Most energy companies know when their Energy Trading and Risk Management (ETRM) platform is causing pain.
Traders complain that the system is cumbersome and not timely. Schedulers maintain spreadsheets because the standard workflow doesn't meet their needs. Risk teams pull data into separate tools to produce the analysis they need. Operations teams rekey information between applications. Reports take too long to produce—or can't be produced reliably at all.
Eventually, the question reaches management:
Do we need to replace the ETRM?
Maybe.
But that is usually not the first question I would ask.
The better starting point is:
What is the current system really costing the business, and which of those costs would be eliminated by fixing, extending or replacing it?
That distinction matters because an ETRM replacement can be a significant investment in money, time and organizational capacity. At the same time, doing nothing can be expensive when years of workarounds, duplicate processes and technology limitations have accumulated around an aging platform.
The objective of an ETRM assessment should therefore be to turn statements such as "the system doesn't work for us anymore" into a measurable business case.
ETRM Systems Rarely Become Obsolete Overnight
Most ETRM environments don't fail suddenly.
The business changes around them.
A company may enter new ISO/RTO markets, acquire additional generation assets, add renewable resources or battery storage, introduce new products, restructure its commercial organization or adopt new risk and reporting requirements. A platform originally designed and configured for one operating model may gradually become less aligned with what the business actually does.
Current ETRM providers themselves recognize this problem. For example, one major SaaS ETRM provider notes that as legacy platforms encounter functional limitations, companies frequently develop spreadsheets, isolated applications and manual workarounds around the core system. It also points out that complete replacement is not always the answer; modular improvements or phased modernization can sometimes address the highest-value gaps at lower cost and risk.
The workarounds themselves are therefore important evidence.
They tell you where the business has evolved beyond the platform.
But simply counting spreadsheets isn't enough. You need to understand what those workarounds are costing.
Start With the Work, Not the Vendor List
When dissatisfaction with an ETRM reaches a certain point, there can be a natural temptation to begin looking at replacement products.
That puts the solution ahead of the diagnosis.
Before developing a vendor shortlist, I would first build a fact-based picture of how commercial operations actually function today.
That means going beyond documentation and interviewing users across the front, middle and back office—and, importantly, watching them perform their daily work.
There can be a significant difference between the documented process and the actual process.
A workflow diagram may show:
Trade Capture → Risk → Scheduling → Settlement → Accounting
The operating reality may look more like:
Trade Capture → Export to Excel → Manual adjustment → Email → Re-entry → Separate database → Reconciliation spreadsheet → ETRM → Accounting
Those intermediate steps are where much of the hidden cost resides.
What Should You Measure?
An effective ETRM assessment should identify and quantify several categories of system-related friction.
Start by identifying business functions the platform was intended, or would reasonably be expected, to support that are actually being completed elsewhere.
Examples might include position management, P&L reporting, trade validation, scheduling, settlement calculations, exposure reporting, curve management or operational reporting.
The issue is not that every activity must occur inside one application. Modern trading architectures can appropriately use specialized platforms and integrated data services.
The question is whether activities are outside the ETRM by design or because users have been forced to compensate for a capability gap.
That difference is critical.
Excel remains an extremely useful tool in energy trading, and the objective should not be to eliminate spreadsheets simply because they exist.
But there is an important difference between using Excel for ad hoc analysis and using it as a permanent production system.
Look for spreadsheets or small databases that:
Those are not merely spreadsheets. They may represent unfunded extensions of the ETRM architecture.
Rekeying information is relatively easy to see and quantify.
How many trades, schedules, prices, settlement records or other transactions are manually entered into more than one system?
How often?
By how many people?
How much time does it consume?
Then look beyond the labor cost.
Manual entry can create reconciliation work, correction cycles and control requirements that would not exist if the applications were appropriately integrated.
An activity that takes one person 20 minutes may create another hour of checking and reconciliation somewhere else.
The total process cost matters more than the cost of the individual task.
Many repetitive processes persist because "that's how we've always done it."
Ask users what they do every morning, every end of day and every month-end.
Where does someone:
Modern ETRM environments increasingly emphasize workflow automation, integrated data and real-time or near-real-time risk and position visibility. Major ETRM platforms now explicitly position automation and connected front-to-back workflows as core capabilities.
That doesn't mean every manual activity warrants automation. It does mean recurring manual work should be evaluated rather than accepted as an unavoidable cost of doing business.
Reporting is often one of the clearest indicators that the platform and the business have diverged.
Ask:
Can traders see the position they actually trade from?
Can management obtain reliable daily P&L?
Can risk reproduce the exposure numbers being reported?
Can operations and accounting trace results back to the underlying transactions?
A company may technically have an ETRM while its real commercial reporting environment lives in spreadsheets, databases and reporting tools surrounding it.
That isn't automatically wrong. Data warehouses and analytics platforms can be entirely appropriate parts of the architecture.
The important question is whether the architecture is intentional, controlled and maintainable.
The cost analysis shouldn't stop with labor.
Organizations may be paying for:
These costs can be surprisingly difficult to see because they sit in different budgets.
IT sees one portion. Commercial operations see another. Finance sees vendor invoices. Individual departments see the people performing manual work.
An assessment should put those costs in one place.
Some of the most important costs will never appear in an operating-expense report.
A platform can become a constraint on the business.
What happens when you want to:
Energy markets and commercial portfolios are becoming more interconnected and data-intensive, and current ETRM design increasingly emphasizes scalability, integration and the ability to support evolving products and workflows.
If each expansion requires another spreadsheet, custom workaround or lengthy development project, that constraint has economic value even if it is more difficult to calculate precisely.
I would generally separate these strategic opportunity costs from hard operating savings rather than artificially assigning them an exact dollar amount.
They still belong in the decision.
This is where the business case begins to become tangible.
For each significant workaround, estimate:
People × Time per Occurrence × Frequency = Annual Hours
Then apply a reasonable fully burdened labor cost.
But don't stop there.
Separate the hours into categories such as:
That helps distinguish between work that could truly disappear and work that would simply move somewhere else.
The objective is not to produce the largest possible savings estimate.
It is to produce one management can believe.
Turning "The System Is Clunky" Into a Business Case
We recently applied this type of approach for an energy company operating hydro, wind, solar and thermal resources across RTO and bilateral markets.
The company's commercial technology suite had been selected roughly a decade earlier. Over time, expansion into new markets, products and acquisitions had outgrown the original tools. Numerous front-office workarounds had developed, and traders and schedulers increasingly viewed the technology as a constraint on the business.
Rather than beginning with a replacement recommendation, we assessed how the operation actually worked.
The process included 35 interviews and 14 independent shadow sessions across the front, middle and back office and IT, and an assessment of 27 core business functions.
The results put numbers behind the frustration.
Among the findings:
The important result wasn't simply that the existing tools had weaknesses.
The company already knew that.
The value was replacing:
"Our tools are clunky and our users are frustrated."
with something closer to:
"Here are the functions affected, the workarounds being used, the annual effort they require, the technology costs involved, the operational implications and the economic alternatives available to us."
That creates a very different management conversation.
The Answer May Be Fix, Enhance—or Replace
A good assessment should not be designed to justify a decision that has already been made.
It should preserve multiple outcomes.
Fix
Some problems may be configuration, training, data-quality or process issues rather than fundamental platform limitations.
Addressing those problems may provide significant improvement without a major technology program.
Enhance
Other organizations may have a viable core platform but need integrations, additional modules, workflow automation, a data layer or targeted custom capabilities.
A modular approach can sometimes address high-value gaps while avoiding the disruption of a wholesale replacement.
Replace
In other cases, the combination of functional gaps, operating costs, architectural limitations, vendor constraints and future business requirements may make replacement the economically sound answer.
The difference is that management now has evidence for making that decision.
What Leadership Should Expect From an ETRM Assessment
By the end of the process, management should be able to see more than a requirements document.
I would expect the assessment to provide a clear view of:
Where the system supports the business well.
Where workarounds have developed and why.
How much those workarounds cost in annual effort and technology expense.
Which gaps create meaningful operational, control or reporting risk.
Where the current environment constrains future growth.
What can reasonably be fixed or extended.
What would require replacement.
And what each alternative is likely to cost and deliver.
That information lets the CIO, CFO, commercial leadership, risk organization and trading desk evaluate the same decision from a common fact base.
Don't Start With "Which ETRM Should We Buy?"
An ETRM replacement may ultimately be the right answer.
But choosing software before understanding the economics of the current environment risks solving the wrong problem—or spending significantly more than necessary.
The better sequence is:
Understand the work.
Measure the workarounds.
Quantify the cost.
Identify the business and control risks.
Define future requirements.
Then compare the options.
When you do that, an ETRM decision stops being a debate over whose system complaints are most compelling.
It becomes an investment decision.
If your trading organization has accumulated spreadsheets, manual processes and shadow systems around an ETRM that no longer seems to fit the business, MidDel can help assess the current environment, quantify the cost of the workarounds and build an evidence-based case for whether to fix, enhance or replace it.
Drew Epps is a senior consulting leader with MidDel Consulting with more than 20 years of experience as a technologist and business consultant in the energy sector. His experience spans ETRM implementations, energy marketing and trading, risk and credit management, data architecture, system integration and process improvement across power, natural gas and related commodity markets.
