Jul 8, 20205 min read

What Makes a Great ETRM/CTRM system? An illuminating series for those who want to know.

Updated: Sep 29, 2021

What Makes a Great E/CTRM? Part 1 – meet Bob

It’s a great question if you are in the business. For the uninitiated, C/ETRM simply means Commodity/Energy Trading Risk Management and is an acronym for highly specialized, niche software addressing the needs of commodity trading businesses, in general, sometimes with an emphasis on Energy Commodities.

What does make a great C/ETRM? You may have asked this question yourself. Or, perhaps, someone you know is looking for a good answer to this sometimes-important question. The question is not in the same league with “What is the meaning of life?” But, some part of one’s life may have been in question when an answer was needed.

Take Bob, for instance. Bob is a fictional person representing a myriad of persons looking for “the very best one”. How does Bob make his choice? How does Bob navigate the perilous waters of commodity trading applications? We have all heard the horror stories. We’ve peeked inside a closet or two where skeletons hide. We may even know where some bodies are buried. Certain tales of certain implementation projects, “of which we all know of”, are mentioned still in hushed whispers irreverently.

What sort of questions will Bob ask himself, do you think? What sort of question SHOULD Bob ask himself?

One possible question is, which software fits my company’s business model best? Or perhaps, which has the best value, as in: it fits within Bob’s budget? Or maybe, which will bring Bob the most kudos from his peers, subordinates, and/or superiors? Perhaps, Bob is thinking of software to benefit employees who often stay late or work weekends. That’s nice, Bob. You must be a good person.

But, Bob may be like many of us. Bob is probably thinking, if I pick the wrong system, will I lose my job? Will people blame me for system failures or failings? How can I be removed from sole responsibility for this decision? After all, these days, a few hundred thousand dollars is still a lot of money. Best ETRM systems end up costing many multiples of a few hundred thousand dollars after implementation costs are factored in.

Best ETRM/CTRM software. What advice would you give Bob?

You might tell Bob to hire a team of consultants who specialize in this sort of thing. This isn’t Bob’s strong suit. There were no college courses on software selection when Bob went to school. There are no night school courses offered now. So, bring in the big guns. They probably have some sort of Magic 8 Ball to divine just the right answer. And, here’s the good news: After they have helped Bob make the “right” decision, they can bear away the burden of any “wrong” decision, while they help Bob implement “his” decision.

Or, perhaps, you might tell Bob to gather consensus. Get everyone involved. Make it a group decision. Spread around decision-making responsibility. And, when everyone is a decision-maker, no one will be the decision-maker. Yes, that’s the idea. Get feedback from the very people who will poke and prod on whatever system they choose. Spend lots of time researching all the features and functions. It is an important decision after all. Bob and his staff of researchers will have to live with their decision for a very long time. Might as well pick a system everyone will be happy with. One everyone can live with. One without serious consequences.

Sounds like good advice for Bob. After all, he doesn’t know much about the ins and outs of his company’s business. Oh, he knows about lots of details, in general. But, the nitty-gritty stuff is why all those other employees are paid the big bucks, right? Why should Bob be an expert in everybody else’s job? That’s not how companies work. Lots of talented people are needed to make a business work. It all makes sense, doesn’t it?

Yes, in theory, it certainly does. But reality seems to have a different perspective than does theory. And, Bob doesn’t know what he doesn’t know. Should Bob believe what consultants tell him? Is their advice completely unbiased? Can anyone’s advice ever be completely unbiased? Is it well informed, then? Probably. Any hidden bias? Probably.

Are projected costs and timelines accurate? Or close enough? What is close enough? What time obligations are required? Will company staff have time to participate in the installation of a product? Don’t they have daytime jobs to do, too? Can they squeeze in time for a software implementation and still do their day jobs? Will they buy into THE decision and make it work? Does a product really do what Bob was told it does? So many troubling questions. Bob really isn’t paid enough, is he?

Let’s follow Bob on his journey to make an informed decision. Let’s find out from people Bob knows what a high-quality system looks like. Let’s see why certain features and functions matter; why they are important to a system’s ultimate users. Let’s find out how to help people at Bob’s company be more productive and happy, and profitable.

Along the way, we will look deep into Bob’s thought processes. We will explore C/ETRM in a way never before attempted. We will discover what makes a great C/ETRM system. We will discuss Bob’s C/ETRM options. We will interview Bob’s team of experts to determine what a great system should look like. And, when we are done, we hope Bob will finally get a well-deserved night’s rest.

Options Bob will explore:

Building your own C/ETRM
Exploring Best of Breed Solutions
Selecting Off-the-Shelf Solutions

On Bob’s list of experts to interview are representatives from each functional area of his company:

Trader Joe
Mid-Office Manager Sue
Donna the Scheduler
Credit Manager Steve
Bob’s IT Support Staff
Bob’s Bosses

We confess that we, the authors of this series of articles, may be slightly biased. After all, we are people, too, and no one is completely unbiased. But, we will share why we think the way we do. And, if our experience forms the basis of our bias, if having seen both the good and the bad informs our opinion, we hope our bias will become your bias, and Bob’s, too, as he charts his course through a labyrinth of difficult best C/ETRM system choices.