Event

On 3 January 2013, Triple Point Technology, an energy trading and risk management company, announced the acquisition of Wam Systems. Financial terms were not disclosed.

Analysis

Wam’s supply chain planning software will enable Triple Point Technology to add further functions to its trading and risk management commodity suite. Widespread efforts to better manage commodity price volatility have contributed to the dramatic growth in Triple Point’s revenue over the past five years. Wam is the latest in series of acquisitions and will bring Triple Point’s revenue close to $200 million annually. Wam’s 50-member staff will grow total Triple Point’s headcount to approximately 850. Gartner observes Triple Point has more employees per customer than are customarily found in supply chain vendors, but this may reflect higher growth rates and earnings margins in the energy trading and risk management (ETRM) space. This high ratio could become a longer-term issue as growth slows or if margins decline.

The Wam acquisition diversifies Triple Point’s capabilities into planning and establishes a new chemical vertical presence. Triple Point will continue to sell Wam software separately, competing with SAP APO and other process supply chain planning vendors within the chemical industry. Triple Point’s global reach offers the potential for Wam to gain more customers from larger chemical companies. In addition, Triple Point may find some near-term cross-selling opportunities with refining companies that use Wam’s software through its marketing alliance with Honeywell.

Triple Point has indicated it intends to integrate demand planning visibility upstream and Commodity XL market pricing downstream for profit optimization. Gartner sees this as promising and consistent with the vision of orchestrated value networks; we believe it could position Triple Point well as it develops its market readiness and maturity to capitalize on this combination. Capitalizing on the integration of Triple Point and Wam products is a longer-term proposition, since most chemical companies manage raw materials sourcing and finished product planning separately.

• Current Wam Systems customers: Monitor your service and give attention to key resources transferring to Triple Point. Take advantage of bulk chemical pricing and demand integration between Wam and Triple Point's Commodity XL when available.
• Prospective customers of Wam Systems: Evaluate the software on the merits of current planning functionality. Monitor the product road map from Triple Point.
• Triple Point customers: Evaluate Wam and consider the value proposition of the proposed solution integration, but do not use this in any business case without firm delivery plans.

Some documents may not be available as part of your current Gartner subscription.

• "Magic Quadrant for Energy Trading and Risk Management Platforms" — This Magic Quadrant analyzes the leading vendors of ETRM platforms. By Keith Harrison and David Furlonger
• "Chemical Industry Leaders Must Rethink Six SCP Dimensions for Better Business Results" — Chemical companies are applying lessons learned to their supply chain planning and inventory management strategies. By Paul Lord