Disruptive Technologies in Commodity Trading Markets A ComTechAdvisory Report
Data, Big Data, and Data Management
Data is everywhere and in almost every format. According to IDC 5 the digital universe is set to reach 180 zettabytes( 180,000,000,000,000,000,000, 000 bytes) by 2025 as data creation and capture accelerates … in fact, more data has been created in the last 20-years than in the whole prior existence of mankind. Unfortunately, much of this data is not contained in structured lists residing in relational databases, but rather is unstructured in the form of photos, videos, social media content, and more. Web-enabled devices, ranging from smart consumer products to sensor-enabled field equipment, are increasingly common and important sources of data, and as the Internet of Things( IOT) expands, so too will the amount of data – all of it increasingly in near real-time. And as data and data sources increase in quantity, heightened concerns regarding the security and use of that information are growing as well – resulting in a number of new and emerging regulations around the globe regulating how data is captured, stored and used, including data associated with industrial activities such as commodity trading. That said, many regulations, including Dodd Frank and REMIT / MIFID, have forced increased market transparency across parts of the commodities complex, resulting in increased availability of data to inform decision making.
Highlighting the increased importance of data, Thompson-Reuters 6 reported last year that in a survey of over 700 commodity professionals, more than 60 % of those surveyed expected their firms to increase budgets for data management, driven by a need to cut total cost of ownership, centralize data, reduce operational risk and create an analytics platform to better manage growing complexity in data management.
Data is now the life blood of commerce; and in commodities, data is the essential ingredient for the tools of decision making and trading, including analytical models, predictive models, and high-frequency trading.
Over the past couple of years, even as CTRM software sales and deployment slowed, ComTech was observing increased market attention and expenditures on data management strategies, including data capture, storage, integration, retrieval and visualization. This increased focus and spend may have contributed to delayed CTRM procurement activity as a coherent architecture and data management strategy is increasingly viewed as a critical precursor to deploying other key solutions such as CTRM software. Driven in large part by the increased market awareness of the criticality of data management tools, we have seen increasing M & A activity in the data management space for energy and commodities. For example, Drillinginfo has, within the last couple of years, acquired a number of data-centric firms, including Datagenic,
5 https:// www. forbes. com / sites / michaelkanellos / 2016 / 03 / 03 / 152000-smart-devices-every-minute-in-2025-idc-outlines-the-future-of-smart-things /# 61b8236d4b63
6 https:// blogs. thomsonreuters. com / financial-risk / trading / drilling-for-data-gold-who-has-the-tools-for-commodities-success / © Commodity Technology Advisory LLC, 2018, All Rights Reserved.
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