As the new year dawns, we at ComTech are watching developments on a number of fronts. That said, we’ve picked out five that could be bellwethers of the trajectory of the ETRM/CTRM markets in 2019 and beyond:
- CTRM Demand and Global Economic Uncertainty
Global economic developments will likely determine how the last half of 2019 plays out – The die may be largely cast on the first half of 2019 as long sales cycles for new systems means that funnels for deals closing in the first and second quarter of 2019 are pretty much established. We also noted a pick-up in demand late in 2018, especially in ags, softs, metals and liquid hydrocarbons that will spill over into the first half of 2019. However, the last half of the year, where deals will largely close for companies deciding in the next 30 to 90 days to buy a new system (or those currently in the very earliest stages of the buying process) will be determined more by how the global economic situation shakes out in the first and second quarter of 2019.
With trade battles being fought on a number of fronts, uncertain economic news out of the US and China, and Brexit being a “dog’s breakfast” of bad news – along with a plethora of other global issues – future demand (and prices) for almost all commodities looks pretty uncertain right now as unprecedented geopolitical risks are clouding the market outlook.
- The ION Unveil and Forward Product Strategy
We expect ION will fully unveil its new identity and go-to-market strategy early in 2019 and it will be telling to see how it plays in the market. After integrating two significant acquisitions this year, and now with three major product lines (Openlink, Aspect and Triplepoint), there is a lot riding on how well the ION’s messaging is accepted by the market, both for ION and their competitors. With the expanded portfolio of products, there is – at least in broad terms – some overlap in functional/market coverage among ION’s offerings. As a result, ION’s messaging will likely focus on ensuring potential buyers understand clearly, and as early in the buying process as possible, which product is the right one for their needs. How well ION does that could determine who builds market momentum in 2019.
- Other Vendors to Watch
While ION moves to fully consolidate their now sizable market position and Allegro seeks to build on their number two spot, there are a few vendors that appear positioned to outperform their peers in terms in growth. In this list, we might include vendors like Eka, Gen 10, Molecule, Pioneer, Enuit, and Brady. We do expect to see smaller cloud-based vendors continuing to take increased market share over the period. In particular, we see Eka, based on their increasing sales momentum (which has positioned them at or very near the top of the market in terms of growth for 2018) and with a product offering and message that fits well with point 5 point below, could very well be a (or possibly the) sales leader again in 2019.
- Salesforce as a force in CTRM
Wait, what? That’s right, Salesforce is positioned to be an emerging force in CTRM and we expect that you will hear its name mentioned in this market more throughout the year. Energy trading companies are finding that SF’s app development, data integration and cloud deployment kit – the Lightning Platform – are great tools for developing ancillary capabilities to connect to, and augment, their core ETRM/CTRM capabilities. We recently spoke with some of the leadership at Capco and they indicated they are seeing an increasing number of requests for SF skilled resources. We also noticed a few other consulting firms in this space are building out dedicated SF practices. At the end of the day, companies using SF to build CTRM-centric capabilities slots perfectly with the last item on our list…
- The Disaggregation of the CTRM Model
While the full “soup to nuts” solutions will continue to sell, we see more commodity trading companies moving to a “technology portfolio“ or ecosystem approach to address emerging CTRM needs and to improve agility in their business. These technology progressive companies are looking particularly at new cloud-based products and solutions (like SalesForce’s Lightening Platform, Beacon and others) that allow them to quickly prototype and standup new capabilities. Though some smaller players in the mid and low-tier markets may still want that “single throat to choke” solution from a preferred vendor, at the higher end we see the large and global scale traders looking at new tech to provide a range of solutions from integration, data management, data analytics and web-delivered micro-services. At the same time, many of the vendors in the space are moving with some speed to address the trend too, including for example Eka, Gen10, TRADESPARENT and Pioneer, all offering applications and API’s that can be deployed in the cloud and allow users to incrementally (and quickly) add functionality on top of their legacy CTRM investments.