Energy Risk Magazines ETRM Software Rankings 2013

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Energy Risk Magazines ETRM Software Rankings 2013

  1. 1. c o mm o d i t y risk management & tr ading REPRINTED FROMrisk.net/energy-risk March 2013ETRM customers have spoken –Allegro ranks #1 brand in software Software Rankings 2013
  2. 2. Software Rankings 2013Energy trading and risk management (ETRM) software budgets are declining, just as new regulatoryrequirements are putting more demand on ETRM platforms than in previous years, according to theresults of Energy Risk’s 2013 Software Survey and Rankings. Stella Farrington reportsReadyingFor regulationE nergy firms are currently being bombarded with regulatory requirements, many of which will require changes to energy trading and risk management (ETRM) software systems,according to market participants. But despite this,budgets for ETRM software are continuing to decline,according to Energy Risk’s 2013 Software Survey andRankings, raising questions about the ability of firms toadequately adjust their systems. The responses to this year’s survey give the impressionfirms are attempting to do more with less when it comesto ETRM technology. Above and beyond generalmaintenance, some 67% of respondents say theirorganisation is planning to invest in ETRM softwaresystems this year – a figure that is up from 56% last yearand 50% during 2011 (see figure 1). However, only 28%of respondents report having a larger budget this yearcompared with 2012. In fact, almost 27% of respondentssay they have suffered a budget cut, while 45% ofrespondents say their budget will stay constant this year.This shows a steady downward trend in ETRM budgetsover the past few years. During 2012, 35% of respondentssaid they would have a larger budget, while in 2011 thecorresponding figure was 38% (see figure 2). A trend of reduced spending on vendor systems issymptomatic of current economic conditions, combinedwith the maturity of the ETRM software space, saysMandeep Sidhu, London-based managing director atenergy consultancy Opportune. “Increasingly, clients arefocused on improving capabilities through integration andthe streamlining of business processes. Unless vendorscome up with software components that provide significantadded value, new software purchases will decline as part ofclients’ overall ETRM spending,” he says. Chris Strickland, Sydney-based director at energy Ralko / Shutterstock.comsoftware firm Lacima Group, agrees. “People probablywon’t look so much at replacing their full ETRM systemnow, but look at where they have weaknesses and see howthey can best address them,” he says.1 Reprinted from EnergyRisk March 2013
  3. 3. Software Rankings 2013Focus on rules Indeed, a significant number of F1. Do you or your clients have plans to invest inCompliance with new regulations is respondents to the survey say they software systems in 2013, over and above generalone of the biggest focuses for energy would like to see more ETRM maintenance costs?trading firms in 2013 and will require components specifically focused onsignificant additions to ETRM systems. compliance with Dodd-Frank andThe most significant reforms include the other important regulations. Majordemands of the US Dodd-Frank Act vendors such as New York-basedand European Market Infrastructure OpenLink, US-based Accenture NoRegulation (Emir), as well as the and Connecticut-based Triple Point 33%Regulation on Energy Market Integrity have developed specific regulatoryand Transparency (Remit). Both Dodd- modules for Dodd-Frank, but these YesFrank and Emir require clearing and are expected to remain a work in 67%reporting of over-the-counter derivatives progress until the rules implementingtrades, while Remit attempts to crack the law are fully written bydown on energy market manipulation regulators. Software developers needby ushering in a mandatory trade a degree of certainty before they canreporting regime across the European finalise their offerings, while newUnion. Despite this, only 20% of products require extensive testing byrespondents to the survey feel their both developers and their prospectivesystems are ready for rules such as these. users. This makes the timetable for F2. How has your budget for ETRM software changedSome 40% report being almost ready, producing software compliant with compared with last year?with 34% classing themselves as not Dodd-Frank extremely challenging,quite ready and 5% saying they are not say consultants. The sameready at all (see figure 3). Around 57% “I really don’t think there’sof respondents expect Dodd-Frank to enough time for everyone tobe the regulation that will affect them implement systems around [Dodd- 2013most, with 12% focusing mainly on Frank],” says Ertan. “It’s definitely Decreased 2012Emir and 10% on Remit. going to be challenging, as vendors Houston-based Baris Ertan, partner still have to finish development and 2011and vice-president for commercial then test and then clients have totrading at implementation specialist implement the systems and test.The Structure Group, says his firm This leaves little time for a package- Increasedhas clients at various different stages type solution, which will mean thatof readiness for Dodd-Frank. “Some some things will be done manuallyhave been preparing for it for the last in non-optimal ways.” 0 10 20 30 40 50 %two years, while others are literallyonly just starting now. Delays in the Flexibilitytiming and confusion over the scope Phil Wang, senior vice-president or upgrades remains a bone ofof the regulation have held some for financial services product contention for many risk managers.companies back from focusing on management at OpenLink, agrees While almost 52% of respondentsany real solutions,” he says. the timeframe for developing ETRM say they implemented a new system In addition, many software vendors software to accommodate Dodd- last year, over 61% of those say theare producing solutions that only Frank is challenging. “As a software implementation took over six months.address a small part of the challenge, developer, we cannot wait for every Only 3% say implementation tookmaking complying with the law much rule to be fully defined before we start less than four weeks.harder for energy firms. “Because not work – the timeframes for compliance When asked about the outcome ofall vendors are addressing the full set really do not allow for that,” he says. a new implementation, some 82% ofof requirements, some companies will According to Wang, OpenLink is respondents say the final result wasbe left with a much greater effort to developing its regulatory offerings as a better, while 3% say it was worse.comply in the near term. A lot of risk plug-in that can be customised further Fifteen per cent of respondents saymanagers are building component-led by the client or OpenLink, without the final result was neither bettersolutions for dealing with the the need to change basic code. “This nor worse (see figure 4). A commonregulation – for example, reporting method offers a lot of flexibility and criticism among respondents is thatpackages and data repositories – means that, as the scope of regulation implementation took longer thanand I think we’re going to see a expands and evolves, we can make originally estimated and was subjectlot more of that approach to come, changes quickly.” to delays, while many respondentsalong with demand for off-the-shelf The length of time it takes were also irked that vendors did notcomponents,” he adds. to implement new systems sufficiently understand their needs. www.allegrodev.com 2
  4. 4. Software Rankings 2013 F3. ow prepared are your firm’s systems for H This year’s survey shows quantitative modelling. regulatory changes? many market participants to Many consultants argue STP be less than pleased with their will never be fully realised and 50 current ETRM software. Only that much money has been 8% of respondents say their wasted trying to achieve the 40 current system provides all impossible. Because of the 40% the functionality they require, complexity of energy trading 35% while 12% complain that it and reporting, there will 30 doesn’t provide the required always be a need for add-ons functionality. A whopping 80% or workarounds, they assert. % 20 say the system does provide the This will often mean using 20% required functionality, but that spreadsheets, data warehouses 10 there is room for improvement or other solutions to allow for (see figure 5). accurate reporting and tracking. 5% Dissatisfaction with the “The ETRM software world 0 speed and usability of an is still relatively new and the Ready Almost ready Not quite Not at ready all ready existing software system is markets are highly complex and still the biggest driver behind ever changing,” notes Houston- the decision to purchase a based Austin Morris, global new system or upgrade, with managing partner at consultancyF4. What was the final result of your new implementation? 54% of the vote. Some 31% of firm SunGard Global Services. respondents say regulation is the “It will always be difficult to biggest factor in their decision model highly complex deals and to purchase a new system or it’s unlikely there will ever be Better 82% upgrade, while 30% say changes full standardisation.” in the market are the most Properly integrating important consideration. datasets and systems is also an area that requires greater Worse 3% Breakneck speed improvement and one that The pace of change within companies should take better commodity markets adds to ownership of, according to the challenge of keeping an implementation specialists. Neither better nor worse 15% ETRM system aligned with “Integration is key to reducing business needs, consultants note. operational risk, improving data “New types of commodities processing times and ensuring 0 20 40 60 80 100 % products, markets and trading that an organisation is using a strategies are emerging all single, common dataset for all the time – and existing ones metrics and reporting,” notesF5. Does your current system provide the functionality are constantly evolving. This Ertan at The Structure Group.you require? requires ongoing investment in “The ability to see a complete supporting and extending the portfolio across all commodities Yes, but there core ETRM platform,” notes and instruments is also key to is room for 80% Sidhu at Opportune. understanding risk – or at least, improvement When asked what issues not overlooking risk that might ETRM software systems should not otherwise be reported as tackle next, the responses were part of a consolidated package.” No 12% diverse. Themes mentioned Because most companies’ repeatedly by survey respondents ETRM systems consist of several include achieving complete different software packages, straight-through processing including legacy systems and Yes, all needs 8% (STP), better integration, spreadsheets, it’s vital a company are met real-time reporting and has plans in place to tackle its middle-office functionality individual integration needs, 0 20 40 60 80 100 around reporting, analytics and say consultants. ■3 Reprinted from EnergyRisk March 2013
  5. 5. Software Rankings 2013Most preferred software brand Most preferred software brand 2013 Vendor Name of software system/brand 1 Allegro Allegro 8 2= OpenLink Endur 2= Triple Point Commodity XL 4 Temenos Energy Credit 5 SunGard Aligne 6 ZE PowerGroup Zema 7 Murex MX.3 8 Pioneer Solutions TRMTracker 9 Lacima Group Lacima Analytics 10 GlobalView MarketView FrontOfficeETRM SOFTWARE Regulatory compliance Overall ease of using the system Best front-office system 2013 Vendor % 2013 2012 Vendor % 2013 2012 Vendor % 1 Allegro 25.1 1 1 Allegro 31.3 1 2 Allegro 25.0 2 SunGard 17.4 2 3 Triple Point 13.8 2 1 OpenLink 17.3 3 OpenLink 16.4 3 2 OpenLink 12.4 3 3 Triple Point 11.8 4 Triple Point 9.6 4 5 Pioneer Solutions 7.6 4 4 SunGard 8.2 5 Pioneer Solutions 5.5 5 4 SunGard 5.8 5 – Pioneer Solutions 7.7 Customer/support services Front office trade capture Integration of different data sets 2013 2012 Vendor % 2013 2012 Vendor % 2013 2012 Vendor % 1 1 Allegro 22.5 1 2 Allegro 28.2 1 2 Allegro 26.8 2= 2 OpenLink 10.0 2 1 OpenLink 23.2 2 1 OpenLink 14.6 2= – Pioneer Solutions 10.0 3 3 Triple Point 12.0 3 3 ZE PowerGroup 8.6 3= – Lacima Group 8.7 4 4 SunGard 8.7 4= – Lacima Group 6.1 3= – Triple Point 8.7 5 5 Pioneer Solutions 8.3 4= – Murex 6.1 4 4 Murex 7.8 4= – Pioneer Solutions 6.1 5 5 ZE PowerGroup 6.1 Best for project delivery on time and 4= 4 SunGard 6.1 within budget 5 5 Triple Point 5.6 Degree of straight-through processing 2013 2012 Vendor % 2013 2012 Vendor % 1 1 Allegro 23.4 Best overall ETRM platform 1 2 Allegro 27.9 2 – Pioneer Solutions 10.2 2013 2012 Vendor % 2 1 OpenLink 25.0 3 2 OpenLink 9.6 1 1 OpenLink 27.6 3 4 SunGard 10.5 4= – SunGard 8.1 2 2 Allegro 26.9 4 – Murex 9.3 4= 3 Triple Point 8.1 3 3 Triple Point 8.8 5 3 Triple Point 8.7 5 – Lacima Group 7.1 4 – Lacima Group 7.1 5 – Pioneer Solutions 6.7 www.allegrodev.com 4
  6. 6. Software Rankings 2013ETRM SOFTWARE (Cont) Widest product coverage Best middle-office system Operational risk 2013 2012 Vendor % 2013 2012 Vendor % 2013 2012 Vendor % 1 1 OpenLink 32.9 1 1 OpenLink 25.1 1 2 OpenLink 28.1 2 2 Allegro 26.2 2 2 Allegro 22.8 2 3= Allegro 23.7 3 – Triple Point 11.0 3 – Lacima Group 12.1 3 3= Triple Point 10.1 4= – Lacima Group 7.1 4 – Pioneer Solutions 7.9 4 1 SunGard 8.6 4= 3 SunGard 7.1 5= 4 SunGard 7.0 5 – Murex 6.5 5= 3 Triple Point 7.0 Market risk: Oil Order routing connectivity 2013 2012 Vendor % Carbon emissions trading 2013 Vendor % 1 1 OpenLink 21.5 2013 Vendor % 1 Triple Point 26.9 2 3= Allegro 17.7 1 Pioneer Solutions 29.8 2 OpenLink 19.4 3 2 Triple Point 17.3 2 Allegro 25.0 3 Allegro 10.4 4 – SunGard 6.8 3 SunGard 16.1 4 SunGard 9.0 5 5 Amphora 6.3 4 Triple Point 10.5 5= Pioneer Solutions 4.5 5 OpenLink 7.3 5= Trading Technologies 4.5 Portfolio management Modelling 5= Trayport 4.5 2013 2012 Vendor % 1 1 OpenLink 23.6 2013 2012 Vendor % Physical and financial integration 2 – Lacima Group 16.4 1 – Lacima Group 32.1 2013 2012 Vendor % 3 2 Allegro 15.9 2 3 OpenLink 18.7 1 3 Triple Point 28.4 4 5 Pioneer Solutions 8.6 3 4 Allegro 7.5 2 2 OpenLink 27.4 5= 3 SunGard 6.8 4 2 SAS RiskAdvisory 5.6 3 1 Allegro 8.0 5= 4 Triple Point 6.8 5 – FEA 4.4 4= 5 Pioneer Solutions 7.0 Coal trading 4= 4 SunGard 7.0 Risk metrics 2013 Vendor % 5 – Murex 5.0 2013 2012 Vendor % 1 Trayport 26.5 1 – Lacima Group 30.8 2 Triple Point 25.8 2 1 OpenLink 16.8 3 Allegro 19.4 Methodology 3 2 Allegro 12.2 4 SunGard 13.5 The Energy Risk Software Rankings 2013 survey 4 5 Triple Point 7.0 received 238 valid votes from respondents. 5 OpenLink 5.8 Participants were asked to vote for their 5 4 SunGard 5.9 preferred software provider, data management Market risk: Gas firm and implementation specialist in a variety Market risk: Power of categories. All votes were carefully checked 2013 2012 Vendor % 2013 2012 Vendor % and invalid votes stripped out. These include 1 – Lacima Group 25.9 votes from people for their own firm, multiple 1 – Lacima Group 26.1 votes from the same person or IP address, votes 2 1 OpenLink 20.5 2 2 SunGard 20.8 from people using personal email accounts 3 2 Allegro 20.2 3 3 Allegro 13.5 and votes by people who chose the same firm 4= 4 SunGard 6.4 indiscriminately throughout the poll. Votes were 4 1 OpenLink 9.9 4= 3 Triple Point 6.4 weighted, with three points for a first place, two 5 4 Triple Point 6.3 points for a second and one point for a third. 5 – Pioneer Solutions 5.75 Reprinted from EnergyRisk March 2013
  7. 7. Software Rankings 2013ETRM SOFTWARE (Cont) Freight trading Credit risk Post-trade services 2013 Vendor % 2013 2012 Vendor % 2013 Vendor % 1 Triple Point 27.6 1 2 Temenos 22.0 1 Trayport 24.1 2 OpenLink 18.9 2 1 Triple Point 16.6 2 OpenLink 19.0 3 Allegro 15.0 3 3 OpenLink 12.3 3 Triple Point 11.6 4 Amphora 12.6 4 4 Allegro 11.2 4 SunGard 9.7 5 SunGard 7.9 5 5 SunGard 7.2 5 Allegro 8.3Adviser/ Data ManagementImplementationspecialists Preferred system Ease of integrating with other systems, including ledgers, clearing/analytics 2013 2012 Vendor % systems and reporting systems 1 3 ZE PowerGroup 23.0 Best for project delivery on time 2013 2012 Vendor % 2 2 GlobalView 22.5 2013 2012 Consultant % 1 3 GlobalView 23.6 3 4= SunGard 14.4 1 2 The Structure Group 18.9 2 2 ZE PowerGroup 23.3 4 1 Morningstar 11.1 2 – Baringa Partners 10.1 3 – SunGard 12.8 5 – Interactive Data 7.7 3 1 Accenture 8.1 4 1 Interactive Data 12.5 4 5 Deloitte 7.4 5 – Morningstar 5.9 5 – KPMG 5.7 Best customer service 2013 2012 Vendor % 1 – Interactive Data 24.8 Weather data management Best for project delivery within budget 2013 Vendor % 2 2 ZE PowerGroup 21.5 2013 2012 Consultant % 1 Speedwell Weather 24.9 3 3 GlobalView 11.9 1 – Baringa Partners 17.4 2 Statweather 24.3 4 – SunGard 8.9 2 – Sapient 10.6 3= MDA Federal 11.2 5 1 Morningstar 6.0 3 2 The Structure Group 9.4 3= Met Office 11.2 4 1 Accenture 9.1 4 MeteoGroup 9.5 5 – Opportune 8.7 Ease of using the system 5 WSI 8.0 2013 Vendor % 1 ZE PowerGroup 21.8 Best adviser/implementation specialist 2 GlobalView 13.4 2013 Consultant % 3 Morningstar 12.2 1 The Structure Group 16.4 4 Thomson Reuters 6.9 2 Baringa Partners 8.6 5 SunGard 6.5 3 Deloitte 7.1 4 SunGard Global Solutions 6.4 5 Accenture 5.0 www.allegrodev.com 6

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