Gen10 recently sponsored ETOT, the energy trading operations and technology virtual conference. In the wake of the coronavirus pandemic, the event moved online for the first time, where, unsurprisingly, it was digitalisation that led the agenda. Digitalisation is the process of moving to a digital business, improving the way we do things with the support of new technologies. Below we summarise some of the key takeaways from the event.
The need to adapt
At the start of 2020, the energy industry was already facing many challenges that all increased the need for digitalisation, from decarbonisation to regulatory requirements. Data management was becoming an essential business competency and more efficient processes a source of competitive advantage. The Covid-19 pandemic has only accelerated the need for digitalisation, particularly across back-office, risk, finance and other teams that had relied on manual processes. All processes now need to be digital, no longer for a competitive edge, but because there is no offline alternative.
The need to digitalise caused by the pandemic and the rapid technology adoption by other players means that all organisations should be asking whether their technology is still sufficient for today’s needs. Your technology may have been acceptable a few years ago and got you through the pandemic until now, but the experts at ETOT agreed that the pace of technological change in recent years has been tremendous, and is only being accelerated by Covid-19; even just 2 years ago without prevalent cloud technology we would have struggled to respond so well to the virus as an industry.
Among many other digitalisation drivers that have been accelerated, the need for system security has increased as employees need to access information and systems from anywhere whilst maintaining this security. Errors are another important driver: for years our industry has been talking about removing error-prone spreadsheets from crucial processes but only making minimal headway. Now that people are not sitting together in an office, the risk of errors from working in Excel or other offline tools mean that digitalisation is essential for optimising trading and operations.
Business continuity has been the most significant reason for technology adoption during the pandemic to date. Many organisations were forced to implement remote ways of working and digital processes at short notice simply because there was no alternative. And with this extreme motivation, they did just that. So now the question is how do we ensure these digital processes are creating a real source of value for the back office and the wider business?
Undertaking a commodity digitalisation project
Several presenters gave advice on managing a digitalisation project. The most important step of the digitalisation journey is to understand what it is you are looking to achieve from the project and bring in the technology that meets this goal, as the investment needs to add value to the business.
Back office automation has been less of a priority for many digital transformations in the past but is now an important goal for many businesses. Manual processes whose inefficiencies were a lower priority suddenly became a critical part of business continuity plans as organisations rushed to work out how they could be completed remotely. For example, one speaker estimated that digital invoices had previously been used by approximately 60% of the organisations they interacted with before the pandemic, but this figure is now close to 100%. Acceptance of digital signatures has also grown rapidly, paving the way for a paperless back office supporting digital trading in future.
Embracing digitalisation was agreed to be an important factor for survival in volatile environments, but the technology itself is not the only success factor. Digitalisation also needs people, culture and governance to be successful.
Data management and big data were key themes at the conference and are a core part of digital transformation. With the right technology, data belongs to the entire company and everyone is able to use it to create better results.
This can be difficult to achieve but technology such as Gen10’s commodity management system, CommOS, lets you structure data from internal and external sources, manipulate it within the system or export it for further analysis with ease. Again, mindsets need to change for the benefits to be realised. Users need to give up possessive attitudes towards data and realise that the benefits of collaboration are greater than the benefits of acting individually. And with systems such as CommOS that provide live data throughout the day, users need to understand the best ways to draw conclusions from live data, rather than creating their own subsets from data snapshots.
Data points on their own are useless
The role of the ETRM
Data points on their own are useless – their value comes from being analysed, so businesses need the tools to make sense of huge amounts of data and to ensure its accuracy. Indeed, it was stated that survival amidst the competition depends on data analysis.
Every panellist at ETOT had a different experience with their ETRM and different opinions of what an ETRM should do, but modern commodity management technology is capable of far more than the legacy C/ETRM systems that many are used to.
Commodity management technology can automate processes, shortening timescales and impacting the entire business. For example, speeding up reconciliation can also improve credit lines and ensure you get payments faster; an improved back-office process therefore impacts a wide range of other teams too – an important consideration in the current competitive climate.
ETRMs can also support the move to a digital world by virtualising processes. Once data is input it can be used by everyone, giving risk and compliance teams the information they need in real-time and providing clarity to all in the trade lifecycle. Solving the problem of communicating when working remotely, a system like Gen10’s CommOS means that users can see what their colleagues are working on at that moment and what tasks have been completed, without needing to ask or wait for them to report it.
These features are only a small part of how a C/ETRM can improve business processes, but they show how essential digital transformation is for solving the challenges the energy industry is currently facing. The right commodity management technology reduces time-intensive activities and frees people up to focus on adding value, reducing operational costs and improving business outcomes.
The energy industry continues to face many challenges, but as ETOT shows, is ready to embrace new solutions to solve them. Digitalisation is a proven way to improve operational excellence and overall business performance. With the capabilities of modern technology and clear signals from the rest of the industry that new digital ways of working are here to stay, now is the time for companies across the energy value chain to review whether their current technology is providing the capabilities they really need to succeed in future.
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