White Papers Multi-commodity ETRM’s are becoming too expensive | Page 5

Multi-commodity ETRM’s are becoming too expensive A ComTechAdvisory Whitepaper
costs and effort, and once in production, will usually
provide the specific functionality needed to manage
the inherent risks in the business and provide the
controls, checks and balances increasingly required
by market regulators and stakeholders. ty solution has only resulted in many cases in long and
expensive implementations, a low rate of satisfaction,
high maintenance costs as requirements continually
change, a continued reliance on spreadsheets and
other ad hoc tools to fill in ‘gaps’, and a low ROI for the
original investment in the software.
Indeed, the result of the search for the multi-commodi-
CHANGING REQUIREMENTS
As business conditions and regulatory oversight have changed over the last several years, so
too has the vision of the ideal ETRM solution. Market participants - faced with lower commodity
prices and increasingly intrusive regulations and shareholder scrutiny – are looking more than
ever at costs, exposures, and operational risks.
Achieving a positive margin in this market is increas-
ingly dependent upon optimizing supply chains and
improving efficiencies. Simply put, it’s no longer about
capturing a trade, settling and invoicing it, but about
dealing with complex pricing, accurate hedging, effi-
cient transportation, optimal cost routing, speed of
providing required documentation for insurance com-
panies and banks, optimal inventory levels, and so on.
Further, in order to address regulatory and stakehold-
er demands, improved controls, checks and balances
are in increasing demand, necessitating additional
capabilities such as configurable workflows, compre-
hensive audit trails and added security of access to
sensitive screens and data.
Banks that provide lines of credit and other collater-
al are insisting on ever more detailed audits and due
diligence, drilling specifically into approaches to risk
management including operational risks across the
business and supply chain. They want to see how
these risks are managed and they want to see how
supply chains, assets, and trade financing, for exam-
ple, are optimized and controlled. Addressing these
demands requires detailed and specific physical com-
modity functionality of the type not usually found in
broad multi-commodity systems.
The management wants to see accurate reporting of
the key KPIs (profit, risk, inventory, cash flow) and be
able to spot exceptions and anomalies in the business.
Finally, and perhaps most importantly, to be com-
mercially successful, any system designed for these
markets needs to be user-friendly – providing a well
thought through user interface that is both intuitive
and easy to use, helping reduce data entry and/or
interpretation errors and all of this is needed faster
(near real-time) and at a reasonable cost.
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