Find out why implementing the right ETRM system improves internal business processes, controls, and provides more robust workflow efficiencies throughout an organization.

Business processes can get complicated over time in any organization. A fitting example of a core business process is the processing of payable invoices. The old-fashioned way of processing invoices is to receive the invoices and then have someone of authority, or knowledge of the correctness of the invoice, approve the invoice, many times by putting a signature on it. The problem with this process is that it relies on the approver taking the time to validate the accuracy of the invoices, which can be very time-consuming. Because it’s time-consuming and there may be a large volume of invoices to approve, the approver may just sign off assuming the invoices are correct.

Why Systems Can Define Business Processes

A trading and risk system, like RightAngle for example, can help define business processes and provide better controls. Based on system security roles there can be a valid separation of duties that can ensure invoices are paid correctly. In the example of the payable invoice, several elements make up the total value (i.e., price, quantity, time, payment terms, etc.).

The price could be a fixed price or a formula using a pricing publication like OPIS or Platts. When utilizing a system, contract details are captured around significant items. If the price is formula-based the base prices can be interfaced into the system from pricing services such as OPIS and Platts, which means no human error is in play. If the pricing is done manually, it can be inputted by a pricing analyst, based on their security roles in the system.

The scheduler can then enter all the relevant movement information, which would then provide the data needed to calculate the total value. From this point, a payables analyst would receive the invoice and use the total value calculated by the system to validate the invoice. No manual approvals are needed because each step in the process was executed, and the validation is that the invoice amount matches the system-calculated value.

Examples Of How System Implementations Can Simplify Business Processes

Several years ago, there was an energy company that was growing by acquisitions. The original entity acquired other entities that were twice the size of the original entity. They continued to acquire other entities to the point it ended up being at least four different entities combined into one company. When this happens, especially if it’s rapid, the business processes become disjointed. It may end up with one set of assets using one set of business processes and another set of assets using another business process. This situation makes the controls of a company weak and difficult for auditors to perform their functions. This particular energy entity attempted to consolidate all of the combined businesses into a trading and scheduling system that wasn’t sophisticated enough to handle the core functions of the business.

When it came time for this entity to purchase an ETRM system, they recognized it was their opportunity to clean up their internal business processes. The system they selected was a system that was developed for a company that had exceptionally good business processes and controls. The system was designed based on the existing business processes of the original development partner, with some improvements. The flow through the system made it much easier to define new business processes during the implementation of the new system. The entity that implemented the system went through a lot of changes and divestments but the original core entity, now another company, still uses that system and those business processes.

READ MORE: 10 Ways To Build Layers Of New Value Around Your ETRM System

Another good example of how a system can help streamline business processes is for a new startup company. In the case of a startup, there aren’t any business processes in existence. If there isn’t a system implemented the processes may develop organically. When the first contract is issued, they develop that process and, subsequently, when they pay their first invoice they develop that process. As business increases and employees are added the original processes may not be sufficient for a growing organization. This may present an opportunity to implement a software system and follow the processes and controls of the system flow. During implementation, relying on knowledgeable consultants as the system is implemented, the processes and controls can then be folded into the software implementation to streamline business processes.

Opportune has worked with multiple energy companies to assist in the selection and implementation of ETRM systems. Part of the implementation involves working with the client to make changes to the existing processes to work better with the new system. Opportune has highly qualified consultants with many years of experience in system implementations and business processes.

About The Expert

Brad York is a Director in Opportune LLP’s Process & Technology practice based in Tulsa. Brad has 19 years of experience in the energy industry and 23 years of experience in RightAngle, having packaged and delivered multiple RightAngle system selections and implementations. Before Opportune, Brad was a Business Services Director/Senior Business Services Director at OpenLink/ION where he executed upgrade assessments evaluating clients’ needs in an upgrade, worked closely with product management to define the direction of the software, and managed eight consultants in the scheduling domain, among other duties. Brad began his career at Warren Petroleum Co. in the mailroom. He then was promoted to the NGL accounting and scheduling departments. He transitioned to Dynegy with a merger and became a Manager in NGL Scheduling. Dynegy implemented RightAngle in 1998, which was Brad’s first exposure to the system. He then joined SolArc as a Consultant for RightAngle specializing in the scheduling area. Brad holds a B.S. in Accounting from The University of Tulsa.