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Dislocations and Adaptions

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Opinion

In our book and many different papers over the years, Patrick and I have talked about the evolution of C/ETRM software in terms of technology adoption curves and market dislocations. Some of you might be familiar with out model? The general idea is that the technology adoption curve for E/CTRM software keeps on getting ‘dislocated’ by sudden changes in the industry – Enron, Regulations, deregulation of markets, and so on.

 

 

AdvertisingBrady Technologoes
AdvertisingAmphora

 

The impact of these market dislocations is to stall the natural growth of the adoption curve creating a set of stranded products from smaller vendor who cannot afford to adapt while creating a new and larger market/adoption curve for an enhanced version of CTRM. Some products and vendors survive and transition while there is an opportunity for new entrants in the form of start ups and opportunists from nearby markets – banking, risk management, treasury etc.

 

The model helps to explain why there remain over 100 vendors in the market despite many being very small, highly focused and regional in nature. It helps explain why the top 2-3 vendors haven’t yet saturated the market and why build is more often a solution than one might imagine in what is now a fairly ‘mature’ software market.

Of course, over the last two years, we have witnessed a super dislocation event in which it was not a single factor that shifted the market but multiple factors simultaneously including;

  • Pervasive and sustained collapse in commodity prices and volatilities in many commodity markets,
  • Technology and deployment innovation including cloud, mobile devices, automation, and so on,
  • Regulatory uncertainty,
  • The rise of renewables and impacts,
  • Cost cutting and lower margins,
  • and more….

The impact of this has been slightly different though this time. There have been new entrants into emerging markets like real-time power for example, as well as into the broader market. However, many of the existing vendors have engaged in innovation and adaption in order to cope. Examples might include OpenLink’s pre-configured solutions for smaller companies – where it has seen some success, it’s targeting of treasury-trading, the launch of its Asset Transaction Management solution and most importantly, cloud initiative. Brady PLC has also restructured and recreated itself offering micro services in addition to its suite of products. Smaller vendors such as Agiboo have launched multi-tenanted cloud versions of their solution targeted at specific different industry niches while G10 has been able to focus on traceability and extend its footprint into biomass and other supply chain opportunities where traceability is an emerging need. Other vendors have been in the right place at the right time and have thrived under current conditions – Aspect springs to mind here. Others like Eka have migrated into solving a different problem around enterprise risk management in the cloud and new entrants like TRADESPARENT have also developed solutions in this area.

In short, the current super dislocation event is having a different impact driving innovation and adaption from all sorts of vendors in the space (apologies to those not mentioned). This is taking the form of identifying was to make things more cost effective and scalable, get software implemented faster and more efficiently, access new peripheral or emerging markets and leverage technology innovation to do all of the above.

There may yet be casualties. There always are in a dislocation event. But, for the moment, this event has spurred an exciting arena of vendor innovation, adaption and improvement.

 

Much of this will be covered in the content of the 2017 CTRMConference on October 5th in Amsterdam. Register now to get a special rate and reserve your place.