Brno, Czech Republic, August 2011

The acquisition of VIZ Risk Management at the tail end of 2010 by UK-based Brady PLC almost certainly catapulted the company into the top six in E/ CTRM software on a global revenue basis creating around about a $30 million annual revenue company operating across almost all commodities.

Perhaps even more interesting is that Brady PLC represents the first vendor to enter the top six by revenue globally that actually didn't get its start in energy commodities. Brady PLC started in the metals commodity trading side of the business and has grown out from there both through acquisition and organically. It has also become the top indigenous European vendor in revenue terms, as well.

So What are the Six Largest E/CTRM Vendors Based on Annual Revenues These Days?

With the vast majority of E/CTRM vendors being private companies, it's difficult to know for certain what any vendors revenues really are, therefore this list will certainly be open to some debate. Nonetheless, according to our latest estimates of global revenues for commodity trading and risk management, OpenLink Financial (OLF) is probably still sitting atop of the list weighing in with estimated revenues in excess of $225 million (of which a significant proportion is not related to E/CTRM, of course), but these days Triple Point isn't that far behind, with estimated revenues of approximately $110 million.

OLF and Triple Point have managed to open up a sizable gap between themselves and all of the other vendors in the space over the last few years. Triple Point's growth rate, supported by several good acquisitions, as well as organic growth, has probably been stronger than all other vendors in the space over that period. OLF has also made some astute acquisitions, particularly those which have given it quite a strong presence in the agricultural commodity trading space, while Triple Point has been present on the metals side for several years with one of its early acquisitions. Both OLF and Triple Point can offer multiple commodity group coverage but both remain some distance from being able to cover all commodities in all markets.

SunGard Energy & Commodities is also one of the industry's largest vendors by virtue of SunGard Energy's large installed base (which was also acquired primarily via a number of earlier acquisitions of companies like Caminus, for example) and the addition of the SunGard Kiodex business when the two were rolled up into a single entity in 2010. SunGard Energy & Commodities has largely remained energy-centric as its more recent acquisitions, such as Energy Softworx, have been more about moving up and down the energy value chain. SunGard Kiodex has historically been more geared towards financial players but it too has had a more energy-focused past.

SolArc also ranks in the top six of revenue, thanks to several years of solid growth and more international business. SolArc can cater for non-energy commodities, as well as energy, but currently lacks an electric power aspect to its Right Angle product line. SolArc's strategy has been quite interesting to watch, as it has targeted various industry segments and dominated them such as products marketing, coal and fuels in sectors such as the airline industry. Additionally though, SolArc is perhaps not yet well-known for this yet, it has for the last several years been—in our view—a leader in technological innovation developing products for visualization, migrating its application to .Net and delivering support for various handheld devices.

Another of the six largest companies by revenue is likely to be Allegro Development. Allegro has been around since before the beginning of ETRM/CTRM software as an identifiable software category and has certainly had some ups and downs along the way. But Allegro, too, has been a technology innovator with the first migration to .Net and deep modularization of its product. It has a broad footprint but it too is still somewhat energy-centric.

The top six E/CTRM vendors from our perspective in revenue terms are then OLF, Triple Point, SunGard Energy & Commodities, SolArc, Allegro and Brady PLC but CommodityPoint still tracks 74 other E/CTRM vendors in the space. As of 2011 there is still no outright winner as each vendor has different specialties so there is no “one size fits all” supplier out there. . The requirements for E/CTRM software are so complex and broad that no single vendor can provide a total solution meaning that multiple solutions often supplemented by homegrown custom functionality are still required.

Will This Change?

CommodityPoint doesn't see much chance of E/CTRM being dominated by 2-3 vendors in the short to medium-term because the industry is still too volatile in terms of requirements and there is still a lot of evolution left. It's a complex industry with a set of complex requirements and it will take some time before anyone vendor will be "best in class" across the entire space. The smaller vendors can survive quite nicely in such a market and the market offers opportunities for new start ups as well to fulfill highly specialized niche market needs.

We have noticed that other major software companies are involved, if only peripherally, including SAP and Oracle. SAP has a number of applications in areas like logistics for certain commodities and Oracle can also claim some ancillary ETRM capabilities in energy—but, is it yet a big enough market for such companies to show increased interest in? CommodityPoint's 2011 Market Sizing Study report showed it is a sizeable a market of close to $500 million per annum in license opportunity alone.

Meanwhile, those with access to capital can, and will, continue to make acquisitions to grow. Since the start of the year iRely has acquired Summit Software and Constellation Software has acquired Agris. Many readers may not have heard of these companies, but just three years ago, very few of our readers might have known who Brady PLC was, either. The conclusion is that there remains plenty of time for the E/CTRM vendor play to work itself out and there remain plenty of smaller vendors to be acquired to change the entire scene.

Ends --

By Gary M. Vasey, Ph.D., Managing Director, CommodityPoint.

Note: Vendor revenue estimates are based on CommodityPoint's research and methodology for market sizing. The CommodityPoint 2011 CTRM Software Market Sizing report was kindly sponsored by Brady PLC and Eka.

Note: The term 'by revenues' used above refers to revenues gained via the licensing, support, maintenance and provision of certain consulting services around E/CTRM software. Other vendors may have larger revenues overall but much of that revenue stream originates from other software categories and/or services.

©2011, UtiliPoint® International, Inc. All rights reserved. This article is protected by United States copyright and other intellectual property laws and may not be reproduced, rewritten, distributed, redisseminated, transmitted, displayed, published or broadcast, directly or indirectly, in any medium without the prior written permission of UtiliPoint® International, Inc.