Howard: Hello, I'm Howard Walker, CEO America's for Commodities People. We're really pleased to have you join us here today for an exciting interview. I'm happy to be joined here today with Talis Bennett-Verschure, one of Baringa's Energy and resource experts based here in Houston to discuss the digital energy transition.
So, digital transformation is key to accelerating the energy transition, and with rapid new development in the market, it can become challenging for organizations to keep up and successfully integrate new technology and data insights. So the folks at Baringa use their deep market insight to help clients solve complex problems across all stages of trading maturity, geographies and instruments, which gives them a great perspective on the state of play across a number of different companies.
So Talis. Welcome. First of all, thanks for being here today.
Maybe you could start off by sharing what you're seeing in respect to the overall state of the market. What are some of the key trends at the moment?
Talis: Sure. So, as no surprise to many, due to current geopolitical tensions and the ongoing energy transition, which is really the ramping down of high carbon greater control energy solutions, and the scaling up of low carbon, lower control energy solutions, our projections show an increased volatility in the short term across all major commodities.
And what that means really is that we're seeing businesses looking to be scalable and flexible across people, process and technology in order to adapt to this quickly changing market. Now, the biggest piece across those three levers is really on the data and technology side, as you said in your introduction, where existing ETRM centric trading data and technology architectures are viewed as being unable to support new requirements. So for example, new instruments associated with low carbon technologies, etc.
And it's really the inability to model and onboard new trading activities quickly to translate the increased traded volumes into a portfolio wide risk position in a timely manner. And then of course, also to enable advanced analytics at scale.
Howard: Okay, I guess my question is we're talking about changes in how people are viewing their systems. Is the current trading data and technology architecture keeping pace with the rate of change in the market and the influx of new revenue streams. For example, almost anything having to do with renewables PPAs Rins, not to mention some of the changes in workplace dynamics. Is the ETRM at the center of the architecture diagram becoming a bit of an obsolete concept.
Talis: in terms of being the center of the diagram, as you said, that is really changing. So what we're seeing is less reliance on the ETRM being the center, right? And what that means is differentiating business activities are being abstracted from the ETRM with data and technology tools. But the ETRM still forms a vital role in enabling trading businesses. And it's really by providing an effective trading business subledger and delivering up to date position and in some cases risk data to systems to enable those activities.
That's not going away. But again, what we are really seeing that the changes in requirements for is low code and no code tooling, quicker access to trusted data, and also data analytics, independence from IT, but framed within controls. So really in simpler terms, enabling self service of the trading business itself.
And as you said, overall the ETRM has been the center of the trading landscape from a data and technology side. It's really moving away from that app centric to more data centric views to enable all these new business activities.
Howard: So that agrees with what we're seeing and hearing that more and more data, especially as we're getting into new worlds of things like AI and machine learning, data is becoming the most important sort of intelligence asset a company has.
So where are different organizations standing in relation to this journey around data? What does this mean for their overall transformation plans?
Talis: Yeah, so there's another great question, exactly as you said. So data is key to all of this transformation. And the first thing you need to get right is the data. What we're really seeing is we're seeing three categories around this. So firstly, organizations that understand they need to undergo a data and technology transformation, but they don't know how to start. And so that's maybe the first bucket.
Then the second bucket is clients who've started their transformation but maybe have lost sight of value capture. And they're building the technology kit, but they're not prioritizing what they're doing in terms of technology build out framed around business activity, enablement, capability enablement and skills. So what that means is the momentum of the transformation may be somewhat slower than it could be.
And then the last category on the data side is clients who are advanced in their data journey. But what they're really struggling to find is the experts to build and scale these technologies, as you said, to really enable generative AI and other advanced analytics tools going forward.
Howard: That makes a lot of sense. So when you're approached by a company, what are some of the, I guess some of the approaches and methodologies you use to assess where they are in their journey and help them out.
Talis: So going in, we typically work quite closely to understand where the as is capabilities are. We don't tend to spend too much time there. So going back to the first companies that know they need to transform but are not sure where to start. So from a high level, what we do is we come in and work shoulder to shoulder with clients to define what their Aspiration is and the value pools that they want to be targeting.
Again, to what you're saying. So aligning the data transformation to value generation. Then what we do is we co create this value proposition and a competitive advantage, really focus on how data will enable them to succeed. Then we devise a list of these capability, data capability areas to be improved and help create roadmaps to be implemented that tie back to data value and business value capture.
For this second, we're typically brought in to mediate and bring the trading business and IT back together. So following a similar framework, as above, but we go through and ask questions of has your winning aspiration changed? Have the value propositions or your competitive advantages changed? How is data enabling you to succeed? Are there new ways that data capabilities can be improved and tied back to value capture to kick start the program again?
And for the third, and bearing in mind that this list of advanced players is a very short list, what we do is we provide targeted build support in high priority areas, as well as we act as a client side advisor on the latest trends in the data space specifically.
Howard: Wonderful. And of course, as you said, you mentioned capturing value and ultimately that's the key metric, isn't it? And keeping that thought, as you said, at the center of your digital transformation journey is what any project will ultimately be judged on, isn't it?
Talis: Absolutely.
Howard: Well, thank you very much, Talis. I really appreciate you joining us here today.
And thank you to all your colleagues at Baringa. And of course, if you want to learn a little bit more about what Baringa does and how they might be able to help your organization with your projects, you can visit www.baringa.com or you can reach out to Talis directly. His email will be posted up on the screen.
And thank you all for joining us today. We hope you found this useful and informative, and we look forward to seeing you on interviews, webinars and some of our conferences in the future. So thank you very much for being here today. Thank you very much, Talis and everybody, have a great day.
Talis: Thanks.
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