Legacy ETRM system replacement: Big-Bang or Modular Implementation?

Post by Pioneer Solutions on June 4, 2015

big bang

The “big bang” ETRM go-live where all of the main modules of an ETRM system go live at the same time, is a widely-known approach for ETRM replacement and/or implementation projects. The alternative approach is to adopt some level of phasing for example, by functional area or by business priority level.

The conundrum large, global energy companies consider as they weigh the high-risk wholesale replacement of their ETRM system against the need for improved and more cost-effective functionality in selected areas to adapt to new business environments is: Big-Bang or Modular Implementation?

Substantial investments have been made in large ETRM system implementations in the last decade, but as a result of the inability for legacy systems to evolve, limitations are hit, dozens of spreadsheets must be generated and isolated, home-grown applications or manual workarounds spring up in an effort to help handle specialized functions outside of the main system.

Consequently, those non-integrated workarounds results in operational inefficiencies, poorly informed managerial decision making, lost audit trails, inaccurate compliance reporting and higher operational costs that result from increased manual workloads for staff members. Calls for a system replacement are getting louder.

For most small organizations a big bang approach is feasible, while for larger and more complex organizations some degree of phasing is inevitable. The general consensus, when it comes to complex software solutions like ETRM systems, is that big bang implementations are much riskier than modular implementations.

There are good reasons for this, including the difficulty to roll back to the old system if everything goes wrong after a few hours of operation and achieving full end-to-end testing. There are simply more things that can go wrong when many modules go-live together.

In contrast, a modular implementation tends to involve discrete business units or functions, so there is a better chance that any serious issues can be contained. For the same reason, it can be easier to revert to the old system if necessary.

For an organization with multiple large sites across a region, it would generally make sense to start with a pilot site and then roll out the template to the other sites. That’s very often the approach taken by large multinationals. The same thinking would apply for multiple business units. In the process, cost-savings might be realized as the lessons learned from the first project can be replicated at the next location.

For a phased approach, a modular and modern ETRM suite of applications is required that offers highly flexible configurability to evolve with the changing business and includes embedded integration capability. Areas where improvements are needed often involve the middle and back-office since the original ETRM system investment and selection were typically decided by the front-office.

The most effective modules are those that are part of a system that will have been developed from the back-end to the front-end so that they deliver the proper data structure and processing capabilities. Inherent to next-generation ETRM software is that a template and formula-based approach allows the user to maintain them and thereby lower Total-Cost-of-Ownership over time.

Legacy systems usually represent years of development and investment and provide mission-critical capabilities upon which the business has come to rely. While those ageing systems may not provide the flexibility to evolve with the business, a complete system replacement is not realistic but a phased approach is.

A partial functional replacement may either make the system up-to-date again or just be the start of a full replacement. A phased approach can lead to quick wins and be a much lower-risk, lower-cost solution that delivers the desired business benefits one module at a time.

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Pioneer Solutions is a global provider of next generation CTRM, ETRM, environmental management and financial and regulatory compliance solutions. Offering the latest in business processing capabilities with a modern data structure, Pioneer’s products offer the user a configurable environment that allows for customizable templates for STP workflow and user-defined custom formula entry. Serving some of the largest utilities and energy companies across the globe, Pioneer’s flexible solutions are designed for rapid deployment and easily adapt to clients’ unique business processes, model complex trading scenarios and automate business processes.


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