4 Ways ETRM Software Vendors Give You a Competitive Advantage
ETRM software vendors know the ins and outs of risk management software, so your organization can adapt to changes in the industry without having to make major changes to your tech infrastructure. The last thing you want is to have to constantly evaluate and purchase new software to accommodate new needs or spend precious resources on updating a system to fit internal or external demands.
Your ETRM system should be able to adapt quickly to meet your company's needs and keep up with the demands of the industry – whether that's the evolving renewables market or industry-standard security measures. Without an ETRM, your company's risk management strategy will start falling behind.
Read on to see how ETRM systems provided by leading software vendors are a valuable tool to ensure you're staying on top of the latest industry standards, emerging markets, and technology.
Table of Contents
- ETRM Software Vendors Stay Up-to-Date on the Energy Industry
- ETRM Systems are Flexible and Adaptable
- ETRM Systems are Designed for Energy Trading and Risk Management
- ETRM Software Vendors Adhere to Industry-Standard Security Measures
1) ETRM Software Vendors Stay Up-to-Date on the Energy Industry
The energy and commodity trading industry has changed drastically over the past few decades, and it will only continue to evolve with the growth of ESG and net zero efforts.
"Renewables are expected to become the new baseload, accounting for 50% of the power mix by 2030 and 85% by 2050" – McKinsey and Company, "Global Energy Perspective 2022" Report
The advent of renewable trading has forced ETRM vendors and their systems to adapt to renewable credit and offset management. The best and most forward-thinking ETRM vendors anticipate these shifts and adapt their software accordingly.
For instance, if you’re trading renewables, your ETRM software should handle the following:
- Forecasts, contracted, and delivered credits and offsets
- Matching credits and offsets with the commodities that generated or consumed them
- The full lifecycle of credits and offsets
Since enterprise ETRMs are designed to handle a range of commodity products, they already have the infrastructure in place to adapt to industry shifts and demands.
“What makes some ETRM vendors stand out over others is providing, not just IT specialists, but an entire team of industry experts to assist with support, new features, and implementations.” -Chiarmyce Lyons, Molecule Implementation Specialist
That’s where investing in an ETRM with a specialized and experienced team behind the software gives you a competitive advantage. More knowledge of the industry leads to more flexible software that stays up-to-speed with these changes. Without this subject matter expertise, software systems can struggle to innovate – and doing so can be a long and arduous process.
2) ETRM Systems are Flexible and Adaptable
Changes to internal systems call for a large investment of resources into your IT team – this can be a costly and time-consuming feat to do in-house. Risk management systems need to be agile to evolve with the industry, not stay static. That’s where multi-tenant ETRMs come in.
The shared infrastructure of multi-tenant applications means frequent software releases and new features to every customer at once - and at no extra cost to the customer. This is crucial considering the industry has been confronted with unprecedented challenges over the past few years, including when crude went negative. Software vendors had to roll out quick solutions for their customers.
With a multi-tenant ETRM, vendors could identify a problem, determine a solution, and send a quick update to their entire customer base before it caused widespread errors or other issues. For on-prem, single-tenant ETRMs, this process may not run as smoothly.
3) ETRM Systems are Designed for Energy Trading and Risk Management
ETRM systems were designed to process the full lifecycle of trade transactions. Although you can use software that isn't specifically designed for energy trading risk management, it isn’t fully equipped to manage and monitor your trades, data, and risk exposure.
A solution that's not purpose-built for your business needs can not only cause your company to fall behind but can also cost you more money on usage and upkeep over time.
On the other hand, it’s table stakes for an ETRM to handle:
- Deal capture
- Forward positions and exposures
- MtM
- P&L
You may be able to handle those in spreadsheets or another software solution. However, ETRMs are built to scale, automate, and adapt. An ETRM streamlines your essential workflows and business processes by automatically consolidating your trade, market, and valuation data into one place.
ETRMs also offer additional functionalities, including:
- FCM reconciliation
- VaR (Value at Risk)
- Built-in exchange, FCM, and market data integrations
- Advanced analytics
- Workflow management
- Audit trails
- Trade lifecycle management
- STP (Straight-Through Processing)
- Flexible APIs
- YTD/QTD/MTD calculations
A system with built-in valuations and automated reporting means less chance for manual errors.
4) ETRM Software Vendors Adhere to Industry-Standard Security Measures
Established ETRM software vendors take precautions to ensure customers' data remains private, secure, and protected through SOC-1 and SOC-2 certifications. They are constantly monitored with layers of tests and security measures, including:
- Pen-tests
- 2FA and SSO
- Data encryption at rest and in transit
- Automated testing
- Regular vulnerability scanning
With enterprise software, you don't have to allocate more resources, time, and money to an internal team. You'll have access to industry-standard security measures and 24/7 monitoring.
Investing in an ETRM gives companies a competitive advantage with software designed for trade lifecycle management, valuations, emerging energy markets, and industry-standard security measures.
Sameer “El Jefe” Soleja
ETRM software also delivers a high ROI by significantly reducing the time and resources spent on usage and upkeep.
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