Hi Everyone:

I am new to this site and was hoping some of you could assist me. I am in search of a Risk System Administrator: Below is a small note from the hiring manager as to the type of candidate he is looking for. I was hoping you all could help me determine for this individual if a salary in the 90k range is acceptable. This is where they want to be but I have never placed someone with Allegro experience. Is this acceptable? Thank you for your time and should you want to know more I can forward you the full job description. The position is in St. Louis!

They are not interested in someone who has been in a position such as a broker, a security analyst, a “traditional” corporate finance person, or is involved with insurance risk. The person may be a CPA. . .with the appropriate background. If a resume says experience with Allegro, they will hire the person. . .yesterday. Compensation will be in the high five-figures.

An UtiliPoint IssueAlert

By Patrick Reames
Vice President, Trading & Risk Management

When energy trading and risk management (ETRM) software first appeared in the post FERC 636 era, the applications were built around the best available technologies of the dayclient server architectures, relational databases and Visual Basic or PowerBuilder front ends. These applications were suitable for the times, sitting on an internal server and running over the client company’s internal network. The data and the program itself stayed within the physical confines of that company’s business.

Following the client server phase, new technologies came into vogue, like n-tier and Service Orient Architectures (SOAs), and Java and .Net, offering the promise of improved performance, improved ability to integrate with other applications, and, perhaps more importantly, the ability to deploy the applications directly over the internet, enabling what has become known as “Software as a Service” or SaaS.

Using the Web for Energy Transactions

For energy companies, the advent of the Open Access Same-time Information System (OASIS) and the development of the RTO markets in the mid 1990s essentially forced a broad acceptance of web-based transaction exchange. The standardization of OASIS functionality (and later, the mandated use of e-Tags) meant that companies operating in the markets had to accept that doing business in those markets meant using the internet to communicate with their business partners.

Still, there remains some resistance in trading shops to the idea of transmitting critical and proprietary data to an offsite server not owned or controlled by that company. Some organizations continue to hold the perception that someone could hack-into that third-party box, access the database and read or corrupt their critical data, crippling that data owner’s business. What’s not readily recognized is that the servers within most of the trading shops today are probably less secure than those sitting in a hardened data center operated by a SaaS provider that has developed the operating protocols and security measures necessary to legitimately operate in the space. Today, particularly for critical industries such as power generation and transmission, data center cyber security and protection is a top priority. The proper certifications, such as SAS 70, and compliance with industry standards such as the NERC CIP Standards, provide assurances for SaaS customers that their data is secure and that their system will be readily available.

Today, the Intercontinental Exchange, ICE, is the largest energy commodity exchange in the world and all its transactions are conducted via the web or via virtual private networks to its own data centers. Given ICE’s ubiquitous use by virtually all trading companies, it’s increasingly difficult for holdouts to make the argument that Web-based transmission and third party storage of sensitive data is too risky to employ.

With energy markets’ participants increased exposure to web-based technologies, such as ICE, more and more are accepting of SaaS solutions for their critical business software. In our market research, UtiliPoint has seen annual double digit growth in the SaaS ETRM markets over the last several years, and we are forecasting that growth to continue, even in an otherwise potentially slowing market.

With the acceptance and adoption of SaaS solutions, companies are finding numerous advantages in relieving themselves of the burden of housing and maintaining these critical applications. Amongst those advantages:

- Limited or no hardware investments
- Reduced maintenance costs
- Standardized XML based integration points yielding potentially faster implementations
- Nearly transparent product upgrades-reduced cost, time, and pain

While SaaS does provide a number of benefits, it’s not without its perceived drawbacks. In particular, if a company wants a highly customized solution to fit a particularly unique business process, maintaining those customizations in a hosted, web-delivered system has the potential to erode the value of the model.

OATITHE SaaS Success Story in Energy

While almost all ETRM vendors will advertise their ability to deliver their applications via the web, only a few have architected their products specifically for SaaS delivery. In fact, most will utilize a technology such as Citrix to “Web enable” their products.

One of the earliest solutions companies to adopt the SaaS business model for product development and delivery was Open Access Technology International (OATI). With the opening of the RTO markets, the deployment of OASIS in the transmission markets and the evolution of e-Tagging, OATI, founded in 1995, began providing the technologies and products required by market participants. The company’s web based solutions quickly became the standard for the vast majority of regional power market participants.

Since that time, the company has grown to be one of the largest players in the energy technology space (and the largest vendor of dedicated SaaS energy solutions), providing products in energy trading and risk management, NERC compliance, congestion management, transmission management, and smart grid development and management. However, despite their breath of solutions, there’s a chance you may not have heard of them as the company has accomplished all that it has without much investment in marketing. As they will readily admit, they’ve historically relied more on word of mouth to sell their products, believing that success breeds success, and apparently it has.

Despite their low profile in the market, the list of accomplishments for this company is impressive. Consider these facts:

- The company has over 650 active customers for their various products
- They handle over 96 percent of the e-Tagging in the North American market
- They’ve deployed their RTO market solution 116 times
- They’ve deployed their ETRM solution at more than 65 companies
- The company has over 80 percent of the Transmission Providers utilizing their transmission management, scheduling and OASIS solutions.

As Jerry Dempsey, OATI’s vice president of sales and marketing says, “We’ve focused our efforts on building an organization that is 100 percent dedicated to providing the highest value to our customers by utilizing the best available technologies to solve extremely complex business problems. We know that by delivering on that strategy, the market will be there for us.”

“The SaaS model has proven very successful in delivering on that strategy. Our customers have been able to achieve superior value on their investment and are assured that the products they are using will always be up to date with the ever changing energy markets.”

According to Mr. Dempsey, while OATI’s products can be delivered on servers located within their customers’ facilities, in almost all cases customers have elected to use OATI’s dedicated hosting facility. “For clients that want a more customized solution, even for some very large customers, we’ve been able to demonstrate that our SaaS model can provide that uniquely customized solution in a fully hosted environment. It’s the same effort whether the system is hosted or delivered. Customers recognize the benefits of a SaaS model. Yet some customers do elect for a delivered solution over a hosted solution mostly due to lack of experience of SaaS or the strong desire to simply retain the solution within their own facilities.”

OATI’s hosting facility is one of a kind for an energy solutions vendor, providing not only application hosting, but also managing almost all of the thousands of e-Tags that are transmitted every day in the North American power markets. In all, their data center manages over 80 terabytes of data on a daily basis.

I recently had the opportunity to visit the company’s headquarters in Minneapolis and tour their data center, which, from the outside is a rather unassuming building on the west side of the city. However, as you pass through a very robust security process, the unassuming label quickly drops away. OATI is very serious about their facility and have built a state of the art data center by essentially constructing a hardened bunker within the building, one equipped with its own utility feeds and back-up systems, operating independently from the outside facility.

“Our data center is the heart of our business. Our customers, including most of the power industry, rely on us to ensure that their data is safe and their business critical applications are available. We are constantly working to ensure that our facility remains state-of-the-art and is the most secure and reliable in the market. We’ve worked hard to maintain SAS 70 and NERC CIP compliance, and we take pride in that we are the only energy technology vendor to have achieved that compliance with their own 100 percent dedicated data center,” said Dempsey.

Good News for Other Vendors

For vendors of SaaS products, OATI’s story should be heartening, for it clearly indicates the growing acceptance of internet delivered solutions in the energy markets. Their continual success in selling, deploying, and maintaining SaaS solutions is one of the most persuasive arguments in tearing down perceived barriers to web-based ETRM products.

There have been rumors in the market recently that ConocoPhillips had signed a significant new contract with Triple Point. I had the chance to talk with Peter Armstrong, Triple Point’s president and CEO, recently and he confirmed the rumors with the following statement, ConocoPhillips, a long-time customer of Triple Point, has just licensed additional components of the Triple Point platform for natural gas, power, and LNG trading and risk management and also for power scheduling.

While he indicated that he wasn’t at liberty to provide any additional details, he did say, “Obviously we’re very proud of winning this business. Deals of this caliber are the best validation of our multi-commodity strategy - a strategy backed by product excellence and superior technology.”

It’s clearly a big win for the company. Following on from the (still unannounced) Cargill deal of a couple of months ago, this win would seemingly position Triple Point well for another record revenue year, despite what is for many vendors, a difficult market.

To borrow a visual from my one of my more exciting experiences as a truck driver in the oil fields, ERCOT’s Nodal restructuring project has slid off the road and landed firmly in the ditch with the dirty side up and the wheels spinning.

In a press release sent out the day before Thanksgiving, ERCOT said, “The Electric Reliability Council of Texas (ERCOT), grid operator for most of the state, submitted a preliminary schedule and budget for the nodal market implementation to the Public Utility Commission today with a new go live date of December 2010 and a cost estimate of $660 million.”

The $660 million is a more than doubling of the current budget of $319 million, a number that was increased from $263 million at the start of 2008. If the new number is correct, it will add $.38/megawatt-hour to the costs of power in Texas. According to ERCOT, they’re currently working on a cost/benefit analysis to make sure it still makes sense to proceed.

One rumor from a fairly informed source says that ERCOT is contemplating junking the current project for one of two options - 1) start over from scratch or 2) buy a model from one of the other ISOs that has already implemented a nodal market and try see if they can make that work.

The rumors of the troubles at ERCOT have been swirling around for several months. Apparently there have been ongoing and serious problems with the software behind the common information model (CIM), with missed delivery schedules and poor quality code. Additionally, the program has not been able to retain the type of quality resources necessary due to lack of appropriate compensation, especially for the level of experience and skill that they need to make the project successful.

From what I’ve heard, many of the contractors and vendors involved are heading toward the door at the end of the year, throwing their hands up in frustration with the mess.

Consider for a minute the proposed new budget and timeline. Since the start of the program in earnest, let’s say June 2006 when they first awarded contracts to vendors, and according to ERCOT’s latest status report, they’ve spent right at $300 million through September 2008 - that’s 27 months. Now they are proposing spending an additional $341 million in the next 25 months. Based on those numbers, the rumor that they will blow up the project and start over with something different sounds pretty much spot-on.

Note: Here’s a sneak preview of an upcoming announcement about a new website we’re launching. We are continuing to enhance and refine the listings, so if your company is not listed and you think it should be, or if you have any other feedback, just drop me or Gary Vasey an email, or you can go to http://www.trmdirectory.com/contacts.php and leave a note there. PR
__________________________________________________________________________________________

For Immediate Release

Albuquerque, New MexicoDecember 1st, 2008UtiliPoint International, Inc. (UtiliPoint) has created a a new online directory of commodity trading & risk management software and service providers at http://www.trmdirectory.com. The TRM Directory is designed to be the premier source of provider information for commodity trading and risk management software and services for those seeking to procure software or services. The site is maintained by Dr. Gary M. Vasey and Mr. Patrick Reames of UtiliPoint International, Inc.

The new directory is easy to use and offers a fast and convenient tool to find software vendors and service providers across any number of categories and search criteria, reports Dr. Vasey. The directory will be linked to our other sites and blogs to make it even easier to find.

The directory lists software providers in categories ranging from “Commodity Trading & Risk Management Systems” to “Pipeline Management Systems” and draws its information from the UtiliPoint Directory of Trading & Risk Management Vendors and Solutions which continues to be available as a subscription service and contains additional vendor information, including deal detail. That directory may be found at http://utilipoint.com/rci/details.asp?ProductID=1084.

We’re excited to bring this enhanced tool to the market. The TRM Directory website is just the first of many new products and offering that we will be rolling out over the coming months. We believe these new capabilities will provide tremendous value for both the buyers and sellers of commodity trading and risk management solutions and services.” said Patrick Reames of UtliPoint International, Inc.

About UtiliPoint International, Inc.
UtiliPoint is a leader in providing analysis and consulting services to the energy and utility industry. Our 73-year history and over 500 clients worldwide have led us to currently operate as an energy and utility consulting and issues analysis firm. Our staff is comprised of leading utility and energy experts with diverse backgrounds in utility generation, transmission & distribution, retail markets, mergers and acquisitions, new technologies, venture capital, information technology, outsourcing, renewable energy, regulatory affairs, and international issues.

UtiliPoint International is offering a limited time savings of 25% of many of our key ETRM market research reports. These savings are good only until December 31, 2008. For more information, or to purchase online, click on the links associated with each report.

2008 North American ETRM Market Analysis and Sizing Report
This study provides the latest analysis of the trends impacting the market for ETRM software in North America, and provides a quantitative analysis of the size of that market. Included in this report is an expanded examination of market forces and trends impacting market players and the providers of ETRM solutions and services.
Price: Regularly $2,495.00, Limited time price $1,875.00
For more information, or to purchase this report: http://www.utilipoint.com/rci/details.asp?ProductID=1173

European ETRM Integration Survey Results
This report provides a view of the levels of maturity of the different application areas around trading & risk management in Europe. For completeness, data has also been utilized from other UtiliPoint reports including the 2007 Benchmarking of European ETRM Software study, and the 2005 North American Gas Company study.
Price: Regularly $2,495.00, Limited time price, $1,875.00
For more information, or to purchase this report: http://www.utilipoint.com/rci/details.asp?ProductID=1164

European Markets for Energy Trading, Transaction and Risk Management (ETRM): Market Size and Analysis
This study utilized both top-down and bottom-up proprietary analysis techniques to establish the European market size for ETRM software license sales in 2007 for all energy commodities. The final report details the ETRM market size by a number of parameters.
Price: Regularly $995.00, Limited time price $750.00
For more information, or to purchase this report: http://www.utilipoint.com/rci/details.asp?ProductID=1152

ETRM Software Implementation ProjectsSnapshot Survey Results
This report looks at ETRM project duration and costs, project activities including integration, enhancements, data conversion and training, the use of third-party consulting firms in implementation, respondent’s ETRM Implementation project experiences, project success rates and approach to training. While the quantitative metrics provide good data points for ETRM Implementation project managers, it is the lessons learned section that may provide the most value to report readers.
Price: Regularly $499.00, Limited time price, $375.00
For more information, or to purchase this report: http://www.utilipoint.com/rci/details.asp?ProductID=1149

Benchmarking of European ETRM Software Markets
This report details the findings of the breakthrough survey of European users of Energy Trading, Transaction and Risk Management (ETRM) software including ETRM vendor brand recognition in Europe, perceived European ETRM market leaders and why, installed base among respondents, what European buyers want in a new ETRM system, replacement rates and procurement rates in 2007 and beyond, and a comparison with North American ETRM buyers.
Price: Regularly $995.00, Limited time price, $750.00
For more information, or to purchase this report: http://www.utilipoint.com/rci/details.asp?ProductID=1142

It appears that SunGard Energy has chalked up another victory for ZaiNet with a major player in India. While SunGard is saying no comment, it appears the deal could be a sizable one…

I’ve talked to a number of the leading vendors of ETRM systems in the last few of days and most are reporting the market for new systems isn’t dead, but it has started to get a little lethargic. These software companies are saying that while their sales pipelines are healthy, they are having trouble pushing some deals to closure. Given the current credit crisis and overall lousy economic conditions, it’s really not surprising that many of the buyers are slowing down, reluctant to make a multi-million dollar commitment on new software.

This is particularly true of what we call around here the “asset heavy” companies, those that rely on physical assets (such as producers, generators, and pipelines) for the bulk of their revenue streams. These companies rely heavily on the capital markets for much of their growth and operations. Given the recent market meltdown, it’s to be expected that they would be proceeding cautiously when contemplating a significant new investment.

While many of the utilities we deal with have indicated they are reducing discretionary spending and are cutting many budgeted projects, oil and gas producers are being even more cautious as they are faced with rapidly declining values for their products. With crude trading below $50 today, and natural gas off more than 50% from its highs of just a few months ago, these producers are cutting back and are having to revisit their 2009 budgets which were developed based on the assumption that oil would remain at least $75/bbl.

It won’t be surprising if many of the deals that have been in negotiations over the last few weeks don’t make it to closing until after the markets find the bottom, which hopefully will be very soon but probably not until sometime in the first quarter of the new year.