Formula-driven Vs. Hard Coded ETRM Architectures- Differences & Benefits
With a host of options, features, functions, benefits and architectures available in the C/ETRM software space there remains some important differences to consider when embarking on a C/Etrm software system purchase. First, let’s distinguish the difference between hard coded software (Traditional Etrm Software) and new template-based and/or formula-driven architectures.
Hard coded software means that it takes coding changes to a core C/Etrm product to meet unique challenges; this is the traditional method of meeting customer’s unique requirements and it is costly and risky to implement, maintain and modify.
Traditionally, these vendors, and this applies to most established C/Etrm vendors, have internal professional services staff (programmers) and consultancy partners that will customize the source code to meet your requirements. This is conventionally how C/Etrm implementations are done today and it is a big reason that the C/Etrm space has long legacy of rouge or failed implementations. Code customization is not an easy task and it is where big dollars are spent in an attempt to deliver unique business needs, which is commonly the case as every client has unique needs or ways of doing energy trading and risk management. This legacy of costly and risky implementation efforts is so prevalent that consultancies have made a living off these inefficiencies and buyer beware, consultancies often thrive off this inefficiency and may or may not have your best interest in mind when recommending such products.
That is old school, today much like the IPhone changed the cell phone industry, formula-driven “no coding needed” architectures are blazing a new path in the C/Etrm space. Gone are the days of backing up the bus with the consultants to code software to requirements, and gone are the days of having IT .Net, Crystal report and/or Java programmers on staff just to maintain a C/Etrm software system. Gone are the days when an upgrade or new version release may jeopardize all of the customization coding efforts that took place when the C/Etrm system was implemented.
Seem hard to believe? Well it’s not. So how do formula-driven architectures work? Simply put, a formula’s template is the brains or business logic behind all of the C/Etrm templates necessary to manage the front, middle and back-office C/Etrm processes. Ironically, it is the logic that coders in heavy customization efforts must ultimately program for a traditional C/Etrm system to meet unique needs. Think about it, all business processes boil down to a formula and a formula-driven architecture removes the need for expensive coding efforts, you simply enter the business logic or formula that drives a particular process or template and you’re done!
Sound simple, well it is! “Customization” which I think of as coding changes is no longer needed with this architecture. Now simple “configuration” is all it takes to implement and manage change; this drastically lowers not only the implementation costs but the total cost of ownership over time as the business user that understands the business logic can now control his or her destiny. With this architecture the tech savvy business users, usually the person in your shop that programs Excel spreadsheets (not IT or Consultants) can not only modify and maintain the C/Etrm application, they can actually implement it!
In addition, with this advanced architecture, no longer do you have to be concerned about expensive customization coding efforts that might be compromised by upgrades or new releases of the software. Why is that, because template configured business logic is not effected when the core software product is changed. Simply put, the business logic or formula behind a template drives the C/Etrm software and that never changes when updates or new releases are deployed.
This architecture works and it works very well, this configuration supports the notion of rapid delivery (Avg. 3-6 months) as no coding drastically lowers the time it takes to deliver and this has been proven to be the case in extremely complex business scenarios. For example, complex end-user structured deals can now be modeled on the fly and settled based on a formula and/or any @ risk models or metrics can be easily invoked as a formula.
While this is a popular concept, many in the C/Etrm community are not aware of this improvement, however the C/Etrm vendor community is starting to wake up and some are even making claims to have this ability however this is rarely the case. Buyer beware, vendors that make the claim of being configurable (no coding) vs. customizable (coding) often confuse the subject, to say it nicely. One acid test to ask them is “what is the core programming language and architecture behind the software?” If the answer is a traditional programming language like .Net, Java etc. then it is probably not truly formula-driven; also ask to see an example of how unique business challenges can be met without coding, at that point it should become evident that they are a traditional C/Etrm vendor. To find out more about this new technological improvement in C-Etrm technology visit us at http://www.pioneersolutionsglobal.com