It’s the time of the year again to change the old for the new; we bid farewell to 2019 and head into 2020 – the start of a new decade. Whatever the future will bring, it will continue to require companies’ abilities to anticipate and creatively respond to on-going change. Doing so in the commodity/energy trading and risk management space, is hampered by legacy systems that have been outgrown technically, functionally, as well as financially. As you are looking ahead to the new year, as well as how to navigate the next 10 years, now is the time to leave outdated solutions and assumptions behind: Out with the Old (C/ETRM) – Must Haves for 2020!
As the saying goes, “The best way to predict the future is to invent the future”. This means seizing the opportunity by investing in solutions that do what was done before better, faster, easier, and cheaper but also enable an agile transformation, thereby a means to unlock value and enable quick reactions to new business needs. Touching on architecture, setup, and operations, a modern C/ETRM solutions must be capable or featuring the following characteristics:
Must have: A SOLUTION TO K.I.S.S.
There is growing recognition that solutions work better if they are kept simple rather than made complicated: Keep It (Stupid) Simple will help curb the proliferation of custom extensions that are hard and costly to maintain. Yes, the energy and commodity markets have grown increasingly complex when it comes to trading, risk management, settlement and regulatory reporting. Yet to avoid entrapment of a highly customized, nearly unmanageable, inflexible and costly monolith system, companies that want less costly solutions with proven functionality that are implemented faster with reasonable flexibility as their business changes, must consider modular and cloud-based Software-as-a-Service solutions. A C/ETRM Software-as-a-Service with configurable standard functions delivered in the cloud offers a compelling value proposition to businesses who need a modern, agile business solution that reduces their complexity and cost, while allowing them to scale rapidly for long term innovation and growth.
Must have: ABILITY TO MODEL SIMPLE TO COMPLEX BUSINESS PROCESSES
As companies try to differentiate themselves in a competitive market, legacy functionality and technology will impede on the flexibility to implement and change customer-specific strategies. Apart from inadequate functionality to handle the evolving and specific customers’ needs, this also increases Total Cost of Ownership (TCO). Next generation technology is designed for progress and reduced vendor reliance. This means a user-configurable environment that allows for customizable templates, user-defined custom formula engine, a flexible hierarchical book structure, as well as utilizing Charge types and billing determinants to support complex contract settlement, such as Wind PPA. TRMTracker combines this further with functionality for user defined fields and user defined tables that can be added to extend data models such as on deals, counterparties etc, mapping tables to allow users to easily add data such as tariffs or taxes, time series data support, data import/export rules, and innovative reporting.
Must have: EASE OF INTEGRATION
In an environment where time is money, this calls for solid integration with other systems and markets, which is not what legacy C/ETRM solutions are equipped to support. Traders and portfolio managers and their colleagues in risk management, need to have access to have the information about their business at their fingertips. And this information is coming from multiple information sources. Those not being organized and automated can’t keep up and will miss out and/or pay more than was necessary. A modern C/ETRM system relies on an architecture that has embedded middle-ware technology that supports ease-of-integration including market-connections. This includes support for a variety of formats for both inbound and outbound interfaces, from user configurable flat-file methods, to XML, SOAP webservices, FIX APIs, and REST based webservices.
Must have: A “LIVE” SYSTEM WITH ABILITY FOR NEAR REALTIME UPDATES
In this era of renewable energy, with commodity markets volatile, relying on End-of-Day processes is just not good enough anymore. If you are a user of legacy C/ETRM systems, you are experiencing every day that they are not designed to support such requirements where pre-deal and what-if risk scenarios are expected to calculate within 1-2min max. Where import and processing of exchange trades for viewing takes seconds. And triggered by those new deals, hourly positions are recalculated in seconds with updated Mark-to-Market reporting following minutes later.
Must have: EMPOWERING REPORTING AND DATA ANALYTICS
Organizations increasingly realize that in order to stay competitive, data is the fuel for success. Insights from data helps them to innovate and make smarter decisions based on facts, instead of gut feeling. The idea of an integrated C/ETRM solution is that is serves as a single ‘version of the truth’. TRMTracker empowers users with its powerful and popular proprietary Excel Add-in module as well as seamless integration with Power BI for transactional data analytics. It helps them see and understand their data. Leveraging the system’s real-time processing capability and existing data views, the integrated Excel Add-in and Power BI functionality enables users to create rich, interactive reports with visual analytics at their fingertips and deploy those as native reports within TRMTracker or Mobile App. As a result, they can be easily accessed by other users thereby streamlining the decision-making process by traders, portfolio managers, forecasters, settlement staff, and business leaders for actionable insights.
Must Do: FUTURE PROOF
The biggest challenge over the next ten years will not be “the future,” but how you navigate your future, and the steps you take to remain relevant. With Pioneer Solutions as a partner, commodity and energy trading firms have the opportunity to reinvent themselves, transforming their traditional business model to an intelligent enterprise by leveraging Pioneer’s next generation C/ETRM solutions.