Group Co.
Software Packaging for Financial Firms Must Go
Traders Magazine Online News, August 24, 2018
To accelerate innovation, we need to bring about the end of software packaging
When Salesforce.com was founded in 1999, founder and CEO, Marc Benioff defined the company’s mission in a simple statement: “The End of Software”. At the time, customer relationship management (CRM) systems were dominated by heavy and complex software which required installation both on the front end and back end. Benioff saw the enormous opportunity for the internet to completely eliminate the need for software installation and make CRMs easily accessible to enterprise users.
In his terrific book, Behind the Cloud, Benioff describes this guiding principle that made Salesforce the poster child for software-as-a-service (SaaS): “We believed in the End of Software—that all companies would eventually use the Internet to replace all the software they once installed on PCs.” Despite widespread skepticism in the early days, by 2008 the CRM landscape had been fundamentally transformed and Benioff marveled: “Finally, The End of Software is here.”
And yet, 10 years later, installed software is still rampant in the financial services industry.
Tens of thousands of applications installed on PCs power global markets. Banks, buy-side firms and brokers use these installed applications for trading, order management, trade capture, risk, analytics, market data, news, research, collaboration and more. The process for installing these applications virtually hasn’t changed in more than two decades -- since before Salesforce’s founding.
According to a new report from Greenwich Associates, “slow and inefficient software development processes cost financial services firms $1.5 billion in aggregate.” The report specifically cites the enterprise software installation process known as “software packaging”.
For those not familiar, it’s ‘quite simple’:
- An end user at a bank becomes interested in a vendor application.
- The user encourages the vendor to reach out to the bank’s software packaging team.
- The software packaging team then asks the vendor to deliver the software, often through a Microsoft Installer (MSI).
- The software is then installed in a testing environment where different testing is performed, depending on the bank. This can include “static” and “dynamic” analysis of the software to scan for security threats.
- The review often also includes a lengthy, bespoke questionnaire that the vendor must complete. “Where is your datacenter?”, “Is it protected by armed guards?”, etc.
- Once the reviews are completed successfully, the team “packages” the software and makes it available on central infrastructure at the firm.
- A request is then made to “push” the package to the desktop of the user who requested the software.
See how easy it is? A vendor providing software, such as a market data application, goes through this process individually with every bank. It can take months or quarters to install a single app on end user desktops, resulting in an enormous waste of time and money for both vendors and banks.
As the Greenwich Associates report explains, this delays getting innovation in the hands of end users, the opportunity cost of which is incalculable.
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