CTRM IMPLEMENTATION
Kevin Rose, who has 29 years of experience in the CTRM space
including many application upgrades, notes that customization is a key complication to upgrades. “A CTRM system should handle 80% of your business out of the box. Customers try to push beyond 80% through customization. It’s an important profit driver for vendors. So don’t expect them to apply the brakes. But customization brings with it huge overhead in terms of upgrades. So be careful what you wish for.” The best practice for the CTRM buyer is to upgrade every few
years to stay under the umbrella of support and to avail of the new development that they are funding through maintenance. The more frequent the upgrade, the simpler because less has changed. Contractually, the CTRM buyer may seek to include language
stipulating that the vendor is responsible for ensuring that any customization they do is compliant with core upgrades, thereby guaranteeing that the customization can be upgraded at the same time as the core application.
Poor Service CTRM buyers can also be nudged toward the exit by poor
service; and the problem may have deep roots. Business requirements are usually gathered during initial scoping. The requirements are then translated into a technical specification, the document which is agreed and becomes a contractual deliverable. But the two documents are essentially written in different languages as they try to bridge different bodies of knowledge. The seeds of failure are sown when the functional specification is not highly specific and devoid of any assumptions. You’re going to get what’s in the technical specification - not what you understood to be in the business requirements. Pietro recounts how this gulf can reveal itself in as basic an issue as the trade date. “It’s September 20th
and you just did a one
year deal on an exchange. At some point, the one year deal will cascade into four quarterly deals. At another point, the quarterly deals will cascade into three monthly deals. All flow from a deal done on September 20th
. But that trade date is lost at the first
cascade; replaced by the cascade date. So a concept as simple as the trade date requires an expert translation of business requirements to emerge intact in the technical specification.” Dick Couron has observed additional complexities particular
to logistics companies that might sabotage long term satisfaction with a one-size-fits-allCTRM system. Whereas wholesale trading is relatively simple, the wrinkles, the nuances are all in physical delivery. “Here the 80/20 rule is reversed, with about 20% being
standard and 80% being company specific. Furthermore, a lot of the company variation can be traced back to how the company got its start, as well as state and local practices. For instance, a producer who is focused on owner distribution, wellhead netback pricing and balancing in the well might acquire a gathering system and begin functioning as a gatherer for others. Or a gatherer might acquire processing plants and/or wellheads and have to adapt to those operating paradigms. When this happens, companies often try to extend their original business model,
Source Code Nothing signals a coming divorce
like a source code sale. The CTRM buyer was either getting no upgrades or no service – or both. The buyer and the vendor are officially separated. I hope CTRM buyers can use these
suggestions and lessons learned to craft agreements that better align interests. Then, perhaps, wedded bliss is just around the corner. •
Larry Hickey is a Director with Sapient Global Markets and frequent contributor to these pages. He has spent the past 13 years taking clients live on industry leading ETRM systems – overcoming varied and sundry obstacles along the way.
www.sapient.com September 2011 67
resulting in a mish-mash of roles and challenges for the CTRM system trying to capture it all.”
Poor service is ultimately a
symptom. Look to the company culture for the root cause. Is management from the physical or trading world? Is the company primarily focused on customer service or new sales? Every company needs new sales, but are they the bread and butter or the cherry on top? In vendor- speak, what fraction of license sales are to existing customers? A lack of incremental sales to existing customers sends a powerful signal. Does the company have the business knowledge necessary to effectively consult around the product? The best protection against
the vagaries of poor service is a separate service level agreement that specifies which issues must be addressed on what timetable. The
“... customization brings with it huge overhead in terms of upgrades. So be careful what you wish for”
strongest resources should be used to gather business requirements and ensure those requirements survive translation into technical specifications.
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