities as well as in the more asset based areas of the multi-commodity traders. I have noticed a lot of growth in the outsourcing market. Whilst the UK and Switzerland has been quieter than usual, most firms tend to hire more globally dispersed teams, which comes with the added benefit of cost savings / staffing arbitrage. In the last 6 months, we have been involved in staffing projects into the Netherlands, Germany, Portugal, Estonia, Stamford, Singapore and the Czech Republic. Two years ago, it was mostly Switzerland and the UK.

Improving Data Aggregation and Analysis to Address Challenges of an Evolving Energy Market

Improving Data Aggregation and Analysis to Address Challenges of an Evolving Energy Market

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The North American energy markets, influenced by both domestic and international developments, are undergoing a rapid evolution that has and continues to challenge energy commodity producers, processors, and traders. Driven by technical innovation, regulatory intervention and globalization, the changes occurring have impacted the entirety of the energy supply chain - establishing new pricing correlations, increasing operational complexities and creating new markets and trading hubs…and, by extension, created vast new pools of data and information that must be considered when formulating market strategies and trading decisions.

Despite these challenges, for those properly equipped with the tools and applications that can capture, analyze and support real-time decision making, there are any number of new opportunities to profit in this complex environment.

In this white paper we will examine the ongoing changes and the resultant challenges in a few of the most rapidly evolving North American energy markets, and discuss an approach to address those challenges through sophisticated real-time data aggregation and analytics.

2016 – 2021 CTRM Market Outlook

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Commodity Technology Advisory LLC (ComTech), the leading analyst firm covering commodity trading and risk management (CTRM) technology markets, has recently completed its biannual in-depth review of the CTRM software market space in order to compile an estimate of the size of the global CTRM technology market and prepare an outlook for growth across the various component submarkets that comprise it.

Readers of this report should be aware that in the development of this data, as in past years, we must delineate boundaries for the companies and applications reflected in the scope of the analysis.

Purchase the full version 2016 – 2021 CTRM Market Outlook

Risk Monitoring & Management Trends in Commodities

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Commodity producers, traders, and industrial consumers are all facing a barrage of risks such as price exposure and cyber vulnerability, as well as legal, credit, operational and market risks. The risks associated with buying, selling, and moving commodities only seem to be increasing exponentially with greater regulatory oversight and a broadening of supply chain operational issues like traceability. Many of these risks can be business killers – the actions of rogue traders or the impact of counterparty business failures, for example – and lead to fatal damage such as an inability to access capital or damage to brands (via issues around sourcing commodities or producing substandard end-products). Other risks, such as ineffective price risk management, inefficient scheduling of transportation, or regulatory non-compliance can erode profitability and damage the company’s ability to execute on strategic plans and growth initiatives.

Of course, often where there is risk, there is also an opportunity to profit - but only when those risks are recognized, effectively managed, and properly mitigated. The rise in stakeholder scrutiny and regulatory oversight also means that being able to demonstrate effective risk management across the organization is certainly more important today than ever before.

Commodity Technology Advisory LLC (ComTech), with the support of study sponsor Allegro Development Corp., undertook a snapshot survey of the industry to find out more about the types of risks faced by trading companies and to gain an indication of how and where those risks were being managed.