5 Benefits Modern CTRM Systems can Deliver to Soft Commodity Traders
Most of the installed CTRM systems in use today were originally designed 15 or 20 years ago as energy trading systems. This explains why existing legacy CTRM systems are a poor functional fit for softs trading businesses.
Recently a new generation of CTRM systems have become available that have been designed specifically for soft commodity trading. These next generation CTRM systems offer significant benefits that include:
Benefit 1: True Soft Commodity CTRM Functionality – Soft commodity traders need systems that supports the ways they actually operate. Management of “As it Happens” component pricing is an example. Soft commodity CTRM systems need to do more than support just the required trade types they also need to support the ways soft commodity traders do business.
Soft commodity contracts are typically made up of multiple parcels, and the price of each parcel is made up of multiple price components that need to be priced over the deal life-cycle. Traders need the ability to “price it as it happens”, unfortunately CTRM systems that were originally designed as energy trading systems cannot effectively support “price it as it happens” functionality. Next generation CTRM systems can efficiently support the way soft commodity traders actually do business.
Benefit 2: Reporting and Analytical Tools – None of the existing legacy CTRM systems provide effective business reporting and analytical tools. This is a problem because it impacts the quality of decision making and therefore costs money. Modern next generation soft commodity CTRM systems such as Fusion from Fendahl Technology come with a fully integrated suite of reporting and analytical tools specifically designed for soft commodity trading.
Benefit 3: Increased Flexibility – The legacy CTRM systems used by soft commodities traders today were originally designed 15 or 20 years ago, back then it was not technically possible to build flexible CTRM systems. Modern design techniques allow next generation CTRM software to be highly flexible. Systems can be quickly modified to support bespoke business processes without months of expensive custom development.
Benefit 4: True Multi-Currency Support – Legacy soft commodities CTRM solutions were originally designed as energy trading solutions. Most energy commodities (oil, gas, coal, etc.) are only traded in USD. As a result, energy trading CTRM systems were only designed to cope with a single currency (USD) and their ability to manage soft commodities traded in multiple currencies is poor. This is a major issue for Ags traders where single trades can contain legs priced in multiple currencies.
Benefit 5: Lower Cost of Ownership - The legacy CTRM systems used today are very expensive to purchase, implement, and support & maintain. Modern CTRM systems are significantly less expensive. In many cases the cost of ownership can be reduced by up to 50% or more. This means that legacy CTRM systems can often be replaced within the existing support budget, with a new soft commodity specific CTRM system. Ongoing support costs are similarly reduced.
Leading Ags trading businesses are realizing that their legacy CTRM systems have become a constraint on their future growth and profitability. As a result, market leaders such as Seaboard Overseas Limited, have choosing to replace their poorly performing legacy CTRM systems with modern next generation CTRM software.