Reports ETRM in a Low Commodity Price Environment | Page 6

ETRM in a Low Commodity Price Environment Q: Please rate the Feature/Functions of your current ETRM system(s) when trading in the current price environment. North American respondents felt Valuation capabilities were the greatest strength of their current systems, while Europeans ranked that capability below several others. Europeans ranked Efficient Deal Entry and Effective Portfolio Management as the key strengths of their systems. Effective Position Management Efficient Deal Entry Valuation Reporting Capabilities Market Risk There was also significant regional disagreement regarding Market Risk, Contract Modeling and Accounting capabilities, with the European participants ranking those capabilities significantly lower than the North Americans. Scheduling Contract Modeling Accounting Compliance and Reporting A potential explanation is that many of the systems used in the European market area had initially been developed for the US markets and at their core reflect the business processes common to that region. When used in a European market context, many of these systems may require additional development or work-arounds to be fully functional for some of the markets, commodities and business practices in the region. Adaptability to New Requirement Credit Risk Performance and Real-Time Capabilities Asset Modeling and Optimization 1.00 Strength Strength Europe North America 1.50 2.00 2.50 Weakness Weakness Total Q: Do you believe your energy trading software helps you respond to new business opportunities as they arise in this market under these current market conditions? Only 24% of respondents felt their ETRM software helps respond to new business opportunities under current conditions, with little difference between North America and Europe. Around a third stated that their software does not help them respond to new business opportunities. This result should not be unexpected given the varying capabilities of the many vendor-supplied solutions in use across both markets. For example, some available solutions provide a wealth of data visualization capabilities that may provide rapid identification of price arbitrage opportunities, or provide capabilities to model and analyze physical supply chain optionality (or least-cost pathing for transportation). However, these solutions do tend to be more costly and complex to implement and are most commonly deployed at larger energy trading firms. Solutions that compete for mid-sized and small market players are generally less costly (both in terms of licensing/support and implementation) and may not provide capabilities that identify and respond to these types of opportunities. Yes No The Same 0% 10% Europe 20% 30% North America 40% 50% Total In rapidly changing markets where participants are under cost pressures, a perceived inability for their ETRM solutions to grow and evolve with their businesses and adapt to new opportunities is problematic and may eventually lead to replacement of those solutions. On the other hand, those same cost pressures may force participants into workarounds (via spreadsheets for example) until market conditions improve. © Commodity Technology Advisory LLC, 2016, All Rights Reserved. 6