A UtiliPoint IssueAlert

By Patrick Reames, VP of Trading and Risk Management, and
Dr. Gary M. Vasey, General Manager of UtiliPoint Europe

Energy trading, transaction and risk management (ETRM) software solutions are the highly specialized systems used by companies engaged in the production, buying, selling, moving and managing of energy commodities. According to UtiliPoint’s Directory of Trading & Risk Management Software Vendors and Solutions, there are more than 70 firms offering ETRM solutions, from established companies servicing the entirety of the energy value chain, to smaller and sometimes upstart companies offering focused solutions for specialized links in that chain. With this wide variety of vendors selling an even wider range of solutions, selecting the right vendor and the right product can be a daunting task.

Beyond the difficulty in indentifying the “best fit” solution or combination of solutions for your company; once identified, that product must be installed and implemented in order for it to provide the advantage for which it was purchased. ETRM solutions are complex software systems. In the best of circumstances, they will take months to properly install, configure, and train on before they can be put into production. In the worst of circumstances, a company can spend literally years trying to get the product into production in their environment, with the project ultimately ending in failure at a cost of millions of dollars, a situation that is thankfully rare, but does happen. In between the best circumstances and worst, lay the majority of ETRM implementation projects those that last 6 months to a year, consuming valuable time, dollars and human resources as the project slips behind its original, best intentioned schedule. And even after going live on the new system, a surprising number of ETRM system users say their systems were not implemented properly and they are not receiving the value from the project that was originally intended.

In fact, a recent UtiliPoint study of 35 ETRM implementation projects showed that while there was only a single complete failure, fully 25% of study’s respondents indicated that their systems were not implemented properly. Given that UiliPoint’s data indicates that the “average” implementation project takes 9 months to a year to complete, and that the median initial licensing fee is well over a half million dollars; combined with implementation services costs of 1.5 to 2.5 times that license fee, the cost of any degree of failure is extremely expensive.

With this backdrop of high cost and high risk projects, UtiliPoint International’s ETRM Experts, Patrick Reames and Dr. Gary Vasey, along with 3 of the leading ETRM consulting services firms have produced the first of its kind examination of the process of selection and implementation of ETRM systems. The result of this effort is the new UtiliPoint Expert Series book, Selecting and Implementing Energy Trading, Transaction and Risk Management Software A Primer, co-authored and edited by Mr. Reames and Dr. Vasey, with contributions by Mr. Randall Orbon, VP of Trading and Risk Management for Sapient; Mr. Roger Schaffland, Energy & Resources Director of Deloitte & Touche LLP; and Ms. Angela Ryan, Director and Mr. Baris Ertan, Senior Manager of The Structure Group.

This book, the second installment of the UtiliPoint Expert Series, follows Trends in Energy Trading, Transaction and Risk Management Software A Primer and provides valuable insights into the process of selecting, implementing and maintaining these critical systems. Ultimately, this new book is intended to create a more complete understanding of the critical activities that are the ultimate determinate of success for any company seeking to improve their ability to compete in a complex and dynamic energy commodities market via the acquisition of a new ETRM system.

In addition to providing information about the specific activities involved in ETRM system selection, implementation, and maintenance, this book also provides in-depth discussions of critical tasks and decision points within those activities, including the importance of testing and the management of historical transactional information. Other topics will assist clients to better understand the business models of their ETRM solutions providers, as the strategies and decisions made by those vendors can have significant implications for the users of their systems.

Leveraging the best of UtiliPoint’s energy trading and risk management research and the experience of its analysts, coupled with insights from three of the leading consulting firms in the space, this book will prove a valuable tool for the staff and stakeholders of any company contemplating the acquisition of a new ETRM system.

The two UtiliPoint Expert Series books, Selecting and Implementing Energy Trading, Transaction and Risk Management Software A Primer and Trends in Energy Trading, Transaction and Risk Management Software A Primer are both available for purchase through Amazon.com.