Survey Results

What impacts have these trends had on technology adoption and investment? What are the use cases that motivated the investment in, and adoption of, these various technologies? These were the questions our survey and research asked.

ComTech conducted the survey component of this study between February 2021 and early June 2021 using a web-based tool. Survey responses were encouraged through email, blog and word of mouth efforts. ComTech also partnered with Commodities People to include an invitation to participate in the survey as industry players signed-up for their Commodity Trading Week event.

In all, the disruptive technologies survey had 63 valid participants with just over half of those being in Europe (Figure 1). Both the North America and Asia-Pacific regions were also quite well represented.

Although technology providers were the largest group of respondents (46%), end users of technology were also well represented (38%), with the remainder being consultants and systems integrators. The end users also had diverse backgrounds, with respondents representing an array of market segments including producers, consumers, banks and funds, and merchants (Figure 2).

When asked about how various technologies might impact commodities and commodity trading over the next 12-24 months, it was apparent that cloud and SaaS may already be in the rear-view mirror. With these technologies having been broadly adopted and deployed across the industry, it’s perhaps not surprising that these technologies would be seen as having the largest impacts. Data management and data mining, again somewhat mature and widely accepted technologies, follow closely behind in levels

of expected impact. AI and ML also ranked highly as even though they are still somewhat early in their adoption phase, several practical use cases have emerged for these technologies. By comparison, blockchain, despite much hype and investment over the last 5 plus years, remains some ways off it seems, ranking only slightly higher than opensource software and virtual/augmented reality (Figure 3). Workflow and microservices ranked somewhere in the middle; however, if you combine ‘significant’ and ‘some’ impact responses, then they also show potential in our respondent’s opinions.

Looking specifically at the responses of just the end users shows little change versus the larger sample, except for Microservices, which drop further down the list.

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By comparison to the earlier 2018 study, it seems more respondents view all the technologies as having a more significant/deeper impact now, yet the relative ranking of those technologies remains nearly identical. AI and ML are seen as more important in this study and, as we predicted in 2017, appear to be front and center now in terms of attracting both interest versus the other newer/emerging technologies.

In terms of investment plans (Figure 6), cloud and SaaS dominate with 84% of respondents saying their firms expected to invest in those technologies. AI and ML have moved up into the next place with almost 60% expecting to invest, while 32% expect to invest in blockchain. These numbers remain pretty much identical when just the end user group of respondents is analyzed. However, comparison with the 2018 results is interesting.

Comparing the results from the current survey to those from 2018 indicates that investments in cloud and/or SaaS (74% in 2018 vs. 84% in 2021) and microservices (24% in 2018 vs. 41% in 2021) are expected to increase. Investment in areas like AI and ML and opensource will remain somewhat consistent while investment in blockchain (46% in 2018 vs. 32% in 2021), data management (66% vs. 56%) and VR/ AR (9% vs. 5%) might be expected to decline.

Blockchain appears to be struggling even more in 2021 than it was in 2018 in the opinions of the respondents. When asked where blockchain might succeed commercially (Figure 7), there was little confidence of its commercial application in any of

the tested areas except perhaps custody transfer / ownership transfer.

Equally, using social media data draws little interest for most respondents (Figure 8), with the number of those who see value in mining social media for market indications having dropped from 39% in 2018 to 25% in 2021.

Referring to where disruptive technology will emerge from among the various types of technology providers (Figure 9), most expect it to emerge from the cloudbased AI/ML vendors (Azure, AWS, etc.) and technology platforms that facilitate digitalization of deal negotiation, contract management and related business processes. ERP providers are seen as the least innovative in bringing new technologies to market, trailing behind the other low-ranking segments, including global IT firms (IBM, Oracle etc.), industry consortia (Figure 9) and CTRM providers.

When it comes to which types of firms are at the most risk of being disrupted by these emerging technologies, the respondents pointed to CTRM and ERP software firms as those most likely to impacted (Figure 10).

Finally, as AI and ML are generating growing interest across the commodities trading space, we asked where these technologies might be applied for the most impact (Figure 11). Perhaps not surprisingly, “Data Analysis” is cited as the number one area for the use of this technology. Asset Modeling, Price Forecasting and to a lesser degree, Risk Management, are also all seen as areas for potential use.

Commodities People often obtain ad hoc survey data from its conference sessions audience as well as collect data during registration for its conferences. It’s data also shows that while AI and ML seem to be seeing rapid deployment across several use cases, blockchain has not yet fully emerged commercially. A CTW tradeshow poll showed that almost half of those responding felt AI to be a game changer and almost 1/5th was most excited by its potential. Though blockchain excites with its potential (26% in that same poll), almost half of another poll from the same conference suggest that it hasn’t yet shown its business case convincingly in commodity trading. These data points do help reinforce the trends

suggested by our own data.

In summary, the 2021 survey results show only subtle yet arguably significant differences to the previous survey conducted in 2018, but those differences are informative. Cloud and SaaS seem to be the major focus for most firms and these technologies are clearly being broadly accepted within all sides of the industry. It could be argued that digitalization should be preceded by data management; elevating data mining/management as a significant area of investment, though there are hints that this focus is lessening somewhat. Viewed another way, perhaps there is an on-going shift from organizing data to attempting to extract value from it?

Of course, at any point in time, each of these trends is at a different level of maturity or adoption within any individual company or technology vendor. While some innovative vendors have already fully moved to a “true cloud” platform, others for various reasons are only in the early staging of architecting their products to run

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effectively in a cloud environment. The same is true with respect to end users. Though each respondent may be at different points in the adoption curve for any technology, the cumulative data does provide a view of where the industry is generally with respect to the technology adoption curve for the technologies examined. As such, the data does suggest that we may be close to the peak of cloud adoption and perhaps slightly past the peak in terms of investments in data management.

AI/ML and automation appear to still be prior to the peak of the technology adoption curve and can be expected to draw increasing levels of investment. These technologies are finding some use in practical business applications and new use cases are emerging. Our research indicates this is driven in large part by the need for better control of a remote workforce, and the massive growth in the volume of data generated and consumed by industry players and the need for new tools/applications to extract actionable insights from it. AI and ML empowered Robotic Process Automation (RPA) tools are also finding utility in allowing machines to manage routine work and process tasks, which in turn frees humans to focus their expertise on problematic exceptions. Though use cases in commodity trading are still somewhat limited in their scope, the early results from these efforts show enough promise and return on investment that we do expect to see increasing interest and investment in these areas.

Blockchain, hyped and touted as “the next big thing” for the past 5-plus years, still seems to be some way off from broad practical application in the opinion of our survey respondents. Indeed, it may be further off now that it was thought to be in 2018. This is indicated not just in the lower percentage of respondents planning to invest in blockchain in our most recent survey, but also by the apparent lack of use cases to support its deployment. Based on levels of investment to date and the results achieved, it seems that blockchain will be likely be used initially to securely record certain types of transactional data via smart contracts and in managing custody transfer. We anticipate that blockchain, given its inherent latency in capturing and recording transactional data, will remain somewhat of a niche technology deployed in a small percentage of applications supporting after the fact recording of commodity trading and management activity in the near to mid-term future.

Aside from its established (though perhaps improving) latency issues, an additional aspect of blockchain that will likely hinder its uptake, is the need to establish process rules, standards, and governance for its use. In order to gain broad acceptance as an enabling technology or platform, this often requires the creation of a consortia of industry participants to own and operate the initiative. Anyone familiar with the history of commodities knows very well that consortia, standards and working together do not have a particularly successful track record in this industry, particularly as the markets have increasingly become more global in their reach. As indicated in Figure 9, the survey respondents appear to echo this sentiment as they do not consider consortia to be among the leading candidates for promoting disruptive technologies.

Given that most blockchain initiatives to date in the commodities industries have been driven via consortia, their lack of broad success might be more a result of their inability to overcome competing agendas in terms of business processes and proposed standards, and less so any shortcoming with the technology itself.

It is also interesting to examine perceptions as to where the impetus for adoption of disruptive technologies is coming from. Our respondents point squarely to those technology vendors that are focusing on cloud delivery of AI and ML tools, and to data and data management solution providers. The availability of these platforms that have embedded these technologies seems to be driving additional adoption as opposed to users having to invest in the basic technologies and develop their own solutions from them.

Other technologies like VR remain on the edge of perception it would seem; yet our research indicates there does seem to be evidence that augmented reality is getting closer to practical usage as there are a few emerging use cases that will be covered later in this report.

In summary, it appears the drive to digitalize, supported by the broader trends of work-from-home, and the need for greater efficiencies and improved control are driving people’s perceptions of disruptive technologies. This in turn makes investments in cloud, automation, AI and ML, improved data analytics tools, and (based on events in 2021) security more attractive or even pressing. Further, when it comes to security considerations, perhaps blockchain will have a future role by helping to improve trust and verification, particularly in sensitive areas such as critical infrastructure.

Of course, each technology has its own adoption curve and there are early adopters and laggards across the industry for each technology. However, the overall push for adoption of these emerging and advanced technologies does appear to be catalyzing the movement away from monolithic systems to ecosystems comprised of numerous specialized applications; and, from traditional on premises to SaaS or at least subscription priced. For example, SAP’s S4/Hana and Industry cloud approach is a somewhat dramatic shift for many market participants who have relied on the company’s traditionally installed ERP solution and may herald the ultimate end to any continuing resistance to cloud solutions for mid and large companies. Other examples of vendors that have moved from being providers of traditional monolithic applications to providers of cloud-enabled ecosystems of specialized applications (or apps) include Eka and Gen10. Even SAP has adopted the idea of an ecosystem of web-based apps and other more recent market entrants, including Previse Systems and CTRMCubed, have made this their initial go-to-market model. Still others, such as Beacon, have moved into the space with a platform model which allows users to leverage a sophisticated trading data model to build-out those capabilities specific to their unique mix of assets, processes, and markets.

It should be noted that despite the growing availability and adoption of these emerging technologies, the reality is that commodity firms are often laggards overall when compared to other markets such as financial services or those that are more consumer oriented. Given the complexities of producing, managing, processing, trading, marketing and transforming commodities, it is perhaps understandable that there is still a long way to go in terms of digitalization and broad adoption of these technologies in this space; and why, for now at least, Excel remains the tool of choice for many.