Navita’s Excellent But Challenging Year
CommodityPoint recently had an opportunity to talk with Dr. Grim Gjonnes, EVP with responsibility for business development at European TRM software vendor – Navita. We asked him what kind of year 2009 had been for his company and what he saw as key trends in the industry for 2010. Dr. Gjonnes characterized 2009 as an “excellent but challenging year” for Navita. In common with almost every other business, Navita had to conduct its activities against the backdrop of a global financial crisis and credit crunch.
Solid Financial Performance
The impact of the general difficult business environment we all experienced in 2009 meant that Navita unfortunately lost several of its customers as consequence of customer bankruptcies, going into administration, or because they simply chose to close down trading activities. However, 2009 was also a year in which those very same business challenges meant that there was a good deal of procurement activity as trading companies sought to address business issues such as risk management, credit and operational risks. As a result, Navita was able to more than compensate for lost customers as it completed a number of additional licensing deals including a POMAX PENS license to Gunvor International, a global energy trading firm based in Amsterdam. It also had two major wins in North America, by following its European accounts into the North American market, along with 2 major wins in Germany, including DB Energie, and signing a new license deal with a major Russian player.
The result of this activity was, according to Dr. Gjonnes, a strong and profitable financial performance with an estimated 5-10% growth in revenues relative to FY08 (pending finalization of its accounts) off of approximately the same level of orders as in FY08 which was a record-high for the company carrying a “full order book” going in to 2010.
Investments
Navita also made some key investments in 2009 in areas such as strengthening its delivery and engagement models for strategic accounts, and increasing its enterprise readiness. Another area of focus was working with partners which CommodityPoint has identified as a key requirement in European markets and in ’09 the company became a designated Microsoft Gold partner and enlisted in the Thomson Reuters Application Partner Program while developing closer and more formalized cooperation with the top-tier system integrators. It also strengthened its links with universities in particular becoming a member of the joint university industry center officially designated as the National Center of Expertise in energy trading, as one way of seeking highly talented individuals that can take POMAX, Navita’s product platform, one step further.
Navita in 2010
In 2010, Navita has a number of strategic plans including an effort to further enhance and develop its product platform including completing its .Net conversion work and further progress around integration across its entire product portfolio. Another key and innovative initiative is the creation of Navita Labs which allows experimentation with new technologies such as Microsoft Surface and with location/map-centric information, especially for gas logistics. It also plans to continue to strengthen its products’ functionality in the area of electric power for North American, Russian and Asian/Australian markets where it sees good growth potential.
Industry Trends
Dr. Gjonnes sees some of the emerging trends in the industry as being the continued convergence between physical and financial trading, the addition of commodities to ETRM software particularly including Carbon, further consolidation in the CTRM software space, the growing interest in Software as a service delivery models for CTRM software solutions and, more activity in markets such as Asia and Russia.
Summary
Like its competitors, 2009 was a mixed year for Navita. The financial crisis actually drove some traders out of business – especially commodity trading hedge funds as investors withdrew funds – and banks who had to cover losses in other areas of their business and were forced to downsize trading operations as a result, as well as impacting other types of traders across the industry. But, consistent with findings in CommodityPoint’s market research reports, the economic downturn created demand for procurement as trading firms dealt with new challenges around credit, regulations, volatility and liquidity issues. Against this backdrop, Navita made forward progress and is well positioned to benefit in 2010.
