Lending credence to its ‘Powered by’ concept, Goldensource has secured IBM Canada as a client for its data management platform to underpin IBM’s back office processing software.
IBM’s Securities Industry Service (SIS) division will be using the platform to support its range of brokerage processing applications and services as it kicks off its ‘Revitalisation Program’, a three year program aimed at “realigning the application suite of services so we are not just seen as application software,” says Ken Miller, director and general manager of IBM’s SIS.
“It has become apparent over the past three to five years that our clients’ businesses have changed from transaction-based to service-driven businesses and we realised that we’d only be successful if we adapt our services to fit these new requirements and help enable our clients to provide this type of service,” he continues. “Business drivers are changing. There is more integration between the mid-and back-office, and so siloed technology must be replaced to enable a more cohesive, 360 degree view of the customer.” IBM’s 10 identified key business drivers including investor trust and confidence, regulation, technology leverage, operational efficiency, consolidation, and innovation and sourcing.
The underlying data management is seen as an essential component to facilitate this change. “We identified a need for a service-oriented approach based on a strong data foundation.”
According to Miller, Goldensource is seen as a major component of the solution. “We want a comprehensive data environment with an enterprise approach. Goldensource fits with our strategy.” This was not something IBM considered doing themselves, despite working through a different team in New York for the past few years on a reference data strategy.
The benefits of the new service-oriented architecture, according to Miller, are that “We can enhance our clients’ capabilities, products and data integration, and we can react more quickly to change, such as a client adding a new product. This will now be a systematic change rather than a substantial one. The by-products are an increase in operational efficiency, scalability and revenue generation from the integrated platform.”
For Goldensource, this deal illustrates the ‘Powered by’ concept for its enterprise data management platform, which chief executive officer Mike Meriton outlined at last year’s Sibos event as part of the companies shift in strategy. In recognition that providing a fully outsourced service for managing reference data – such as those offered SunGard or Accenture/Asset Control – takes the scale of a major corporation or backer, Goldensource decided to take a different tack and is now making its platform available to larger service providers as an integrated component for their services to clients.
Says Meriton, “There’s lots of work ahead for us,” but he believes that IBM’s decision illustrates the view that “data management can provide a competitive advantage.”
Although the deal is with the Canadian operation, it is not a regional solution. IBM’s SIS services global players, and has seen an increase in demand for global coverage, which is partly why a Goldensource approach was deemed appropriate, says Miller. And Goldensource hopes to “earn the right to carry (its service) to a broader audience within IBM,” says Meriton.
The deal also covers the full spectrum of data components. As Meriton says, “We take a holistic view. It’s not just about instrument or counterparty or transaction data, as there is significant value in the integration of all these data types and seeing the relationship between them. For example, a risk data model can encompass, say, equities and fixed income instrument master alongside transaction data. They are not siloed anymore.”
IBM Canada opted for Goldensource after more than a year of evaluation and proof of concepts. Both companies are currently visiting clients to demonstrate the data model and architecture, and an incremental transition (in order to minimize impact on clients) to the new product suite will begin in 2007.
The two companies have a history. Says Meriton, “We have a long-standing relationship with IBM, which was one of our primary backers when Goldensource originally developed its data model-based platform.” Neither side will comment on the financial arrangements, except to confirm that it is some combination of a license fee and recurring revenues for Goldensource, which will grow as the business expands.