The buying and selling of power, natural gas, coal, crude oil, and refined products and emission-related products are core functions for energy producers, consumers and market speculators. The range of traded products associated with the buying and selling of these commodities is extensive — from simple buy-or-sell transactions in or near real time to ensure that delivery is met, to complicated, structured contracts involving multiple commodities. Since the opening of the wholesale U.S. natural gas market in the early 1990s, energy trading and risk management (ETRM) platforms have evolved to accommodate an increasing range of commodities, as well as a diverse array of physical and financial instruments, as markets deregulated.

The global energy and utilities market continues to be driven by a confluence of forces — security of supply and environmental concerns, ever-changing regulatory and legislative requirements, and the quest for improved performance and profitable business models. Governments are addressing security of supply and energy sustainability concerns through policies that promote investment in clean technologies, and encourage consumers to deploy energy efficiency solutions, including consumer-owned distributed energy resources. Consequently, energy and utilities companies are regularly forced to modify their IT and operational technology application portfolios and architectures to meet these challenges. ETRM platforms form a significant part of every energy and utilities company application portfolio, providing a solution to manage and optimize wholesale energy market positions and risks. Changes in regulatory and legislative requirements, market structures and end-user energy asset portfolios provide opportunities to improve and consolidate these systems. Hence, the significance of this Magic Quadrant in helping end users make the right selections for new or consolidated platforms.

Despite the lingering fallout of the 2008 financial crisis, 2010 saw investment growth in these platforms continue across the North America, Europe and Asia/Pacific regions. On a global basis, estimated average annual growth (vendor revenues) of the ETRM platform market since 2008 is just less than 7%. The market for ETRM platform solutions is more fragmented than markets for established administrative solutions, such as customer information systems or general ledger systems. The reasons for this fragmentation, and the consequently wide range of vendors, include regional and regulatory market variations, the range of end-user requirements, and the extent and rapidity of market change. Some businesses, such as investment banks and hedge funds, focus more on financial trading. Some other businesses, such as load-servicing entities meeting demand or load requirement needs, focus more on physical delivery aspects. Businesses, such as industrial end users (for example, airlines involved in fuel hedging), focus on optimizing energy procurement. All participants transact with third parties directly with a counterparty, and/or via exchanges or brokers. These transactions must be managed from execution through physical delivery to invoicing and settlement. Furthermore, all market participants must manage positions in all their traded commodities, which means monitoring market price movements and counterparty status, and tracking the impact of many variables on the current and future value of contracts, assets, trading books and the entire portfolio. These common functions are the domain of the ETRM platform.

The complexities of the ETRM marketplace increase the need for careful installation and configuration to achieve sustainable project success. Based on our research, and anecdotal evidence, installation times will range from a minimum of three months for a small-scale or single-commodity software as a service (SaaS) solution, to 18 months or more for a multicommodity or multinational deployment. No two ETRM platform installations are the same. There is a wide variety of energy portfolio elements, and how they are modeled and valued varies across market participants. When purchasing or replacing an ETRM platform, buyers must recognize that the configuration of the platform to accommodate internal views of asset modeling and valuation will require translation into the configuration screens or scripting tools of the new platform. Some end users rely on third-party system integrators (SIs) to undertake much of this work, and some end users train internal resources. Either way, this is a critical activity.

Another key concern is that, although ETRM platforms will cover much of the wholesale energy commercial process, it is likely that a new installation will require extensive integration with existing internal systems — from financial systems to spreadsheets and other legacy commodity management tools, and from external data sources for price and market data to exchanges for transaction execution. The establishment or enhancement of an enterprise information management strategy and solution to cope with the number, frequency and time-critical nature of ETRM interfaces is key to success.

During the past 12 months, a number of factors have continued to influence the ETRM platform market, not the least of which is the fallout from the financial crisis. Some of these factors, in no particular order, are:

• A continuing interest in widening the use of simulation and scenario-based analytics ("what if" analyses)

• The desire to reduce the ongoing costs and risks associated with multiple commodity platforms

• Greater and more-varied connectivity to trading markets

• Continued globalization of commodity and energy markets

• Increasing correlation between commodities — for example, burning fuel to produce power also produces emissions

• Linking trading operations to physical asset optimization — for example, optimizing power generation across asset types (coal, gas, wind, solar, nuclear) based on physical constraints, weather and market parameters

• The need for deeper, more responsive risk management capabilities and a holistic view of risk across the enterprise

• Responding to tightening regulatory and legislative reporting requirements

• Widening of the asset types, such as new forms of power generation or energy storage, to be modeled and valued

Another factor influencing the ETRM platform market is a widening of the type of market participant. As a result of the recent financial crisis, many hedge funds that once traded energy in forward markets are no longer doing so. However, increasingly, banks and investment companies are taking a more active position in physical markets, as well as forward markets. As energy markets become increasingly politicized and volatile, and as energy-related developments attract government subsidies and the interest of the wider investment community, we can expect the nature of energy market participants to widen and their number to increase.

Looking at this year's Magic Quadrant, notable developments include the widening of the gap between OpenLink Financial and Triple Point Technology, and the rest of the field. Both maintain strong growth well above the average, and offer the widest range of functional capabilities across the widest range of commodities over all regions. Most of the Niche Players in last year's Magic Quadrant have grown, expanded their functional capabilities and, in some cases, entered into new end-user markets, improving their Ability to Execute and Completeness of Vision scores. Among the rest of the field, while improvements in functional coverage and some growth have been noted, the majority of the cautions in last year's analysis still apply.

An ETRM platform is a single or modular solution that is capable of capturing and managing wholesale energy market transactions from execution to settlement, invoicing, managing, and reporting market and credit exposures. For the purposes of this Magic Quadrant, we have taken a global perspective, but have also included regional players fitting the inclusion criteria. Among the ETRM platform vendors, four additional factors need to be considered:

• Functional Coverage or Focus: Some vendors cover all areas in depth, some are more focused on the physical logistics of one or two commodities, and some focus on the risk management aspect through proprietary models or a business intelligence (BI) capability.

• Commodity Coverage: Some vendors cover all energy-related commodities and many other commodities, and some cover only two or three energy-related commodities.

• Geographical Coverage: Some vendors cover all major markets in all geographies, and some cover markets only in North America, EMEA or Asia/Pacific.

• Deployment Options: Increasingly, hosted or SaaS-based solutions are gaining favor among end users as a means of reducing capital costs, deployment times and support overheads. While traditionally these solutions were preferred options for smaller end users or end users with limited functional requirements, as the functional capabilities of SaaS- or application service provider (ASP)-based deployments grow, the appeal to larger organizations will widen.

The market for ETRM platforms is fragmented. Mergers and acquisitions among the vendors, mostly privately owned, are an ongoing theme. There are approximately 20 ETRM platform vendors offering multicommodity solutions in line with the Gartner ETRM platform market definition. The wider ETRM solution ecosystem contains approximately 40 other vendors providing point solutions for specific issues (such as market integration, market and/or credit risk management and analytics solutions, and hedge accounting), generation and forecasting, or professional services (such as installation, integration and training). The inclusion criteria for this Magic Quadrant are listed in the Inclusion and Exclusion Criteria section.

The ETRM platform market is maturing, and — despite its fragmented nature — the majority of core functional requirements are met by the market leaders. The adoption of service-oriented architecture (SOA) has led to improved performance and integration capabilities. Beyond the core ETRM platform requirements, vendors, in an attempt to differentiate themselves, are focusing their efforts on different areas, such as building:

• Richer functional coverage in areas such as risk management (e.g., real-time market risk, cross-product/asset risk assessments and compliance with accounting rules)

• On the link between trading and upstream forecasting, and physical asset optimization

• On the physical or logistical aspects of trading

• On architectural or graphical user interface improvements

Many vendors have developed solutions for the management of carbon dioxide (CO₂ ) emission certificate inventories, allowing the ETRM platform to take a key role in the management of emission-related positions. ETRM platforms are particularly suited to this kind of activity — essentially paper trading. As global concerns over greenhouse gas emissions intensify — and as the global markets for CO₂ emission certificates, projects and related products grow — it could lead to further evolution of the ETRM platform.

For a full definition of the ETRM platform market, see "Market Definition: Energy Trading and Risk Management Platforms." The core functional requirements of an ETRM platform include the following for at least two energy-related commodities:

• Transaction/Deal Capture: Many of the larger multicommodity ETRM platform solutions began as trade/deal capture solutions and developed from there. The trade or deal can be viewed as the initial transaction in a process that will conclude with the settlement of an invoice. Real-time trade capture is a key component for power generators, using links with generation operations to ensure that the company remains in balance with supply meeting demand. The potential range of transactions is extensive, covering financial instruments from simple deals to complex single and cross-commodity or asset-class transactions, as well as physical commodity transactions.

• Logistics and Delivery: The delivery of energy or commodities is a significant part of an ETRM platform. All commodities associated with energy trading (with the exception of emissions) have a physical delivery aspect, although, where energy is traded on a purely speculative basis, this is less of a concern. There are many unique constraints and considerations with the delivery of these commodities. Power is scheduled and delivered via a transmission network; natural gas via pipelines and storage facilities; coal via shipping, rail and road; and so on. In each case, the ability to optimize the delivery of a commodity is an ETRM platform requirement.

• Trader Tools/Analytics: Traders are key users of ETRM platforms and should be provided with a range of tools used in establishing the potential value of a transaction in isolation, and when set against a book or portfolio.

• Position Management and Reporting: Possibly the most critical capability of an ETRM platform is the ability to reflect the status of the company's energy portfolio from physical and financial perspectives. Additionally, the end user should be able to view the position through a number of operational lenses — for example, by book, strategy, commodity, trader, counterparty and so on. Wherever possible, this should be in real time or near real time.

• Risk Management and Reporting: Many risks can be quantified and reported via an ETRM platform — from credit-related or counterparty-related risks to market-related or price-related risks, risks related to the physical aspect of delivery, and risks related to compliance with regulatory requirements — such as accounting standards. Many specialized energy risk management solution providers do not offer ETRM platforms; however, portfolio risk management capabilities have been a feature of ETRM platforms for several years.

• Straight-Through Processing (STP): This ETRM platform capability — the ability to automate the management and control of all touchpoints among trade entry, invoicing and settlement — significantly reduces the potential for error associated with the use of multiple systems. This capability can also help reduce the burden associated with IT and business-unit compliance.

• Integration: An ETRM platform's integration capabilities with internal solutions (such as financial and operational systems), external systems and data sources (such as market prices and intelligence providers) are critical to the wholesale or marketing operations. In some cases, these interfaces are with real-time systems, such as scheduling, and supervisory control and data acquisition solutions. Such interfaces need to be reliable and secure.

Inclusion Criteria

All analyses for this Magic Quadrant relate to vendor submissions that had to be provided as of November 2010.

ETRM platform vendors were considered for inclusion based on these criteria:

• The offering must be software products developed and owned by the vendor, and intended solely for energy and/or commodity trading and risk management.

• The offering must be delivered via a traditional software license or ASP/SaaS business model.

• A vendor must have at least 12 paying, unique institutions (energy companies or utilities) as customers using its products for ETRM purposes, and must be able to demonstrate at least two years of live implementations.

• Products must be able to demonstrate:

  • Support for multiple commodities

  • Transaction/deal capture facilities

  • Logistics (e.g., scheduling, nominations, balancing, transportation) facilities

  • Trader tools and analytics

  • Physical and financial position management and reporting

  • Risk management and reporting

  • STP (transaction to invoice)

  • The ability to integrate with enterprise applications

Exclusion Criteria

Vendors and products that did not sufficiently meet the specifics of the inclusion criteria, and those that did not have a sufficient number of clients/implementations in the energy trading area, were not considered for this Magic Quadrant.

Vendor "service-based" products or "consulting-led" offerings were not included, although we recognize that IT and business services are an important element of ETRM solutions.

Magic Quadrant Vendors

From an initial pool of 17 vendors, 15 were selected for this Magic Quadrant based on inclusion/exclusion criteria, client feedback, general industry visibility and relevant fit to the market. Our survey requested information about company size; distribution channels; financials; unit sales; and product features/functionalities, alliances and technical architectures. Additional input to the overall analysis came from the Gartner client inquiry process. Vendors were advised that they would be ranked by having their products compared against our criteria, and by our analyses of other vendors. Here are the vendors and products included in this Magic Quadrant:

• Allegro Development — Allegro v.8.

• Amphora — Symphony CS v.2.1 (trade capture and processing), Fleetime (waterborne transportation and logistics for crude/products), Market Connectors (for exchange connectivity), LivePrices (imports settled prices to Symphony or third-party risk systems).

• Aspect Enterprise Solutions — Aspect CTRM and AspectTradeFlo.

• Murex — MX.3.

• Navita Systems — Pomax ECTRM v.10.0 (core platform). Other related products include Pomax TRM, Structuring Manager, various commodity/regionally specific logistics modules, Curve Manager and Broker Price Manager.

• Open Access Technology International (OATI) — webTrader Power, webTrader Gas, webTrader Enterprise, webRisk, webTrader Market, webSettlement and webIntelligence.

• OpenLink Financial — Endur; pMotion, gMotion and cMotion modules; iOPT modules for forecasting and optimization; vDesktop; RiskPak, Risk Dashboard; Tax Module; Hedge Analyzer; Accounting Manager; Trade Process Manager; Collateral Management; Energy Scenario Management; Reconciliation Module; Producer Services Module; Active Data Services; Standard Gateways (ICE, NYMEX, EEX, Trayport, Reuters, Bloomberg, etc.); dbc SMARTsoft (supporting biofuels market); and IAM through a joint venture with MCG Energy Solutions (supporting North American power market requirements).

• Pioneer Solutions — TRMTracker.

• SAS — SAS BookRunner Commodity Capture v.12, SAS BookRunner Analytics Workbench v.12 and BookRunner Advanced Analytics v.12.

• SoftSmiths — SoftSmiths TMS.

• SolArc — RightAngle v.11.

• SunGard — Aligne; Entegrate; Kiodex; GMS/GTMS.

• Triple Point Technology — Commodity XL (power, gas, oil, coal, freight, biofuels, emissions, natural gas liquids [NGLs], liquefied natural gas [LNG], credit risk and fair value disclosure, hedge accounting); Xchange, management dashboard, strategic planning and procurement; MarketData Hub;, Commodity SL (preintegrated with SAP); and Visual Cockpit (logistics solutions for bulk/liquids/packaged commodities, chartering and vessel operations, power scheduling and natural gas).

• Viz Risk Management — Elviz v.10.2.

• Ventyx — TRM v 5.0.

Here are the vendors that had been considered for the 2011 ETRM Magic Quadrant update that were excluded:

• Encompass Technologies — fewer than 12 active, unique, energy market customers

• Calypso — Despite having no active users among energy companies and utilities, the Calypso Commodity Derivatives Module is used by several Financial Sector users to manage derivatives in power, coal, natural gas and, increasingly, carbon markets.

• SoftSmiths

• Pioneer Solutions

Dropped

• None

This axis evaluates ETRM software application vendors on the quality and efficiency of the processes, systems, methods or procedures that enable their performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. These software application providers are judged on their ability and success in capitalizing on their vision. Our evaluation of a vendor's Ability to Execute is based on these criteria (see Table 1):

• Product/service: The breadth and availability of the vendor's products that compete in and serve the ETRM market.

• Overall viability: Product quality and consistency, as well as the vendor's financial strength, including the likelihood of the continued investment in ETRM software for the financial services industry, and advancing the state of the art within the provider's portfolio of products.

• Sales execution/pricing: Capabilities of presales structures and management activities, including pricing and negotiation, as well as the overall effectiveness of sales channels.

• Market responsiveness and track record: Ability and responsiveness to meet changing market dynamics.

• Marketing execution: Market share in the global enterprise market.

• Customer experience: Ability to provide technical and relationship support and services that drive customer satisfaction.

• Operations: Effectiveness in meeting organizational goals and commitments.

This axis evaluates ETRM application vendors on their ability to convincingly articulate logical statements about current and future market directions, innovations, customer needs and competitive forces, and on how well they map to the Gartner position. These application providers are rated on their understanding of how market forces can be exploited to create opportunities. Our evaluation of a vendor's Completeness of Vision is based on these criteria (see Table 2):

• Market understanding: Competitive position, market knowledge and mechanisms for customer feedback.

• Marketing strategy: Ability to provide various professional services.

• Sales strategy: Ability to work with customers through the vendor's sales force and sales tools.

• Offering (product) strategy: Strength of R&D, capability in product design and the vendor's ability to offer image stability.

• Business model: Soundness and logic of the underlying business proposition.

• Vertical/industry strategy: Ability to provide a vertical-specific product and service.

• Innovation: Ability to have investment resources, expertise or capital for consolidation, defensive or pre-emptive purposes.

• Geographic strategy: Ability to provide products and services globally.

This quadrant tends to be occupied by vendors with applications that cover all core ETRM platform requirements for all traded commodities within energy markets, extending coverage in key areas such as market and credit risk management, logistics or portfolio/asset optimization. These vendors have true global coverage, providing solutions to all major energy markets. In addition, these vendors demonstrate established relationships with complementary product and service providers in all regions, a well-defined corporate and marketing strategy, and strong financial viability.

Typically, Challengers meet all core ETRM platform requirements, but may not have as extensive geographical, commodity or functional coverage as Leaders do. Challengers often demonstrate Leader-like qualities in specific areas, such as strong performance in a specific commodity or functional area. A strong balance sheet and proven abilities in delivery and expansion in key markets, through internal resources and external partnerships, are characteristics of Challengers in this Magic Quadrant.

Visionaries may not have complete regional, commodity or functional coverage, or they may not have as large a market share as Challengers or Leaders. They often take a unique and commendable approach to areas such as strategy, marketing and pricing, delivery methods, or functional specialization. Innovation of some sort is typically a quality demonstrated by vendors in this quadrant. Visionaries can become Leaders by improving their ability to deliver and grow the business.

This quadrant contains a number of regional or commodity-specific vendors. This quadrant typically accommodates the vendors in these categories that have a proven track record in their specific geographies or commodities covered. Typically, in this quadrant, we see vendors covering power and natural gas, but not oil and refined products, or vice versa, and they have a relatively small customer base compared with Challengers or Leaders.

Product: Allegro v.8.

Allegro continued to focus in 2010 on extending the functionality of its v.8-based product set, migrating existing clients to v.8 solutions and introducing an agile deployment approach that focuses on the rapid attainment of customer business benefits. During 2010, enhancements, included a streamlined deal entry process with the ability to set trader defaults, and prepopulate fields and new power and gas asset optimization capabilities. Additional improvements were made to the integration capabilities associated with credit, price and ERP connectivity.

• Allegro is an established ETRM vendor in the energy sector, with a sizable presence in the sectors of exploration and production, refining and marketing, and utilities.

• It offers a functionally rich, fully integrated and modular product suite with coverage for all energy-related commodities, including, as of 2009, emissions.

• It supports a wide range of physical and financial transactions, and has excellent market and exchange connectivity, including the recently developed Exchange Connect component, which provides two-way connectivity to 22 commonly used derivative exchanges.

• Its energy risk management coverage extends into hedge accounting, with support for International Accounting Standard (IAS) 39, and for Financial Accounting Standards Board (FASB) 133, FASB 161 and FASB 157 compliance requirements.

• Its product has been based on the .NET framework with XML Web services and SOA since 2002, with grid computing performance improvements arriving in v.8. Architecturally, v.8 is one of the most flexible, secure and scalable solutions within the Leaders quadrant.

• Allegro has established partnerships and relationships with many third parties, including professional services organizations such as Deloitte, The Structure Group, Baringa Partners, Sapient and Indra.

• For less complex installations, a preconfigured version of Allegro is available and can reduce deployment times.

• Allegro's revised software development process actively engages customers in all aspects of design, and makes use of the architectural improvements in v.8 to improve turnaround times.·

• Although Allegro's geographic coverage extends worldwide, its presence in EMEA and Asia/Pacific markets remains small compared with markets in North America.

• For customers on v.6 and earlier, realizing the architectural and functional benefits of a v.8 installation can involve a complex migration.

• With a planned reduction in its internal professional services staff, Allegro has transitioned to a greater reliance on partners for implementation services, and has had senior management changes in sales and marketing.

• Its SaaS delivery goal set last year has not been achieved due to lack of client demand.

Products: Symphony CS v2.1 (trade capture and processing), Fleetime (waterborne transportation and logistics for crude/products), Market Connector (for exchange connectivity), LivePrices (imports settled prices to Symphony or third-party risk systems).

During 2010, Amphora added a logistics module to Symphony, providing enhanced facility and route management functionality for operators. Additional enhancements have been made to market risk management capabilities (a more flexible Monte Carlo value at risk [VaR] engine), and credit risk management capabilities have been significantly enhanced.

• Amphora is primarily focused on oil markets, although with a commodity-neutral approach. Its Symphony product has a good reputation within oil and gas markets globally.

• Since its inception in 1997, Amphora has not lost a customer to its competitors.

• Its functional coverage within oil markets is extensive, and it is particularly strong in logistics, physical movements, position management and reporting, with a growing footprint in emissions.

• Its architecture lends itself well to large deployments in terms of number of concurrent users, integration and performance. Amphora offers competitive pricing/ownership costs when set against larger ETRM vendor solutions.

• It has a good partner network covering SIs, professional services and other complementary solution providers in the ETRM space, such as specialist risk management solution providers.

• Its solutions are available on a lease basis and through perpetual license agreements, which provide flexibility for procurement functions. A hosted deployment option is available.

• Although the Symphony ETRM platform is commodity-neutral in terms of trade capture and processing through settlement and invoicing, its current use beyond crude or hydrocarbon markets is low.

• It has only limited direct sales and marketing capabilities, although 2010 saw new clients and, more recently, the recruitment of additional sales and marketing staff in the European Union (EU).

• The company's growth in the EU was a challenge in 2010; however, with recent sales and the recruitment of additional staff, the focus on EU markets is being addressed.

Products: Aspect CTRM — LE (light edition), SE (standard edition) and EE (enterprise edition).

Initially offering a SaaS solution designed for crude and refined products, Aspect's solution is now extending into other commodity areas. Its depth of functionality in all commodity areas is less than that of many of its competitor's offerings, but for some end users this may not be an issue. The past year saw steady growth in customer numbers and included development in the support of physical operations, scheduled for release in 2011, and new support for bunkering trades and scenario planning.

• Aspect is a predominantly SaaS offering that is primarily used for crude oil and refined products, but it is also used to manage coal products, emissions and metals. Additionally, the system can be deployed locally on-site.

• Its customer growth from a small base is targeted at midmarkets or high-end users seeking a SaaS solution. This is particularly applicable in global oil markets, where companies have a wide range of locations.

• Its main product is available in three options, offering end users the choice of a light solution (AspectCTRM LE), the standard offering (AspectCTRM SE), or a more comprehensive tool in the form of AspectCTRM EE for large enterprises.

• The company offers a forward curve solution, which was developed in collaboration with a major oil client.

• Aspect provides market data, news and analytics through its portal-based AspectDSC (Decision Support Center), which can be linked to the ETRM platforms and add further value to the installation. This also provides Aspect with another channel to market.

• AspectCTRM solutions are well-suited to merchants in the oil and refined products space that are looking for a keenly priced trading solution with a rapid deployment time.

• Its support for credit risk management functions remains limited, compared with larger competitors.

• Its support for logistics and transportation remains limited, compared with competitors, although the 2011 introduction of physical operations functionality should begin to address the gap.

• Aspect remains a small, but growing, company that will continue to be challenged to compete with bigger vendors without substantial organic investments or via acquisitions. Focusing on midmarkets may offer interesting niche market play.

• There are no linkages to major electronic marketplaces, although this is in the development road map.

• Aspect's architecture has run into some scalability issues due to the way it manages data in memory. While this is a known problem, major system changes/enhancements will be required — these are scheduled for 2Q11.

• It has no formal partnering arrangements due to a market philosophy that centers on simplifying the product development/deployment process.

Product: Murex MX.3.

Murex delivered a number of functional improvements/enhancements to its MX.3 platform during 2010, most significantly in the areas of real-time position and risk reporting, the configuration and maintenance of complex price indexes and the availability of a new volatility management framework. In addition, Murex has enhanced the operational aspects of bulk physical operations, including the following of physical trade events and operational workflows.

• Murex is a large, long-standing, privately held vendor with a global reach. MX.3 is a cross-commodity and cross-asset-class trading and risk management platform.

• Murex product architecture has a range of connectivity options for internal integration and external connections with various trading and data platforms/exchanges, including Reuters, Bloomberg, Trayport, Intercontinental Exchange and Eurex.

• The company has a solid global sales presence and a professional services support capability.

• Its system has a strong front-office to back-office capability, especially in terms of transaction management and derivatives modeling.

• Murex offers solid reporting capabilities. It is also strong in over-the-counter derivatives for principal trading and structured products.

• The vendor has extensive risk management capabilities, including scenario generation, back testing, aggregation analysis, limits, collateral management and reporting tools. In addition to supporting a range of VaR calculations, MX.3 calculates earnings at risk (EaR), which is of value in power markets when factoring in volumetric or delivery risks for assets held to maturity.

• MX.3 can manage multiple commodities, including oil, natural gas, power, emissions/carbon, metals, agriculture and freight. Its predominant capabilities center on the trading, risk and processing aspects of these commodities.

• MX.3 is configurable and a functionally rich product. To streamline the implementation process, Murex offers an accelerated deployment methodology (MXpress), based on the use of preconfigured solutions with "out of the box" functionality and an associated implementation methodology.

• Murex is used as a cross-asset-class trading platform in many financial institutions; however, its presence among energy merchants and utilities is smaller than many of its key competitors in this Magic Quadrant.

• Murex is increasing its focus on physical trading functions. In particular, its coverage of power and natural gas in the EU and oil (hydrocarbons) has improved. Support for vessel operations and logistics remains an area of catch-up with key competitors.

• MX.3 is a substantial platform technically and functionally. Its management and development require skilled resources that are familiar with the product's configuration and integration tools. Murex provides training and support for technical and functional staff.

• While Murex can offer, in some cases, a hosted delivery model, the vast majority of its clients opt for a traditional deployment.

Products: Pomax ECTRM v.10.0 (core platform). Other related products include Pomax TRM, Structuring Manager, various commodity/regionally specific logistics modules, Curve Manager and Broker Price Manager.

Architectural improvements to Pomax continued with the replatforming of its workflow engine to Microsoft Workflow Foundation. Europe-centric functional enhancements also were delivered to provide European Federation of Energy Traders (EFET) confirmation matching capabilities and increased physical power market capabilities in central/eastern Europe.

• Through its Pomax product, Navita provides a comprehensive ETRM solution at a lower price point than many of the more established and well-known ETRM vendors.

• It is well-suited for asset-heavy end users, such as utilities and energy merchants, with many deployments (mostly in the EU) integrating directly with system operators. It has a comprehensive range of external interfaces with exchanges and market data providers.

• Another key feature of the Pomax product is its ability to undertake the majority of typical configuration, modeling and setup activities directly through the product management and utility screens, thereby minimizing the need to use scripting or coding facilities to model assets or complex contracts.

• Installation times for Pomax, which are based on a screen rather than a script configuration, can be significantly shorter than some of the more established ETRM solutions.

• Navita offers comprehensive support for market and credit risk management functions, including Monte Carlo and parametric VaR, profit at risk (PaR), cash flow at risk (CFaR), and earnings at risk analysis and reporting.

• The vendor has provided support for CO₂ /emission trading since the inception of the EU Emission Trading System (EU ETS) in 2005.

• Pomax can be purchased under a traditional perpetual license or be a lease-based model, which reduces initial capital outlay.

• Navita offers attractive pricing, when compared with its larger competitors.

• Navita is predominantly a supplier to EU-based companies. The company has clients in North America and a small but expanding staff. However, growth in established North American ETRM markets will be challenging.

• Achieving growth while maintaining customer service and support levels, and continuing to develop products in line with existing and new market developments, has been challenging. Concerns over postimplementation support have been raised.

• Coping with the joint demands of growth, modernizing the Pomax architecture, and supporting the existing and extensive client base appears to be stretching Navita.

Products: webTrader Power, webTrader Gas, webTrader Enterprise, webRisk, webTrader Market, webSettlement, webIntelligence.

Functional enhancements during the past year include deeper analytical capabilities in market risk with the addition of market-based forward price curves, Monte Carlo and analytical VaR, and enhanced portfolio reporting tools; enhanced credit risk functionality with current and potential future exposure reporting capabilities, counterparty financial credit scoring and benchmarking, financial reporting capabilities to support FASB 133,157 and 161 requirements, and new collateral management tools; transmission settlement capabilities and support for the Electricity Reliability Council of Texas (ERCOT) market. OATI's market reach is now beyond the energy sector, with new installations in the financial sector.

• OATI is an established vendor in North America — primarily in power, but also in natural gas, coal and emission trading under the Clean Air Interstate Rule (CAIR).

• OATI is the largest and most established provider of SaaS-based ETRM platform solutions in this Magic Quadrant.

• It has deep knowledge of North American ISO/regional transmission operator power market operations. More than 700 companies use OATI's e-tagging solutions.

• OATI solutions are provided predominantly under the SaaS model, which reduces on-site IT deployment times and risks, hardware capital costs, and customer IT staff time. Given this approach, webTrader Power and webTrader Gas can be of particular interest to smaller regional energy merchants, utilities or supply companies, and to financial services organizations seeking entry into North American physical markets for power and natural gas.

• OATI's functional coverage in physical power logistics is strong, with additional functionalities in asset optimization, management and reporting, which are provided through its webPlant application.

• The vendor has a symbiotic and productive relationship with its extensive user base through an active, formal user group. Through an annual user conference and quarterly conference calls, users can propose and vote on the prioritization of enhancements and modifications.

• OATI's multicommodity coverage remains limited and currently does not include crude or refined products. However, a three-year development road map includes plans to expand into other asset classes, such as coal and precious metals, as well as increase financial trading capabilities.

• Market coverage is currently limited to North America. While inroads into the financial sector have been made, because this market differs considerably from OATI's traditional utility market, a more strategic approach will be required if growth is to be more than organic in nature.

• While the number of SaaS-based ETRM deployments is growing, this is predominantly among small/midsize entities. Larger entities will consider SaaS-based solutions for specific ETRM components, but, traditional deployment remains the dominant delivery method for ETRM platforms.

Products: Endur; pMotion, gMotion and cMotion modules; iOPT modules for forecasting and optimization; vDesktop; RiskPak, Risk Dashboard; Tax Module; Hedge Analyzer; Accounting Manager; Trade Process Manager; Collateral Management; Energy Scenario Management; Reconciliation Module; Producer Services Module; Active Data Services; Standard Gateways (ICE, NYMEX, EEX, Trayport, Reuters, Bloomberg, etc.); dbc SMARTsoft (supporting biofuels market); and IAM through a joint venture with MCG Energy Solutions (supporting North American power market requirements).

OpenLink was among the pioneers of a strategy that recognizes ETRM platforms as part of a wider wholesale energy solution, providing forecasting and optimization product options through a large, dedicated internal professional services organization. The past year saw significant functional enhancements in crude pipeline scheduling and in energy scenario management. With the acquisition of dbcSMART software, more associated with agricultural products, OpenLink plans to extend energy-related commodity coverage into the growing biofuels market.

• OpenLink is an established ETRM vendor with operations in all major geographic market locations. Across all commodity markets — from smaller regional operators to multinational energy companies — OpenLink continues to demonstrate a broad and deep understanding of all energy markets.

• Endur is a highly configurable cross-commodity product with extensive support for physical and financial transactions, portfolio asset modeling, and valuation and analysis.

• Endur is capable of scaling to very large international deployments, and provides extensive integration capabilities.

• Through its iOPT modules and "smart ETRM" strategy, OpenLink provides forecasting and optimization capabilities as an extension to the Endur ETRM platform. For asset-heavy companies linking asset optimization and ETRM makes sense. OpenLink is currently the only ETRM platform vendor to offer a product and solution in this space. Enhanced derivatives modeling and collateral management capabilities have improved functional breadth.

• OpenLink has a range of deployment options, including ASP offerings, that provide end users with flexibility when it comes to IT deployments and capital/revenue payment options.

• Extensions of and enhancements to OpenLink's product line are continual. Adapting to market changes, new regulations and legislation is critical in energy trading.

• OpenLink, in 2010, had one of the largest dedicated internal professional services staff of all the companies surveyed.

• Endur is a substantial application. Extensive product training and education will be required for new users — particularly staff members involved in functions such as asset, risk and scenario modeling. OpenLink University provides training in all areas.

• Implementation time scales for an Endur deployment can be underestimated, based on end-user capabilities and the relatively complex nature of Endur's architecture.

• OpenLink limits the distribution of product road map information beyond prospects and existing clients. However, prospects are invited to user conferences, where more information is shared.

• IT staff at some customers would like to see a wider adoption of SOA principles and a data-centric design. However, OpenLink's approach to upgrading the product architecture is cautious, in an effort to ensure consistency across all customers and minimize transitional risk.

Products: TRMtracker, EmissionsTracker and RECTracker.

New to the Magic Quadrant this year is Pioneer Solutions. Pioneer has a strong background and track record in IAS and FAS hedge accounting solutions. The extension to trading and risk management solutions is logical. Having grown the installed base of the TRMTracker, and providing related solutions designed specifically for the management of emissions and renewable energy related credits, Pioneer offers a more lightweight, if niche, alternative to the traditional ETRM platform vendors.

• It has a solid set of core market and credit risk metrics and analyses that would meet the needs of most energy companies or utilities.

• Its rapid deployment and integration times (less than six months) will be of interest to many end users.

• Its solution is keenly priced against the competition.

• Although its current installed base is relatively small, feedback from end users is positive.

• It is a highly configurable solution, providing end users with a high degree of control.

• It is available and supported in the North American and European markets.

• Its support for physical/logistical operations is less comprehensive than much of the competition, although this is an area of ongoing investment.

• As a relatively new solution, there is a danger of fragmented version control and maintenance overheads as unique end-user-driven developments stem off the core code base.

• This is a relatively small company. To maintain current customer satisfaction levels and grow the business will require careful planning.

• It has no formal partnerships or system integrator agreements in place.

Products: SAS BookRunner Commodity Capture v.12, SAS BookRunner Analytics Workbench v.12, BookRunner Advanced Analytics v.12.

The past year saw SAS deliver enhancements to the BookRunner graphical user interface (GUI) and the BI capabilities of BookRunner, providing a more flexible and configurable means of report production or analyses, all based on SAS's core BI platform. Perhaps more significantly for asset-heavy energy companies and utilities, SAS has developed a capability to optimize physical assets against a range of factors and constraints.

• SAS offers two options for analytical capabilities. A core level of position/risk analytics with commodity-neutral deal capture for multiple physical and financial transaction types is provided through BookRunner. BookRunner Advanced Analytics provides a more comprehensive set of analytical tools, including a range of VaR reporting options, current and potential exposures, scenario analysis, and sensitivity analysis.

• For organizations that want to undertake a BI approach to risk and portfolio analysis, SAS is a market leader in BI solutions. The SAS approach and solutions could be of particular value in the context of mergers and acquisitions, where multiple regional or local ETRM platforms are used and the consolidation of commodity positions and risk-related data is required.

• Many organizations have SAS-trained programmers who could leverage BookRunner's open application programming interface to customize the product and avoid paying substantial professional service fees.

• The provision of a physical asset optimization solution demonstrates an ability to leverage the wider organizational capabilities of SAS, and provides value-adding functionality for asset-heavy energy companies with diverse portfolios. A range of interface options is provided for integration with internal/external applications and data sources.

• The expansion of SAS ETRM solutions into the EU demonstrates the company's capability to extend the geographical footprint of a solution.

• The extent of BookRunner support for physical operations is less complete than many other vendors in this Magic Quadrant. Third-party products will be required for scheduling, nomination, shipping and transportation functionalities, and SAS is positioned to enable third-party product interoperability, rather than native development.

• The SAS-for-ETRM solution is SaaS-ready. However, SAS currently sees no client demand for this deployment option.

• While SAS has demonstrated an ability to tackle complex analytical and reporting functional requirements, much of this has been delivered on an as-needed basis rather than as out-of-the-box configurable application functionality. Ongoing productization is part of the SAS product road map.

Product: SoftSmiths TMS.

Having experienced growth from new customers in the North American market using its ETRM platform through its SaaS delivery model, SoftSmiths returns to the Magic Quadrant this year. The company remains a relatively small business, focusing efforts on new and existing customers primarily in the power domain. Functionality added in 2010 includes the accommodation of ERCOT market changes, rework of its ISO/RTO settlement user interface, and additional/enhanced trading and supply management for load-serving entities.

• SoftSmiths maintains a good knowledge of North American markets, and is more suitable for small and midsize North American asset-centric companies.

• Its lease-based solution is also well suited to small or midmarket end users, or to companies seeking a limited IT footprint solution for power.

• It offers robust logistical coverage for North American power and gas companies.

• SoftSmiths has extensive integration capabilities through its e-Link modules.

• The SaaS solution has grown in favor among customers and is now the prominent delivery method.

• SoftSmiths is a small and privately held/funded company focused solely on North American power and gas solutions.

• Its solutions are only available in North American markets. As of now, it has no plans to expand geographically.

• Its market and credit risk facilities are restricted to limit management, market-to-market, credit exposure and position reporting.

• It has no integration or business consulting partnerships or strategy at this time.

Product: RightAngle v.11.

In 2010, SolArc released a number of new functional enhancements to customers. Voyage Viewer is a user-configurable solution for waterborne voyages (coal, crude and refined products), consolidating all the associated information within one screen. Widening the reach of RightAngle, RightAngle Mobile Companion provides real-time remote staff connectivity in areas such as price changes and market alerts.

• RightAngle is a comprehensive solution for a range of commodities — including crude, fuel, coal, natural gas, natural gas liquids and biofuels — for all sectors of the energy market, from regional to international players in all geographies. Customers range from commodity desks in financial institutions to utilities, such as oil and gas majors and transportation companies (airlines, railways and cargo).

• Support for the logistical aspects of fuel management and delivery makes RightAngle a strong contender in industrial end-user markets, such as airlines.

• SolArc's experience in solution provision to agricultural and fuel market participants strengthens its position in growing biofuel markets.

• RightAngle's .NET architecture positions it well in responding to functional changes and the exploitation of new technologies.

• RightAngle is capable of capturing a wide range of physical and financial transaction types that are in line with supported commodities.

• RightAngle offers extensive support for market and credit risk functions. Market risk capabilities include realized and unrealized profit-and-loss reporting, volumetric or delivery risk analytics, VaR analysis reporting options, what-if testing, stress testing, and back testing.

• SolArc has good integration capabilities with external exchanges and data sources, and is NetWeaver-certified for SAP general-ledger integration.

• The vendor has a relationship with a range of SIs to assist with on-site implementation and development services.

• Among the SI and end-user communities, SolArc continues to enjoy a reputation as an innovative vendor that is good to work with in the ETRM platform market.

• SolArc's energy coverage does not, as yet, extend to trading power. However, a solution for power markets is under development, with an anticipated availability in the U.S. during the next two years.

• SolArc, while a leader in the fuel management domain in utilities, may suffer as utilities look to consolidate commodity trading platforms, including fuels such as coal or natural gas, on multicommodity platforms with the capability to support fuel and power positions.

• While emissions capabilities exist within Right Angle, these are less comprehensive than competitor solutions. This is, in part, linked to the current lack of a viable power solution.

Products: Aligne; Entegrate; Kiodex; GMS/GTMS.

SunGard Energy and Commodities continued to develop its Aligne product set in 2010. Enhancements include a new hosted version of Aligne, a BI module for typical end-of-day reports and associated analyses, and a wider choice of VaR metrics, including marginal, component and incremental VaR analyses.

• SunGard's range of products covers all energy-commodity-related activities in all geographic markets. It is particularly strong in physical/logistical areas and in power and natural gas markets. The range and geographical coverage of the available solutions in these markets are among the widest.

• Consolidation of the various commodity-specific and risk management tools has been achieved under the Aligne architecture and a common reference data model, which have greatly improved the fit of the various components, improved the overall flexibility of the solution and facilitated rapid deployment.

• SunGard has an extensive customer base in the energy sector, and has largely simplified the product offering under three primary brands: Kiodex, Entegrate and Aligne. The use of standard technology and SunGard IP for integration and user experience allows for greater configurability and deployment options.

• SunGard is supported by a relatively large consulting/professional service function. Planning, project management and implementation services can be provided directly by SunGard.

• SunGard has a robust user community, and it actively identifies, promotes, prioritizes, and, in some cases, funds product development activities.

• It has a substantial, long-standing track record in the energy and financial services industries, with significant deployments of multi-asset-class trading and risk management platforms.

• SunGard support for emissions trading remains among the leaders in this Magic Quadrant.

• The Aligne architecture and common data model consolidate the various point solutions that are widely in use today. However, much of the competition has been offering SOA and common-data-model-based consolidated solutions for some time.

• While pre-Aligne legacy code streams will still be supported, end users may choose to examine the value of migrating to the Aligne architecture, compared with a replacement solution.

• SunGard solutions supporting crude and refined product operations remain behind much of the competition. However, SunGard continues to work on this, with a release of scheduling functionality planned for late 2011 and additional functionality in 2012.

Products: Commodity XL (power, gas, oil, coal, freight, biofuels, emissions, NGLs, LNG, credit risk and fair value disclosure, hedge accounting, Xchange, management dashboard, strategic planning and procurement, MarketData Hub); Commodity SL (preintegrated with SAP); Visual Cockpit (logistics solutions for bulk/liquids/packaged commodities, chartering and vessel operations, power scheduling and natural gas).

Triple Point's energy market growth during the past three years continued in 2010. The company's track record in the identification and timely integration of acquired solutions is widely recognized, but organic customer growth has also been evident among energy companies. The 2010 functional enhancements include EFET electronic confirmation matching (originally from Enerbility), and chartering and vessel operations management (originally from Softmar).

• Triple Point Technology has an extensive range of functional coverage in all aspects of energy/commodity trading and risk management, with particularly solid support for risk management. It continues to offer the most comprehensive credit risk management, hedge accounting/IAS and FASB compliance solutions in this Magic Quadrant.

• Its partnership with SAP goes beyond NetWeaver compliance, providing end users that want to integrate an energy and commodity trading and risk management platform with SAP the option of the Commodity SL platform developed in association with SAP, thereby providing a common data model and an opportunity to minimize the integration effort.

• A range of deployment options, including ASP and a quick-start "lite" solution, provides flexibility to suit large international and smaller regional installations. ASP customer numbers continue to grow, and there is a solid client base for this delivery option.

• Through the Management Dashboard module, which is a decision support solution, users are able to dig into the data structure of Commodity XL and generate a range of custom reports and analyses without the need to learn a complicated scripting or interrogative tool.

• Market coverage and support are global, with an active user group providing input to product development.

• Triple Point Technology continues to demonstrate an ability to acquire and integrate smaller specialist solution providers quickly.

• It has relationships with SIs and professional service firms (such as formalized global relationships with Accenture and Deloitte) to extend its deployment and implementation capabilities.

• Its architecture supports extensive integration, configuration and performance capabilities, with all applications or modules sharing the same code base.

• Triple Point Technology's product suite is substantial in terms of functional scope, and it can be overwhelming to first-time users.

• Triple Point Technology's growth across all energy and commodity markets continues. Rapid growth can lead to a drop in responsiveness to individual customers. That said, Triple Point Technology has continued to invest in improving customer responsiveness with the appointment of a chief customer officer in 2010, along with Customer Driven Development and satisfaction survey programs.

• Triple Point Technology's support for physical energy asset optimization is less comprehensive than some of the competition; however, plans to address this are in place for 2011 through 2012.

Product: TRM v.5.0.

The past year was transformational for Ventyx, being acquired by the ABB Group, a large international power and engineering company. The role and fit of the ETRM platform solution within the wider ABB software group appear tactical and complementary to other solutions, rather than strategic. Functional enhancements in 2010 included Trayport and ICE integration improvements, and the addition of a "spot" VaR calculation.

• Ventyx covers all aspects of the energy value chain for power, from generation to distribution and supply, and retail operations. It provides a range of solutions that are complementary to the TRM solution (formerly known as Monaco, but rebranded to fit with other product lines), such as generation optimization, asset management and load forecasting tools.

• Its commodity coverage extends to power, natural gas, crude, coal and emissions. Most of its installations are primarily power-oriented and natural-gas-oriented.

• Ventyx's ETRM capabilities were largely gained through the acquisition of a number of companies with strong histories in the ETRM/wholesale solution market, such as NewEnergy Associates (formerly part of Siemens) and Global Energy Decisions (which acquired KWI and Henwood Energy Services).

• TRM provides good coverage for risk management, and volumetric and delivery risk analysis, as well as a range of market and credit risk measures and analytics. It caters to a wide range of physical and financial transaction types.

• Ventyx's Energy Portfolio Management trading and risk software is installed with an almost equal split between EMEA and North American deployments.

• Ventyx has an extensive range of partnership arrangements, including SIs and professional service firms that provide installation and integration services around the TRM product.

• Despite a strong legacy of ETRM platform solutions, TRM is falling behind the competition in terms of the depth and breadth of support for ETRM.

• Ventyx doesn't have a SaaS offering; however, it has the capability to accommodate clients, if requested.

• The Ventyx acquisition of nMarket, a widely used solution for physical market integration and transaction management, could have enhanced Ventyx's presence in the ETRM domain; however, a strategic link with the TRM solution does not appear to be a priority.

(This company was acquired by Brady in 2010.)

Product: Elviz v.10.2.

In one of the more significant ETRM market developments in 2010, Brady, a provider of commodity trading and risk management solutions in metals and other commodity groups, announced its acquisition of Viz Risk Management. Our analysis of Viz is based on its status in November 2010, but the Brady acquisition will raise the profile of Viz, providing more investment into the product and its support as it becomes the core Brady offering in energy markets. In 2010, Viz enhancements included additional price curve production and management capabilities, along with the ability to manage exposures from indexed contracts in German and Italian gas and power markets.

• Viz Risk Management retains a strong European presence in the energy/commodity trading space.

• Viz continues to demonstrate an ability to enter new European markets and adapt to regional EU markets.

• About half of Viz's customer base is managing EU ETS (emissions) positions using Elviz, with interest growing in this capability from nonenergy EU ETS participants.

• It has a commodity-neutral approach with extensive support for market risk management, including CFaR, VaR and sensitivity analysis perspectives, as well as configurable parameters, such as prices, volatilities, correlations and volumes.

• An SOA provides a good integration capability with internal solutions (such as general-ledger tools), external exchanges and data sources. Viz, like many vendors in this Magic Quadrant, is migrating to a .NET architecture.

• Viz is the only Software Engineering Institute Capability Maturity Model Integrated- (SEI-CMMI-) accredited software company in this Magic Quadrant.

• Elviz is quick to deploy and is keenly priced, with a range of plug-ins in areas such as storage and generation optimization, data warehouse/BI support, and enhanced scenario analyses.

• Its leased pricing approach reduces much of the capital risk associated with ETRM platform deployments.

• Although commodity-neutral, Elviz remains in use primarily as a trading platform for European power and natural gas markets.

• Its logistical, scheduling and transportation support is less complete than much of the competition, although partnering arrangements exist in this area.

• As with any merger or acquisition, regardless of perceived company fit, there are always integration challenges.