White Papers What Does Tomorrows CTRM Look Like? | Page 4

Commodity
 Management

 A
 ComTech
 Advisory
 Whitepaper

address
 operational
 risks,
 effectively
 manage
 and
 optimize
 supply
 chains,
 ensure
 compliance
 with
 regulations
 and

provide
 trading
 intelligence.

The
 tremendous
 drivers
 for
 change
 that
 we
 see
 impacting
 commodity
 markets
 mean
 that
 all
 companies
 must
 take

immediate
 action
 to
 improve
 their:

•

•

•

Market
 transparency
 –
 a
 need
 to
 develop
 market
 awareness
 driven
 by
 data
 and
 maintain
 a
 vigilant
 eye
 on

macro
  trends.
  Strategies
  must
  be
  formulated
  around
  those
  macro
  trends
  and
  managed
  on
  market
  data

and
  real-­‐time
  (or
  near
  real-­‐time)
  analysis
  of
  that
  data
  in
  multiple
  formats
  and
  from
  many
  sources,

including
 quite
 possibly
 even
 various
 forms
 of
 social
 media.

Internal
  transparency
  –
  profit
  is
  made
  or
  lost
  on
  daily
  decisions.
  Accurate
  and
  timely
  position

management,
  risk
  management
  and
  business
  intelligence
  support
  are
  key
  to
  ensure
  opportunities
  are

exploited,
 costs
 kept
 under
 control
 and
 risks
 addressed.

Regulatory
 transparency
 –
 regulators
 will
 be
 quick
 to
 move
 and
 once
 on
 their
 radar,
 businesses
 will
 be
 the

target
 of
 scrutiny
 for
 a
 very
 long
 time.
 Developing
 a
 culture
 of
 compliance
 and
 improving
 transparency
 for

regulators
 is
 crucial
 to
 avoiding
 punitive
 and
 damaging
 enforcement
 actions.

The
 chances
 of
 succeeding
 in
 the
 broader
 commodity
 industries
 in
 the
 future
 are
 increasingly
 dependent
 on
 the

trading,
  trade
  management
  and
  supply
  chain
  management
  technologies
  deployed
  and
  utilized
  to
  address
 these

big
  challenges,
  including
  CTRM,
  data
  aggregation
  and
  analysis,
  trading
  surveillance,
  business
  intelligence
  and

reporting.

Much
  like
  the
  traders
  who
  earn
  their
  living
  in
  these
  unsettled
  markets,
  the
  technologists
  that
  produce
  CTRM

software
 are
 also
 being
 challenged
 like
 never
 before.

Delivering
 Flexibility
 and
 Agility
 in
 CTRM

The
  common
  factor
  to
  being
  successful
  in
  meeting
  these
  challenges
  is
  to
  deliver
  CTRM
  software
  that
  not
  only
  has

the
 required
 functionality
 but
 that
 is
 also
 both
 flexible
 and
 agile.
 However,
 when
 it
 comes
 to
 software
 of
 any
 kind,

these
 terms
 are
 overused
 and
 therefore
 somewhat
 meaningless.
 Providing
 agility
 and
 flexibility
 is,
 in
 part,
 about

the
  technology
  and
  architecture
  chosen
  to
  deliver
  the
  functionality.
  Today,
  those
  applications
  best
  able
  to
  deliver

these
  attributes
  are
  generally
  highly
  modular,
  web-­‐enabled
  applications
  that
  make
  use
  of
  service
  oriented

architectures.
 Consideration
 must
 also
 be
 given
 to
 the
 user
 interface
 to
 ensure
 that
 it
 is
 not
 merely
 configurable,

but
 that
 it
 can
 truly
 be
 personalized
 by
 each
 end
 user
 without
 the
 need
 for
 programmer
 involvement.
 It
 must
 also

be
  graphical,
  intuitive
  and
  engaging
  to
  the
  user.
  Finally,
  the
  application
  must
  be
  able
  to
  deal
  with
  data
  in
  multiple

formats
 and
 to
 help
 the
 user
 extract
 the
 maximum
 value
 from
 that
 information.
 However,
 even
 when
 all
 of
 the

above
  is
  true,
  it
  might
  all
  be
  for
  naught
  if
  the
  software
  vendor
  takes
  the
  traditional
  approach
  to
  delivering

software.

In
  the
  traditional
  software
  delivery
  mechanism,
  a
  vendor
  releases
  upgrades
  to
  the
  software
  periodically.
  In
  the

fast-­‐moving
 world
 of
 CTRM,
 there
 might
 be
 4
 to
 6
 incremental
 releases
 per
 year.
 Each
 incremental
 release
 needs

to
 be
 tested
 and
 then
 implemented
 by
 the
 user
 and,
 after
 a
 while,
 the
 users
 inevitably
 fall
 behind
 on
 the
 release

cycle.
  In
  extreme
  cases,
  the
  end
  users
  fall
  so
  far
  behind
  that
  they
  lose
  their
  support
  (most
  vendors
  will
  only

support
  a
  fixed
  number
  of
  previous
  versions
  of
  their
  software).
  Given
  that
  fact
  and
  the
  unavoidable
  conflict

between
 the
 vendor’s
 prioritizing
 of
 certain
 new
 functionality
 to
 drive
 sales
 rather
 than
 meet
 the
 specific
 needs
 of

individual
  customers,
  the
  inevitable
  happens:
  Users
  are
  forced
  to
  create
  spreadsheet
  workarounds
  to
  give

themselves
 much-­‐needed
 new
 functionality.
 Suddenly,
 the
 use
 of
 spreadsheets
 outside
 of
 the
 system
 –
 the
 very

problem
 that
 the
 new
 CTRM
 solution
 was
 designed
 to
 fix
 in
 the
 first
 place
 –
 begins
 to
 flourish
 once
 again.

Surprisingly
 perhaps,
 another
 issue
 is
 the
 commercial
 structure
 of
 the
 software
 licensing
 deal.
 Most
 software
 has

historically
  been
  licensed
  on
  a
  one-­‐off
  basis
  and
  the
  users
  then
  pay
  a
  percentage
  of
  that
  initial
  license
  fee
  for

annual
 support
 and
 maintenance.
 Add
 more
 users
 and
 perhaps
 you
 will
 pay
 an
 incremental
 license
 fee.
 Ask
 for

©
 Commodity
 Technology
 Advisory
 LLC,
 2014

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