Commodity trading and

risk management (CTRM)

Helping create business
value from your information
technology systems
 Commodity transacting technology services and experience with the vendors that provide the solutions.
Our professionals are experienced problem solvers We leverage our proprietary Project and Integration
across many technical and business areas. Management (PIM) methodology & toolsets, specifically
adapted to commodity trading & risk management system
Recent challenges in the commodity transacting environment solutions. Our detailed requirements database is used to
are driving the need for improved information technology accelerate and streamline the selection process. When
and operational efficiencies in trading organizations — it comes to implementation, PIM is integrated with the
companies are facing higher analyst and shareholder selected vendor’s implementation plan to provide a fully
expectations, more complex trading risks, greater volatility, integrated implementation approach. Our mix of business
broader cross-commodity positions, and changing regulatory and technology experience, combined with our proprietary
compliance and financial reporting requirements. selection tools, methodologies, and demonstrated
knowledge and experience with leading vendor products,
As a leading provider of transacting and risk management allows us to increase the probability for a successful project.
solutions for commodity companies, Deloitte offers
a full range of specialized services to help our clients Application integration
address the operations and technology needs associated It would be nice if there were one solution supporting
with these challenges. Our team of experienced trading the business requirements of the entire commodity
and risk management specialists provides solutions transacting life cycle — unfortunately, such a solution
for operations and technology strategy, application does not exist. Commodity transacting organizations are
selection, implementation, data integration, cross- faced with the challenges of integrating a number of
commodity reporting, data warehousing, business process disparate vendor solutions; in-house applications and, of
re-engineering, and business process automation. course, spreadsheets. With the continued growth in the
use of commodity exchanges, another level of complexity
Technology strategy has developed, requiring companies to integrate external
Technology is an enabler. The alignment of business applications into their transacting infrastructures. As
vision with your technology strategy and the associated management focus increases on improving operational
investment in people, processes, systems, and and organizational efficiency and controls, the advantages
infrastructure is critical. The technology strategy provides associated with improved integration, less redundancy
the roadmap for supporting business agility and flexibility in and manual data input cannot be ignored. Focusing on
the decisions, architecture, and solutions you deploy. “Build practical solutions, we combine our understanding of
versus buy” decisions are now more complex and include the different approaches and issues with our technical
options such as outsourcing, crowd-sourcing, and Software experience to assist in successfully developing and
as a Service (SaaS). Data Quality, security, application implementing an integrated transacting environment.
controls, protection of data, and business recovery are
high priority. Concepts such as straight-through processing Business Process Reengineering (BPR)
and zero-latency transacting are increasingly becoming Meeting end-user expectations of a system on go-live is
a reality for commodity firms as lessons from financial crucial for an implementation to be considered successful.
service organizations are integrated into the commodity It is the key to defining the future state of your business
technology horizon. Drawing from our interdisciplinary and processes and system requirements at the beginning of
multi industry experience, we bring leading practices to your implementation journey. To develop “fit-for-purpose”
bear so that your technology strategy is optimally aligned business processes and systems, we leverage Deloitte’s
with your corporate targets, so you can respond quickly to proprietary Capability Maturity Model (CMM) to assess
changing business demands and emerging trends. our client’s capabilities in four categories — Governance
& Policies, Processes & Procedures, People & Organization
Application selection and implementation Structure, and Technology & Infrastructure. The CMM
Successfully evaluating and implementing the right creates a platform for a rigorous assessment of your
technology solutions is difficult. We see underutilized “current state” processes and capabilities and provides
functionality, new and improved products rapidly coming a transparent view of commodity industry practices and
to market, convergence in vendor functionality, increasing your desired “future state” maturity levels. This assessment
consolidation among existing vendors, and fundamental can be used for the identification and prioritization of
changes to the underlying technologies — all against the functional gaps in the selected system solution. Our
backdrop of constantly changing business requirements. One experienced commodity transacting professionals leverage
can no longer rely on a traditional RFI/RFP process to provide the CMM to reengineer business processes and desk
the required vendor differentiation, and new approaches are level procedures, in conjunction with process automation
needed. We help clients navigate the technology landscape enabled by new systems. We can also evaluate existing
through a combination of strong project management, a operational and financial controls frameworks and provide
detailed and hands-on understanding of the business drivers, recommendations for redesign in line with reengineered
processes and systems.
As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see
www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

2
Cross-commodity reporting and data warehousing proprietary tools and methodologies to reengineer future state
Every transacting organization can acquire the same processes, which were used to identify additional functional
applications. True competitive advantage is gained by gaps for the CTRM implementation team. Our assistance in
harvesting and consolidating the information available the implementation resulted in significant reduction in the
within these applications providing management with an use of spreadsheets; elimination of redundant processes and
accurate, unified, and timely view of the entire business reconciliations; enhanced level of process consistency, system
and exposures. The ability to “slice and dice” data for integration, and controls across the organization; and an
different purposes can be combined with drill-down into increased confidence in the data available to end-users and
supporting details for a new, faster, and more intelligent management.
perspective on the enterprise. It sounds easy, but the
challenges resulting from multiple applications, quality of Infrastructure, Credit, and Quantitative Services
the data, a lack of consistent master data, multiple and We assisted in the implementation of a commodity-trading
potentially global transacting data repositories, and a and risk-management system for one of the largest utilities
mix of technology platforms has led to many costly and in North America. Our services included detailed validation
failed attempts. Our combined experiences with data and documentation of the VaR methodology, as well as
marts/warehouses, integration tools, OLAP applications, assisting in the implementation of the client’s credit risk
and commodity transacting positions us to assist with methodology. We also developed detailed processes and
developing and implementing the reporting frameworks procedures that were mapped to a wide range of the
that work and meet the demands of today, while client’s business scenarios, encompassing full front-to-back
providing the flexibility and scalability for tomorrow. office functionality of the system. We advised the client on
system data requirements, as well as established system
How we help our clients configuration and maintenance procedures to support
Our professionals combine business experience with the implementation. The project involved training of
specialized technical skills to deliver value. A sample of business users, development of detailed acceptance test
illustrative projects includes the following: plans, design of key system reports, and overall project
management.
CTRM system selection and implementation
We assisted a large North American integrated oil company Infrastructure and Risk Accounting
in their efforts for requirements definition, system selection, We assisted in the development of functional requirements
and implementation of a CTRM and specialize credit risk for back-office systems related to commodity transacting
applications. The team conducted interviews and reviewed activities. The team researched industry-leading practices,
documentation across the company to gather business identified front- and middle-office data transfer points
requirements and developed business scenarios for the for back-office activities, developed future-state business-
client’s North American and international crude oil, North functional requirements for back-office applications, and
American natural gas, sulphur, and pet coke marketing performed a gap analysis and fit assessment for a package
and trading activities. These were used by our team in subledger software system. From this fit assessment, we
vendor demonstration and selection process. We assisted then assisted in the implementation of the back-office
in vendor negotiation strategy, and developing the business subledger, including the design and development of
case, and the implementation and integration planning. interfaces between the subledger and the client’s billing
We assisted in the implementation efforts and have vendor system and general ledger system. The team redesigned
management responsibilities. The CTRM solution was back-office business process flows, configured and tested
integrated with SAP to substantially improve efficiency the three modules of the subledger system, and provided
across the business, and significant control improvements, business and technical advise on the interfaces to the
supporting business growth. client’s other systems, and developed the business design
for reports to support the back-office activities. Deliverables
Business Process Reengineering (BPR) included customized procedures manuals for each module
We assisted a global Oil & Gas company in integrating their of the subledger system, process diagrams and narrative
acquisition of new oil & gas assets into their ongoing CTRM descriptions for the flow of transactions and control activity
implementation scope and re-engineering their processes points, and interface design and architecture documentation.
for better business management. For an interim time,
the acquired assets were managed with legacy personnel Independent experience
and manual processes separate from the trading and risk Our team of multidisciplinary professionals is experienced
management functions of the new parent company. Through in commodity transacting and risk management
our BPR efforts, data integration and process harmonization and is well-versed in the related business processes,
were enabled within the scope of the larger ETRM project. methodologies, and enabling technologies. Since we
We assessed all areas used to manage the acquired assets do not sell software or focus on application development,
impacted for process and systems inconsistencies including we offer independent and unbiased options. We bring
trade entry, confirmation, production forecast and actuals, experience from working closely with the majority of
cargo forecast and liftings, revenue allocation, vessel vetting, the leading commodity transacting and risk
logistics, risk, credit, and accounting. We leveraged our management software vendors.

Commodity trading and risk management Helping create business value from your information technology systems 3
Contact information

John England Roger Schaffland

Managing Partner Director
Oil and Gas Leader Deloitte & Touche LLP
Deloitte & Touche LLP +1 212 436 6803
+1 713 982 2556 rschaffland@deloitte.com
jengland@deloitte.com
Thad Malit
Dominic Young Director
Partner Deloitte & Touche LLP
Deloitte & Touche LLP +1 213 553 1716
Calgary, AB tmalit@deloitte.com
+1 403 267 1778
doyoung@deloitte.ca Dale Jendruszka
Associate Partner
Trent Gall Deloitte & Touche LLP
Partner +1 403 267 1868
Deloitte & Touche LLP djendruszka@deloitte.ca
Calgary, AB
+1 403 267 0569
tgall@deloitte.ca

Tom Lochbichler
Partner
Deloitte & Touche LLP
+1 713 982 4330
tlochbichler@deloitte.com

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