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IDC MarketScape: Worldwide Energy                                                               Trading and Risk Managemen...
are logistics, oil and gas management, credit risk, compliance    readiness, mobility, analytics, and geospatial visualiza...
MethodologyIDC Energy Insights IDC MarketScape criteria selection, weightings,and vendor scores represent well-researched ...
FIGURE 1Energy Trading and Risk Management ApplicationsSource: IDC Energy Insights, 2013Inclusion CriteriaTo be included i...
SITUATION OVERVIEWWhats New in Energy Trading andRisk ManagementOTC and Transparency RegulationThe dust has finally settle...
allowed to be exported. All this is to say that there are significantchanges to the supply chain.FUTURE OUTLOOKIDC MarketS...
FIGURE 2IDC MarketScape Energy Trading and Risk Management VendorsSource: IDC Energy Insights, 2013Vendor ProfileTriple Po...
agriculture, metals, recycling, and so forth — as a CTRM player.Triple Point is ranked as a Leader in this IDC MarketScape...
St re ngt h sOver the years, the company has grown up in an organizational sense,adding key personnel, building out the or...
● The Leaders. Leaders are characterized by having a rich set of  functionality, ease of application integration, scalabil...
LEARN MORERelated Research● Business Strategy: The CIO Agenda: IT Solutions and Technology  Priorities — Results from the ...
Copyright NoticeCopyright 2013 IDC Energy Insights. Reproduction without writtenpermission is completely forbidden. Extern...
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Energy insights market scape 2013 report

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Energy insights market scape 2013 report

  1. 1. IDC MarketScape: Worldwide Energy Trading and Risk Management 2013 Vendor Assessment IDC Energy Insights: Worldwide Oil and Gas IT Strategies IDC Energy Insights: Utility IT Strategies V E N D O R A S S E S S ME N T #EI240388Ewww.idc-ei.com J i l l F e b l o wi t z IN THIS EXCERPTF.508.988.7881 The content for this excerpt was taken directly from the IDC MarketScape: Worldwide Energy Trading and Risk Management 2013 Vendor Assessment (Doc # EI240388). All or parts of the following sections are included in this excerpt: IDC Opinion, In This Study,P.508.935.4400 Situation Overview, Future Outlook, Essential Guidance, and Synopsis. Also included are figures 1 and 2. IDC ENERGY INSIGHTS OPINIONGlobal Headquarters: 5 Speen Street Framingham, MA 01701 USA The energy trading and risk management (ETRM) solution vendor evaluation in this study is based on a comprehensive and rigorous framework that assesses vendors on current capabilities and future strategy. This evaluation includes a quantitative and qualitative assessment supported by exhaustive, practical feedback from energy companies using ETRM solutions to assess vendors. For this assessment, IDC Energy Insights evaluated nine vendors: Allegro, Amphora, Aspect Enterprise Solutions, Brady, Murex, OpenLink Financial, SAS, SunGard, and Triple Point. According to our research: ● Besides the basics, energy companies want ease of integration, user friendliness, and rich functionality — especially associated with physical delivery. ● Over the past two years, vendors have moved to expand their reach through pursuing more asset classes, acquiring functionality in adjacent spaces, and expanding partnerships with professional service firms. ● Features and functionality will continue to be the mainstay of energy trading and risk management applications. Of note this year March 2013, IDC Energy Insights #EI240388e IDC Energy Insights: Worldwide Oil and Gas IT Strategies: Vendor Assessment
  2. 2. are logistics, oil and gas management, credit risk, compliance readiness, mobility, analytics, and geospatial visualization.IN THIS STUDYWith the development of the identification of new energy resources,new regulations on commodity trading, the emergence of newexchanges and energy products, and the need to understand exposureto trading partners, oil and gas companies, utilities, merchantgenerators, hedge funds, and financial services companies need a wayto understand the state of ETRM technology. This IDC EnergyInsights study is intended to help buyers of energy trading and riskmanagement software applications in their selection of ETRMapplications.The evaluation is based on a comprehensive and rigorous framework— the IDC MarketScape model. Vendors are assessed relative to thecriteria and one another. The analysis highlights the factors expectedto be the most influential for success in the market in both the shortand the long term. This assessment discusses both quantitative andqualitative characteristics that explain success in this market.The focus is on ETRM, rather than commodity trading and riskmanagement (CTRM), which encompasses other commodities such asagricultural products and metals. The physical aspects of energytrading are an important part of trading for those that have or takepossession of the commodity, so these are treated in some detail.This study is composed of two sections. The first part involvesdefinitions of the characteristics that IDC believes lead to success inenergy trading and risk management. These characteristics are basedon buyer and vendor surveys and key analyst observations of bestpractices. The second part of this study provides a visual presentationof multiple vendors in a single bubble-chart format. This displayconcisely exhibits the observed and quantified scores of the reviewedvendors.The document concludes with IDCs essential guidance to supportcontinued growth and improvement of these vendors offerings.#EI240388e ©2013 IDC Energy Insights
  3. 3. MethodologyIDC Energy Insights IDC MarketScape criteria selection, weightings,and vendor scores represent well-researched IDC Energy Insightsjudgment about the market and specific vendors. IDC Energy Insightsanalysts tailor the range of standard characteristics by which vendorsare measured through structured discussions, surveys, and interviewswith market leaders, participants, and end users. Market weightings arebased on user interviews, buyer surveys, and the input of a reviewboard of IDC experts in each market. IDC Energy Insights analystsbase individual vendor scores, and ultimately vendor positions on theIDC MarketScape, on detailed surveys and interviews with thevendors, publicly available information, and end-user experiences inan effort to provide an accurate and consistent assessment of eachvendors characteristics, behavior, and capability.Market DefinitionETRM applications are involved with trading physical and financialenergy commodities and include transactional and analyticapplications used in the front office, midoffice, and back office. Theseapplications cover business processes from deal capture to settlementand include trader tools, risk management, credit risk management,bidding and pricing strategy, forecasting, settlement, and logistics.Logistics depend largely on the commodity and its origination anddelivery point and include pipeline nominations, power scheduling,and shipping (see Figure 1).Vendors have been building up extensive capabilities in areas adjacentto ETRM. These are primarily in the areas of generation assetmodeling, contract management, chartering and vessel operations, andsupply chain.©2013 IDC Energy Insights #EI240388e Page 1
  4. 4. FIGURE 1Energy Trading and Risk Management ApplicationsSource: IDC Energy Insights, 2013Inclusion CriteriaTo be included in this worldwide IDC MarketScape, a vendor musthave over $10 million in revenue and operate in more than one region.Companies must offer functionality in at least two of the followingareas — deal capture, risk management, scheduling, nominations,logistics, and settlement — and at least two energy commodities —power, natural gas, natural gas liquids, coal, crude oil, and refinedproducts.Page 2 #EI240388e ©2013 IDC Energy Insights
  5. 5. SITUATION OVERVIEWWhats New in Energy Trading andRisk ManagementOTC and Transparency RegulationThe dust has finally settled, at least in the United States, on newregulations for transparency in the commodities markets. The Dodd-Frank regulations are in place and companies trading in energycommodities are affected, whether or not these companies are majorswap participants (MSPs) or swap dealers (SDs). In fact, one utilitycompany stated that it is building out Dodd-Frank reporting capability,even though it did not qualify as an MSP or SD, simply because ittrades with a number of smaller utilities and it believes that being ableto report to a swap data repository will be an incentive for smallerutilities to trade with it.In Europe, European Market Infrastructure Regulation (EMIR) wentinto effect August 16, 2012. Technical standards were expected by theend of 2012, with expectations that by 2013 companies should beready on reporting. In addition, energy companies may have to beprepared for regulation of high-frequency trading — MiFID II — andwholesale energy market integrity and transparency to address marketabuse — REMIT. Due to the nature of regulation in Europe, it may notbe possible to litigate against the regulations (such as in the UnitedStates where CFTC position limits regulations are under injunctiondue to a lawsuit). In both Europe and the United States, traderepositories will not have ultimate responsibility for the quality of thedata — companies participating in the trades will.New Resources in New LocationsBy now, almost everyone in the industry is familiar with the latestforecasts by the IEA that the United States will overtake Saudi Arabiaand Russia as the worlds top oil producer by 2017 and become a netexporter of oil by 2030. The U.S. Department of Energys EnergyInformation Agency has provided evidence bolstering this conclusionwith its finding that crude oil production increased by 790,000 barrelsper day from 2011 to 2012, the largest increase in annual output sincethe beginning of the U.S. commercial crude oil production in 1859.Much of this growth is being driven by development ofunconventional resources. With unconventional resources, there arenew logistics challenges. There may not be pipeline infrastructure inplace to transport oil or gas from newer fields to storage or processing,so energy companies have to turn to truck transport. Where there arepipelines — for gas, for example — there may be less pipelineavailability or the need to optimize gas storage. There is also a debatein the United States whether natural gas, in the form of LNG, will be©2013 IDC Energy Insights #EI240388e Page 3
  6. 6. allowed to be exported. All this is to say that there are significantchanges to the supply chain.FUTURE OUTLOOKIDC MarketScape ETRM Market VendorAssessmentThe IDC MarketScape vendor assessment for the ETRM marketrepresents IDC Energy Insights opinion on which vendors are wellpositioned today through current capabilities and which are bestpositioned to gain market share over the next three to five years.Positioning in the upper right of the grid indicates that vendors arewell positioned to gain market share. For the purposes of discussion,IDC Energy Insights divided potential key strategy measures forsuccess into two primary categories: capabilities and strategies.Positioning on the y-axis reflects the providers current capabilities andhow well aligned the provider is to customer needs. The capabilitiescategory focuses on the capabilities of the company and product today,here and now. In this category, IDC Energy Insights looks at how wella provider is building/delivering capabilities that enable it to executeits chosen strategy in the market.Positioning on the x-axis, or strategies axis, indicates how well theproviders future strategy aligns with what customers will require inthree to five years. The strategies category focuses on high-levelstrategic decisions and underlying assumptions about offerings,customer segments, business, and go-to-market plans for the future, inthis case defined as the next three to five years. In this category,analysts look at whether or not a suppliers strategies in various areasare aligned with customer requirements (and spending) over a definedfuture time period.Figure 2 shows each providers position in the vendor assessmentchart. A providers market share is indicated by the size of the bubble.Page 4 #EI240388e ©2013 IDC Energy Insights
  7. 7. FIGURE 2IDC MarketScape Energy Trading and Risk Management VendorsSource: IDC Energy Insights, 2013Vendor ProfileTriple Point — Solid Product Offerings, Steady GrowthTriple Point has come a long way since the company first startedselling energy trading and risk management software. The companyhas shown consistent and impressive year-over-year growth. By ourestimate, company revenue has increased almost nine times over whatit was in 2004. Growth is organic but has also been boosted byacquisitions. Triple Points customer base is primarily companies withover 2,500 employees. Triple Points roots are in oil and gas, and oiland gas companies make up a higher proportion of customers thanutilities. The company also has a sizable amount of revenue from otherindustries, especially customers that deal in multiple commodities —©2013 IDC Energy Insights #EI240388e Page 5
  8. 8. agriculture, metals, recycling, and so forth — as a CTRM player.Triple Point is ranked as a Leader in this IDC MarketScape.Triple Points stated product strategy is to "provide solutions thatdeliver full automation/integration, visualization, and intelligence(analytics) across multiple commodities and regions, from upstream todownstream." The company has done this through:● Acquisitions. For the past several years, acquisitions have added to Triple Points capabilities in ETRM and in adjacent spaces. In addition to past acquisitions (ROME, Softmar, TradeWell, Enerbility), recent acquisitions have extended the companys portfolio in the areas of supply chain management and planning (WAM Systems) and coal and mineral supply chain optimization (QMASTER).● Internal development. New features being developed include expanded SDR connectivity, enhanced nominations for the rack, expansion of risk to include conditional VAR, PFE and economic capital, asset optimization for generation and natural gas storage, and functionality to support natural gas liquids (NGL).Triple Point continues to advance its technical architecture. TriplePoints service-oriented architecture is well established. Now thecompany is moving into cloud, Big Data and analytics, and mobility:● Cloud. The company has been working over the past four years to move clients to a cloud platform. Triple Points development organization, quality assurance team, and sales demonstration group all use Amazons cloud computing environment to build, test, and demonstrate Commodity XL. The company is in the process of moving its entire internal computing environment to the cloud.● Big Data and analytics. Like most ETRM providers, Triple Point is enabled for grid computing. The company has recently been certified for Oracles Exastack for Big Data and Analytics.● Mobility. Triple Point is building out one mobile application per quarter. A recent addition is the Mobile Inventory Navigator, which allows personnel to view supply points, view feasibility plans, and update quantities while in the field.Customers are satisfied with Triple Point overall. The customersinterviewed by IDC Energy Insights expressed satisfaction with theease and simplicity of deal capture and position management,capabilities for confirmation and straight-through processing (STP),and the low number of IT personnel required for support.Page 6 #EI240388e ©2013 IDC Energy Insights
  9. 9. St re ngt h sOver the years, the company has grown up in an organizational sense,adding key personnel, building out the organization structure, anddeveloping partnerships. Many companies that grow rapidly do notgrow their management structure to meet the needs of a largerbusiness, but this is not the case with Triple Point. New executive staffincludes a vice president of Corporate Development to vet acquisitionsand a senior vice president of Global Product Development. Sales andmarketing are organized on a regional basis, with industrysegmentation within each region. Triple Point has also addedsignificantly to its professional services staff, especially in emergingmarkets. The list of Triple Point partners is impressive. It goes beyondmarketing partnerships to reseller relationships, bench development atprofessional service firms, and integration. For example, customers ofSAP can use SAP level 1 support for all issues because Triple Pointand SAP have worked on joint development and integration.O ppo rt un it i e sWith Triple Points acquisitions, there is a lot of room to grow into thecustomer base with more offerings. At the same time, Triple Point isextending to new markets — it recently opened an office in LatinAmerica. It will be a testament to the companys leadership if it is ableto continue to develop, integrate, and sell existing and adjacentproducts while broadening its markets.Triple Point customers we interviewed noted that they would like tosee Triple Point strengthening ongoing support. In particular, they areinterested in online support, help with integration, technicaldocumentation, and faster resolution of issues. Triple Point isaddressing these issues through several new in-place initiatives — aTriple Point University for customers, centralization of accountmanagement, and closer collaboration between customer support andsoftware engineers.Competitive SummaryAt first glance, what continues to be striking about this evaluation isthat there is a great deal of parity among the vendors in this market inthe Leaders and Major Players groupings. This is in large part due tothe attitude of the industry toward software in this market. Theindustry is willing to pay top dollar for applications in this space anddemands the latest in technology because speed and scalability areimportant and the stakes are high. There is a demand for applicationsbuilt on the latest and most advanced technology. Automation is not somuch about efficiency as it is about opportunity and risk mitigation.Regulation will also play a key role going forward. Further:©2013 IDC Energy Insights #EI240388e Page 7
  10. 10. ● The Leaders. Leaders are characterized by having a rich set of functionality, ease of application integration, scalability, and a relatively long history in ETRM. All of the IDC MarketScape Leaders are able to support multiple commodities and have strong physical delivery capabilities. Leaders have demonstrated growth and have solid plans for the future.● The Major Players. Major Players are more diverse in their approach. This rating includes smaller cloud players, commodity specialists, and analytics experts.ESSENTIAL GUIDANCEActions to Consider● Use this IDC MarketScape to develop a short list of vendors for consideration. However, note that the weightings used in this study may not apply to your companys priorities and requirements, as they were developed with a range of buyers in mind. For example, you may be interested in the cost savings and convenience of a SaaS approach, which will influence your decision to put Aspect Enterprise Solutions at the top of the list.● When considering a major upgrade of an existing application, take time to look into alternatives. There may be some situations where a major upgrade is equivalent in time and effort to a change to a new application provided by a different vendor.● Expect the market to be somewhat stable for the next year or so as vendors continue to integrate acquisitions. Assess whether acquirers can articulate a road map that provides integration milestones in addition to product development and plans to enhance customer support.Actions for Vendors● Continue to look for growth in emerging markets. There may be more activity in those markets as some trading companies look to trade in markets that are not subject to regulation being implemented in the United States and Europe.● Invest in developing methodologies and tools to speed implementations and upgrades. Work to improve integration, given the large number of applications tied to the ETRM.Page 8 #EI240388e ©2013 IDC Energy Insights
  11. 11. LEARN MORERelated Research● Business Strategy: The CIO Agenda: IT Solutions and Technology Priorities — Results from the Western European Utilities Survey 2012 (IDC Energy Insights #EIOS01V, January 2013)● Worldwide Oil and Gas Industry 2013 Top 10 Predictions (IDC Energy Insights #EI238363, December 2012)● IDC MarketScape: Worldwide Oil and Gas Professional Services 2012 Vendor Assessment (IDC Energy Insights #EI237328, October 2012)● Perspective: Energy Trading and Risk Management — Hurry Up and Wait (IDC Energy Insights #EI235528, June 2012)SynopsisThis IDC Energy Insights report is intended to help the buyers ofenergy trading and risk management (ETRM) software applications intheir selection of ETRM applications. The evaluation is based on acomprehensive and rigorous framework — the IDC MarketScapemodel. Vendors are assessed relative to the criteria and one another.The analysis highlights the factors expected to be the most influentialfor success in the market in both the short and the long term. Thisassessment discusses both quantitative and qualitative characteristicsthat explain success in this market.According to Jill Feblowitz, IDC Energy Insights vice president,"Leaders in ETRM are characterized by having a rich set offunctionality, ease of application integration, scalability, and arelatively long history in ETRM. All of the IDC MarketScape Leadersare able to support multiple commodities and have strong physicaldelivery capabilities. Leaders have demonstrated growth and havesolid plans for the future."©2013 IDC Energy Insights #EI240388e Page 9
  12. 12. Copyright NoticeCopyright 2013 IDC Energy Insights. Reproduction without writtenpermission is completely forbidden. External Publication of IDCEnergy Insights Information and Data: Any IDC Energy Insightsinformation that is to be used in advertising, press releases, orpromotional materials requires prior written approval from theappropriate IDC Energy Insights Vice President. A draft of theproposed document should accompany any such request. IDC EnergyInsights reserves the right to deny approval of external usage for anyreason.Page 10 #EI240388 ©2013 IDC Energy Insights

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