The Era of ETRM in the Cloud
A ComTechAdvisory Whitepaper
AN APPETITE FOR THE CLOUD ?
As commodity prices fell throughout FY2015 , many energy companies cut their budgets and reduced , or delayed , their spending on IT solutions . The first half of FY2016 saw similar conditions , and with deadlines for regulatory reporting occurring during the same time period , the spending that did occur was with an emphasis on compliance in European energy markets specifically . Faced with reduced revenues , higher costs , and harder to find profitable trading opportunities more companies are turning to cloud-based solutions . This trend has continued in the latter half of 2016 and is forecast to continue 4 . ComTech anticipates that spending on ETRM procurement will rise in 2017 primarily driven by previously deferred IT spending , as there is significant pentup demand for solutions that can assist industry participants address the near constant changes impacting their markets .
Experience has demonstrated that ETRM in the cloud does provide a number of business benefits . The initial cost of procurement is lower , as there are no upfront license fees and no hardware , third-party software , or infrastructure / installation services required ( though implementation services are still required ). Instead , the buyer will pay a recurring ( usually monthly ) fee that includes usage of software and hardware infrastructure , upgrades , and support . Additionally , all bug fixes , upgrades , and new functionality will be provided by the vendors and will be automatically applied to the software as part of the cloud agreement . This arrangement ensures users will stay current with industry changes , providing greater agility for the business in responding and adapting to change .
Back in 2010 , research by CommodityPoint 5 showed considerable resistance to cloud-delivered ETRM software , with less than 10 % market penetration at that time . Yet by 2014 , subsequent research 6 suggested that ETRM in the cloud penetration rates had increased by 150 %, accounting for about 16 % of the total market . The report also showed how buyer resistance to ETRM in the cloud had melted away with around 80 % of respondents being open to deployment in the cloud and just a hardcore of 20 % still resisting .
The results showed that industry participants had begun to realize the advantages , with survey respondents citing a number of perceived benefits , including ,
/ Lower total cost of ownership ( TCO ),
/ Lower entry costs ,
/ Lower demand on IT resources ,
/ Faster deployment , and
/ Lower implementation costs .
4 . 2016 CTRM Market Update , Commodity Technology Advisory Report , 2016 5 . CTRM in the Cloud , CommodityPoint Report , 2010 6 . CTRM in the Cloud , Commodity Technology Advisory Report , 2014
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