Commodities companies use trading and risk management (CTRM/ETRM) software to manage their core business operations, covering trading, procurement, logistics, inventory, hedging, risk, position, and P&L. Historically, CTRM software vendors offered these solutions on-premise. These solutions would typically be hosted by commodities companies themselves, or through a data center.
However, the growing importance of analytics is forcing companies to re-think their strategies on how they want to manage and run the infrastructure of commodities solutions, especially in a geographically dispersed working environment that requires real-time consolidation and collaboration.
Next-Gen Analytics Solutions for Commodities Companies
Software applications like CTRM/ETRM and ERPs are transaction oriented solutions that manage core business operations, but these are typically not designed for analysis. First- and second-generation commodity management systems are restricted to capturing, integrating, and sharing data across organizations. Missing from these systems are advanced analytics to make better, faster, fact-based decisions.
To support big data and analytics, faster processing capabilities are needed today than previously. Cloud based solutions for analytics are available today that serve the need for speed by commodities companies, without incurring additional infrastructure costs to these companies.
Advantages of Cloud Computing
As security has improved and confidence levels have gone up, cloud computing has become more accepted by companies.
At one time there was a fear that cloud based solutions were not as secure as those installed in-house on a company network. Naturally, the technology has evolved to address these concerns and today’s cloud based solutions can be as secure, if not more, than on premise software.
In addition, cloud based analytics solutions can be deployed quickly and are easy to maintain.
Cloud based software also provides anywhere access and collaboration with better scalability because users can be added quickly, typically with no software updates.
But the larger advantage is the savings in upfront hardware costs. By implementing a cloud based software solution, commodities companies save money by avoiding buying hardware. This decrease in upfront infrastructure costs can enable companies to derive value from the solution quicker than they could otherwise. In addition, there is a savings in manpower costs with a cloud based solution because the IT department doesn’t need to manage software and hardware.
How Analytics is Changing the Game
Critical in any analytics solution is the support of big data and fast processing speeds. The software needs to be able to parse huge amounts of data and respond quickly to user interaction.
Business users at commodities companies will gain maximum value from analytics solutions built specifically for commodities markets where information is displayed in an easy-to-understand way that encourages the user to drill down to dig deeper. As users analyze results of the business with probing questions, this inevitably leads to more questions. Any analytics solution will continue to evolve to respond to the changing needs of its users.
High speed computations and consolidation of data across multiple sources of information are required to support analytics that can bring actionable insights to the business. Predictive and prescriptive analytics is enabled by extremely fast processing of algorithms. When all the data can be brought into one data eco-system, users can perform real-time analysis. These requirements are driving wider acceptance of cloud based solutions.
Cloud based solutions are ideally suited to provide analytics in three ways:
First, analytics requires speed to deploy. Today’s businesses are seeking ways to increase flexibility and respond quickly to market changes. To remain competitive and meet aggressive growth plans, commodities companies need fast and easy deployments of scalable analytics solutions that deliver value to the business almost immediately. Adopting an analytics solution specifically designed for the commodities markets enables business users to maximize the value of the solution. Using analytics is an evolving process that changes with the business maturity and changing markets.
Second, because the volume of data required for deep analysis is huge, the analytics solution must use a scalable infrastructure. Ultimately, the commodities industry is a big data business. The complete commodity supply chain, from source to destination, over a period of time and for historical comparison, creates huge amounts of data sets – a wealth of information is stored within them. Information on prices, costs, hedges, quantities, P&L, inventory – everything within the company – not to mention all the market data and news associated with the business must be included in analysis. Although there is a huge quantity of data available to commodities companies, if the infrastructure within which users operate cannot traverse and manipulate the large volume of data quickly enough, the wealth of data will be of little use.
Finally, today’s businesses require web based solutions that enable users to access analytics wherever they happen to be, whether from their desktop, laptop, or mobile device; cloud based solutions readily provide this.
By Shobhit Mathur, VP Product Management at Eka Software Solutions.