Your ETRM solution: A Palette of Options to Reduce Cost and Add Value
Following the economic downturn after 2008, Energy Trading & Supply companies are going through a transformation to position themselves for the future. Many of them have initiatives underway to examine whether their current Energy Trading and Risk management system’s environment can meet their changing business needs. Budgets are under pressure and cost reductions are necessary. As they seek operational efficiency, they also must comply with new regulatory reporting requirements. How does one implement a solution that can meet this need for both increased flexibility and robust and cost-effective functionality? A Palette of Options that reduce cost and add value!
Let’s paint the current landscape. Inflated ETRM system budgets are a thing of the past and no longer tolerated by energy trading & supply companies. Unduly, lengthy implementation times are no longer accepted, yet ETRM systems need to be more configurable, robust and cost-effective than ever before.
Asset-backed utilities, load serving entities, marketers and other energy market participants often discover that the system, deployment and support approaches they have chosen in the past years no longer deliver what their budgets can sustain. Functionality capability is hitting a ceiling and restricting quick course changes, while stretched business and IT resources are unable to efficiently execute system enhancements.
Hence, the interest in vendors that offer a fresh alternative to legacy ETRM suppliers and can offer energy companies tailored solutions that help them to unlock new value. Choices in software modules – integrated, modular or pre-configured, deployment – on-site or remotely hosted and tailored managed services merge to produce a lower total-cost-of-ownership masterpiece. Companies courageously examining their core competencies will recognize this as a path to a solution that supports a successful transition to a new operating environment and as a result, adds tremendous value.
First: Software capabilities
Software needs differ across various market participants. Regardless of size and complexity, a 21st century ETRM system must be malleable around the company’s business processes and not the other way around. This can be achieved with template and formula-based software. For large and complex organizations, it might be unrealistic or maybe unnecessary to replace an entire ETRM system.
A more cost-efficient approach, the delivery of a modular application that can be easily integrated, may add value in selected functional areas that require improvement. Imagine a much more effective settlement solution that leaves none of your precious money on the table. For the less complex market participants, a cost-effective solution may involve the implementation of standard functionalities as a baseline implementation for accelerated time-to-value.
One step further: Managed Services
There are risks involved when having to maintain and upgrade software that is owned by a vendor instead of you. Energy Company CIOs are recognizing that there is no one but the ETRM vendor that understands its system best and are increasingly taking a closer look at managed services. While the practice of outsourcing day-to-day management responsibilities is often done to improve operations and cut expenses, it also helps IT departments to reduce support burdens and keep projects on-track.
An experienced ETRM provider in managed services is able to take care of application operations, maintenance and development. This will involve such tasks as testing an application and database space’s health, system monitoring, functional support/training and release testing. In addition, they act as the internal IT department for the ETRM system and liaison between the business users and the vendor.
Lastly, the managed service provider will directly work on technical changes, new releases, upgrades, reports and interfaces changes. In the rapidly changing energy industry where time-to-market and time-to-value are critical to organizational survival, an ETRM vendor that can offer both functional and technical support through managed services enables IT departments to focus on proprietary priorities while still catering to business needs.
Go full-service: Deployment capabilities
Software delivered over the internet is seeing high adoption rates. Just ask Oracle and SAP–two organizations whose ERP systems are remarkably similar to an ETRM system. Concerns about web-based systems’ security and availability still exist, but these concerns have been muted due to the realization that many critical functions involve relying on communications that also use the internet infrastructure.
As a result, if internet communication should go down, it wouldn’t matter if the software application was installed onsite or not. Of course, to have a choice of deploying on-site or remotely hosted, the ETRM system needs be designed for web delivery rather than getting Frankensteined to make it work as is the case with many legacy vendors. Energy companies can benefit from cloud computing as their environment changes.
Realizing hardware implementation and maintenance are core competencies of an IT department, the IT manager will likely consider this a low-risk activity. Creating and maintaining software however, is likely to be viewed by IT as far more risky. Consequently, the selection and implementation of a vendor-supplied ETRM system will therefore be high risk and an upgrade of that ETRM system probably beyond risky for the IT manager as the burden is on them and not the vendor.
With a cloud-based solution, all the costs and risks of the system upgrade are the responsibility of the vendor; therefore, there is an undeniable incentive for the vendor to make the cost of upgrading as small as possible. Furthermore, when honestly putting all the costs of ownership on the table: hardware, software, maintenance, upgrades and innovation, real “Cloud Computing” wins out every time. As a result, remotely hosted solutions are overtaking traditional delivered software because it is fundamentally a better business model for the company and the vendor.
Now more than ever, energy companies need to partner with vendors that can deliver end-to-end flexible solutions that fit each unique business environment. Traditional software, deployment and support won’t cut it. Cost-effective modular approaches and outsourcing are front and center. Taking advantage of next- generation technologies and services will help energy companies’ progress with their initiatives and transform themselves. Who doesn’t appreciate a work of art?
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.