We have a saying at MidDel Consulting – “ETRM systems are not purchased at Walmart!"
Regardless of which software you choose and the size of your company, ETRM systems are extremely complex and difficult to implement. Having said that, choosing the right ETRM software for your business and implementing it correctly will pay for itself many times over through improved efficiencies, timely and accurate position and P&L reporting, a system of record for one source of the truth, improved risk management and hedging capability, automated physical scheduling, physical commodity and inventory management, and the list goes on.
Some of these best practice tips may seem to be stating the obvious. However, we have found over the years they are not always followed and are often the difference makers between a successful ETRM implementation and a disastrous one.
Choose Your Partners WISELY
Unless the ETRM implementation is small, rarely will the software vendor be the sole services provider. Depending on the size of the project, a Systems Integrator and/or consulting firm specializing in ETRM implementations will work with the vendor and the client in tandem.
Do your due diligence on the SI and consulting firm partners and check their track record of meeting deadlines, staying within budget, and seamlessly implementing difficult projects into production. How easy were they to work with and do they follow through on their promises? What were the quality of their resources? What is the ratio between junior and senior level SMEs?
Too often we see companies skip this step and rely on a familiar recognized brand name as opposed to a firm with a long track record of successful project implementations.
Stack Your Implementation Team With Do-ers, Not Managers
Especially in the beginning stages of the project, we often see the Project Org chart far too top heavy with an over-abundance of project managers and far too light with the people who will actually carry out the work. A qualified PMO and Project Manager are absolutely essential for a successful project, however, in some cases we have seen a ratio as high as 1 to 2:1 of manager to implementer!
This is a guaranteed recipe for delays and cost overruns. Staffing the appropriate hands-on skillsets to meet the project requirements is often the most difficult step, but is likely the most essential to guarantee a successful delivery.
Balance Your Team With The Right Amount of Technical AND Functional Experts
Typically, we see the implementation teams heavy in technical expertise but far too light in business level and functional expertise. The technical experts are primarily needed for system architecture, heavy configuration, interface development, and custom development if required. However, often times these resources are not familiar with the trade and market data. Do not wait for the regression testing and QA phase to bring in functional experts with knowledge of the business. In order to avoid the difficult showstopper issues that often grind projects to a halt, involve the Functional team early on to work closely with the technical team.
Not only can they help the development team code more efficiently but they can also work with the software vendor to shepherd bug fixes much faster. A quality functional team equally strong in the business as well as the software can shave months off project implementation time.
Set Realistic Expectations For Internal Employees
Strong internal employees assigned to the project can be indispensable due to their knowledge of the company’s landscape and familiarity with the data. If an internal employee is assigned to a project part time and also expected to complete their “day job” as well as they did before, it is generally best practice to identify some sort of incentives, career advancement opportunities or bonus plan to recognize the employee for double duty. Without incentives we typically see burnout by month six, if not earlier, resulting in unwanted employee turnover and/or low morale.
Ideally, it is best to assign internal employees full time to the project so they can focus 100% of their effort on the project and not be burdened with completing their “day job”. This approach can be more expensive in the short term since the employee’s former duties now need to be backfilled by either hiring a replacement or spreading the work amongst the rest of the department and therefore risking further burnout and costly employee turnover. However, by keeping your best employees happy, in addition to having a more efficiently run project, your long term savings will offset this cost many times over.
ETRM projects are extremely complex and expensive. Poorly managed ETRM projects can go off the rails quickly resulting in long delays and massive cost overruns. The efficiencies and intelligence capabilities of a properly implemented ETRM system will add millions to your bottom line over the long run. Stack the deck in your favor and follow these best practice tips.
Scott Levin is CEO and Founder of MidDel Consulting, a System Integrator and Consulting firm specializing in services supporting the business systems for Front, Back, and Mid Office. MidDel has been in business for 14 years, and our consultants, on average bring over 20 years of senior level energy industry knowledge to our projects. We have deep relationships with our clients, often working with them for more than a decade. For more information, email us at email@example.com or call #952-500-9275.