Patrick Reames, Managing Director

Service providers and system integrators are a vital part of the CTRM landscape, providing unique skills or supplementing resources for companies that are working to improve their CTRM system capabilities. In fact, a recent CommodityPoint study, Consultants and Systems Integrators in Trading and Risk Management, notes that about 80% of the companies utilizing commercial CTRM systems have employed the services of one or more of these consulting organizations.

The companies that provide these services around CTRM software can be generally described as one of four types of providers:

1. Global well-known firms (including what is known as “The Big 4″) for which E/CTRM is but a component of their overall business
2. Relatively large firms that employ one hundred or more consultants and specialize in few markets, such as E/CTRM and Financials
3. Firms who service a local market only, employing a few dozen or less consultants and who specialize in a particular industry (in this case E/CTRM)
4. Boutique specialist firms, who employ few consultants, but have specific capabilities in some aspect of E/CTRM, such as risk management.

Additionally, not all of the larger Service Provider firms have capabilities (practices) around CTRM software in all geographies or locations, or they may focus in on particular aspects of Trading & Risk Management such as business consulting, strategy consulting or software selection.

capSpire, founded in early 2009 and with clients in the US and Europe, is blazing a bit of a different trail in this industry. While they had been essentially a boutique consulting firm, they have recently begun pursuing a growth strategy that leverages their deep domain knowledge around specific CTRM solutions, such as Solarc’s RightAngle product, and coupling those skills with leading edge technical resources in order to create an organization that is capable of providing unique solutions to difficult business issues. As Lance Laubach, capSpires CEO notes, “We’re always looking ways to improve our value proposition to our customers and differentiate ourselves from the competition. You can’t do that by merely providing an hour’s effort for an hour’s wage – you have to look for ways to utilize technology as a lever with which to create multiples of return for that hour’s effort.”

Having seen solid success with this model, the company has been filling their growing staffing need through the recruitment of highly experienced industry veterans and new university graduates that possess unique technical skills. The combination of resources enables capSpire to:

• Deliver expert level consulting support for industry standard CTRM applications
• Mentor and train new resources in the company’s methodologies
• Create high value, blended teams capable of consulting around industry specific issues, yet also able to deliver leading edge technical solutions at a cost below the industry average.

As Jeff Hardcastle, capSpire co-founder puts it, “We invest considerable time and resources in the area of recruiting and employee development. We have a very strict discipline on the skillsets we recruit and have grown very effective at identifying those traits, especially in college hires. All of our new hires, including those from the universities, undergo a comprehensive three month program of education in our methodologies, the CTRM market as a whole, and our unique technical “toolbox” that we’ve developed around our CTRM practice that allows us to provide holistic “engineering quality” solutions that contrast stereotypical consulting methodologies.”

The “toolbox” that Mr. Hardcastle references is being leveraged as the company has also been purposefully evolving from a “pure” consulting business to one that is more of a full service CTRM company – that is an organization that provides both services and products that support, but are essentially agnostic, to the underlying CTRM product(s). capSpire has taken a few of the technical solutions within that “toolbox” and are evolving those into products that can create significant value and accelerate the delivery of solutions to complex business issues.

Their first such product offering, Gravitate, is a CTRM “portal” and is currently in use by wholesale petroleum marketers, providing a valued added service to their customers. This newly delivered product enables a marketer’s customers to access their information contained within the marketer’s CTRM system, such as prices, trade performance, and invoices. The system, via the use of its own data structures, is independent of the underlying CTRM software, yet has been designed to easily integrate with all leading products, providing a highly configurable platform for web-enabling those products.

According to Mike Scharf, the other capSpire co-founder, “We recognize traditional consulting is all about reinventing the wheel on each project. Our approach is recognition that for most clients, they don’t need a new wheel; they need a services partner who can quickly provide them with the solutions they need coupled with the reassurance of an “always available” partnership. The Gravitate CTRM Portal is just another example of our own innovation and investment in creating solutions that don’t require our clients to reinvent the wheel.”

capSpire has been able to create a bit of a unique animal in this market. Their deep domain knowledge and roster of talented people and specialized technical solutions has enabled them to grow quickly and has provided a solid base of referential customers. Their challenge will be in maintaining what for some has proven a difficult balance between growing rapidly and maintaining a consistently high quality of service on the consulting side. capSpire’s recruiting and training model, combined with their ability to leverage proprietary technical solutions would seem to position them well for meeting that challenge.

The BPC, a Washington based non-profit think tank, was founded by four former Senators, two each representing Democrats and Republicans, and has been dedicated to, “develop and promote solutions that can attract public support and political momentum in order to achieve real progress.” The BPC was asked by the federal government’s National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling to review the effect of the moratorium and the response by both industry and the government.

Among the conclusions in the BCP report:

• “We (the BCP) believe that the need to impose a moratorium on deepwater drilling reflects how unprepared both government and industry were for an incident of this magnitude.”
• “The DOI’s (Department of Interior) drilling moratorium has served the productive purpose of allowing time for both industry and government to prepare for a safer, more vigilant, and dependable future for U.S. offshore drilling.”
• “We believe DOI and the industry have used this time effectively to develop a new regime for drilling in the Gulf of Mexico.”
• “We believe this new regime will provide an adequate margin of safety to responsibly allow the resumption of deep water drilling in the Gulf of Mexico.”

Among the new regulations being proposed and/or implemented by the DOI include the development of new comprehensive safety and environmental protection plans that cover each operator’s specific operations and assets, including new standards and inspection/certification requirements for blow-out preventers and casing/cementing programs (critical failure points in the Deepwater Horizon disaster). The proposed new regulations also require that drillers develop worst case scenario case studies for each deepwater well drilled.

The BPC notes that these and other proposed changes are not without substantial cost, concluding that, “It is possible that the costs and technical sophistication needed to comply with these new requirements may discourage some rigs and companies from future operation in the Gulf of Mexico. Although this outcome would be unfortunate, we believe it is imperative that all companies be held to a consistent set of safety requirements.”

Given the vitriol, misinformation and finger pointing that has been associated with the blowout and its aftermath, it has been difficult to find reasoned discussion about the path forward for the industry. The involvement of a non-partisan third party to review the impact of the moratorium, and the joint response by industry and government, has shed a sterilizing light on the aftermath of an event that has been infected by emotional hyperbole and political gamesmanship. A rational, balanced review of the response to a terrible tragedy, such as that provided by the BPC, will help in advancing the development of improved practices and standards for safety and environmental protection. Once in place, these new practices and standards will allow the industry to move forward in developing much needed natural resources in a manner that minimizes the risks to both the environment and the workers in the Gulf.

Reames, Steele, Vasey and Tredway by the Prague Astrological Clock

Admiring the Charles Bridge and Prague Castle

Prague Castle and Seat of Government

View of Prague from Clock Tower

All photos courtesy of Patrick Reames.