London, 5 May 2011

CommodityPoint's assessment of the 2010 market for CTRM software assembled recently as we prepare our 2011 CTRM Market Sizing Study Report is that it was a year of record revenues and growth. Almost every vendor that we talked to or polled told us that they had had a record year in 2010. The strong level of activity and demand seems to have continued into the first quarter of 2011 as well according to our research.

CommodityPoint sees growth in the market occurring in two ways. Firstly, the total market for E/CTRM software has expanded to incorporate new geographies and new industry segments. This can clearly be seen in the vendor's activities. For example, AES, with its Saas-based solution, has opened up new geographies and segments in places such as Africa where it has had success with its solution in the crude oil industry.

Offering an affordable solution with sufficient functionality to be an attractive alternative to spreadsheets, it has signed a number of deals there in recent years. By doing so, it helps expose African oil producers and marketers to the broader ETRM software landscape because they still have to perform their due diligence around their software procurement decision.

Another example would be Triple Point's success with some of its recently acquired software. The addition of the credit risk solution, for example, has helped create and define a market against a backdrop of the financial crisis and interest in credit risk in the industry. As a result, other vendors have also benefited developing additional credit functionality, modules or software solutions in this area. Triple Point's acquisition of SoftMar in the vessel chartering and operations area has also essentially helped extend the CTRM software space into the freight rate and maritime operations area while its focus on bulk commodities and supply chains has done the same.

SolArc has also been an innovator in terms of expanding the CTRM market and perhaps for longer than many of the other vendors. It has established a strong presence among airlines and transportation companies for example that has also now extended the definition of the CTRM market into a whole new area of potential commercial and industrial customers.

While OLF's movement into the agricultural commodities side has also helped to establish the concept of multi-commodity CTRM solutions. This move has been mirrored in some respects by Eka who had established themselves in the agricultural side and have now extended their reach into liquid hydrocarbons and in Brady PLC's move into electric power via its acquisition of VIZ risk management. Meanwhile, other vendors, such as SunGard for example, have moved up and down the energy value chain expanding the market in that way.

One could point to many other vendors whose activities have helped push the boundaries of E/CTRM software wider and broader such as Navita in the emissions area, UK-based Contigo in the fuels logistics and retail power space, Allegro and more.

But in reality, the vendors are responding to market dynamics of course. More volatile prices for commodities have resulted in users of commodities across the board upping or initiating hedging activities. Increased oversight of markets and participants by stakeholders has resulted in an increased onus on risk management in all forms and so on. Industry issues and trends are driving these changes in the CTRM software market and extending the definition of the software category and expanding its borders.

Organic Growth

At the same time, we have also seen growth in traditional E/CTRM markets. This has been both "downwards" into smaller companies who find that they increasing require a commercial solution (as a result of the same industry trends mentioned above) and also more "churn" in replacement markets as users seek to procure a better more modern platform to support their trading and risk management operations.

Going Global

In the past, CommodityPoint has sized the ETRM market for North America and Europe only. The 2011 CTRM Market Sizing Report will be the first time that we have estimated the size of the global market for CTRM software. While North America and Europe and Energy remain the significant portions of the total CTRM market, other markets are also now growing. These include geographic regions such as Asia-Pacific as well as other commodity groups such as agricultural commodities and metals.

As if to emphasize the global nature of CTRM software markets today, as I write this CommodityAlert article, an Amphora press announcement arrived in my e-mail inbox stating that it had opened a European office in Zug, Switzerland. "Our business is growing rapidly in Europe, and we knew we needed a location that offered us access to high caliber talents, proximity to major clients and prospects, and also a natural geographical fit with our existing offices to underpin our 'follow the sun' support model," said David Newton, Amphora's CEO and president.

Summary

The release of our 2011 CTRM Market Sizing Study Report, kindly sponsored by Brady PLC and Eka Software Solutions, later this month will show that the CTRM software market is growing at a reasonable pace and is now a sizeable market, especially when one adds in associated services and peripheral software. Unless some fundamental in the industry changes unexpectedly, we believe that this growth is set to continue through 2011 and beyond.

Ends --

Gary M. Vasey, Ph.D., Managing Director, Europe and AsiaPac.