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CHANGING LANDSCAPE In Europe, cross-market competition makes technology upgrades critical to survival. The Technology Imperative Competition through evolution is the name of the game in the capital markets universe. Modern advanced trading techniques have been the state-of-the-art sporting equipment, providing a competitive advantage in the contest of finance. The equipment race is changing dramatically, and nowhere are the stakes higher than in Europe. Deregulation started in the U.S. in 1998 and quickly jumped the Atlantic, making it possible for firms to trade across markets. As a result, many firms actively seek trading advantages in alternative markets. The close proximity of many smaller markets with long overlaps in trading hours makes Europe a natural fit for intense cross-market competition by big firms, but leaves smaller local firms vulnerable. The stronger financial areas of London, Frankfurt and Paris are highly motivated to stay Eric Johnson on top of competitive strategies, but plenty of Senior Vice President smaller markets still may consider tried-and-true and General Manager, North America, techniques to be good enough. Falling behind in Sybase, an SAP Company CAPITAL MARKETS GUIDE I 105 The equipment race is changing dramatically, and nowhere are the stakes higher than in Europe. Firms that are willing to disrupt the status quo to truly meet the needs of the business today and beyond will become far more agile and far less vulnerable than those only willing to polish the technology race could mean elimination by a existing systems. But even for large competitor. Thanks to intensifying market those firms ready to embrace competition, European capital markets firms may new ideas, executing on those face more of a collapse than an expansion over ideas can be an inefficient and the next decade. error-prone process. Empowering the Front Office Front-office staff traditionally Most firms know that times are changing. But use a mishmash of tools to do they face a significant uphill battle against a their jobs, including spreadsheets, massive spaghetti bowl of information systems in-house applications and that has tangled and evolved over 30 years. memorization. Opportunities to improve the process of extracting Protectionist and cultural hurdles prevent key reliable intelligence from these stakeholders from thinking outside the box. For multiple sources of data are many, the first line of defense is to create ad not difficult to conceive. But hoc extensions to an existing system. However, updating front-office software many stakeholders don’t consider how long tools requires a long, back-and-forth these extensions will serve the needs of the exchange with back-office business—assuming they are still useful by the developers. And miscommunication time they are delivered. frequently hampers that process. 106 I SYBASE 2011 CHANGING LANDSCAPE Evidence of the industry’s acute lack of real-time market intelligence abounds in 2011. Worse, results often come too late to make a real impact. The market may move in a different direction or competitors may beat them to the punch, eroding the value of the opportunity. Organizations everywhere—but particularly in Europe—need an end run around the traditional capability is the use of a single tool to develop back-office development process. a new model, deploy it and then view the performance of the new strategy alongside Newer technologies make it existing ones, using both historical data and possible for front-office traders to real-time data in one place. This approach is interact in new ways with the particularly valuable when those strategies can systems that assess risk or monitor be quickly updated, enhanced or swapped in trading strategy effectiveness. and out according to market conditions. They can build precisely the views that they need on the fly, Sadly, the systems that today’s front-office without invoking a complex and traders rely upon can’t do this. Waiting weeks costly development process. The or months for developers to make it happen is front office can directly implement excruciating, especially when the life span of the its business differentiation in a new trading strategy may be shorter than the fast and robust way. development cycle. One example of an exceedingly Tying Risk and Reward useful and potentially profitable Evidence of the industry’s acute lack of CAPITAL MARKETS GUIDE I 107 real-time market intelligence abounds in 2011. Present-day data monitoring The global credit crisis—and the trillions of techniques, which capture dollars in stimulus spending and bailouts that and copy large data sets resulted from it—poignantly show that those who from production to a local do not have the means to monitor performance environment, create out-of-sync [Companies] have plenty of good data, but it’s in too many places and lacks a facility to merge and draw inference. data and multiply the data management burden. It takes about 1,000 times more energy, which is the lion’s share of today’s supercomputing costs, to move a data byte than it does to do a computation with it in situ, according to a 2010 article by the BBC. Modern technologies and movement in a very transparent, easily capable of in situ data analysis accessible way will ultimately fail. promise lower expense, faster results and a low margin of error. It’s not because companies have bad data. They have plenty of good data, but it’s in too Finally, consolidated views many places and lacks a facility to merge of trade and risk data can and draw inference. This situation prevents elevate business performance companies from making accurate decisions in more tangible ways. A firm and costs them a lot of time. that can identify new areas of 108 I SYBASE 2011 CHANGING LANDSCAPE Consolidated views of trade and risk data can elevate business performance in more tangible ways. opportunity without enduring unnecessary risk is one that can easily justify the budget to develop more advanced trading strategies. And that will lead to higher investor returns and revenue. One clear, transparent view of organizational data will open the door not only to risk avoidance but also to incremental revenue and, ultimately, a strong defense against the rigors of cross- market competition. services, as well as directing financial services accounts for the Central European region of While currently responsible Sybase. Before coming to Sybase, he was at for leading the company’s WebMethods as director of sales for financial North American operations, services and served as vice president of sales during his tenure at Sybase of North America for Aleri.