By definition, the commodities industry has always been a big data business. Physical trades that are hedged with financial derivatives create thousands of individual data points. And each of those data points represent multiple decisions to be made and perhaps reconsidered before the trade is eventually closed. Prices move, markets change, and regulations get updated.
All of this data drives complexity in decision making. Those companies who are best equipped to leverage the data available to them to make the best decisions will gain a competitive advantage. No longer is the typical commodity trading and risk management (CTRM) software system adequate for companies exposed to commodity market risk. While the ability to capture the data that surrounds each transaction or engagement is still required in CTRM software, that functionality alone is not enough. As margins tighten and conditions get tougher, these systems need to do more.
To remain competitive, today’s commodities companies need next-generation systems that support real-time decision making to move beyond data capture to data analytics. The ability to analyse information to create predictive models allows firms to develop accurate, repeatable formulae that take into account market conditions to identify optimal scenarios. Using advanced visualisation techniques coupled with user-controlled, predictive analytics, commodities companies can optimise operations.
Commodities companies can no longer afford to wait days and weeks to understand market changes, analyse the alternatives, and make decisions. Instead, all business users need the power to analyse data the way they want. The solution that will enable real-time decision making requires two components: the right technology to handle the large volume of data generated by the commodities industry and built-in commodity specific intelligence to analyse the data. In addition, the most useful analytics solutions will enable business users to start using the solution immediately without an extended and costly implementation project.
The Right Technology
Most companies have access to lots of data; but without an integrated view of the data, it can be of limited use. Frequently, different categories of data are stored in different systems and these systems don’t necessarily talk to each other. So, companies end up with multiple spreadsheets to analyse data coming from multiple systems.
In addition to managing disparate data coming from multiple systems, a next-generation CTRM system that supports decision making must be able to process large sets of data quickly. Commodity transactions are complex and have huge volumes of data. Extremely fast processing speed is required to traverse all the data to deliver timely answers to users.
Built-In Commodity Specific Intelligence
Generic business intelligence tools do not offer enough capability for commodities companies. Instead, what’s needed is commodity specific intelligence that will enable companies to get answers to their questions faster.
Commodity specific intelligence will enable commodities companies to quickly answer the most critical questions such as ‘what type of profits or losses will result in the future if I continue with my current trading strategy?’
For truly useful analytics, business users should be able to create their own analytics, then be able to customise those analytics on an ongoing basis as the needs of the business change. In fast moving markets, the delays caused by relying on the IT department or other specialists to create analytics render the results useless.
Workers on the move can’t be tied to a desktop - they need decision support wherever and whenever they are working. Their analytics solution should be accessible from all mobile devices as well as their office workspace.
Today’s Next-Generation Analytics Solution for Commodities Companies
The necessary solution for advanced analytics is available today from Eka - Commodity Analytics Cloud. Geared specifically for commodities companies in the agriculture, manufacturing, energy, and metals industries, Commodity Analytics Cloud provides traders, risk managers, analysts, supply chain/logistics managers, IT specialists, back office personnel, and executives with previously unavailable insights into key business areas. With Commodity Analytics Cloud, business users can take action before competitors.
Harnessing data from internal systems, such as ETRM, CTRM, ERP, CRM, and spreadsheets, and external sources, such as market curves and weather data, Commodity Analytics Cloud brings all the data together in one place to answer the most important questions. Information is displayed in an easy-to-understand way that facilitates deeper inquiry. Business users can focus on data analysis, not data collection.
Backed by years of deep domain experience, Eka has created a series of apps specifically designed for the commodities markets that address high value business issues. Providing an end-to-end analysis of the entire enterprise, these apps span multiple categories including positions, P&L, trading, risk, credit, finance, supply chain, reconciliation, counterparties, and more. Users can download the specific apps needed for their area of the business, and even customise apps for their individual needs. Analytics are no longer restricted to the realm of the IT department or other specialists. Commodity Analytics Cloud opens analytics to everyone.
Eka’s revolutionary next-generation technology, Pace, processes millions of data entities in seconds which enables users of Commodity Analytics Cloud the ability to move through data at unprecedented speed. Users can mix and match different data sets and perform real-time analysis on extremely large volumes of data. Available on both smartphones and tablets as well as desktops and laptops, Commodities Analytics Cloud can be deployed on-premise in an internal company network or externally on a public cloud. Learn more about Commodity Analytics Cloud here.
Commodities Analytics Cloud is part of Eka’s Smart Commodity Management suite and can be used stand-alone or combined with Eka’s InSight CM platform, which supports the entire commodity transaction lifecycle including trading, risk, compliance, procurement, supply chain, operations, logistics, bulk handling, and processing. InSight CM is Eka’s next-generation integrated system for managing commodity transactions end-to-end throughout the value chain. Learn more about Eka here.
By Michael Schwartz, Executive VP and Chief Marketing Officer, Eka Software Solutions