Energy Risk Awards 2016
Accenture, a global giant in IT consulting, boosted its presence in North American electricity and natural gas markets significantly when it acquired the Houston-based technology services firm Structure early last year.
When the transaction closed on January 27, 2015, the majority of Structure's staff became part of Accenture's trading and risk practice, which has a global headcount of about 1,000. Worldwide, the Dublin-based consulting firm employs 373,000 people and has offices and operations in 55 countries.
Led by Houston-based Baris Ertan, a former managing director at Structure, the trading and risk unit saw its baseline revenue grow 43% in the year following the deal, according to Accenture. "We have become the leading global provider of end-to-end commodity management services," says Ertan.
"With the integration of Structure, we are now uniquely positioned to help our clients transform their business across Accenture's five key disciplines of strategy, consulting, digital, technology and operations. We have become the leading global provider of end-to-end commodity management services, supported by our vendor ecosystem, which has resulted in a track record of success for our clients."
Mike Preston, a managing director at Accenture who led the acquisition, says one of the main challenges that the global consulting firm faced after the deal was how to maintain Structure's "focused and committed practice" within a much larger company.
"You are combining people on new processes and new systems, which we all know is not easy," Preston says. "We branded this acquisition with a ‘one plus one equals five' view; while the math doesn't add up, we do believe the combined practice adds up to much greater than its individual parts. We are very selective when we think about acquisitions and we only target market leaders... it points to our commitment to the trading and risk space."
Structure's regional expertise – including its work with a number of multinational commodity traders that have set up shop in North America – combined with Accenture's global experience in crude oil and refined products, agricultural commodities and metals trading made the acquisition "one of the most successful integrations in the history of the firm", says Preston.
Last year, Accenture provided services specifically focused on commercial energy trading to more than 40 clients, 10 of which were new. Most of these were multi-year technology implementation projects. New clients added during the past 18 months included municipal electric utilities looking to implement energy trading and risk management (ETRM) systems, a global oil and gas company that required a technology platform for its US trading unit and an LNG firm that expanded its trading operations to North America.
Clients praise Accenture for its breadth across the commodities markets and its command of a wide range of ETRM systems. Over the past year, the firm established new relationships with a number of software vendors and broadened its knowledge across commodity management, risk analytics and data aggregation products.
In a project completed earlier this year, Accenture carried out a major technology implementation for TrailStone, the Austin- and London-based commodity merchant started in 2013 by former Deutsche Bank commodities chief David Silbert. TrailStone needed to have a global ETRM platform capable of supporting physical and financially settled products across power, natural gas, liquids, agricultural commodities and metals in both Europe and North America. Accenture was charged with delivering the North American components of the system, which needed to be tailored to the requirements of local markets while also being compatible with the client¹s global platform.
Troy Martin, TrailStone's Austin-based chief operating officer, says Accenture consultants served as the firm's in-house technology team throughout the project, before responsibilities were shifted to the commodity merchant's internal IT team during the final stages of implementation.
"Accenture communicated openly, challenged effectively and were a critical component of a complex global delivery program utilising a mix of internal and external resources on both sides of the Atlantic," Martin says. "They consistently met our expectations and delivery schedule, and more importantly, helped shape and reshape our goals and expectations and successfully delivered a solution based on their knowledge of best practices."
Looking ahead, Accenture plans to leverage the expertise it gained from the Structure acquisition to expand its business into new markets. In particular, the company hopes to offer risk management solutions to the transportations and chemicals sectors.
"When you see airline companies and chemicals companies begin to embrace the capabilities required to manage the volatility that results from commodity exposure and explore ways of managing that exposure… we see that as an emerging opportunity for Accenture," says Preston.