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 As their ETRM and related solutions have quickly become outdated, these systems are effectively deadweight - holding those businesses back from responding to change and streamlining business processes.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.

Latest Publications

Sourcebook 2017

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The 2017 Commodity Technology Advisory LLC (ComTech) CTRM Software Sourcebook is designed to be a useful and usable resource to help those seeking information as to the capabilities and coverage of products within the CTRM software category. It is a starting point in the product selection process - a mid-level guide to allow the reader to develop a long list of vendors that have high potential capabilities in terms of functional and commodity coverage meet the specific needs of CTRM market participants.

It is NOT intended to be a replacement for a formal selection process - CTRM software is simply too complex to be selected properly without utilizing a programmatic selection process.

Our intention in developing the CTRM Sourcebook is to inform the reader of the wide universe of vendors and products, and allow companies seeking a new system to compile a list of vendors that may include some that might not have otherwise been considered, or that they may not have even previously been aware of.

Trends in Technology

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ComTechAdvisory: What is Contigo seeing in terms of uptake of the ETRM in cloud and what are the benefits of such an approach?

Adrian Bullock: We are seeing strong interest in implementing in the cloud from both small and bigger players. Over 80% of our contracts signed in the last 18 months are implemented in the cloud, we have also migrated a number of our deployed clients to the cloud in the last year.

ComTechAdvisory: What does Contigo see as the main pros and cons of a single tenanted versus multi tenanted approach for ETRM software?

Adrian Bullock: The flexibility we can offer our clients with a single tenanted model greatly outweighs the operational advantages of a multi tenanted architecture. Using a shared infrastructure with a high level of automation of releases and upgrades gives us many of the advantages of a multi tenanted architecture whilst still maintaining the ability to have a high level of customization for each of our clients and ensuring data segregation. We have never had an actual or potential client insist on a multi tenanted model.

Developments in CEE

Developments in CEE - An Interview with David Kučera

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An Interview with David Kučera, General Secretary of the Prague Energy Exchange („PXE“)

ComTechAdvisory: Tell us a little about PXE – its history and objectives

David Kučera: PXE was established as a daughter company of Prague Stock Exchange. The idea came from the largest power market participants who were looking for an independent and transparent venue that would show electricity market prices and that would enable to conclude transparent transactions on the anonymous basis.

As we were successful on our local market we wanted to take advantage of our know-how and expand our product offering to other countries. We focused on financially settled long term derivative products. Currently PXE offers derivatives on Czech, Slovak, Hungarian, Romanian and Polish electricity.

PXE originally used its own trading system as well as clearing but we gradually started a cooperation with EEX group and implemented ECC clearing and this month also T7 trading system.

Artificial Intelligence and Machine Learning

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An Interview with Cyrus Dadachanji, Partner, Energy Trading and Risk Management at Infosys Consulting

ComTechAdvisory: Please tell us a little about Infosys Consulting and the team that you are building?

Cyrus Dadachanji: Infosys Consulting’s Commodity Trading & Risk Management (CTRM) practice sits within a broader Commodity Consulting organization, and focuses on all activities in the commodity trading/risk and the logistics value chains. We cover the full range of physical and derivative commodities including the energy complex (oil, gas, power, emissions and LNG), metals (base and precious), and agricultural products, as well as FX and interest rates derivatives. Functionally our service offerings address topics aimed atidentification of value leakages, increasing revenue generation, reducing the cost per trade with a focus on margin uplift, and ensuring necessary governance and control across the commodity trading value chain. Our clients include oil companies, vertically integrated utilities and commodity traders, as well as financial institutions.

Our CTRM practice is a global practice, led from our London headquarters with activity in Europe, Middle East, AsiaPac, North America and Latin America.

We aim to bring advanced and cutting-edge technology concepts such as digitalization, machine learning, artificial intelligence and big data analytics to address tomorrow’s CTRM issues. Our professionals combine deep business, functional and technology expertise.

We deliver value to our clients through a global network of consulting, large programme delivery and development/testing professionals.