US refiners with outdated trading, transaction and risk management systems can overlook millions in potential annual revenue, according to a study commissioned by OpenLink, the global leader in trading and risk management solutions for the energy, commodities, corporate and financial services industries.
Hobson & Company, a research firm focused on return on investment (ROI) and total cost of ownership (TCO) studies, conducted a sample survey of eight of OpenLink’s existing energy clients, finding that a refinery operation with an implemented ETRM system could potentially save up to US$5.6 million each year in improved operational efficiencies, amounting to nearly US$30 million in savings and revenue growth over a five year period. The annual benefits add up as follows:
- Up to US$1.5 million in efficiency savings when replacing legacy IT, disparate systems and spreadsheets for contract management, logistics, inventory management, ordering, regulatory tax reporting and settlement.
- Up to an additional US$1.1 million through better compliance management and risk mitigation.
- Up to US$3 million in business growth and new revenue streams.
The study, ‘Driving ROI: The Business Case for a Comprehensive ETRM Liquid & Bulk Commodities Solution’, captured the collective benefits participants attributed to their ETRM solutions. Clients saw a range of improvements, including:
- Up to 70% reduction in time spent on reconciliations across departments and operations.
- Up to 80% reduction in time spent managing rack pricing.
- 50% reduction in time spent monitoring trades and managing risk.
- Up to 50% reduction in time spent on settlements/invoicing.
- A 30% drop in the amount of time spent on deal capture and processing.
- One less tax infraction/penalty due to reduced risk of errors in tax calculations.
- One less default per year as a result of credit extended to counterparties.
- The ability to house data in a single source for analysis and reporting, as well as running risk scenarios.
"This study is a remarkable illustration of the rewards that come with investments in comprehensive ETRM solutions,” said James Potts, Director, Americas Energy & Commodities for OpenLink. “The research presents a fuller understanding of the ROI, and the business growth that can be sustained despite the demands of complex regulations and market volatility. A company that makes a five year investment in ETRM solutions can generate positive returns within 14 months and can capture an astounding 432% ROI.”
Adapted from press release by Rosalie Starling