How to Structure an ETRM Purchase Decision
CTRMs are complex – and so are their implementation and onboarding processes. CTRMs automate deal capture, integrations, and other important workflows for trading and risk management. In turn, they can be a big investment for companies, and there can be some risk when implementing new CTRM software into your company’s workflow.
Due to the complexities involved in handling crucial data, setting up integrations, workflows, and permissions as well as incorporating any necessary custom features, it is common for a CTRM implementation to take several weeks or even months to complete.
Don't let any of this get in the way of finding a solution that optimizes your energy and commodity trading experience, though. To mitigate some of the risks of transitioning to a new CTRM, base your decision on a thorough, structured purchase process.
Follow the steps outlined in this article to undergo an efficient, informed, and process-driven CTRM purchase.
Identify your business requirements
The first step of the purchase process is to determine your company's specific business needs and goals. Then, determine how new risk management software will help them achieve these goals.
Some of these needs may arise out of the shortcomings of your current solution. If so, compiling a list of the pros and cons of the risk management solution you currently use may be beneficial.
For instance, here are a few questions to consider:
- What do you like?
- What do you dislike?
- What do you wish to change?
- What are the one or two achievements that, if it were to happen, would represent a win?
Next, collaborate with your team to develop a reasonable list of your need-to-haves and nice-to-haves.
You should also identify the following:
- Which instruments you trade
- Which markets you participate in
- What you want the system to capture
- Which features you're looking for
Keep these factors in mind as you navigate the market. Some companies or products may specialize in specific commodities or features that better suit your company's requirements.
Define your budget
Once you've compiled a list of your business requirements, establish a budget with your CFO, finance team, and stakeholders for your CTRM purchase.
Your budget should include the following costs:
- Software
- Implementation
- Maintenance
- Support
Keep each of these costs in mind as you move along the purchase process.
Some CTRM companies bid on a fixed-fee basis, like Molecule, while others may quote an initial price that doesn’t include any additional fees.
On average, a CTRM costs between $150-$250K, plus additional implementations and maintenance fees. These fees could range from $100-$400K annually. After implementation and maintenance, some CTRM costs may balloon into the millions. You can see how Molecule's fixed-fee pricing compares to other CTRMs here.
Conduct research
This stage of the process may be the most critical in your purchase decision. The more research you conduct, the more equipped and informed your decision will be.
As you work through your research, evaluate different:
- Product offerings and capabilities
- Pricing models
- Support services
Curious about pricing? Check out our blog post, "How Much Does an ETRM/CTRM Cost?"
Note what each product offers and, most importantly, how it aligns with your business needs. Again, if you're looking at specialized products, look for those that excel in the commodity you trade.
Due to the complexity of CTRMs, avoid apples-to-apples comparisons. You should have a complete and holistic understanding of each CTRM you're seriously considering. Think about how the tenancy, APIs, and integrations of each individual solution impact your decision.
Google can be a great place to start. A quick "ctrm software" Google search yields 25,000+ results. Visit some different vendor websites and check out their case studies. You can read Molecule's case studies and testimonials here.
You also can check out G2 for a list, overview, and comparison of different CTRM software – along with customer reviews. CTRM Center also provides recommendations to evaluate. Their annual Sourcebook offers a comprehensive visualization of the features and functionalities of nearly every CTRM on the market.
It can be helpful to ask other industry experts and friends to see what they use, as well. With personal recommendations, you can get a first-hand account of how well the CTRM really works.
Once you've found viable options that satisfy your business requirements, need-to-haves, and nice-to-haves, you are ready to start demoing.
Schedule demos
Narrow your search to three to four CTRMs, then schedule demos with the vendors that best meet your business needs. Demos allow you to see different solutions in action, which helps you determine whether or not the CTRM will be a good fit for your company.
Be upfront about your requirements, need-to-haves, and nice-to-haves with the vendors’ sales teams so they can demonstrate how their software can help you achieve your goals.
If any of the vendors don’t yet offer specific features you’re looking for, be sure to ask about their product roadmap to see if those are already on their radar. This will also give you an idea of how the vendor invests in continuous product improvement and how they roll out updates to customers.
Communication, transparency, and realistic goals from both your team and the vendor sales team are crucial during this stage of the process. Without these expectations, you risk getting stuck with inefficient or inadequate software.
The sales team may send over a deck, case studies, or other helpful resources. Take the time to look through these supplemental materials because they can provide additional insight into your purchase process decision.
Evaluate options
Once you've narrowed your CTRM options and attended a few demos, you're one step closer to finding the right software.
Now it's time to evaluate your options based on cost, functionality, ease of use, vendor experience, support services, and overall fit for your business.
Consider how all of your CTRM options satisfy your:
- Business goals
- Requirements
- Preferences
- Budget
- Timeline
Rank your top solutions and negotiate a contract with the CTRM at the top of your list. If you can't agree on a contract with your first solution, move on to the next.
We’ve created a template for your team as you navigate the purchase process to this point.
Here’s a preview:
You can download the template for free here.
Start implementation
Once you've determined which CTRM solution best suits your company and have moved forward with contracts, you're ready for implementation. This will look different for every solution, but here’s an overview of what you could expect from Molecule.
During implementation, the customer success team will create a project plan with you and get to know your team and your data better. You'll designate a project champion from your team to coordinate meetings and training. Your team should be willing to participate in these meetings to support an easy transition.
Have your credentials for trade capture ready so the customer success team can upload your data into the system as soon as possible. Your implementation team will show you the capabilities of their application, from how to enter trades to how to use their APIs. They'll configure their application to your business needs. Once your trade and market data are in the system, you can see your position reports and other essential metrics.
You can read about the different stages of Molecule's implementation process here. Since Molecule is cloud-native and multi-tenant, keep in mind that we take a modular approach to implementations that you may not get with single-tenant solutions.
Post-Purchase Evaluation
Depending on the length of your contract, you'll have to decide if you want to continue with your current CTRM or go through another evaluation process for a new solution.
Re-evaluate your goals to determine how well your solution has helped you achieve them. If your CTRM satisfies your business goals and you're happy with the performance, price, and support, consider renewing your contract.
However, if your current CTRM isn't meeting your business goals or is presenting obstacles you didn't anticipate, it may be time to look at a new solution. If your team is unsatisfied, re-evaluate your business goals and develop new ones if necessary.
Ensure you have a plan for ongoing support and maintenance of the CTRM solution, including access to technical support and regular software updates.
Download our CTRM purchase process template here and check out this case study to see how Molecule can achieve your company's business needs.
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