Across the commodities space, ever-narrowing margins are fuelling a search for cost savings and increased efficiency. As a result, many firms are viewing their IT landscape with fresh eyes, looking to increase automation and improve decision-making with smarter analytics.
Inspiration for this often lies outside the commodities space where the digitisation agenda is more advanced. This has proven to be a boon for US-based advisory firm Accenture, which has a comprehensive scope of coverage across many asset classes.
“Our trading clients are asking us what companies outside of energy or commodities trading are doing to transform their operating models to the new digital world,” says Baris Ertan, global trading and risk lead at Accenture. “Given our reach, we have been able to apply learnings across our industry verticals, as others are far ahead in some areas, to help our clients rethink their operating models [and] evolve [them into] the energy trading desk of the future,” he says.
The firm provided trading and commercial-related services to more than 40 clients last year, with 16 of them new. It helped deploy around 12 energy/commodity trading and risk management (E/CTRM) systems, one of which was the largest ETRM implementation in the world in the crude and products area, it says.
The firm’s trading and commercial practice, part of the resources operating group, supports physical and financial trading activity across crude oil, refined products, natural gas, natural gas liquids, liquefied natural gas, electricity, base metals, emissions and agricultural commodities and focuses on managing risk, lowering costs and monetising opportunities across the entire energy value chain.
The team combines deep experience of these markets with extensive knowledge of a very wide range of E/CTRM packages and related data and analytics systems, as well as having rich in-house IT capabilities that enable it to deliver bespoke software solutions where necessary, the firm says.
Data and analytics have been a big focus for the firm recently. The firm’s ‘commodity analytics’ solution, delivered via its ‘Insights Platform’ uses machine learning to support forecasting and business optimisation. It can also be used in trade surveillance by applying predictive analytics to spot trends in commodities trading.
But even with state-of-the-art technological solutions, Accenture recognises its first task with a potential client will often be to help them produce a business case that allows the project to be considered by the wider business.
We have had to evolve to a point where we talk about the business case or the outcomes to be achieved first, and the technology second. And that’s not easy. It’s obviously a longer sales cycle, but it leads to happier clients
David Kayserman, Accenture
“Everything now is business-case driven,” says David Kayserman, managing director of trading and commercial at Accenture. “In many instances, our clients struggle to develop a business case themselves so we have to bring that to our clients based on our insight into the markets, the industry and access to our broader client base. We have had to evolve to a point where we talk about the business case or the outcomes to be achieved first, and the technology second. And that’s not easy. It’s obviously a longer sales cycle, but it leads to happier clients.”
Very often clients need help with their strategic goals as well, he says. “Market dynamics are changing, as new digital capabilities are enabling higher levels of competitiveness among our clients,” he says. “We have been able to … engage clients on more strategic opportunities such as M&A evaluation and integration, or helping clients develop a strategy and roadmap for the adoption of digital technologies to run their businesses more efficiently, or even evolve new business models.”
Accenture’s core commodities team came from energy consulting firm Structure Group, acquired by Accenture three years ago. The purchase allowed the in-depth commodities experts at the former Structure Group to access far greater digital development resources, Kayserman says. For example, Accenture has a digital practice, supported by a centre in Houston that can host clients’ systems to help work through use cases, design solutions and assess developmental needs for specific applications and solutions they may require, Kayserman explains. This could include various forms of applied or artificial intelligence or prototyping with distributed ledger technology.
“Those are resources that we didn’t necessarily have as part of the Structure Group that we are now able to bring to our clients as part of Accenture,” Ertan says.
But as well as delivering and helping to implement technology, Accenture sees a vital part of its work as helping a firm devise its philosophy and strategy around digitisation.
“We know that intelligent automation can help eliminate the need for manual processing … but how do our clients internalise these capabilities and make them a part of their culture? How can they continue to canvas their own organisations for new opportunities?” Kayserman asks. “We, appropriately, spend more time answering these questions than on implementing the technology itself.”