Musings About the ETRM Industry
IGTE & CTRMCloud Podcast

Our friends at Insider’s Guide to Energy (IGTE) have released a mini-series of ETRM-related podcasts. CTRMCloud’s episode went live recently. Thank you, again, to the wonderful co-hosts Chris Sass of Fidectus and Martin Hiller of Forrs, both of whom are extremely well versed in the intricacies of the complex world of energy trading, had a ton of insightful questions and comments. 


As Chris pointed out during the podcast, the ETRM space is a crowded one. IGTE selected 13 leading ETRM vendors to interview. Whilst we are proud to feature in that list, we realize it’s not an exhaustive list of all the ETRM solutions out there.  




One obvious reason is that energy trading is a highly complex business – I think of it as a multi-dimensional matrix of requirements. On one axis you have the type of organization such as energy producers, retailers, trading companies, commercial and industrial consumers of energy. On the second axis, you have the parts of the energy world the organization is in – power, natural gas, LNG, renewables, oil, and so forth. For many parts of the energy world, particularly, power, regional differences are another axis in this matrix, for example, the way power trades in North America is different from how it trades in Europe, which is different from how it trades in Japan. And lastly, there is the part of the business/organization such as trading, risk management, scheduling, settlements, or accounting. Each requires its own unique tools and solutions. In short, it is a large list of requirements that ETRM systems have to serve, hence the large number of ETRM vendors. 


I think another reason there are so many ETRM vendors out there is because we are at an inflection point when it comes to software principles and technologies. Over half of the 13 ETRM vendors that IGTE selected were promoting what I would call ‘legacy systems’, built 10, 20, and even over 30 years ago using previous generation(s) of B2B software technologies and practices. The remaining few on the list are newer solutions built on modern software technologies, such as cloud computing. 


One question that Chris and Martin asked during our interview is whether I thought the number of ETRM vendors will in the future grow or shrink. My answer was simple: that it will shrink. When I said that, I was only thinking about the economics of the question – the market is not large enough to sustain that many ETRM systems and hence the recent frenzy of acquisitions. But the other reason, the number of ETRM vendors will go down in the future is that it will be extremely difficult, if not impossible, for the legacy vendors to re-invent themselves and successfully move to the new technology paradigm. The fact that they have large client bases will end up being a double-edged sword. Whilst it may be an advantage to serve a large number of customers, it also makes it nearly impossible to reengineer the entire system AND THEN successfully migrate all those clients to the new platform!  




IGTE Podcast Interviewees

IGTE Podcast Interviewees


Looking at the new entrants in the world of ETRM, I see two distinct approaches. One group believes that ETRM users will prefer or demand a true Software-as-a-Service solution. The other group, too, believes in the newer set of technologies including cloud computing. But they do not think that users will want to change their practice of having their own technical and business teams to support the needs of their ETRM end users.  


Hence, these vendors focus on designing tools to enable the ‘solution’ build, but not the solution itself. The premise behind this second approach is that it is the only way to lend the required flexibility in order to meet the needs of energy professionals. And therefore, it is worth the associated costs, which can usually be placed into three categories:  

  1. The cost of maintaining and supporting an ad hoc environment
  2. Even if cloud-based, the risk of not being able to deliver the project within time and budget
  3. And unlike multi-tenant architectures, the cost and risk of upgrades often delays the opportunity to adopt new market standards. 


We, at CTRMCloud, believe that is a false choice. We know that an ETRM software can be successfully delivered as a true SaaS solution and give customers the flexibility required for their unique needs.  


You can tune into the IGTE podcast and share your thoughts with us. We’d love to hear what you think. 

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