Molecule Software Blog

The Molecule Software ETRM/CTRM Blog

Selling Against a Fallacy in ETRM/CTRM Software

One of my favorite things about being a Molecule is that we under-promise and over-deliver. Regularly.

When I'm on a demo with a prospect and they ask for a new feature to be delivered by a particular date? Nope, no can do.

WILL we do it? Maybe. But only via a contract and if our CEO 100% knows we can deliver.

We strive to be honest and factual about our ETRM/CTRM software. What we can and can't do.

Working for a company like this is refreshing - I've worked on the other side of this when it comes to company values.

One thing I've never done in my career is bad mouth a competitor. There's no point. We focus on solving our customers' problems better than anyone else. We trust that our team's integrity is evident.

In this post, let's look at software in general. I've sold a lot of it, so I have outside perspective as well.

Timelines and Costs

In every industry there are companies that bend the rules when answering RFPs, promising a new feature, or even mocking up an 'MVP' and calling it a production feature. Lots of companies promise a timeline for implementation or feature development, and then riddle customers with change orders and blast the implementation costs to the moon.

The ETRM/CTRM industry wrote the blueprint for decades-long implementations that balloon costs into the billions.

Product Quality

I want software to work like technology from Minority Report. But other ETRM/CTRM platforms don't. I've seen them.

Building Trust with Customers

How does Molecule combat our customers' fears of a vendor lying to them? Here are some of the big ways, and we challenge you to ask your vendors to do the same.

  1. If we promise a new feature, we'll tie it to a timeline in the contract. And we meet that deadline.
  2. We are open to Proofs-of-Concept. If we don't meet your requirements, you can walk away. Ask a monopoly to do this. Please.
  3. We do not lie in RFPs.
  4. We provide support our customers adore, with live, full-time Molecule employees. Check out what our users say about our support on Molecule's G2 page.

That being said, we are not perfect. We've missed a deadline before. Every now and then we find a bug. We are humans writing code and running a company with the end goal of making our customers' lives better.

Maybe it's to our detriment that we answer RFPs with total honesty. We lose more of them than we win. But we know this for a fact: companies that choose Molecule come to learn that we strive, on a daily basis, to outperform any other ETRM/CTRM they have ever used–or ever will.

ValuesSalesCost Savings

How much does an ETRM cost in 2021?

For most trading companies, an ETRM costs about $100k-200k/year, plus taxes and implementation fees. The smallest, simplest, exchange-only shops can get away with simpler software (around $60k/year) – while the largest companies, with enterprise support, physical logistics, and heavy workflow needs may pay $500k/year or more. Contract terms are generally 1-5 years.

These prices are what we've gathered across the industry – meaning, they include what we charge and what we've heard about our competitors.

What levers change the price?

Usually, the factors that drive the pricing quote are:

  • Complexity of the portfolio (i.e., exchange-only vs bilateral, commodities)
  • Number of users
  • Needs for physical logistics features
  • Expectations around support

The biggest item that changes the cost of the solution – and which can ultimately triple in cost during the life of an ETRM/CTRM system – is implementation.

Implementing ETRMs is a difficult, consultative task that often involves building some customizations. Vendors will typically quote the lowest number that seems likely, but include a provision that indicates the actual spend will be based on "time and expenses", or T&E.

What costs aren't accounted for?

Typically, the price of an ETRM system includes the software itself and a low estimate of the implementation cost. It does not include:

  • Market data (ICE, CME, Nodal Exchange, Platts, Argus, OPIS, LMPs)
  • A market data loading/aggregation solution (i.e., a way to get the market data into the ETRM system)
  • A business intelligence solution (i.e., custom reporting)

Is Molecule any different?

On pricing, we are in line with standard industry pricing. Where we are different:

  • Our contracts are generally 1-2 years, and can bill monthly.
  • We include implementation costs in our fixed-price quote – not an estimate and no T&E for the scope we agree on; we wear the implementation risk.
  • We include some market data in our quote (where the vendor allows us to), such as the LMPs and block pricing we provide for North American ISOs. We also have our own tools that load the data automatically.
  • We include an embedded business intelligence solution, so we can provide custom reports as part of our subscription.

Cost Savings

The Sky is Falling. Get Skinny

As oil prices approach 18-year lows, companies around the globe are already beginning to feel the squeeze. Everyone we talk to points to corporate spending freezes and cost-cutting.

Bob Ronin, previously SVP at Fidelity Investments, writes on CIO.com that one of his top tips for reducing IT cost is to move to the cloud. "Storage and hardware no longer need to be on-site and the cost of renting can be much lower than the cost of owning as resources are only used when needed."

If history is a predictor of what to expect during the current dip in the economy, we'll see an immediate spending freeze followed by drastic moves to cut costs. The difference during this COVID crisis is that many of us are working from home and scrambling to make sense of what's to come.

So, what can you do now?

  1. Challenge the way you have been doing business and identify opportunities to update your processes and technology so that they better match today’s business environment.
  2. If any of your large expenses are IT platforms, determine whether you can replace them with cloud-based software. Working from home provides a great opportunity to do high-concentration tasks, like evaluating tools.
  3. Gather pricing, deal length, and contract terms for the products you currently use.
  4. Regroup internally for feedback and round-table idea sharing.
  5. Be ready to move swiftly when asked to make a change.

If you believe your department will be asked to cut costs in the coming months, now is the best time to prepare. Evaluate your options while you have an extra hour or two (since we temporarily do not have a commute).

If your company trades commodities and uses an expensive on-premise legacy system for deal-capture and risk management, we're ready to help. As ETRMs go, we deliver value by providing fairly-priced, modern software that automates your life, without the implementation & transition costs you usually see in our industry. Further, in these unpredictable times, a system backed by a team that's always remote, can provide support and reliability that nobody else can.

The sky may be falling, but Molecule is still working, as are many other companies across various industries that can help you get lean before it’s even time to migrate back to the office.

Stay healthy and safe. We're here if we can ever be of help.

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