Reimagining Energy Supply, Trading, and Risk Management
Create a data-centric digital ecosystem across Supply, Trading, and Risk to unlock value by increasing agility, streamlining business processes, and enabling next-generation decision support and portfolio optimization capabilities.
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
“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 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 Energy 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 credit 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 cost analysis.
Adapting to the Evolving and Interconnected Commodity Market Landscape
The rapid evolution and increasingly 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, Biofuel, RNG, Agro, Minerals
- Midstream: Oil, Natural Gas, Processing Plant, Crude Storage, LNG, Power Generation, Hydrogen Manufacturing, Batteries, CCS & CO2, Solar
- Downstream: Refineries, Diesel, Plastic, Alternative Fuels, Ammonia, Hydrogen Fuel, Credits, Wind
- End Customer: Industrial, Commercial, Steel, EV, Green Transportation, Cement, Agro, Credits
Conducting Business Across the Front, Middle, and Back Office
Supply and Trading organizations rely on a suite of specialized commodity/energy trading and risk management packages (C/ETRM), shadow systems, and manual processes to manage their business. These specialized C/ETRM packages are effective for single commodity, single market operations, but they were not designed to support cross-commodity, multi-jurisdiction trading and risk analysis. Additionally, most C/ETRM packages 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 proliferation of data in disconnected, highly customized solutions and the extensive development of manual processes to support end-to-end business execution.
Common Supply, Trading, and Risk Personas and Tools:
- VCO* / 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 Credit Registries
- Reporting
- Taxes
- Shared Tools:
- C/ETRM Packages (commodity focused, region focused, business focused, hybrid)
- Master Data Management (Systems of Record)
- Function-Specific Tools:
- VCO* / Front Office: Pipeline Bulletin Boards, ISO’s / 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
*Value Chain Optimization
Addressing Challenges Caused by Legacy Infrastructure and Manual Processes
Common efforts to address C/ETRM system capability gaps have resulted in complex business architectures that are inherently inflexible, inefficient, and costly to support. These C/ETRM-centric architectures restrict agility, hinder innovation, 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 and hinder the use of artificial intelligence (AI) to develop next-generation capabilities
- “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
- Capability gaps, limited solution options, and the slow pace of C/ETRM solution modernization hamper the ability of Supply and Trade organizations to optimize, innovate, and support the Energy Transition
- Extensive manual intervention in data aggregation, analysis, and reporting across the front, mid, and back office increases the risk of human error and security breaches and limits the time available for higher value-add activities
Transform Your Supply and Trading Landscape to Realize Your Business Potential
Agility is crucial for businesses facing 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 enabling agility, improving visibility, increasing efficiency, and enhancing collaboration and innovation.
Digital Ecosystem Value Drivers & Opportunities
- Gain agility to maximize value in a rapidly evolving commodity market
- Accelerate decision-making and enhance collaboration and innovation
- Automate to improve efficiency and reduce risk
- Optimize portfolios and achieve sustainability goals by enabling end-to-end visibility
Value Drivers for Supply, Trading, and Risk Modernization
Creating a data-centric digital ecosystem across Supply, Trading, and Risk that can adapt and scale with the energy industry unlocks value across five axes of digital transformation:
- Enabling agility
- Improving visibility
- Increasing efficiency
- Accelerating innovation
- Enhancing collaboration
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.
Visibility
Centralize data and apply data modeling, integration, and artificial intelligence to enable end-to-end auditability, full-cycle cost analytics, and portfolio-level value chain optimization.
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 to evolve trading algorithms and 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.
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.
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 creating a strong digital foundation to unlock value now and in the future.
Create value while reducing cost, complexity, and risk 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 includes three core architectural components:
- Service and integration layer leveraging comprehensive AI and low-code capabilities to create next-generation business services and digital user channels.
- Unified commercial enterprise analytics platform to bring together data and analytics capabilities across Supply, Trading, and Risk and unlock high-value AI-enabled workflows.
- Commercial infrastructure layer with core systems to execute and record business-critical processes across Supply, Trading, and Risk.
This architecture may be fully cloud-based or hybrid and is designed to leverage enablers to enhance security, drive efficiency, and support innovation and collaboration across the organization.
Conceptual Solution Architecture
- Digital User Channels:
- Supply
- Trading & Scheduling
- Risk Management
- Contracts
- Accounting
- Retail / Marketing
- Business Services:
- Service & Integration Layer: E2E P/L Management, Overall Margin, Intraday Portfolio Valuation, Supply Optimization, What-If Scenarios, P/L Attribution, Contracts Performance, Hedge Effectiveness, Carbon Position Management
- Foundation & Utility Services: Data Reconciliation, Process Automations, Master Data Management, Frameworks & APIs, System Reliability Frameworks, Common Data Models
- Data & Analytics:
- Unified Commercial Analytics Platform across Supply, Trading & Risk
- External Integration:
- Trading Exchanges, eConfirm, Taxes, Market Data, Reporting, Carbon Registries
- Supply:
- Supply Planning, Demand Forecasting, Price Forecasting, Distribution Optimization
- 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
- ERP:
- 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
Accelerate Value Creation with AI and Generative AI-Enabled Workflows
One of the most significant benefits of moving to a data-centric architecture across Supply, Trading, and Risk is the ability to unlock AI and Generative AI-enabled use cases. Imagine traders using simple queries to analyze third-party demand forecast predictions, generate simulated forecasts, and get recommendations on hedge positions and value optimization.
Real-time decision support offered by AI and Generative AI-enabled workflows will define the next generation of Supply, Trading, and Risk operations by dramatically enhancing productivity, collaboration, and innovation.
AI & Generative AI-Enabled Use Cases Across Supply, Trading & Risk
- VCO* / Front Office:
- Demand forecasting
- Market simulation
- Price forecasting
- Schedule generation
- Sentiment analysis
- Policy and regulatory impact
- Optionality and arbitrage opportunities
- Middle Office:
- Credit ratings and scoring
- DOA & credit limits assessment
- Trade reviews and comparison
- Contract review and analysis
- Contract generation
- Risk policy violations
- Bid and offers
- Automated hedging
- Back Office:
- Automated reconciliation reporting
- Invoice matching
- Multi-variable data quality checks
- Management reporting
- Financial statement generation
- Regulatory reporting
- Independent monitoring of changes in regulation
- Corporate Generative AI-Enabled Use Cases:
- Connected Workforce (Employee Chat & Help Desk)
- Information Discovery (expedite analysis by querying disparate document types and sources such as contracts, financials, etc.)
- Co-pilots for M365, BI, Development, etc. (prompt co-pilots to create content, visualizations, apps, etc.)
*Value Chain Optimization
Embarking on the Transformation Journey
A critical first step in creating a data-centric digital ecosystem across Supply, Trading, and Risk 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 from tactical to strategic and from existing business models to digital business models, with initiatives ranging from automating manual tasks and decoupling primary systems, to enabling real-time insights, AI-enabled decision support, and ultimately creating new revenue streams and end-to-end auditability. The journey is structured to optimize the core, capitalize on new technology investments, and partner to change market position, with relative impact increasing as organizations move from incremental to evolutionary change.
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 Its Supply Data Platform to Azure
Chevron worked with Publicis Sapient and Microsoft to design and implement a cloud-based solution with Microsoft Azure, successfully converting over 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
Read the rest of the story: https://www.publicissapient.com/insights/chevrons-supply-chain-cloud-transformation
Top Global Oil and Gas Company Adopts Infrastructure as a Service (IaaS) on Azure Cloud to Reduce C/ETRM Total Cost of Ownership (TCO)
A leading oil and gas company partnered with Publicis Sapient and Microsoft to implement an IaaS solution on Microsoft Azure with SQL Database, and Table and Blob Storage, improving scalability and operational efficiency of its existing C/ETRM systems.
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 Publicis Sapient and Microsoft 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