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Another Round of Acquisitions in CTRM

Periodically, there are a round of acquisitions in the E/CTRM space.

Today, Brady announced it was acquiring Igloo following on the heels of its acquisition of cRisk and I have a call later in the week with Brady management where I hope to learn more although, the strategy looks eminently sensible especially when considering the investment Brady is making in the the PowerDesk offering. It essentially affords Brady a leap in technology on the ETRM side of things and allows them to deliver more rapidly on products in real-time and related power and gas markets in Europe with an emphasis on the UK and Nordics where Brady historically have a strong base. It is, as the press announcement describes, an accelerator. I suspect the same can be said for the cRisk acquisition as well.

Similarly, Energy One has announced its next acquisition in the form of EGSSIS in Belgium. Again, this is an acquisition that makes sense adding to Energy One’s European capabilities in power and gas but also accelerating its move into the ‘acting on behalf of’ scheduling marketplace where there is less competition and a good appetite for that sort of service.  There is no doubt at all that Energy One is not finished with acquisitions.

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Meanwhile, the rumour and activity mill suggests to us that there may be a couple of other such deals in the works.

This sort of activity often leads people to think that we are seeing consolidation finally. Actually, for every acquisition like these, we discover 3 to 4 start ups or new entrants into the space so we would argue that consolidation via acquisition isn’t really happening – we are rather seeing expansion of choice in the E/CTRM space. With the shift in technology and the ever increasing pace of change, this is probably good news for the industry as it keeps the pressure on the larger vendors, who are often pulling a heavy trail of legacy applications behind them, to react, invest and keep up. In terms of choice, there is expansion as opposed to consolidation.

However, each acquisition does consolidate market share a little more in the hands of those making the acquisitions.  On the other side of things though there is more churn and more replacement activity and that helps balance things out a bit over time. In the past, many acquisitions were all about market share and so overlapping and even competing platforms were bought by the same company often leading to dissatisfaction on the part of certain customers for a variety of reasons. One thing that is different about the current round of acquisitions is that they are not all about market share. They are more strategic and are aimed at building more complete coverage in market niches and in accelerating company plans to do exactly that. They usually do bring additional customers of course and a cross selling opportunity but they do not bring user confusion as to which platform they ought to chose from the same vendor. In fact, to be fair to vendors who have acquired aggressively in the past like SunGard, Brady in the past and ION more recently, they have now developed a platform strategy that makes a lot of sense and avoids many of the issues they faced initially.

Of course, there are always risks with acquisitions for everyone concerned. However, those risks are minimised when there is true synergy between the parties and a common share goal. One only has to look at the acquisition of Contigo and eZ-nergy by Energy One to see that the benefits often outweigh any issues.

And, at the end of the day, buyers still have a choice. A growing choice in fact while the additional investment by those doing the acquiring hopefully means better solution available as well.