Energy Trading Risk Management (ETRM) System Selection and Implementation Top Challenges

Transcription

1 Energy Trading Risk Management (ETRM) System Selection and Implementation Top Challenges May 27, 2014

2 Energy Trading Risk Management Challenges Agenda Agenda Speaker Introduction Overview of Energy Trading Risk Management Systems Case Studies Conclusion Q&A 1

3 Energy Trading Risk Management Challenges Speaker Introduction Brent Morgan Director, Risk Consulting Tel: (403) Christine Colbert Senior Manager, Risk Consulting Tel: (403)

4 Overview of ETRM ETRM System Defined An Energy Trading Risk Management System is an integrated solution that enables decision making with the involvement of the Front, Middle and Back Office. The process will involve deal capture and scheduling (front office), risk management and governance (middle office) and settlement (back office). 3

5 Overview of ETRM ETRM System Components Deal Capture and Transaction Management Market Price Management Market Risk Management Credit Risk Management Contract Management Marketing and Transportation Fees Management Reporting and Analytics Compliance Data Management 4

6 Understanding ETRM Framework for Success System requirements align to the Strategy of the Organization. Strategy Organization Strategy Business Objectives Business Objectives in support of the Strategy ETRM Project Success Criteria Success Criteria that align to the Business Objectives Key Performance Indicators Measurable benefits of the ETRM project Technical, Functional and Vendor Requirements Prioritized Requirements 5

7 Case Studies Case Study #1 Best in Breed Solution Situation Purchased a best in breed system without a selection process IT led selection and implementation Multiple system interfaces Case Study #1 What went right. Observations Staffed with system specific experienced IT resources Developed automated reconciliation and testing tools Performed System Integration Testing, Quality Assurance Testing and User Acceptance Testing What went wrong Lack of business involvement in selection, requirements gathering or design Underestimated system integration complexity Driven by financial accounting needs Success criteria, scope and requirements not identified Pressure to meet a specific date 6

8 Case Studies Case Study #1 Best in Breed Solution Case Study #1 Outcome Lessons Learned Manual workarounds Observations Lack of functionality to meet business needs Business developed tools outside system Lack of buy in from business Integration delays resulted in compressed User Acceptance and Parallel testing Lack of benefits realization Involve all areas of the business and IT in all selection and implementation activities Do not skips steps Conduct reference checks and ask the tough questions Build in contingency and expect the unexpected 7

9 Case Studies Case Study #1 Best in Breed Solution 8

10 Case Studies Case Study #2 Vendor Driven Situation Allowed vendors to control vendor demonstrations Failed to conduct reference checks Focused on a single business priority Assumed system alone would create a marketing organization Case Study #2 What went right. Observations Identified and prioritized business requirements for the short term Conducted a Request for Proposal (RFP) and Vendor demonstration process Business led with strong support from Information Technology What went wrong. Did not provide vendors with test cases that tied to business requirements Did not provide vendors with sample data Did not consider long term needs Did not develop robust marketing processes beforehand Resourced marketing organization in parallel resulting in low buy in of the system 9

11 Case Studies Case Study #2 Vendor Driven Case Study #2 Outcome Lessons Learned Observations Failed to understand system complexity resulting in low business buy in and lack of full functionality being utilized Did not fully implement system project fatigue Data configuration constraints let to garbage in, garbage out Provide vendors with sample data and test cases to ensure business needs can be filled Understand data requirements differ from system requirements Request for Proposal considers short and long term needs Systems are tools and need resources and process to realize benefits Engage business end users in system selection 10

12 Case Studies Case Study #2 Vendor Driven 11

13 Case Studies Case Study #3 Requirements Driven Situation New Marketing Organization First developed Marketing Policy and process to identify functional requirements Involved Front, Middle, Back office and IT throughout and each on the Steering Committee Vendors selected based off ability to meet requirements and test cases Case Study #3 What went right. Observations Business led with information technology support Documented and prioritized needs before selecting a system Managed user expectations by acknowledging manual workarounds and system limitations Focused on processes around the system understanding that systems are a People project, not a technology project Hired consultants to fill gaps in knowledge and experience What went wrong. Vendor and client had challenging moments - not everything goes according to plan 12

14 Case Studies Case Study #3 Requirements Driven Case Study #3 Outcome Observations System implemented per original scope with minor delays Strong vendor / client relationship Lessons Learned Involve all areas of business and information technology from start to end Do not take short cuts Ask for help when it is needed Be realistic there is no perfect solution 13

15 Case Studies Case Study #3 Requirements Driven 14

16 Conclusion Success Criteria People Change Management Training Manage Expectations Engagement Organization Structure and Resources Process and Policy outside System Cross functional processes Project Management Scope Change Management People Process Technology Defined requirements and measureable success criteria Engage all stakeholders throughout Fit for Purpose 15

17 Q & A

18 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. NDPPS