ROI

Compelling economics.

When examining how energy companies operate and compete, Allegro advantages quickly become apparent in measurable terms. The following examples stem from comprehensive Allegro integration and automation capabilities.

Integrated collaboration: $1 million advantage
Integrating physicals and financials means schedulers get instant notification of trades. There’s no time lost waiting for hardcopy confirmations. The extra lead time enables schedulers to create more cost-effective schedules — an advantage that could reduce total cost of delivery by 10%.

Given an average $10,000-per-day delivery cost, cash savings over three year period would total $1,095,000.

Integrated simulation: $9 million advantage
Only when physicals and financials are fully integrated can traders and risk managers accurately simulate the impact of specific events on a portfolio. The best new energy solutions will analyze what-if’s involving multiple simultaneous factors — simulating real-world risk exposures with unprecedented precision. For example, consider a team that needs to simulate a 10% winter temperature drop that may occur seven days forward.

Using rapid simulation, the team tests an outcome involving 3% higher consumption of retail gas volume, a 4% gas price increase, a 2.5% rise in power demand and generation, 5% higher demand for heating oil, plus associated impacts on transmission, transport and storage. A single event could easily reveal an unhedged risk of $1 million.

Given an average of three better-hedged events a year with advanced simulation, cost savings over a three year period would total $9 million.

Integrated data entry: $0.6 million advantage
Redundant data entry exacts a heavy price. Consequential costs include an excessive number of staff devoted to rote paperwork and, because every manual entry introduces a potential error source, an excessively high error rate. Reducing the number of keyed data entries typically enables some staff members to be reassigned to more productive tasks and, at the same time, reduces the error rate, eliminating associated costs and complications. Fewer errors also improves regulatory compliance.

Integration across multiple commodities and business functions eliminates redundant data entry. All aspects of the business tie into an integrated Allegro application environment, and operate from a single database across multiple commodities and user processes.

As an example, assume a company has 15 users in the front and back office. Average salary: $60,000 — with taxes and benefits, $70,000. Six of these 15 staff devote much of their time entering data. The same data is entered twice — that is, into two different systems that aren’t integrated. Therefore half this work is redundant. When an Allegro solution is deployed, three staff members are reassigned to more productive tasks that return greater value to the enterprise. Over a three year period, reduced data entry would save the company $630,000.

That figure doesn’t include substantial cost savings gained by reducing the error rate, plus higher corporate earnings generated by the higher-value work of three reassigned staffers.

Many Allegro customers report advantages from their real-world experience. These examples are typical.

Speed: 30 hours vs. 3 minutes
An oil producer faced a complex accounting challenge. This operator was successfully using steam drive to extract heavy crude from a mature field. However, his team was spending 30 hours at a time allocating production among hundreds of wells. Using an integrated Allegro solution, the same allocations took three minutes — total.

Efficiency: Data quality accelerates processes
An integrated oil and gas company sought to improve business data quality and make downstream operations more efficient. The company now uses an integrated Allegro solution to manage lease and bulk refinery-supply transactions including contract management, pipeline scheduling, volume actualization, invoicing and management reporting, plus disbursements to interest owners for all lease purchases. This solution also makes it easy to maintain divisions of interest by lease, handle processing of conveyance transactions and generate regulatory reports.

Flexibility: Rapid scaling for strategic agility
The ability to readily add complete application software components to an integrated Allegro solution made sense to an expansion-minded European energy company.

This company required a proven gas trading and risk management system that could rapidly scale with increased activity levels while being potentially capable of also managing electric power, oil, and possibly coal trade exposures, through progressive adaptation. It needed an integrated trading solution that allowed for consolidation of front-office deal and contract capture, middle-office control, and back-office settlement activities.

Allegro delivered. The solution consisted of independently functional modules that seamlessly integrate in any combination. Allegro’s unique architecture gave this company a custom fit with the functionality it needed. Further, the solution deployed quickly and could flexibly accommodate future strategic expansion in a fast-changing marketplace.