Change your Playbook with a Modern C/ETRM system

Whether it is the energy or the commodity market, they reflect a 21st century business climate of on-going and fast change. Markets are getting interconnected and the energy transition is driving shorter term trading, giving rise to environmental commodities, and the introduction of new players. Your current playbook does not help protect your current business, nor does it succeed in getting you into new ones. It’s Albert Einstein’s definition of insanity: doing the same thing over and over again and expecting different results. Just ask all of those famous companies that missed the next wave, like Kodak and most recently Nokia. Don’t become a “Kodak Moment:” Change your Playbook with a modern C/ETRM system.

Waves of disruption are no longer applicable just to high-tech. Fundamental changes in the energy and commodities markets is driving increased volatility, digital transformation, as well as changes in consumer behavior and expectations.

Today, every organization is facing challenges with the concept of disrupt or be disrupted. When disruption enters your industry sector, new business models dramatically reset the pricing for traditional services. They either offer a whole lot more for the same price or offer the same thing for a whole lot less.

Market participants have little choice but to shake up their operations, reinvent and position themselves to find new growth categories by embracing disruption and innovation.

To prevent this wave from catching you and in order to defend your business, your revenue generation operations must run optimally. Productivity-enabling technology, similar to what the disruptor is using, is the tactic to modernize the operating model.

At the same time, new product offerings under development may need to be accelerated towards catching a new wave of disruption. A flexible and well-oiled infrastructure can pick up a new offering when the time is there to roll it out.

Here’s where investment in a next-generation C/ETRM system earns its justification to support your new playbook. It empowers your market origination, trading, hedging and risk management to successfully operate in the wholesale market, while ensuring regulatory compliance, efficient operations and effective competitive performance.

A next-generation C/ETRM system enables the changes you are making in your playbook as they may affect your infrastructure, operating and business model to support your next-generation ventures.

While there are different schools of thought about whether it’s possible to disrupt yourself, there are a couple of areas where a state-of-the-art C/ETRM system can help your efforts to prevent the next wave from catching you.

First, its next-generation technology will modernize your operation model as you play defense: All your data is captured in a single integrated system, where workflow management allows you to implement new company policies for limits, risk, credit and associated approvals and notifications.

As a result, your front-office will improve earnings through detailed insight and full control in the commodity trade chain. This includes real-time open positions, inventory levels, etc. It will deliver greater efficiency with reduced trader’s time on routine tasks from deal capture to approval to counterparty status.

Accurate valuation of assets, positions, inventories etc., will reduce risk for losses, while improving predictability for Profit & Loss. Finally, a reduction in time spent on settlement activities and invoice verification will lead to lower back office costs as the business expands.

Second, unparalleled configurability will allow you to accelerate your new product offerings you have in the pipeline as you play offense.

A flexible, hierarchical book structure along with template and formula-based software will support your changing business process while providing a high-degree of user control for less vendor reliance.

Where regular C/ETRM systems only provide the ability the settle and invoice standard trades/contracts, a formula-based settlement module featuring charge types and billing determinants enables the customer to device and introduce more complex structured products, such as Power Purchase Agreements, for market differentiation.

A system solution that is scalable and highly configurable offers the flexibility to be lower cost for the smaller company and minimizes additional cost when ramping up or changing course.

Furthermore, in a fast-pace digital and mobile world, traders and portfolio managers need access anywhere anytime. A web-enabled C/ETRM system allows companies to benefit from cloud-computing as their environment changes. When honestly putting all costs of hardware, software, maintenance, upgrades and innovation on the table, then real cloud-computing wins out every time. It’s overtaking the traditional delivery software because it’s fundamentally a better operating and business model for the company and the vendor.

Modern business is about speed plus disruption. In times of disruption, the current playbook just doesn’t work. Neither will your legacy systems.

Investing in a modern C/ETRM system will support your new playbook for not just surviving but succeeding in today’s disruptive business world. As famous soccer player Johan Cruyff once wryly commented “If I start running slightly earlier than someone else, I seem faster.”

Can you afford to wait?

Learn more about energy trading and risk management (ETRM) from Hitachi Energy.