Reimagining Energy Supply, Trading, and Risk Management
Create a data-centric digital ecosystem to reduce complexity, enable end-to-end carbon auditability, and drive portfolio-level value chain optimization.
Enabling the Future with Publicis Sapient and Microsoft
Leading energy companies around the world are partnering with Publicis Sapient and Microsoft to drive strategic digital transformation initiatives across their businesses.
At Uniper, our co-innovation efforts helped “bring to the market a newly developed digital business strategy that will disrupt our business chain so that it meets the requirements of today’s modern world.”
—Pete Davies, Head of Software Engineering and Data Science
Meanwhile, at Chevron, we unlocked business value by making it possible to “easily deploy advanced analytics services, including AI, quickly and easily on top of...existing data assets.”
—Troy Engstrom, Senior Manager, Digital Carbon Management
Overcoming the Evolving Complexities of the Energy Industry
Global energy markets are becoming increasingly complex and experiencing unprecedented levels of volatility. Energy supply is constrained due to years of underinvestment, and its growth is challenged by the financial impacts of the energy transition and rising inflation. Additionally, geopolitical unrest in Europe has exacerbated supply chain disruptions and reinforced the demand shift that began during the pandemic.
However, with complexity and volatility comes a unique opportunity to create exponential value by ensuring your organization has the systems and processes in place to respond with agility.
External Factors Impacting Supply and Trading:
- Geopolitical unrest and the energy transition are shifting global energy market dynamics and the Supply and Trading portfolio mix.
- Hydrocarbon supply growth is challenged by rising costs, longer lead times, increasing regulation, and fiscal constraints associated with rising inflation, increasing carbon taxes, and long-term reserve devaluation.
- Oil and Gas and Power and Utility markets and infrastructure are becoming increasingly interconnected, driving the need for greater transparency and risk management across commodity value chains.
- New energies and new energy markets are rapidly emerging and changing the commodity trading landscape.
- Emissions data is becoming increasingly intertwined with trading data, and carbon trading is becoming a core capability.
- Energy companies are increasingly committing to net zero emissions targets, driving the need for greater transparency, auditability, and full-cycle carbon cost analysis.
Adapting to the Evolving and Interconnected Commodity Market Landscape
The rapid evolution and interconnected nature of global energy markets has accelerated the case for transformation. To thrive during the energy transition, trading organizations must adapt quickly and develop new capabilities and digital pipelines to capture opportunities across geographies and asset types.
Evolution of the Commodity Market Landscape:
- Upstream: Rigs, Wells, Oil, Gas & Condensate
- Midstream: Oil, Natural Gas, Processing Plant, Crude Storage
- Downstream: Refineries, Diesel, Plastic
- End Customer: Industrial, Commercial
- Biofuel, RNG, Agro, Minerals, LNG, Power Generation, Hydrogen Manufacturing, Batteries, CCS & CO2, Solar, Alternative Fuels, NH3, Ammonia, Hydrogen Fuel, Insets/Offsets, Wind, Steel, EV, Green Transportation, Cement, Agro, Insets/Offsets
Adapting to the known and unknown business complexities arising from the energy transition requires agility.
Conducting Business Across the Front, Middle, and Back Office
Supply and Trading organizations rely on a suite of specialized C/ETRM packages, shadow systems, and extensive manual processes to manage their business. These specialized C/ETRM packages are competent for single commodity, single market operations, but they were not built to support cross-commodity, multi-jurisdiction trading, and risk analysis.
Additionally, most of the C/ETRM systems lack integrated deal capture, contract management, scheduling, and reporting capabilities and have limited front-office and mid-office capabilities. These challenges have resulted in the implementation of numerous, disconnected, highly customized solutions, complex system integrations, and the development of extensive manual data entry and reconciliation processes.
Common Supply and Trading Personas and Tools:
- Front Office:
- Supply Chain / Marketer
- Trader
- Scheduler & Operator
- Value Chain Optimizer
- Middle Office:
- Trading Operations Manager
- Market Risk Manager
- Credit Manager
- Contract Manager
- Back Office:
- Accounting Manager
- Regulatory Manager
- External Interfaces:
- Trading Exchanges
- Market Data
- eConfirm
- Carbon Registries
- Reporting
- Taxes
- Shared Tools:
- C/ETRM Packages (commodity focused, region focused, business focused, hybrid)
- Master Data Management (Systems of Record)
- Function-Specific Tools:
- Front Office:
- Pipeline Bulletin Boards
- ISOs / OATI / Transmission
- Scheduling Tools
- Facility, Terminal & Fleet Management
- Forecasting
- Optimization
- Middle Office:
- Confirmations (eConfirm)
- Risk Consolidation / Reporting
- Credit Data / Solutions
- Contract Management
- Office Systems
- Back Office:
- ERP
- Inventory Valuation
- Tax Calculation & Reporting
- Equity / Royalty Settlement
- Reconciliation Reporting
- Regulatory Reporting
- Corporate Functions: Accounting, Legal, Governance, Sustainability, Procurement, HR, IT, and others
- Other Business Units
The proliferation of data in siloed systems and lack of automation impedes access to information, slows down decision making, and complicates end-to-end process execution with corporate business functions.
Overcoming Challenges Caused by Legacy Infrastructure and Manual Processes
Common efforts to address commodity/energy trading and risk management (C/ETRM) system capability gaps have created solution architectures which are inherently inflexible, inefficient, and costly to support. These complex C/ETRM-centric architectures hinder collaboration and innovation, limit the ability to automate, and increase the level of risk associated with security breaches and human error.
Moving away from a C/ETRM-centric architecture and streamlining business processes is necessary to reduce cost, complexity, and risk, and to unlock incremental value for the business.
Internal Challenges for Supply and Trading Organizations:
- Prevalence of inflexible, commodity-specific, on-premise core C/ETRM systems with overlapping functionalities causes data silos and process inconsistency
- Data silos, limited automation, and a lack of collaboration tools restrict timely, data-driven trade and risk analysis
- “System of record” functionality of C/ETRM systems limits the ability to support front-office requirements, including forecasting, pricing, and negotiations
- Commodity-specific system nuances drive over-customization and complex, multi-system architectures which are costly to support, difficult to integrate, and result in latency issues
- Limited solution options and the slow pace of C/ETRM solution modernization hampers the ability of Supply and Trade organizations to innovate
- Extensive manual data aggregation, analysis, and reporting processes increase the risk of human error and security breaches
- Time-consuming manual intervention in end-to-end process execution across supply, trading, and finance limits the time available for higher value-add activities
Transform Your Supply and Trading Landscape to Realize Your Business Potential
Agility is crucial when businesses face increasing geopolitical, regulatory, and financial market complexity, and an accelerating energy transition. To enable business agility and drive better decision making, Supply and Trading organizations should recenter their systems and processes around a next-generation, connected data landscape.
Publicis Sapient and Microsoft envision that landscape as a data-centric Supply and Trading digital ecosystem that unlocks value by facilitating agility, increasing visibility, improving efficiency, and enhancing collaboration and innovation.
Common Supply and Trading Personas and Tools
At the center: Energy Supply, Trading & Risk Digital Ecosystem—a connected data landscape.
- Top: Gain agility to maximize value in a rapidly evolving commodity market
- Right: Accelerate decision-making and enhance collaboration and innovation
- Bottom: Automate to improve efficiency and reduce risk
- Left: Optimize portfolios and achieve sustainability goals by enabling end-to-end visibility
Five Value Drivers for Supply and Trading Modernization
Creating a data-centric digital ecosystem that can adapt and scale with the energy industry unlocks value by:
- Enabling agility
- Increasing visibility
- Improving efficiency
- Enhancing collaboration
- Accelerating innovation
Agility:
Decouple systems, federate data, and create a data-centric ecosystem in the cloud to reduce complexity, enhance security, increase transparency, and promote scalability, adaptability, and accessibility.
Collaboration:
Create mobile user interfaces and executive dashboards with embedded workflow collaboration tools to improve accessibility, expedite information sharing, and enable rapid decision making across the business.
Visibility:
Centralize data and apply data modeling, integration, and AI to enable end-to-end visibility and full-cycle analytics, and to generate actionable insights in near real time.
Innovation:
Use low-code and no-code development tools, agile development principles, and a data-rich ecosystem to crowd-source business ideas and codify knowledge within modular applications.
Efficiency:
Automate back-office processes for deal capture, contract management, scheduling, and reporting to reduce cycle time, mitigate risks, and refocus resources on value creation. Leverage platform-enabled artificial intelligence (AI) to evolve trading algorithms and generate actionable insights in near real time.
How to Maximize Value While Maintaining Critical Operations
Our approach to modernizing Energy Supply, Trading, and Risk Management seeks to build upon existing capabilities to minimize disruption to the business while building a strong digital foundation to unlock value now and in the future. These objectives will be achieved by:
- Leveraging existing C/ETRM systems
- Embracing open, modular development
- Following foundational data integrity and security principles
- Enabling seamless business process automation, releasing resources to focus on exceptions, validation, and analysis
- Integrating comprehensive AI capabilities to accelerate data-driven decision making and trade and risk analysis
- Dramatically improving the user experience with modern, mobile, real time decision support and collaboration tools
- Reducing integration complexity, allowing the business to unlock higher-value workflows without disrupting the day-to-day business
- Enabling transformative capabilities and the creation of new revenue streams to accelerate value creation
- Delivering continuous value by employing agile methodology
Next-Generation Supply and Trading Solution Framework
Our vision for a next-generation, data-centric, Supply and Trading digital ecosystem is built upon the following architectural components:
Conceptual Solution Architecture
- Business Functions / Stakeholders:
- DIGITAL USER CHANNELS: Supply, Trading & Scheduling, Risk Management, Contracts, Accounting, Retail / Marketing
- SERVICE & INTEGRATION LAYER: Business Services, Data Services, Foundation Services, Utility Services
- EXTERNAL INTEGRATION: Trading Exchanges, Market Data, eConfirm, Reporting, Taxes, Carbon Registries
- DATA & ANALYTICS: Analytics & Insights, Modelling, Data Lake
- C/ETRM SERVICES: Deal Capture, Position Management, Scheduling, Actualization, Deal Pricing, Invoicing, Inventory Management, Terminal Management
- OTHER CORE SYSTEMS: Market Risk, Credit Risk, Facility & Terminal Management, Fleet Management
- Existing ERP solution(s)
- INFRASTRUCTURE & ENABLERS: Connectors & Common Data Framework, Dataverse, Azure Synapse, Azure Data & AI
- Collaboration: Microsoft 365 & Teams
- Security: Microsoft Security
- AI & Analytics: Power BI
- Low-Code Agility & Automation: Power Apps, Power Automate & Power Pages
- Sustainability: Cloud for Sustainability
Embarking on the Transformation Journey
A critical first step in shifting from a C/ETRM-centric architecture to a data-centric ecosystem is to define a framework for your transformation journey—one that prioritizes business outcomes and maps to a relevant value case.
The key to success is to first unlock the value that already exists (H1), and then to build upon it to enable new capabilities (H2) and create incremental value for the business (H3). Prioritizing where to start and how far to take your journey should be based on your organization’s unique market position, ambitions, and transformation vision.
Transformation Journey Framework
The transformation journey is mapped along two axes: from Incremental to Evolutionary (horizontal), and from Existing Business Model to Digital Business Model (vertical). Initiatives are grouped as follows:
- Experimental:
- Automate manual front-office tasks
- Automate manual mid + back-office tasks
- Decouple primary systems and reduce shadow systems
- Migrate storage and compute to the cloud
- Automate trend and trade analysis
- Federate and contextualize data in the cloud
- H1:
- Real-time insights based on streaming market and peer data
- AI-enabled trader decision and action recommendations
- H2:
- Advanced analytics for what-if and scenario analyses
- Automate and optimize front-office activities
- Real-time visibility on key metrics (i.e. trading position, full-cycle costs, profitability, sustainability)
- H3:
- End-to-end carbon auditability, full-cycle cost analysis, carbon marketplace development
- Mobile integrated trading view
- Agile proprietary algorithms and applications
- Aspirational:
- New revenue streams by monetizing intelligence, algorithms, apps, data, etc.
- New energies trading
- Automate transaction management with shared ledgers
Target Business Outcomes:
- Improve Efficiency and Increase Agility
- Enhance Collaboration and Drive Innovation
- Enable Advanced Trading and Risk Practices
- Gain Full-Cycle Visibility including Sustainability Impacts
- Grow Revenue through New Business Models
Business Principles:
- H3: Partner and Co-Innovate to Change Market Position
- H2: Capitalize on Investments in New Technology for Strategic Advantage
- H1: Optimize the Core Through Data and Operational Efficiency and Resiliency
Relative Impact: Low, Medium, High
Partnering to Drive Strategic Transformation Across the Energy Sector
Publicis Sapient and Microsoft are collaborating with leading energy companies around the world to rethink and evolve their business models to better respond to the complexities and volatility of the global energy market.
Chevron Unlocks Business Value by Migrating Supply Data Platform to Azure
The company worked with Publicis Sapient and Microsoft to design and implement a cloud-based solution with Microsoft Azure, successfully converting 200+ data integration jobs in Azure Data Factory, modeling and migrating 400 data tables, storing 450 procedures and queries, and migrating a data quality engine without business disruption.
Business Impact:
- Minimized support and disruption costs
- Improved ability to develop, test, and deploy changes
- Launch of self-service business intelligence for seamless data exploration and analysis
- 45% of queries completed faster
- Improved capability to enhance and scale the platform
Top Global Oil and Gas Company Adopts Infrastructure as a Service (IaaS) on Azure Cloud to Reduce ETRM Total Cost of Ownership (TCO)
When the company saw an opportunity to improve the scalability and operational efficiency of its existing C/ETRM systems, it partnered with Publicis Sapient and Microsoft to implement an infrastructure as a service (IaaS) solution on Microsoft Azure with SQL Database, and Table and Blob Storage.
Business Impact:
- 25% reduction in TCO with license-as-you-go service software and pay-as-you-go hardware utilization models
- 80% decrease in time to provision new hardware while optimizing capital investment with actual utilization trends
Create Your Digital Future
To win in a world of accelerating change, energy companies must invest in digital capabilities that reduce complexity, increase scalability, and enable rapid adaptation. Partner with Microsoft and Publicis Sapient to define those capabilities and develop a secure, scalable, data-centric Supply and Trading ecosystem that drives a virtuous cycle of efficiency gains and transformational value creation.
Let’s create the future of Energy Supply, Trading, and Risk Management together.
Please connect with us at energyandcommodities@publicissapient.com.