Beno, Czech Republic, 13 September 2011

As an analyst who has watched and participated in the E/ CTRM Software space for 19-years, I am fascinated by the changes in the vendor landscape as the software category matures. Our published sizing of the Commodity Trading & Risk Management (CTRM) software market recently helped us to establish estimated revenues attributable to CTRM software sales and associated services for all vendors in the broader CTRM space.

It confirmed that two vendors; OpenLink and Triple Point, have opened a "gap" between themselves and the rest of the field. Today, we would estimate that OpenLink is the largest vendor on a revenue basis, but that both OpenLink and Triple Point have now grown into sizable global software companies with CTRM revenues in excess of $100 million and look set to fight it out for industry leadership over the next few years.

Triple Point, by our estimates, is growing at a faster pace than the overall market. We estimate the market growth rate to be around 11 percent in 2011 and Triple Point's growth to be more than twice that rate at around 26 percent. OpenLink is also growing steadily but its growth rate is much harder to establish as its revenues have historically been made up sales and associated services around its Endur (energy and commodities) and Findur (Corporate treasury, Finance and Capital Markets) software products

Attempting to determine the relative proportions of revenue streams from both product sets is admittedly essentially guesswork. OpenLink has also added functionality via a number of acquisitions and appears to be having success with its IRM mid-tier ETRM platform to supplement sales of Endur as well as the broader commodities space with its acquisition of dbc SMARTsoft.

However, if current market circumstances continue, there is the distinct possibility that Triple Point could challenge OpenLink's leadership in terms of CTRM revenue in the next two-to-four years.

OpenLink's traditional sale has been into the top tier of the industry with Endur, which is essentially a scripted application, offering a good deal of customization. Endur is a good option for companies requiring a more bespoke solution who don't have the skills in-house for development and the success of this strategy can be attested to by OpenLink's growth and leadership position. Triple Point's platform is a more traditional packaged software application using a configurable (vs. customizable) approach, which also offers a lot of flexibility for its customers.

Triple Point and OpenLink are offering two somewhat different approaches to the market providing customers with options. In CommodityPoint's view, this is good for both the customers and the vendors and there is and probably always will be room for both approaches (scripted versus packaged software) in this market.

CommodityPoint's view that Triple Point may be catching up with OpenLink is based on our assessment of a number of indirect factors including:

- Tracking of relative brand strength and industry leadership perceptions over the last seven years through our Vendor Perception research;

- Our view of market structure and vendor penetration rates in the various segments and tiers of the industry;

- Our assessment of the available market for both vendors and the changing competitive landscapes within those target markets.

Additionally, CommodityPoint's assessment of Triple Point's growth is based on reviewing three key elements of its strategy - alignment with key partners, development of innovative solutions and the acquisition of best of breed companies to broaden its portfolio.

Triple Point has developed both global and regional strategic relationships with many service providers in order to support its rapid growth. For example, Accenture has selected Triple Point as it's only global strategic partner for Commodity Trading and Risk Management. In addition to service partners, Triple Point also has a strategic co-development relationship with SAP and currently offers two versions of its software in the form of Commodity XL and Commodity SL; the latter being built on SAP's architecture and offering tight integration with SAP

In fact, Triple Point's "special" relationship with SAP has a further benefit in the sense that the Commodity SL solution is marketed by SAP. Triple Point is often leveraged into deals that other vendors may not even have knowledge of. In our view, the SAP relationship has also exposed Triple Point to early trends in the market and provided it with customers who could assist in shaping new areas of functionality—particularly in the commercial and industrial (C&I) segment.

Triple Point recently introduced an innovative Strategic Planning and Procurement (SPP) module that has functionality to help C&I companies manage raw material price volatility in the procurement process. C&I companies from the transportation, food & beverage and even consumer durable goods industries, have experienced price pressures on raw materials combined with an inability to pass along price rises to consumers of their finished products. With customers such as Unilever, Grupo Bimbo and General Mills, Triple Point has emerged as the leader in providing solutions to C&I companies. Another innovative product introduction by Triple Point is the merging of Business Intelligence with CTRM via its Commodity XL Management Dashboard to provide real-time decision making information to executives.

Finally, Triple Point's acquisition strategy has both helped it round out and broaden its offering as well as add that acquired functionality on a timely basis. In particular, its acquisition of ROME, INSSINC and Softmar have produced real dividends for the company allowing it to provide best-of-breed credit, regulatory, and shipping functionality, along with traditional ETRM functionality. These acquisitions, as well as enhancements to the Triple Point product suite, have helped it build a large footprint across all major commodity groups, industry segments and major areas of functionality. This, in turn, has allowed it to target a broader market than many of its natural competitors.

The Future

As software markets mature, it is usual for two to three leaders to emerge in the broader category and, although it is still early, CommodityPoint begins to see such a trend developing in CTRM. In fact, the E/CTRM software category has matured to the point where it is now an attractive and strategic software market and it would not be surprising to see a larger horizontal software company move into the space in the near future.

It's been interesting to observe the growth of the various vendors over the last five-years during which time Triple Point has emerged from being one of the group to being a leader along with OpenLink in revenue terms. The next couple of years will be interesting, as we believe the two companies will battle it out for definitive market leadership.

Ends --

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

Note: Both OpenLink and Triple Point are clients of CommodityPoint.

This article is a follow up to the recent IssueAlert article "The Big Six - The Changing E/CTRM Software Vendor Landscape" published on August 3rd, 2011.