Allegro Development | Announcements

Allegro Recognized as a Leader in IDC MarketScape 2011 Assessment of

ETRM Software Providers
IDC Energy Insights Report Highlights Allegros Capabilities and Strategies
DALLAS, TX, SEPTEMBER 14, 2011 - Allegro Development Corporation a provider of energy trading and risk management (ETRM)
software, announced today that it has been named as a Leader by IDC Energy Insights in its report IDC MarketScape: Worldwide Energy
Trading and Risk Management 2011 Vendor Assessment. IDC is a premier technology research and advisory firm. The Leader category is
the reports highest ranking.
Among the reports findings:

What sets Allegro ahead of the others is its momentum and focus on the customer for reducing costs, contributing to the product roadmap, customer education, and customer satisfaction.

There is a commitment to risk management, improving customers business intelligence, efficient execution, and compliance and
control.

The company continues to have strong functionality on the physical side of the energy commodity.

Allegro has a commitment to advanced architecture and innovation.

Modularization, along with component-based pricing, has been attractive to new customers that have the desire to manage costs
through a phased implementation.

Allegro is well positioned to grow, with a well-developed road map that is framed around themes that are attractive to customers.

We are especially pleased to be recognized for our agile approach to deployment and our unique product development strategy, said Eldon
Klaassen, Allegro CEO. IDCs research confirms that Allegros commitment to closely aligning our solutions to meet customer business
objectives is resonating in the market place.
IDC Energy Insights, IDC MarketScape: Worldwide Energy Trading and Risk Management 2011 Vendor Assessment, (Doc. #EI229863),
August 2011.

About IDC MarketScape

IDC MarketScape vendor analysis model is designed to provide an overview of the competitive fitness of ICT (information and communications technology) suppliers in a given market. The research methodology utilizes a rigorous scoring methodology based on both qualitative
and quantitative criteria that results in a single graphical illustration of each vendors position within a given market. IDC MarketScape provides a clear framework in which the product and service offerings, capabilities and strategies, and current and future market success factors
of IT and telecommunications vendors can be meaningfully compared. The framework also provides technology buyers with a 360-degree
assessment of the strengths and weaknesses of current and prospective vendors.

For more information go to

www.allegrodev.com
or call us at +1.888.239.6850
North America +1.214.237.8000
Europe
+44(0)20.7382.4310
Asia Pacific +65.6236.5730
Published: September 21, 2011

Allegro is a global leader in energy trading & risk management solutions for power and gas utilities, refiners, producers, traders, and commodity consumers. With more than 27 years of deep industry expertise, Allegros enterprise
platform drives profitability and efficiency across front, middle, and back offices, while managing the complex logistics associated with physical commodities. Allegro provides customers with agile solutions to manage risk across
gas, power, coal, crude, petroleum, emissions, and other commodity markets, allowing decision makers to hedge
and execute with confidence. Headquartered in Dallas, Texas, Allegro has offices in Calgary, Houston, London,
Singapore and Zurich, along with a global network of partners.
2011 Allegro Development Corporation. All rights reserved. All trademarks and copyrights are the property of the respective owners.
All Allegro information, images and graphics are the property of Allegro. This material cannot be duplicated or distributed without express
written permission of Allegro Development Corporation. Allegro is a registered trademark of Allegro Development Corporation.

E X C E R P T
IDC MarketScape: Worldwide Energy
Trading and Risk Management 2011
Vendor Assessment

Global Headquarters: 5 Speen Street Framingham, MA 01701 USA

P.508.935.4400

F.508.988.7881

www.idc-ei.com

IDC Energy Insights: Utility IT Strategies

IDC Energy Insights: Oil and Gas IT Strategies
VENDOR ASSESSMENT

#EI229863

J i l l F e b l o wi t z

IN THIS EXCERPT
The content for this excerpt was taken directly from the IDC MarketScape:
Worldwide Energy Trading and Risk Management 2011 Vendor Assessment
(Doc # EI229863). All or parts of the following sections are included in this
excerpt: IDC Opinion, In This Study, Situation Overview, Future Outlook,
Essential Guidance, and Synopsis.

IDC ENERGY INSIGHTS OPINION

The energy trading and risk management (ETRM) solution vendor
evaluation in this study is based on a comprehensive and rigorous
framework that assesses vendors on current capabilities and future
strategy. This evaluation includes a quantitative and qualitative
assessment supported by exhaustive, practical feedback from energy
companies using ETRM solution to assess vendors. For this
assessment, IDC Energy Insights evaluated 11 vendors: Allegro,
Amphora, Aspect Technology, Navita, OATI, OpenLink Financial,
SAS, Solarc, SunGard, Triple Point, and Ventyx. According to our
research:
The ETRM market continues to be a healthy one, largely driven by
new trends such as regulations on commodity trading, the
identification of new energy resources, and the emergence of new
exchanges and energy products, as well as the more traditional
consideration of opportunity and risk.
ETRM vendors fall into commodity coverage (single- or multicommodity focus), primary buyer (utilities, merchant generators,
oil and gas companies), region (primarily North America, Europe,

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or global), and delivery model (traditional license maintenance or

software as a service [SaaS]).
There is a great deal of parity among the vendors in this market in
the Leaders and Major Players groupings. The industry is willing
to pay top dollar for applications in this space and demands the
latest in technology because speed and scalability are important
and the stakes are high.
Software-as-a-service offerings are gaining some popularity among
the smaller trading desks, especially in emerging economies.

IN THIS STUDY
The evaluation is based on a comprehensive and rigorous framework
the IDC MarketScape model. Vendors are assessed relative to the
criteria and one another. The analysis highlights the factors expected
to be the most influential for success in the market in both the short
and the long term. This assessment discusses both quantitative and
qualitative characteristics that explain success in this market.
The focus is on ETRM, rather than commodity trading and risk
management (CTRM), which encompasses other commodities such as
agricultural products and metals. The physical aspects of energy
trading are an important part of trading for those who have or take
possession of the commodity, so these are treated in some detail.
This study is composed of two sections: The first part involves a
definition of the characteristics that IDC believes lead to success in
energy trading and risk management. These characteristics are based
on buyer and vendor surveys and key analyst observations of best
practices. The second part of this study provides a visual presentation
of multiple vendors into a single bubble-chart format. This display
concisely exhibits the observed and quantified scores of the reviewed
vendors.
The document concludes with IDC's essential guidance to support
continued growth and improvement of these vendors' offerings.
Methodology

IDC Energy Insights' IDC MarketScape criteria selection, weightings,

and vendor scores represent well-researched IDC Energy Insights
judgment about the market and specific vendors. IDC Energy Insights
analysts tailor the range of standard characteristics by which vendors
are measured through structured discussions, surveys, and interviews
with market leaders, participants, and end users. Market weightings are

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based on user interviews, buyer surveys, and the input of a review

board of IDC experts in each market. IDC Energy Insights analysts
base individual vendor scores, and ultimately vendor positions on the
IDC MarketScape, on detailed surveys and interviews with the
vendors, publicly available information, and end-user experiences in
an effort to provide an accurate and consistent assessment of each
vendor's characteristics, behavior, and capability.
Market Definition

ETRM applications are involved with trading physical and financial

energy commodities and include transactional and analytic
applications used in the front office, midoffice, and back office. These
applications cover business process from deal capture to settlement
and include trader tools, risk management, credit risk management,
bidding and pricing strategy, forecasting, settlement, and logistics.
Logistics depend largely on the commodity and its origination and
delivery point and include pipeline nominations, power scheduling,
and shipping (see Figure 1).

FIGURE 1
ETRM Applications

Source: IDC Energy Insights, 2011

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SITUATION OVERVIEW
Introduction

Evolution of ETRM Software

Although companies have been trading commodities for decades, it

was not until the advent of Enron online that electronic trading in
energy commodities gained momentum. Since that time, energy
trading has become more automated, catching up with highly
automated financial trading. However, it is the physical delivery aspect
of energy trading and risk management that makes ETRM applications
unique.
Just as the rest of the software industry has evolved, so has the ETRM
software market. Many energy companies started out building inhouse solutions for deal capture and risk analysis, putting these
together with credit risk applications used across many industries.
Those companies that did purchase packaged applications did a lot of
customization, with many purchasing the source code, believing that
these customizations helped create competitive edge
More recently, faced with the costs of supporting highly customized
applications and the need for audit ability and standardization driven
by regulation, energy companies are embracing packaged applications.
At the same time, IT has taken on a greater role in selecting the
software which, because of its complexity, had been largely the
responsibility of the trading and risk business units. Now almost twothirds of North American energy companies are using packaged
applications to support their energy trading and risk management
activities (see Figure 2).

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FIGURE 2
Implementation of ETRM Solutions at North American
Energy Companies
Q.

Has your organization implemented an ETRM solution?

Base: energy companies with over 500 employees

Source: IDC's Vertical IT and Communications Survey, January 2011

FUTURE OUTLOOK
IDC MarketScape ETRM Market
Vendor Assessment

The IDC
represents
positioned
positioned

MarketScape vendor assessment for the ETRM market

IDC Energy Insights' opinion on which vendors are well
today through current capabilities and which are best
to gain market share over the next three to five years.

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Positioning in the upper right of the grid indicates that vendors are
well positioned to gain market share. For the purposes of discussion,
IDC Energy Insights divided potential key strategy measures for
success into two primary categories: capabilities and strategies.
Positioning on the y-axis reflects the provider's current capabilities and
how well aligned the provider is to customer needs. The capabilities
category focuses on the capabilities of the company and product today,
here and now. In this category, IDC Energy Insights looks at how well
a provider is building/delivering capabilities that enable it to execute
its chosen strategy in the market.
Positioning on the x-axis, or strategies axis, indicates how well the
provider's future strategy aligns with what customers will require in
three to five years. The strategies category focuses on high-level
strategic decisions and underlying assumptions about offerings,
customer segments, business, and go-to-market plans for the future, in
this case defined as the next three to five years. In this category,
analysts look at whether or not a supplier's strategies in various areas
are aligned with customer requirements (and spending) over a defined
future time period.
Figure 3 shows each provider's position in the vendor assessment
chart. A provider's market share is indicated by the size of the bubble,
and a (+), (-), or () icon, respectively, indicates whether or not the
provider is growing faster, slower, or even with overall market growth.

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FIGURE 3
IDC MarketScape: ETRM Vendor Assessment

Source: IDC Energy Insights, 2011

Vendors

Summary Analysis
Al l eg ro

Allegro Development has its roots in ETRM in the oil and gas
industry, but has since successfully expanded into the trading of
multiple energy commodities by utilities, oil and gas companies, and
financial services companies. The company continues to have strong
functionality on the physical side of the energy commodity, especially
in scheduling, nominations, logistics, planning, and optimization. In
addition to providing ETRM, the company also offers an accounting

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package for those companies that prefer to keep some accounting

functionality in their ETRM or as a substitute for an enterprise
resource planning system. Allegro was rated as a Leader in this
assessment.
Allegro has a commitment to advanced architecture and innovation.
The ETRM offering is fully architected using service-oriented
architecture, and a visual model helps the company's developers
enhance the product while facilitating customer input. When Allegro
released Allegro 8.0 in 2007, it was with the view that modularization
would make enhancements easier to implement for existing customers.
That modularization, along with component-based pricing, has been
attractive to new customers that have a desire to manage costs through
a phased implementation. Grid computing and the potential for
increased performance and lower hardware costs also came with
version 8. Now, over half of Allegro's customers are on the latest
version.
Allegro is well positioned to grow, with a well-developed road map
that is framed around themes that are attractive to customers. There is
a commitment to risk management (credit and counterparty risk,
liquidity risk, market price risk, and commodity cost control and for
utilities, fuel costs, and the price of power), improving customers'
business intelligence (trader productivity, position analysis, and
scalability), efficient execution (contract management, accurate
settlement, logistics optimization), and compliance and control
(emissions, Dodd Frank, hedge accounting).
Customers have an opportunity to contribute to product development.
In addition to the traditional advisory groups, Allegro has taken a
unique approach by creating "collaborative product development" that
brings customers together to participate in all phases of the
development process for specific components or modules. A visual
model of data and workflow, a knowledge sharing platform (currently
new), and Allegro University are ways Allegro seeks to provide useful
information to users and enhance customer participation in the
development process.

ESSENTIAL GUIDANCE
With the prospect of new energy trading regulations, as a result of
Dodd-Frank and European efforts such as Market Abuse Directive and
Markets in Financial Instruments, energy companies will need to
reexamine their trading systems to determine whether these will be up
for new requirements such as over-the-counter electronic
confirmations, trade surveillance, and "real time" regulatory reporting.

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In doing this review, it makes sense to look beyond compliance to

readiness for the faster paced and higher volume markets of the future.
Actions to Consider

When considering a major upgrade of an existing application, take

time to look into alternatives. There may be some situations where
a major upgrade is equivalent in time and effort to a change to a
new application provided by a different vendor.
Use this IDC MarketScape to develop a short list of vendors for
consideration. However, note that the weightings used in this study
may not apply to your companies' priorities and requirements, as
they were developed with a range of buyers in mind. For example,
you may be interested in the cost savings and convenience of a
SaaS approach, which will influence your decision to put vendors
such as OATI for power and Aspect Technologies for oil and gas
at the top of the list.
Do not assume that because a vendor is part of a larger company
offering multiple products that the company will automatically
have the same level of research and development commitment to
its ETRM products. That said, there are vendors that have been
able to leverage advances in technology developed for other
products and successfully incorporate these into the ETRM
product.

Synopsis

This IDC Energy Insights report is intended to help the buyers of

energy trading and risk management (ETRM) software applications in
their selection of ETRM applications. The evaluation is based on a
comprehensive and rigorous framework the IDC MarketScape
model. Vendors are assessed relative to the criteria and one another.
The analysis highlights the factors expected to be the most influential
for success in the market in both the short and the long term. This
assessment discusses both quantitative and qualitative characteristics
that explain success in this market.
According to Jill Feblowitz, IDC Energy Insights vice president, "With
the introduction of new resources, the increase in trading volumes and
volatility, along with new regulations, the most sought after
capabilities are the ability to provide role-based access to position in
near real time, flexibility for changing compliance requirements, and
analytics to gain intelligence for risk mitigation and opportunity."

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Copyright Notice

Copyright 2011 IDC Energy Insights. Reproduction without written

permission is completely forbidden. External Publication of IDC
Energy Insights Information and Data: Any IDC Energy Insights
information that is to be used in advertising, press releases, or
promotional materials requires prior written approval from the
appropriate IDC Energy Insights Vice President. A draft of the
proposed document should accompany any such request. IDC Energy
Insights reserves the right to deny approval of external usage for any
reason.

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