Things to Consider before Implementing ETRM System

Energy CIO Insights | Wednesday, June 17, 2020

The concept of implementing energy and risk management (E/CTRM) system has significantly reduced the risk of budget and schedule overrun.

Fremont, CA: Over the last two decades, numerous energy companies engaged in the purchase and sale of commodities as a matter of transacting their day-to-day business elected to better the purpose-built trading and risk management systems. These technology projects were usually proven to be more expensive and time-consuming than it was initially anticipated. While various factors can contribute to these initiatives' overall cost, few recurring themes come to light when looking back at similar programs across clients in recent years.

In various cases, companies have opted to use an IT project as a catalyst for organizational and process change compounding the problem. On purchasing the software and after the technical delivery team is onboard, costs begin to mount rapidly. Spending time upfront addressing specific themes before the kickoff of an IT project to implement energy trading and risk management (ETRM) systems can substantially reduce the risk of budget and schedule overrun.

An ETRM system is implemented primarily to provide technology enablement for the execution of a commercial strategy in the context of a specific business model to curate value while ensuring needed institutional control. The primary tare examined here while concentrating on how IT implementation costs can be managed by efficiently describing these objectives. All of these elements can create a material impact on ETRM application configuration, customization, and integration required to satisfy the business objectives.

Every business venture is proportional to calculated risk-taking to allow the creation of value. Specific risks are inherited in the fundamental business model, which is anticipated by stakeholders and accepted by the organization. Others have to be managed and mitigated in a manner aligned with the company's overall mandate of the commercial strategy. A robust risk management policy will explain these residual risks, assign ownership, and provide methods for delegated authority,  how they will be assessed, observe, and identify what tools may be applied to manage them.

To conclude, the business and IT leaders have the opportunity to manage implementation risk and set expectations as well as establish the case for change surrounding E/CTRM projects from the outset in ways that will pay dividends in the short long-term.

See also: Top Energy Tech Solution Companies

Risk Management

Energy Trading and Risk Management