White Papers Multi-commodity ETRM’s are becoming too expensive | Page 2

INTRODUCTION
Since ETRM software was first introduced around 20-years ago, developers have continually
sought to move from developing solutions designed to support specific commodities such as
crude oil, natural gas, and electric power, to building solutions that catered for multiple energy
commodities. In part, their objective was to reduce costs – specifically integration costs, but
without a doubt, part of the objective was self-serving, as this also allowed them to broaden the
appeal of their software to a larger and more lucrative market.
Unfortunately, the goal of a multi-commodity ETRM has
remained elusive (and perhaps undesirable) such that
only those willing to throw vast sums of money at build-
ing such a solution have managed to get even close to it.
Much of the problem they face lies in the fact that each
physical commodity is remarkably different and has a
different supply chain encompassing different types of
assets and operations along it. It is virtually impossible
to design a solution that can accommodate the vast ar-
ray of supply chains, commercial processes and physical
characteristics of each commodity while also delivering
efficient deal capture, position management, real-time
reporting and front to back office integration. Many have
tried but few, if any, have succeeded. As trades have be-
come increasingly innovative and specialized, often with
bespoke terms, it has become increasingly difficult to
satisfy all requirements across multiple commodities in
a single solution.
The goal of building an all-encompassing ETRM be-
comes even harder to achieve in recent years as the
requirements of these have also changed and grown
1
2
substantially – reflecting the changes in the industries
and markets they serve. Now, for example, issues such
as auditability and regulatory reporting of trades across
multiple jurisdictions, have become mandatory, increas-
ing the functional burdens placed on these system
as they are deployed across any number of countries
around the globe. Despite these complexities, and the
issues they have created for both software vendors and
users alike, recent surveys of the industry continue to
show that multi-commodity capabilities are still deemed
to be somewhat important by many end users (Figure 1
– Note – about 25% of the respondents were oil & gas
companies and 75% were energy commodity focused 1 ).
Physical commodity support is the most important buy-
ing criteria amongst buyers of commodity systems.
Meanwhile, continuous research around satisfaction
rates 2 also indicates that many end users continue to
be disappointed by the lack of depth of functionality
provided in commercially available ETRM solutions for
specific physical commodities like crude oil, for exam-
ple. Figure 1 also shows that the surveyed users single
Vendor Perception Study, 2016, Commodity Technology Advisory, LLC
Commodity Technology bi-annual Vendor Perception reports
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