Ask Ed Bell about energy trading and risk management (ETRM) technology and he’ll likely bring up his days with Enron back in the early 1990s. Bell—now a principal at Houston-based technology...
ETRM software is adapting to a changing energy market.
small players with limited IT budgets might be able to discard the spreadsheets and access top-shelf ETRM data processing services.
Three major ETRM vendors, SAS, Ventyx and Allegro, base their enterprise offerings on open format platforms that can, if necessary, be scaled up gradually to meet changing customer requirements.
For instance, RiskAdvisory, a subsidiary of SAS Inc., released its latest ETRM platform, BookRunner v12, in November 2009. Like other enterprise system suppliers, RiskAdvisory built BookRunner on a flexible, service oriented architecture (SOA) platform—which opened the door for the company’s growth as the energy market evolves.
RiskAdvisory opened for business in the 1990s and grew into a 15-employee boutique firm that provides risk management services to energy companies. It was acquired by business intelligence behemoth SAS in 2003 and ported its proprietary BookRunner software onto the SAS architecture, which gave RiskAdvisory’s customers access to a wide range of statistical analytics, reporting, and forecasting capabilities.
“So many clients still have fragmented reporting systems,” says Louis Caron, an energy risk specialist with RiskAdvisory. “For example, a large natural gas and electric power utility may gather data from two or three logistics systems and then use spread sheets to consolidate its market and credit positions. Moving BookRunner to the SAS platform allowed us to integrate 64 different data formats and bring an assortment of data into one common modeling, analytic and reporting framework.”
To provide additional flexibility, the latest generation of BookRunner is comprised of three modules that can be accessed through a single browser interface. The SOA design supports analytical functions ranging from deal capture and transaction management, to risk analytics, advanced modeling tools and compliance reporting.
“Users access the information from a dashboard that connects to a Web portal,” Caron says. “A credit risk manager can view all the applicable exposures and drill down further, all the way down to the transaction level if that’s necessary.”
Another company in the ETRM space, Ventyx, has taken a similar approach with Monaco, a scalable ETRM platform divided into front-, middle- and back-office modules. As the energy markets continue evolving, says Simon Crisp, senior vice president of operations solutions, the system can be custom-configured to meet various data capture and transaction requirements.
“There’s more complexity to the marketplace than many customers realize,” he says. “Customers have a lot of contracts they’re not able to model accurately in their existing ETRMs. Clients want a single platform where there are no spreadsheets, an application that’s much more complicated than the prior generation of ETRM products.”
Likewise, Allegro Development says it has combined an SOA platform, which allows external systems and data sources to directly integrate with its Allegro 8 system, with what it calls a standardized integration component platform. The combination integrates existing systems and allows customers to select only the ETRM components and functionalities they need. That, the company says, simplifies deployment and enables companies to expand the system later as needed.
“Today’s customers want a single story, one solution with real-time information and decision support tools that gives an integrated view of their entire portfolio