Case Studies

Trading landscape transformation

One of three actual case studies.

Background

To achieve increased financial targets and compensate for a shrinking asset portfolio, the trading business of a major European energy utility decided on a new strategy to grow geographically, expand its renewable energy business, and add additional commodities and products to its trading portfolio. An internal project was launched with the objective to operationalize the new strategy, but after a year, management considered that very little progress had been made.

Main challenges

Three main challenges made it difficult for the company to realise the new strategy and reach the new financial targets.

The existing system landscape wasn’t designed nor capable of supporting the expected increase of data volumes, expansion into new geographical markets, new functional requirements, new business models, requirements on time-to-market etc.
There were critical capabilities either missing or needed to be enhanced including operation and software development capabilities to support and develop a modular, data centric, and cloud-based system landscape.
The existing operating model i.e., the interaction between the organisation, processes, and system landscape, wasn’t fit-for-purpose e.g., functions with overlapping responsibilities, many manual processes, lacking data ownership, questionable data quality etc.

Assignment

CommodityFirst was initially asked to conduct an independent review of the progress and approach of the internal project, assess the feasibility of introducing a New Trading Landscape, and prepare a business case and funding request to the Board of Directors.

Based on the approval by the BoD, CommodityFirst was further asked to set up and run the New Trading Landscape Transformation Program with the aim to operationalizing the new strategy by delivering enhanced and new capabilities, a new system landscape, and an operating model which was fit-for-purpose.

Approach

Firstly, the New Trading Landscape Transformation Program was defined as a joint Business and IT program. The program was divided into three main phases, Assessment, Implementation, and Operation, and the Assessment phase was in turn divided into three stages, Explore, Define, and Design. The main objectives of the Assessment phase were to ensure alignment between the key stakeholders, to explore options and agree on target solutions (for the system landscape, capabilities, and operating model), to ensure that the solutions were consistent with the vision and direction of the business, and that the program was appropriately structured for the implementation phase.

Prior to the Implementation phase, the defined and agreed governance and operational structure was put in place along with an effective communication plan for management, program members, and staff. To ensure transparency and effective dependency management throughout the program, the Implementation phase started with a detailed design of the various solutions. To deliver the program on time and on budget, the program was coordinated by a central PMO and a Design Authority, but from an operational perspective it was parallelised as far as possible by splitting it into multiple streams, many of which used an agile approach.

Outcome

As several of the program streams used an agile approach, the company was able to start trading some of the new commodities, markets, and products within a very short timeframe. With a clear hand-over strategy, and new and enhanced capabilities, the company is now operating the new cloud-based system landscape with minimal involvement of external support, and even better, over the last three years the company has consistently exceeded the financial targets.

Lessons learned

For commodity trading companies, a transformation program of this size requires both the business and IT departments to be involved and to feel genuine ownership. The time spent on pre-aligning key stakeholders is also a key success factor. Other examples of lessons learned from this, and similar transformation programs are given below.

A new trading landscape must be based on a clear Business strategy.
End-to-end scope require coordination and focus on dependency mgmt.
Ensure dedicated and ring-fenced resources.
Business and IT should both be in the driving seat of the program.
Define clear governance structure, roles, and mandates, and stick to it.
Don’t forget value of continuous communication across organisation.
Ensure commitment across Trade-Life-Cycle and not only to Front Office.
Business cases and simplification key to low Total-Cost-of-Ownership.
Select partner with hands-on experience, and knowing both Business and IT.

Selection of case studies

System selection and implementation

Delivering a new trading business

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