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How Peak Event Analysis Transformed Demand Management at the CME Group

Blog Post created by nlockwood Employee on Aug 17, 2015

By Maria Galindo

CME Group is the world’s leading and most diverse derivatives marketplace, handling three billion contracts worth approximately $1 quadrillion annually. The company provides a marketplace for buyers and sellers, bringing together individuals, companies, and institutions that want to manage risk or that want to profit by accepting risk.

Yet the company struggled to get a handle on one of its own key operational risks – peaks in customer demand that were unexpected and instantaneous. To address these demand peaks effectively, CME Group had committed to having at least two times the capacity of every peak available. This was inefficient and expensive.

Understanding Peak Demand and Costs

The company began to examine the situation by shifting the conversation from just managing the peaks to understanding the customer transaction profiles that fueled the underlying demand. They figured out that if they could find a way to optimize the inefficient customer profiles, they could significantly reduce the need to purchase gear for the next peak.

There was however one key hurdle in this this initiative. CME Group was stifled by a lack of transparency around customer behavior as it was relying on ineffective spreadsheets to measure cost -- a key data point for understanding demand. 


The Road to Technology Business Management

Spreadsheets, static reports, and rigid business intelligence tools weren’t helping CME Group marry disparate data to derive meaning from it. After all, you can ask the right questions and even know how to attack a problem, but without the right tools, even a smart company can be fighting a losing game.

CME Group adopted Technology Business Management (TBM) to reimplement cost modeling. TBM helped CME determine the net impact of the organization's actions on profitability. It also helped them leverage relevant costing data and insights to influence internal and external customer behavior and executive decision-making.

With data-driven insights into customer behavior, CME Group did more than bring operational stability to peak events, it transformed the business – from customer satisfaction to market efficiency, all the way to executive decision-making.

TBM Council Recognition

CME Group were awarded the prestigious IT Financial Pioneer Award winner at this year’s Technology Business Management Conference. This award recognizes CFOs of IT or IT Controllers that help shape and transform the business -- through cost transparency that drives fact-based decisions, through shifting spending from run-the-business to innovation, and through shaping business demand.

You can read the full CME story here. For CME Group, gaining a better understanding of customer behavior driving demand so that behavior could be better managed and minimize peaks wasn’t possible prior to applying TBM.

Next steps? The IT Finance group is partnering with CME architects to implement a spatial computing language, with metrics enabled by TBM, to change the way that complex, real-time, high volume computations are distributed across a global infrastructure.

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