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Optimizing your ETRM technology investment

The malaise in energy and commodity prices that has gripped the wholesale markets for the last two years has had profound impacts on companies that operate in the upper & mid-streams of the market.

Faced with historically low prices, many producers, marketers and physical traders have been forced to reshape and reconfigure businesses to reduce costs, maximize margins and squeeze profitability from almost all assets. However, all too often overlooked in these efforts is the extensive investment most energy players make in their IT systems and tools; those same assets that are vital to managing trades and risks, and optimizing assets and logistics to better ensure profitability during a difficult market.

Though true under any market conditions, now more than ever energy and commodity centric companies need to make every effort to ensure each dollar that has been invested in their IT infrastructure is working to its maximum potential.  

 

Your business has changed and your systems should too

Few if any companies in this market could have anticipated the massive declines in energy and commodity prices that have occurred over these last couple of years.  Three to five year business plans that were developed prior to the crash in oil and energy prices have very little in common with the current conditions faced by most companies.  As such, these companies, particularly those that have or are currently undergoing significant business changes (such as downsizing, divestitures or acquisitions), are faced with IT infrastructures that reflect the needs of a different business – not what they are now.  

Companies that downsize or divest assets may be tempted to address those changes by simply turning off systems or reducing user counts on existing applications; unfortunately this approach will rarely adequately address the challenges of the reformulated business.  Complex technology infrastructures (including servers, networks, databases, applications, interfaces, data feeds, etc.) must be monitored, analyzed, upgraded and tuned to operate optimally, and in concert with business processes.  Reduced IT budgets (including reduced headcounts/support) and/or changes in processes, user counts or business scope will all require thoughtful adjustment to the IT infrastructure in order to operate optimally within the current business scope and organizational structures. Perhaps more importantly though, the reformulated IT infrastructure and business processes must be positioned to grow seamlessly with the current business – both must address the current need in an optimized fashion as well as provide for rapid and efficient expansion as the markets improve and the business grows.

Even companies that held their own during this energy market down-cycle and have opportunistically grown via acquisition of other businesses or assets will be challenged in incorporating new systems and processes.  While most will simply attempt to run any acquired IT assets for some time after the acquisition, such a strategy will rarely result in an optimized infrastructure and could require manual handling of data transfers amongst systems, temporary and fragile interfaces, and poorly functioning business processes that undermine commercial success. 

    

Capco’s approach to optimizing your IT investment

Capco understands the challenges and issues faced by energy market participants. Our methodical, yet efficient optimization engagement, called a System/Process Evaluation & Analysis, addresses both the IT systems and the relevant business processes. This analysis, staffed by Capco’s highly experienced industry SMEs, is a scalable approach that delivers a fully elaborated blueprint for ensuring an energy business of any size or market position can achieve a best fit, but fully scalable, IT infrastructure that is 1) optimized to ensure the highest value for your IT investment, 2) addresses immediate and emerging business needs, and 3) is positioned to grow seamlessly with your business.

This process can be tailored to your needs and requirements, and is undertaken without preconception of the outcome – that is, all strategies will be on the table - ranging from simple but high-yield adjustments of IT components or business process, to upgrade or even full replacement of existing applications and technologies. All recommendations will be based-on achieving the highest return on investment for both individual components of the plan and the overall organization.

The process begins with a detailed inventory, mapping and documentation of the client’s “as is” condition, addressing geographies, markets, business units and organization structures. The documentation from this process will provide the baseline from which the recommendations for improvement and optimization will be built.  

After completion and client verification of the “as is” documentation, Capco’s team of industry and technical experts will conduct numerous interviews and workshops with the client’s business and technical staff to identify, assess and prioritize the needs, gaps and any redundancies in the current environment. In parallel with these interviews and workshops, Capco will also conduct a series of executive level interviews to in order understand the business’ priorities, strategies, growth plans and any corporate initiatives that could impact future demands on the IT infrastructure.  This process is key to ensuring that the needs of the business are properly aligned with corporate strategy, both now and in the foreseeable future.   

Upon completion of the workshops and interviews with all parties, Capco will undertake an extensive analysis process, focused on the issues identified, the IT assets available and the underlying business processes that both support and rely on those assets. Leveraging their knowledge and experience across multiple technologies, including in-depth knowledge of multiple vendors’ ETRM/CTRM products, the team will develop the “to be” technical environment, including recommended business process adjustments.  This plan will be designed to yield the optimal ROI for any recommended incremental spend and provide the business an optimized infrastructure, one that improves usability and the value of the client’s existing technology investments.

 

Addressing the challenges

There is little doubt the energy markets will improve and sustained and predictable growth will return.  Unfortunately, the impacts of the last couple of years continue to be felt, even in companies that have right-sized themselves or have opportunistically grown during this difficult period.  With IT infrastructures that were designed and implemented under substantially different market conditions, many of these companies are finding themselves challenged with a collection of IT equipment, applications and tools that operate sub-optimally – they may be too costly or overly complex, or they may simply not provide the capabilities that are required to support the kinds of decisions that are necessary in this difficult market.  Addressing these challenges requires a programmatic approach, one designed to optimize and tune both the technology components and the business processes that are critical to ensuring profitability in this difficult market.

 

For more information, please email us at contact.ces@fisglobal.com

 
 
 
 
 
 

About the Author

lance mcanelly

lance mcanelly

Lance McAnelly is the Managing Partner for the Capco Energy Solutions business. An established business leader with significant energy industry experience, Lance provides team leadership to deliver and promote client-focused, value-added solutions that result in organizational growth and improved efficiencies. With both national and international experience, he has successfully managed and delivered more than 200 person-years of service to his clients.

 
 

The content and opinions posted on this blog and any corresponding comments are the personal opinions of the original authors, not those of Capco or FIS.