The Case for CTRM and ETRM Software Projects

As commodity prices continue to come down and margins are squeezed, commodity market participants are focusing more on cost containment for their CTRM software projects. In order to keep costs down, they are potentially extending the life of previous investments, keeping with the same outdated systems, or continuing to use home grown solutions or spreadsheets.

But in today’s complex markets, your business simply cannot afford not to adopt a more advanced commodity management solution. This is an investment you cannot put off and still expect to remain competitive. With increasing volatility, risk, and regulatory requirements, your chances of succeeding in this market will be dependent upon your trading technologies.

Focus on Optimization

In order to get the best possible return on your CTRM or ETRM software investment, you should focus on improving utilization of the system. If your users don’t feel comfortable with the system, then they will most likely go back to inefficient methods of using spreadsheets and other siloed solutions. Spend the time upfront to partner with your technology provider to ensure your technology infrastructure addresses your business’s needs. Learn more in “5 Keys to Successful CTRM Software Implementation.”

More Visibility

As the fundamentals of commodity trading change and regulatory oversight becomes more intense and invasive, visibility across all aspects of your business must improve. If you ensure your company is positioned for success even in down markets, then you will be able to take advantage of a market recovery. However, if you are operating on outdated systems prior to a commodity market price crash, then you risk not having access to the data you need in order to make the best decisions in a volatile market upswing. Here are 3 types of visibility your commodity management solution should provide:

• Market visibility – Market awareness and decision making must be formulated based on real-time or near real-time analysis to allow you to take advantage of external opportunities as they arise.
• Internal visibility – Profit is made or lost on daily decisions. Accurate and timely position management, risk management, and business intelligence support is key to ensure opportunities are exploited and risks addressed.
• Regulatory visibility – Regulators will be quick to move and once on their radar, you will be a target of scrutiny for a very long time. Developing a culture of compliance and visibility for regulators is key to avoiding punitive attention and actions.

Long Term Success

As stated earlier, your chances of succeeding will depend on the quality of your trading technologies. If you continue using ineffective legacy systems and spreadsheets, you cannot expect to compete with competitors who have upgraded to a next-generation commodity management solution.

We have seen commodities companies struggle with using data to make critical decisions. The case for upgrading becomes clear when the alternatives are just not sustainable, long-term solutions. Eka’s Smart Commodity Management includes Commodity Analytics Cloud™, an advanced data aggregation and analytics tool, and InSight CM™, an integrated system for managing commodity transactions end-to-end. These two solutions together provide the analytical and operational solutions that commodities companies need to manage in today’s complex and volatile markets.