So, you’ve decided to overhaul or upgrade your CTRM solution. Your previous solution served you well, but there’s something more that you need now. Determining what this “more” is could mean the difference between a great commodity trading and risk management software and one that doesn’t fit the bill.

9 Questions to help find the one right CTRM solution

16 FEBRUARY 2022 | BLOGS

So, you’ve decided to overhaul or upgrade your CTRM solution. Your previous solution served you well, but there’s something more that you need now. Determining what this “more” is could mean the difference between a great commodity trading and risk management software and one that doesn’t fit the bill.

If you do a web search for CTRM software vendors, you’ll find enough options to make your head spin. There are plenty of options and selecting the right vendor for CTRM software solutions can be a tough choice. The wrong choice could lead to additional costs for your company, worse you will be back to searching for a new vendor soon enough.

Fret not, we’re here to assist you with identifying key differentiators that will ultimately help you choose the right CTRM solution. We’ll find the needle in the haystack of commodity trading risk management platforms. Answering these 9 questions will help you find your gem!

1. What exactly do I need?  

Vendors use the term CM and CTRM interchangeably. That’s why when looking for a commodity trading risk management software it’s important to stay vigilant. Defining what your need is can help you shortlist the right vendors.

Example: If your business needs activities such as procurement, producer relations/communications, processing/ transformation, recipe management, selling and pricing/fixation; you’ve to find a software solution vendor who covers all these requirements.

2. Why do I need it?

List out the cons of your current vendor in relation to the CTRM platform. This will help you understand ‘fixes’ and you’ll be able to pin-point why the current vendor doesn’t work for your requirements anymore.

Example: Imagine your current vendor delays bug fixes, fails to adapt to the latest real-time technology trends or doesn’t follow through with their commitment. This means that your key differentiator is product support. Make sure to look for a CTRM software vendor with a good reputation and track record of successful implementations in your market(s).

3. What are my tech mandates?

Does your company have any tech mandates that need to be followed? If so, then the vendor you bring on needs to be in compliance with them as well.

Example: If you’re looking for a web or cloud delivery for your risk management solution platform, then that would filter out CTRM software vendors that don’t provide a cloud-driven CTRM solution.

4. Which commodities am I looking at?

Some commodity trading companies trade with a single commodity while others deal with multiple. If it’s the latter, it is ideal to choose a vendor that provides one solution to handle multiple commodities or asset classes. Sometimes, even a single commodity requires a complex CTRM solution.

Example: Trading in a soft commodity like cotton needs a higher capability system. The reason for this is that cotton has more than twelve distinct quality characteristics that impact its pricing. One would need a commodity trading system with the flexibility to capture, track and value cotton transactions accurately and seamlessly.

5. What markets am I operating in?

Choosing a potential CTRM solution is also market dependent.

Example: If your business has operations in multiple countries, chances are that it requires knowledge of currency conversions, unit conversions and multiple languages. If so, your new commodity trading and risk management system may need to address specific reporting or documentation requirements within those countries.

6. What are my critical function requirements?

Figure out the critical and differentiating capabilities that are needed by your business in a new CTRM solution.

Example: Historically, tools for CTRM did not have great analytic capabilities or decision-making tools. However, with technological advancements in commodities markets, vendors are now providing improved and sophisticated analytics capabilities. You need to look for a CTRM solution that comes with commodity specific nuances seeded into its architecture, so you do not end up using spreadsheets for cumbersome manual calculations.

7. What systems does it need to integrate with?

Don’t be under the assumption that all CTRM systems are built in a way to seamlessly integrate with your existing tech infrastructure. It is critical to identify the depth and types of data that need to be integrated with the new system.

Example: Integrating with an ERP system can be extremely complex depending on the nature of the information that needs to pass from the CTRM solution or ERP solution to the CTRM system. Look for solution providers that have a successful track record of integrating data from various systems and not just an ERP.

8. Which should I choose - cloud or legacy systems?

The right approach depends on the tech mandates in your organization. Traditional solutions are given preference in industries that are prone to breaches in cyber security and those that are hesitant in allowing proprietary data and information to pass outside their firewalls.

Cloud-native solutions, on the other hand, cost you a fraction of traditional on-premise or cloud-hosted solutions, can be implemented faster and remotely seamlessly, and come with the advantage of near-limitless scalability giving you a better ROI. In a cloud CTRM solution, one can opt for hosted or multi-tenanted.

9. Which is better - Traditional monolithic solutions or modular, platform-driven solutions?

Traditional CTRM systems incur higher costs in the form of maintenance and upgrade. In comparison, a modern platform CTRM solution can provide higher levels of scalability and agility, at a much lower initial cost.

Example: Eka provides modular and nimble yet powerful CTRM solutions in the form of applications. In essence, with Eka you only pay for what you need. No need to implement features that come locked in with monolithic systems. If your needs change in the future, adding more capabilities is simple because the Eka CTRM solution comes seeded with years of deep domain knowledge in the form of pre-built workflows and connectors that makes it easier and faster to implement.

Conclusion

Analyzing the above capabilities and characteristics against the available pool of CTRM software vendors can help you make the right decision! So, choose wisely.

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