Energy trading and risk management (ETRM) system implementations can be highly complex projects. The fact that, in many cases, they serve almost the entire origination-to-settlement transaction life cycle means that stakeholders from across the organization will be contributing to the project—trading, risk, scheduling, accounting, etc. The challenge grows as the number of regions and/or commodities increases.
Moreover, ETRM initiatives very often involve extensive integration with other applications in the company’s IT system landscape such as enterprise resource planning (ERP) and data warehouse solutions. Just getting to go-live is enough of a challenge, but the actual process of deploying the solution and starting it up — conversion and cutover — may be the most daunting phase of the project.
Though there are other steps that can be taken to ensure overall success, a detailed, clear, well-reasoned, and rehearsed plan is the key to a smooth launch.
One of the most common mistakes with major IT systems implementation projects is to leave conversion and cutover planning to the later phases. This often results in missed opportunities to identify, build, and test tools or utilities to assist with cutover, as well as fewer chances to practice.
The ideal time to start preparing for conversion and cutover is during the initial planning phase of the project. This effort can culminate in a summary approach document that addresses the major facets and high-level timeline for related work.
Project teams often treat data conversion as a relatively simple step involving the movement of objects from one system to another. Data mapping and entry should be high on the priority list and are important in standing up any new application.
New system implementations offer a rare opportunity to cleanse and harmonize data sets that have slowly degraded in quality over years of use and misuse in the legacy system environment. This can erode the value proposition of the new system and encumber future reporting and analytics initiatives with poor data quality limiting business insight.
Furthermore, conversion and cutover shouldn’t be treated as isolated, parallel activity to the rest of the project workstreams. It’ll share resources, artifacts, deliverables, and many tasks with the rest of the project to mutual benefit. For example, the conversion will likely require the development of one or more conversion programs or database scripts. These items should follow the same software development life cycle (be it Agile or waterfall) as any other technical development object to elicit/analyze requirements, design, build, and test.
Beginning conversion and cutover planning early can also pay significant dividends to the rest of the project through the creation of more realistic development, testing, and training system environments for the broader team to utilize while also gaining valuable experience rehearsing the steps that’ll be required for go-live.
Given the wide range of stakeholders that’ll likely be engaged throughout the conversion and cutover process, it should also be tied into the overall communication plan for the project.
Well-defined accountabilities for all aspects of the conversion and cutover workstream will significantly reduce the likelihood of non-performance, missed handoffs, or issues with completeness/accuracy of the data migration.
Depending on the scope and scale of the project it might be worth identifying a dedicated conversion and cutover lead reporting directly to the project manager. On smaller initiatives, the project manager may be able to fulfill this role. The table below provides examples of some of the most common contributing roles:
It’s not uncommon for the conversion and cutover process for a highly integrated ETRM system to involve hundreds of interdependent tasks that’ll be performed by dozens of different team members over the course of weeks or even months before, during, and after go-live.
Breaking these tasks down into major phases and further into more manageable groups of related activities can clarify accountability and streamline management and monitoring. The process can be logically divided into three primary phases:
Within each of these conversion and cutover phases tasks can be reasonably organized into technically or functionally related groups. Below is one possibility for such a structure:
While the process isn’t perfectly linear, and there could be many other effective ways to divide the activities, this type of model will enable project management to assign accountability and track progress (see Roles & Responsibilities section above) more clearly.
For each major item, the owner should work to decompose the activities by defining the following:
The sum of these parts for each activity group, once assembled, will constitute the bulk of the detailed conversion and cutover plan.
Achieving a successful ETRM go-live will undoubtedly require the project team to produce several specific deliverables to satisfy stakeholders and secure their approval. At a minimum, a detailed plan will be expected.
Other requirements may include items such as trial balances for inventory conversion, verified mark-to-market (MtM) reports for open positions, a validated counterparty list, etc.
Identifying these, and other, necessary deliverables and incorporating them into the overall project plan will ensure that the team can efficiently produce them in the flow of delivery and avoid a mad rush at the 11th hour to secure endorsement for go-live.
As the old adage goes, “practice makes perfect”, and this applies just as readily to conversion and cutover for system implementation projects. A standard waterfall implementation methodology will present several natural opportunities to test and revise the plan, as well as to rehearse execution coordination.
Building the ETRM environments for integration testing, user acceptance testing (UAT), and end-user training are excellent times to work in a dry run. For very large and complex projects involving a significant number of integrated systems and more substantial conversion activities, it may be worth considering a dedicated conversion test prior to the main event.
One aspect that sometimes receives inadequate attention is how the day-by-day, hour-by-hour coordination, and communication will unfold during execution. During test passes and dry runs, capture actual execution times for key or long-running activities so that the plan can be refined.
Use these test cycles to firm up the ways you’ll communicate and coordinate for the production go-live, whether that involves a standing conference line with appointed times for leads to dial in to provide updates, email trees to let contributors know when activities are running ahead/behind schedule, and escalation paths to get prompt decisions if/when things go awry.
Even small wins can be an important boost to team morale. Crisp, daily status tracking and reporting can bring this type of recognition and set the team up for success in the coming days.
Every ETRM system implementation or upgrade project is different, and each will pose a unique set of risks, as well as post-go-live needs to address, depending on the nature of the organization’s legacy systems, processes, and associated data.
However, there are certain data elements that pose challenges for these types of projects, such as:
In the broader context of conversion and cutover, don’t forget to also consider:
A smooth go-live of a new ETRM system will help the organization avoid a precipitous drop in productivity right after launch and begin to realize the benefits of the enhanced transactional fidelity afforded by class-leading software.
Satisfying this objective can best be accomplished with clean conversion and cutover execution by:
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