Redefining ETRM

Redefining ETRM A ComTechAdvisory Whitepaper
INTRODUCTION
In the world of E/CTRM software much is changing and at a fair pace. Driven by a plethora
of new business needs, massive shifts in technology, and changes in software procurement
behavior, it is a software category that is ripe for a true paradigm shift. In a paper written a few
years ago, Commodity Technology Advisory (ComTech) outlined a potential solution to some
of the issues that have plagued buyers of E/CTRM software for decades1
. In that paper, the
authors proposed a different approach to architecting E/CTRM solutions – that is creating an
ecosystem of software capabilities rather than relying on the monolithic applications that have,
or invariably will, become increasingly expensive and difficult to deploy, update and maintain.
ComTech noted that such an approach was both technically feasible given the advent of cloud
technologies and desirable as it helped solve the myriad of business issues buyers face today.
Since then, business trends have continued to evolve in directions around data management,
digitalization and automation, and collaboration. More recently, lockdowns and the need for
business continuity have only served to push the envelope faster and further.
1. https://www.ctrmcenter.com/publications/white-papers/ctrmcm-architecture-approach-20-year-old-condundrum/
As ComTech stated at that time “Throughout, the
twenty-year history of the software category, the
perceived “Holy Grail” has often been to develop a
singular comprehensive solution - one that covers all (or
at least the most common) commodities, geographies,
supplychains,andassets.Unfortunately,experiencehas
proven such a solution to be more or less impossible to
commercially achieve and support - and yet, there is still
a lingering sense in some corners of the market that this
remains the ultimate goal. Though many lessons have
undoubtedly been learned as some vendors (and a few
market participants who invested in bespoke solutions)
tried to build the singular solution that could address any
prospect’s needs, ComTech now believes that the “Holy
Grail” - a singular, monolithic Commodity Management/
CTRM solution that addresses all commodities
and markets – is almost certainly impossible to
commercially achieve and, frankly, is ultimately probably
not desirable. Rather, the most reasonable approach is
an architectural approach – one that combines specific
modules or individual products that can address the
specific needs of an individual company and the market
or markets in which they operate. It is our thesis that
CTRM/Commodity Management is, and should be, an
architecture first and foremost - one in which specific
technologies and solutions are deployed to solve the
litany of complex problems faced by today’s market
participants.”Sincethatwriting,theauthors’assessment
has not changed.

© Commodity Technology Advisory LLC, 2020, All Rights Reserved.
THE PAST
Once users made a product selection they were
essentially ‘trapped’ into a single vendor environment
totally dependent upon that vendor for timely
enhancements and upgrades to keep pace with rapid
industry change. The vendor was also trapped to some
extent in a world where the focus was on winning
the next sale rather than optimally serving existing
customers’ needs. The optimal outcome for all parties
was when new customer needs aligned with broader
industry requirements, though given each companies’
mix of assets, strategies and business processes, this
was a rare occurrence. Upgrades were also expensive
and slow to conclude. Insufficient vendor testing often
resulted in the customer testing more rigorously than
would be considered usual before taking an upgrade
and, quite often changes to one area of these complex
pieces of software would break the software in two or
more other places. Replacement of the solution was
also extremely difficult, expensive and risky and many
users feel trapped as a result.
From time to time, the solution provider would be
acquiredbyanothervendorinthespaceseekinggreater
market share to satisfy its investors or stakeholders.
Often, this acquisition would spell the death knell for the
application as the vendor desired the users to migrate
to another product – perhaps one they already rejected
during the selection process or, the staff who knew
the solution gradually left the acquiring vendor leaving
behind insufficient product knowledge to adequately
support the product. Very rarely was the acquisition
good news for the users.
Until relatively recently, E/CTRM solutions were built more or less as an after the fact recording
system to help manage trade transactions. They were often built by vendors that needed a stream
of new customers and implementations to keep them afloat relying on traditional perpetual
license and support fees for their security. Their solutions were built to be highly configurable
to cater for as many of the broad requirements across the market as possible, since the vendor
needed more and more sales to keep things going. Each implementation necessarily involved
enhancements that may or may not be rolled into the core product and those implementations
could be very long and very expensive. Many implementations failed entirely or were concluded
on a suboptimal basis not truly delivering the anticipated business benefit.
3

These have all combined to mean that most trading
or commodity-related businesses must be much more
agile with an ability to adapt and change or die.
In recent years, significant geopolitical issues have also
plagued the commodities industry impacting supply
chains and, finally in the spring of 2020, lockdowns
and home office placed the focus squarely on business
continuity. In European power and gas, change has been
driven by a shift to renewables primarily making intra-
day trading more important, creating huge amounts
of data and driving a need for near real-time data and
information.
Technology has also moved fast. In an era where big
data and data analysis is key, the move towards more
real-time presentation of information in readily and
easily consumable formats has been paramount.
Automation has also become necessary to reduce
costs and increase efficiencies, as has ways to optimize
assets – often involving AI and ML. However, the move
to the cloud for much more scalability and lower costs
has been one of the major shifts of the last few years
– one accentuated by digitalization and the need for
business continuity. Increasingly, E/CTRM software
is being delivered as software as a service where
fees are charged for usage on a regular basis rather
than an up-front perpetual license. Similarly, the use
of public cloud is enhancing scalability and reliability
while helping to decrease costs. Even in cases of older,
monolithic solutions, the adoption of rental or service
level agreements is transforming payment from upfront
licensing to usage payments.
4
Constant business change has been ‘par for the course’ in commodities. Increasing regulatory
oversights, innovation of business models, and the need to rapidly morph and evolve with all
sorts of business drivers including,
• a switch to renewable generation and in buyer behaviors to cater for environmental and social
issues,
• a decline in trading margins,
• new markets, new instruments and new types of contract including the rapid emergence of
intraday trading,
• new types of trade finance,
• new regulations and reporting requirements, and so on.
CHANGE, CHANGE AND MORE CHANGE

TOWARDS ECOSYSTEMS
Since the publication of the ComTech ecosystem whitepaper1
, the market has seen some
architectural changes emerge in E/CTRM software where more discrete applications are delivered
along with APIs. As the authors said at that time “After 20-years of research and analysis of what
are deeply heterogeneous markets that evolve and adapt very rapidly in an almost punctuated
equilibrium model, ComTech believes that CTRM/CM is best thought of as an Architecture or
ecosystem of commercial and potentially homegrown solutions as described above. We need to
be able to get to the point where buyers can solve the problem through a buy and build approach
within the context of an Architecture (or ecosystem).”
This approach has also been proposed as a way to
gradually migrate away from large monolithic solutions
with a huge sunk investment - essentially replacing
areas of functionality with more agile applications and
migrating to more of an ecosystem. By breaking down
monolithsoffunctionalityintomorediscreteapplications
that deliver vertical functionality or horizontal features
like workflow and approval, document management
and so on, the well-known issues around E/CTRM
software can be more easily tackled. Rather than trying
to solve the problem of complexity with hugely complex
and highly configurable monolithic applications, the
solution can be delivered as discrete applications and
API’s in an ecosystem.
The benefits of using more discrete applications are
numerous and include,
1. Easier maintenance – there is less code to maintain
and any changes will have fewer impacts on other
parts of the application versus the monolithic
approach where a change in one part of the
application can result in a ripple of impact across a
large amount of code,
2. Increased speed of delivery – it simply takes less
time to deliver incremental updates to a smaller and
more discrete parcel of code meaning users get
their needs met sooner,
3. Reduced testing – in the old world of monolithic
E/CTRM users always need to rigorously test
the entire E/CTRM, solution, and this is time
consuming, costly and often results in the discovery
of other errors that need to be fixed (see 1 above).
With a smaller application of more limited functional
scope it is simply faster, less costly and easier to
test,
4. Improved performance and scaling – Users often
experience performance issues in key areas of their
software like reporting or complex calculations and
these are often run overnight as batch jobs. Any
error means the batch job fails and so the results are
unavailable. By reducing and isolating functionality
and deploying them in the cloud, there is more
flexibility of tuning hardware for performance and
scalability as needed. This also means that it is less
costly to run,
5. Reduced cost – all of the above adds up to less
cost than maintaining, supporting and working with
a large, complex monolithic solution.
5

These include the following,
• Vendor dependency – many users are tied into a
particular vendor and dependent upon it for their
E/CTRM solution. If that vendor runs into financial
troubles, is acquired by another vendor, is more
focused on winning new business to maintain its
revenues, or simply starts to behave in a manner that
the buyer doesn’t appreciate, there isn’t much that
can be done. The customer has little leverage and
could be exposed to increasing costs and difficulties.
By using an ecosystem approach ideally, the buyer
has vendor choice, and can both utilize applications
from different vendors to minimize risk as well as
switch vendors and solutions more quickly and cost
effectively. They can more easily use commercial
applications for basic functionality and homegrown
applications for more strategic functions if they so
desire.
• Collaboration – As mentioned above, collaboration
is important both between different parts of the
same business as well as with partners, customers
and stakeholders. Using tools such as workflow and
automation, collaboration can be managed, tracked
and errors and omissions reduced. ComTech
expects that tools to promote collaboration as well
as add controls will be easier to deploy within an
ecosystem approach.
• Technologyadoption–Theecosystemapproachand
segregation of functionality will likely make it easier
to adopt new technologies such as automation, AI,
ML and blockchain in the future.
6
While ComTech has seen a movement towards more of an ecosystem approach in recent years,
there continues to be a number of other characteristics of the current paradigm that should also
change.
BREAKING THE PARADIGM
With the recent issues around business continuity as
a result of lockdowns, many more firms have looked
at or migrated to the cloud for the increased business
flexibility that it can provide. In the process, they have
recognized more acutely that their current solution is
complex, unwieldy and expensive to run and maintain.
Even after the lockdowns are over, we expect more
people to work from home or remote environments and
we see this also as a key driver in moving to ecosystem
solutions in the cloud. Without the collaboration and
ease of communication that can take place in an office
environment, workflow and process control becomes
increasingly important to ensure that work gets done
and people collaborate on a timely basis. We see
workflow and similar horizontal functions, like document
management for example, as key components in the
future ecosystems.

TIME FOR CHANGE
The combination of business drivers and technologies is set to fundamentally change a great
deal in the world of commodities and certainly within the E/CTRM software category.
The need to increase efficiencies, optimize assets,
increase business agility and keep costs down are made
potentially feasible by adopting newer technologies
like cloud, AI, ML, better programming languages,
in memory databases and much more. Evidence of
these changes are emerging with many innovative new
business models and approaches to attempt to solve
the problem. One of which has been announced by
start-up Previse Systems.
7
PREVISE SYSTEMS
Founded by a group of veterans in the industry who have directly experienced all aspects of the
issues associated with monolithic E/CTRM software and the old delivery paradigm, Previse has
brought something new and innovative to European energy markets.
Having seen and worked in ETRM where solutions are
often expensive, difficult and costly to implement, on
client/server or older technologies, and always need
to be customized to some degree from vendors that
are constrained by poor financing or high debt, it has
rethought the entire approach and separated out the
ETRM into three distinct elements;
1. A user-owned common trade repository
(ChorusLink) where each trade is stored and
accessible by all parties to the trade in a fast and
secure environment,
2. A high-performance position application (Coral)
that delivers the ability to quickly and easily
visualize, and process large volumes of data, and
3. An app store-like platform (Coral Ecosystem) where
third-parties can offer incremental and purpose-
built functionality that can easily be added to the
customers’ ecosystem and provides choice and
competitive prices.
Users co-own the trade repository – ChorusLink –
where trades can be captured just once and managed

as a single data object. Counterparties can validate the
trade there reducing to a minimum a lot of often very
manual reconciliations and agreements on trades. By
joining the ChorusLink consortium, trade reconciliation,
settlement and regulatory reporting becomes even
easier. Using an industry standard trade repository like
ChorusLink also ensures that users retain control over
their data as opposed to having it under the control of
a vendor and stored in a standard format rather than a
vendor-proprietary format. Each user company is a part
owner of the repository that will initially utilize Previse
for maintenance and support but which, after a quorum
has been reached, can dictate its own directions and
future. In this model the users own their data and where
it is stored.
Position management of both physical and financial
transactions is a key aspect of trading and it requires
both speed of performance and to be near real-time
to inform decisions. It is also where major controls
are placed in terms of various limits and so on.
Previse’s Coral application combines information
from ChorusLink, internal trades and production/
consumption forecasts, and market prices providing
input for business intelligence and risk management.
Previse also desires to create an ecosystem of low cost
applications that can be quickly and easily adopted
by users via an app store marketplace offering public
and private applications. By publishing API’s and
other guidelines, third-parties including other vendors,
consulting companies and even the users themselves,
Previse Systems will
become the ‘Apple’ of
the ETRM space allowing
the delivery of a full and
complete product using an
ecosystem of applications
and API’s
Jonas Nihøj, Director of Energy Trading & PPA

can add cost effective applications to the app store
and offer them via subscription thus ensuring a healthy
variety of applications from various sellers. Previse sees
this as opening up a development ecosystem around its
CoralapplicationandontopoftheChorusLinkdatabase
and states “that 99% of the functionality available in its
UI is available from API’s that can be called.”
This approach represents a real shift to the paradigm
in that the vendor is not attempting to build everything
for everyone (the ‘all singing, all dancing’ application)
but has instead chosen to focus on delivering a ‘best
in class’ position keeping application with Coral. It has
then broken out the database as a separate horizontal
component and offered it in a collaborative manner
allowing all parties to gain deep efficiencies in the trade
confirmation area to start with - but with potential to
address other areas in the future. Finally, by publishing
clear API’s and providing an app store infrastructure,
it allows others to develop vertical and horizontal
applications within a defined ecosystem.
The benefits of this approach are many and include;
• Speed of delivery is improved meaning that rapid
industry change can be reacted to innovatively and
rapidly,
• Lower cost – in the Software as a Service model,
costs are based on usage and all-inclusive; however,
the App Store concept creates a competitive market
that keeps prices down as well,
• The entire approach allows for collaboration either
The entire idea is unique
and will reduce the costs
of ETRM substantially
while providing an enabling
ecosystem to support
innovation
Jonas Nihøj, Director of Energy Trading & PPA

© Commodity Technology Advisory LLC, 2020, All Rights Reserved. 10
via the App Store or as a result of the ChorusLink
ownership and participation model. Collaboration in
that sense includes an end to tedious, error prone
manual processes,
• By breaking down the problem into smaller, bite-
sized chunks, functionality can be delivered faster
and cheaper with less testing and more ability to
tune performance and scalability,
• Upgrades are delivered continuously as opposed to
via specific projects that can be risky and require
significant efforts in testing,
• The inevitable customizations that so often plague
the traditional model and cause so many issues in
delivery can now be performed vis specific private
apps in the App store meaning that standard
processes and functionality can be supplied with
less effort and therefore lower cost.
There are other benefits, of course, and with adoption,
the approach will offer further benefits into the future. It
will also change the paradigm of ETRM forever.

ABOUT PREVISE SYSTEMS
Previse Systems develops innovative IT solutions for
energy trading and related processes based on the
latest technology.
As a start-up, we combine creativity, out of the box
thinking and disruptive concepts with a solid vision on
how we can reshape IT infrastructure for energy trading
companies to increase intuitiveness, efficiency and
scalability.
Previse Systems believes that the objectives of in-
formation technology primarily consist in suporting bu-
siness operations in the best possible way and at the
lowest possible cost.
Traditional approaches at energy trading companies
have been showing severe systemic shortcomings
to meeting these objectives in a satisfactory way,
exacerbated in recent years by rapidly evolving markets.
Previse Systems proposes a new paradigm for energy
trading software to address these shortcomings.
For more information, please visit
www.previsesystems.com
At ChorusLink, our purpose is to spearhead a change of
paradigm for energy trading software. We think ongoing
trends in energy markets and technology platforms one
step further and follow the vision of a common platform
for energy trading data. This conceptual quantum leap
facilitates process efficiencies, optimises investment
returns on IT spending and fosters future infrastructure
adaptability on an unprecedented level.
ChorusLink was founded by Previse Systems as the
cornerstone of a radical re-design of the software
function in energy trading and risk management
(ETRM).
ChorusLink redefines the mechanics of energy
trade data storage by introducing the common trade
repository. Moving to a single data object per trade
and a standardized format in a highly performant trade
repository enables you to facilitate automation and
streamlined processes at significantly lover costs.
For more information, visit www.choruslink.ch.
ABOUT CHORUSLINK

ABOUT
Commodity
Technology
Advisory
LLC
Commodity Technology Advisory is the leading analyst organization covering the ETRM and
CTRM markets. We provide the invaluable insights into the issues and trends affecting the
users and providers of the technologies that are crucial for success in the constantly evolving
global commodities markets.
Patrick Reames and Gary Vasey head our team, whose combined 60-plus years in the energy
and commodities markets, provides depth of understanding of the market and its issues that is
unmatched and unrivaled by any analyst group.
For more information, please visit:
www.comtechadvisory.com
ComTech Advisory also hosts the CTRMCenter, your online portal with news and views about
commodity markets and technology as well as a comprehensive online directory of software
and services providers.
Please visit the CTRMCenter at:
www.ctrmcenter.com
19901 Southwest Freeway
Sugar Land TX 77479
+1 281 207 5412
Prague, Czech Republic
+420 775 718 112
ComTechAdvisory.com
Email: info@comtechadvisory.com

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