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SAP’s Functionality Push

In a recent post, we discussed SAP’s success in and around commodities with its Commodity Management offerings based on a recent briefing call. During the same call with SAP senior management, we also discussed recent enhancements to the products and the forward roadmap.

Recent innovations to the SAP Commodity Management solution included work on deal capture which had been an area of weakness in our assessment of the product in the past. SAP knew this and have been progressively working to address these issues most recently working on enhanced deal capture initially with an oil industry focus as well as in areas like automatic broker integration for derivative trades.

SAP has also been working on improving the general deal capture area by working on items like book structure enhancements for better reporting and organization for traders, and in the pricing area and contract areas. For example, there is now a single view on trades, it is now easier to deal with options, and overall MtM for both physical and financial trades. Overall, SAP is addressing the shortfalls on the trading side, perhaps with an initial focus on oil & gas users in and around deal capture, position keeping, reporting and so on. It has also been working on the Agriculture Contract Management side adding some of the intricate details that commodity companies require like enhanced wet/dry commodity inventory handling, grain silo management reporting and fee handling throughout the supply chain. Further enhancements are planned through 2019 and beyond for both, the SAP Commodity Management solution and the SAP Agriculture Contract Management application particularly in risk management and risk analytics.

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The vision beyond this year gets into areas like the digital boardroom, ease of use, further deal capture enhancements, simplified hedge accounting, freight trading and much more as can be seen on SAP’s website. Much of the innovation appears to be driven by key clients in the context of co-innovation projects meaning that it has real world meaning and is being driven by experts.

One potential issue for buyers however is that SAP offers a wide range of products and capabilities and it is not easily established as to what functionality lies in or is delivered by which product. Of course, the sheer range of capabilities of a vendor like SAP is very attractive but understanding all of this requires more effort on the part of the potential buyer and can impact implementation costs and time scales.

In a later blog article, we will address this latter point by discussing the SAP Model Company approach. However, it is clear to us that SAP is indeed systematically addressing the trading and risk management weaknesses we historically identified in its product set and is increasingly adding CTRM functionality that users may find attractive and compelling.