Following its purchase of the Capco Reference Data Services (CRDS) business in February 2008, data management and reporting solution vendor Netik has taken the last 18 months to bed down the Global Securities Master (GSM) solution into its overall managed services portfolio. This work has resulted in the release of version 2.0 of the Netik GSM solution’s Netik Container component, which purports to give users more control over their reference and market data in the managed services environment.
“The upgrade process was spurred by prospective customer concerns about a lack of control over their data when they sign up to Netik GSM as a managed service,” explains Keith Hale, executive vice president of the EMEA region for Netik. “This resulted in us upgrading Netik Container in order to allow users greater control over their data on site.”
Netik GSM essentially provides a managed service for the acquisition, cleansing, consolidation and distribution of reference and market data, which the vendor claims delivers an overall cost reduction of 30% due to scale efficiencies. The vendor’s ‘on site’ container technology platform was developed following Netik’s purchase of CRDS and the subsequent integration of components from Netik’s own data warehouse with the ex-Capco managed data service.
The vendor is therefore striving to provide its clients with what Colin Close, president of Netik, calls “the best of both worlds”. Firms that use the newly upgraded solution can apply their own specific and proprietary rules to their reference and market data prior to its ultimate distribution to their consuming applications, but are not saddled with the costs of ongoing in-house maintenance.
“We have added the capabilities for users to add their own business rules and boost their downstream capabilities and outputs,” explains Hale. “The IT function within a firm has long been wary of managed services because of the perceived lack of control in an agreement such as this.”
Netik Container enables clients to manage, change, authorise and distribute, not only the cleansed reference and market data arriving from the Netik GSM service utility, but their own data as well, says Hale. It facilitates the communication of securities of interest to Netik GSM and streamlines downstream distribution as it fully integrates with consuming client side applications as well as the Netik GSM data source.
Managed services, which is essentially outsourcing by another name, has long been a contentious issue in the market due to fears surrounding risk exposure. Moreover, in the current market firms are especially keen to retain a high degree of control around their essential data due to intense regulatory scrutiny. Netik’s response has therefore been to try and allay these fears.
The vendor worked with its user group and garnered feedback from current and prospective clients in order to alter its solution offering accordingly. “The idea was initially conceived when we were working with some recent client wins and the proof of concept process helped us to identify the areas in which we needed to provide users with more control,” elaborates Close. “The solution now enables them to feel like they have more control over their data.”
Hale is confident that the current economic environment will drive more clients to go down the managed services route: “Reference data management is way up the priority list at the moment because of the focus on risk management and regulatory reporting but many do not have the budgets to do this in-house. They need to do all this new work around reporting with less budget and fewer processes and this means that outsourcing can provide them with a more attractive solution.”
Close indicates that four clients are already in the proof of concept stage with regards to implementing the newly upgraded solution and these should be converted over the next four months. The vendor is also confident that the solution will prove to be a draw for new clients in the longer term and Hale expects between five and 10 new clients to come on board in the next six months.
The vendor is hoping that the Netik Container upgrade will go that one step further to convincing prospective clients that managed services are a better option than going down the software route by implementing solutions from EDM vendors such as Asset Control or GoldenSource. “Software products such as those offered by GoldenSource require firms to implement and manage the reference data process whereas our managed services solution provides data experts to cleanse a firm’s data. We have service level agreements and even penalties in place to ensure that we provide a high level of service to our customers and now they have even more control over the process itself,” says Hale.
The vendor is also not worried about the rise in software as a service (SaaS) solutions on the market. Hale reckons that although these represent one step towards a managed services offering, they fall short of providing the full benefits of outsourcing agreements.
The challenge for the vendor over the next 12 months will be to convince the market that managed services are an attractive proposition. “We will be working hard to de-risk the ‘yes’ decision,” says Close. “This will involve defusing all the objections we encounter and being sensitive to the feedback from the market.”
The vendor’s private equity backers are also taking a keen interest in what is going on in the market, adds Close. “We have very active and interested private equity backers and there is lots of activity on the prospective acquisition side of things going on. The next few months may bring big news with regards to this,” he concludes.