Next-Generation C/ETRM: Where the Magic Happens

Post by admin on December 4, 2017

We don’t need to dwell on how we are living in an increasingly competitive and fast-paced world. Conditions that put pressure on companies to change. Not just their markets, operations, and organizations but also their beliefs. Those willing to take risk, step out of their comfort zone and into the discomfort of uncertainty will be those who will reap the biggest rewards. The current playbook just doesn’t work anymore, and neither do legacy C/ETRM systems or established expectations on how to implement them. Those ageing designs do not provide the flexibility to evolve with the business, while modern C/ETRM systems are implemented in months instead of years. “So, why get out of your comfort zone and implement a Next Generation C/ETRM system? Because that’s where the magic happens!

Legacy systems, or spreadsheet-based systems, have been and still are under scrutiny as they fail to deliver on new requirements. In trying to ‘play it safe’, less-desirable interim solutions are implemented, augmented with little armies of deal entry clerks, spreadsheet jockeys, or settlement analysts, while cost of ownership increases. Even when a decision is made for system replacement, oftentimes decision-makers are not willing to get out of their comfort zone and will choose a solution based on the old adage “you can’t go wrong with IBM”. This includes old assumptions about what it takes, in cost and time, to implement a C/ETRM system.

Only in giving up the security of the known can we create new opportunities. Those pursuing real progress will challenge assumptions and try new approaches to solve problems that can’t be solved with established products. Forward thinking business leaders, recognize that a controlled procurement process, such as expansive Request for Proposal (RFP), are not the best route to discovery of innovative solutions. They will get snowed under by the avalanche of questions that ironically only the larger legacy providers have the bandwidth to respond to.

Next-generation solutions have emerged based on what the market participants have stated they are looking for. After all, they not only have experienced two decades of C/ETRM implementations, but also several years of economic hardship. As a result, they are trying to reinvent themselves, pursue an agile organization structure to navigate faster changing markets, and have set their sights on cost of trading in an effort to become more efficient and reduce cost. In return, pioneering vendors are delivering what the market demands: Less costly solutions, proven functionality that is implemented faster with reasonable flexibility as companies’ businesses change. Then, forward looking companies dare to step out of their comfort zone by putting their money where their mouth is.

Functionally, a next-generation C/ETRM system will bring the architecture and automation capability to allow companies to do more with less. This means on the architecture side, it will have the ability to deliver an end-to-end integrated solution as well as standalone modules. From an automation perspective, it can model simple to complex processes through configuration without coding, from trade templates to settlement of non-standard structured contracts. As it is a ‘live’ system, it allows managing exposures and responding to opportunities in real-time, relying on an architecture that has embedded middle-ware technology that supports ease-of-integration including market-connections. Support for regulatory reporting, such as REMIT, EMIR and MIFiD2 enhanced the integrated solution and reduces the number of moving parts. Being web-based allows true cloud hosting, which can further contribute to an overall lower cost of ownership of the C/ETRM solution.

From an implementation point of view, companies have to adjust their assumptions as well. Used to costly waterfall type implementations with a big-bang deliverable at the end, after a 1-2 year process, next-generation C/ETRM solutions are better suited for an iterative implementation methodology such as an Agile process. This approach provides flexibility and adaptability to changes that invariably arise during the process and is designed to deliver small “wins” that demonstrate success, project momentum and therefore a positive customer experience. As a result, an Agile-like implementation methodology can greatly reduce the risk of enterprise software implementation project not being on time and budget.

Operating in an environment where flexibility at a lower cost is required, means a different type of technology solution and implementation. Next generation C/ETRM solution from pioneering vendors, can deliver on those requirements where legacy system and vendors cannot. That means getting comfortable with discomfort is crucial to success. After all that’s where the magic happens.


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