SaaS and Services – Are Services About to Take Off?
As software as a service grows in popularity in energy and commodity trading and risk management, will other services also take off? For many years, GMSL basically ran a profitable business based on providing a variety of scheduling and logistics services in UK and European gas and power markets but beyond that, it was actually quite hard to find businesses that provided discrete services into the more technical side of trading and risk. Yes, there were and are data aggregators providing data as a service and there was a push by the large systems integrators in to business process outsourcing that from here anyway, probably didn’t take off quite as well as was hoped. BPO, for us, includes a transfer of staff from one payroll to another and is usually about cost reduction whereas, providing sophisticated technical services – often based on a software platform – is more about things like staying focused in the business, ensuring weekend and out of hours coverage, and optimizing processes – as well as cost reduction.
However, in the last couple of years and especially since SaaS grew in popularity and availability, we have seen signs of the services sector taking off. Enter Energy One, for example. It has made no secret of its push to provide 24 by 7 services in the scheduling, logistics and auctions arena via its acquisition of various entities in Europe and Australia that allow it to offer a follow the sun support operation. It is seeing success in this area, according to executives I talked to and, hopes to continue to expand in that arena. A quick web search reveals a few other entities starting to offer such services though regionally in places like Iberia, Italy and other markets. It also shows a surge in trading on behalf of services extending the DMA model into a true service for those who wish to outsource energy procurement or hedging, for example. Among the better examples is Enspired Trading who by virtue of its internal software can offer automated and algorithmic trading for customers like batteries or small-scale distributed generation and so on. The trading and hedging side really does appear set for take off. Additionally, risk as a service is now also being offered by a variety of risk software vendors. We wrote a white paper a couple of years ago for FIS who offer RaaS, via its adaptiv platform, but it is not alone in this and other, usually more modern technology-based vendors are able to offer a variety of such services as well.
In essence, as the industry adopts a SaaS architecture – especially one that is more of a mix and match ecosystem of solutions and suppliers, the opportunity to simply outsource parts of the broader trading and risk operation seems to become more viable and attractive. Even if that is only to offer out of hours and weekend coverage. We expect the services side of the business to see significant growth in the coming years driven by needs to focus and ‘reduce’ internal complexity, cut costs, optimize, and comply with an increasing number of onerous regulations and requirements. It simply makes sense, especially for small firms, to look at outsourcing parts of the business to firms that can offer state of the art software combined with deep domain expertise. We have started to add such providers to our directory and added a category of services to that directory to cater for this. And, we will be following this emerging market as it grows and evolves in the coming months and years. If your firm offers such services, please do contact us.
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