The CTRM Blog

Around three years ago, I met with Wolfgang Ferse of IRM at E-World in Essen to discuss OLF’s acquisition of IRM. I was keen and interested to understand the integration strategy and how the two companies would work together (see that IssueAlert in our archives here). I also remarked that the acid test, according to Dr. Ferse, was both the “cultural fit and the degree of happiness with IRM’s key staff with the arrangement and the successful integration of the two product suites.”

IRM Revisited
Recently, I had the pleasure of visiting IRM in Vienna and spending some time catching up on progress and seeing some of its software in action. It would seem that the acquisition has been entirely successful as revenues have almost doubled in the three years since the acquisition and the IRM staff I spoke to felt that IRM had benefited in many areas such as product strategy, marketing, sales and more from OLF’s expertise. As it turned out, IRM has continued to enjoy some degree of ‘independence’. It is still IRM – an OLF company and, it is still focused on its areas of expertise and products. Plainly, many synergies have been capitalized upon by both companies such as consolidation of the OLF/IRM help desk in Vienna for Europe for example.

However, IRM is still very much a company that succeeds in Germanic power and gas markets. It will readily admit that many of its 50 clients are based in Germany and Switzerland but it will also point to successful projects in North America, Australia and other parts of Europe as a benefit of the OLF acquisition. While OLF has transferred a good deal of knowledge it does appear to have left IRM to do what it does best.

The iOPT Suite in a Nutshell
IRM offers an integrated suite of products known as iOPT that comprises of a module of common functions that serves as the integration platform and provide time series data, monitoring and alarms and other ‘common’ functionality along with the Trade, Pro and Opt modules. The software is currently being migrated from Oracle Forms to JAVA but whatever the user interface happens to be built in it looks neat and well conceptualized. iOPT Trade is an ETRM platform with everything you might expect in terms of instrument coverage, risk management, scheduling and accounting functionality but, being a company focused on modeling and simulation, it includes a number of surprises that allow what if scenario modeling and provide users with some real assistance in terms of performing their roles. An additional area of differentiation is the applications ease of working with time series data and complex formulas too. iOPT Trade can be substituted with Endur where appropriate too. iOPT Opt is a module designed to “optimize anything” I was informed. It is used to help maximize profit or reduce costs and I was shown examples that ranged from sensitivity analysis to integrated physical risk hedging. iOPT Pro is the forecasting module and it can forecast load, prices or inflows for example using a number of tested approaches and methodologies.

IRM’s Focus
IRM’s clients are mid-range utilities, industrials and some major utilities and it’s easy to see why. It’s software is configured and designed to cater for the complexities of physical energy. IT is focused in the direction of ‘portfolio management’ and iOPT now covers power, natural gas, certificates, coal, and oil and may be extended in the future to other commodities too. It has what IRM termed ‘built in energy scenario management’ meaning that users can simulate different price scenarios or load scenarios and perform what if analysis in multiple dimensions for multiple functions.
Despite its acquisition by OLF, all IRM product development is performed in Vienna by IRM resources – where the expertise is – even if that means it is at a higher cost than perhaps centralizing development or moving it offshore. IRM also benefits from having a large number of Ph.D.’s on staff including some quants – something that in fact few of the mainstream E/CTRM vendors can actually boast.

Summary
Overall, I was impressed with IRM and its software. Its acquisition by OLF appears to have been well executed and has benefited IRM considerably while it retains a degree of independence as a center of expertise. Perhaps the only criticism would be that after three years of OLF ownership, it has yet to truly move out of its German/Swiss area of coverage in terms of clients but, as CommodityPoint knows only too well, this is not a homogenous market with homogenous requirements and it remains filled with niches that companies like IRM can exploit and exploit effectively.