CTRM Myth: CTRM Solutions are too Expensive
Today, we are continuing our series on the “5 Myths of CTRM” by addressing the myth that commodity trading and risk management (CTRM) solutions are too expensive. Yes, enterprise CTRM software is a strategic investment for your business; and the ROI is undeniable. Here’s why: Outdated and manual processes are costing your business more.
Think about it. When you consider the alternative to forward-compatible enterprise CTRM software – such as spreadsheets or homegrown solutions – you must also consider the heightened risk for human error, noncompliance penalties, inaccurate data, and manual processes that come with forgoing a comprehensive solution to your portfolio management needs. Spreadsheets and dated solutions lack the controls, approvals, and messaging that would help detect these errors earlier in the transaction lifecycle. For many companies, the sheer volume of deals and contracts is problematic for an old-school approach.
Why do companies choose to buy enterprise CTRM software?
A scalable and comprehensive software package – one that has been specifically developed for the purpose of commodity trading and risk management – can lead to tremendous rewards, lower your total cost of ownership and accelerate your return on investment.
Consider these factors as you weigh the various options in the market. As you survey the possibilities, think about the important questions that will arise for your business:
- Will the software limit counterparty default risk by providing real-time access to internal and external credit rating changes and help you define effective credit limits?
- Will it significantly improve your ability to manage cash, collections and borrowing capacity, and will it calculate cash flows?
- Will it separate out your hub, basis, premium, and differential components, leading to a more effective hedging strategy?
- Does the software provide transparency so that you can manage contracts, quickly capture pricing data, implement hedging strategies and run simulations?
How do I convince my team to invest in enterprise CTRM software?
While you may be thinking, “I understand a CTRM software investment is worth making, but I don’t know how to communicate this to my superiors and/or team,” you are not alone. Conveying the ROI on an enterprise system that is used throughout your entire organization for the entirety of your portfolio can oftentimes be a challenge. That’s why we’re here the help. Click here to access our infographic, “20 Facts to Make the Case for Next-generation CTRM,” which will arm you with the statistics you need to approach your team with a CTRM investment strategy.
Interested in learning more about how Allegro’s solutions can help your business? Click here to contact us today.