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Next-Gen Portfolio Management
CheckFree seeks to slash its customers’ account maintenance costs by 50%
CheckFree corp. has long dominated the domain of online financial transactions. The company’s Jersey City, N.J.-based CheckFree Investment Services (CIS) division, founded in 1981, provides electronic services to financial organizations throughout North America.
CIS’ customers include asset managers, broker/dealer firms, and investment advisers who use the company’s technology to manage 1.7 million portfolios totaling $1 trillion in assets.
When you’re the market leader, you want to stay the market leader and expand in that space, says Charles Smith, vice president of product strategy at CIS, who explains that 36 of the top 40 money managers in the United States run CIS’s software. So when the company’s decades-old portfolio management system, CheckFree APL, was showing its age, CIS looked for ways to create a new system that would serve account managers’ end-to-end needs, from proposal to account opening to funding to trading to reporting.
"Our ultimate return-on-investment goal in developing the new CheckFree Enhanced Portfolio Lifecycle, or CheckFree EPL, system is to reduce our customers’ total costs of ownership, including costs to maintain accounts, by 50%," says Smith.
Satyam Computer Services Ltd., a global consulting and IT services firm based in Hyderabad, India, was brought into the rearchitecting project because of its development expertise and financial services experience. According to Anil Kumar, senior vice president and head of the financial services business unit at Satyam, accounts such as separately managed accounts (SMAs), which are fee-based, high-net-worth accounts, can cost up to $250 per year per customer to manage and maintain. “Reducing SMA management costs is a top priority for customers of companies such as CIS,” Kumar says.
Market Demand
Although CIS had many business motivators for reengineering its existing portfolio management technology, the primary impetus was market demand. “CheckFree’s customers are vocal and active in letting CheckFree know what they want,” says Kumar.
Those wants included a friendlier, easier-to-navigate user interface for portfolio management. “Our systems manage billions of dollars of transactions, and they are tax-aware and very complex, so the simpler they are to use, the more our customers can realize their own operational efficiencies and focus on their finance skills and not their technical skills,” says John More, vice president of systems development, architecture, and operations at CIS.
In addition, CIS’ customers have diverse databases, and they needed to integrate the management technology with their database information in real time, says Satyam’s Kumar. Accurate reporting was a challenge because of database and logic flow issues, and the system wasn’t meeting account managers’ diverse reporting needs. New report creation and customization takes a lot of time, Kumar points out. For any changes, the customer had to approach CIS to modify the relevant code. The new system is to be configurable and allow customers to generate customized reports according to their needs.
Moreover, CIS itself needed a system that would cost less to support and would enable efficiency improvements for IT staff. “Because the older system was written in the APL programming language running on a Unix platform, our developers were spending too much time developing and supporting the old system,” explains CIS’ More. "That meant that IT thought leadership was put aside because we were focusing on an older language and not looking at new methods of development."
CIS turned to the Microsoft .NET development environment, which was tied to a companywide decision to standardize on Microsoft technology, explains More. Recently, the CheckFree parent company turned what used to be three independent divisions, with different IT stacks and methodologies, into a shared service model that can identify and leverage resident expertise and economies of scale across all divisions. So the company chose to standardize on hardware and software across all the organizations to realize total cost of ownership (TCO) benefits. A standard platform would enable scalability, availability, and training consistency. For CIS, the move to the .NET Framework would mean an easier-to-learn, cheaper-to-maintain development environment for its flagship product.
Savings all Around
Not only should CheckFree EPL improve CIS’ IT efficiency, the product should also translate into greater revenue for CIS. "The market is moving away from commission-based brokerage accounts and toward more fee-based money-management accounts," says CIS’ Smith. "Because CheckFree EPL will reduce the overhead in managing those accounts, our customers will realize lower TCO, which translates into increased profitability and happier, more loyal customers. These cost reductions will make it easier to open, manage, and reconcile accounts."
CIS is also providing additional functionality in CheckFree EPL to meet current and future account management requirements. "That includes the choice of more financial instruments such as bonds, options, and financial derivatives; multicurrency functionality; updated reconciliation ability; and so on," says Kumar. "The old system didn’t have these capabilities."
One other benefit that .NET and Satyam have brought to CIS’ new system is security, which was handled by simple patches on the old system. "Our customers are managing large accounts,” says Smith. “Our system needs to safeguard privacy, avoid hacking, and guarantee that no unauthorized person has access to that information."
CheckFree EPL is being delivered in stages, making it easier for customers to learn one aspect of the system at a time. “The new system is so much more scalable,” says Smith. “.NET lets us easily build later on what we’re creating today.” CIS serves as an application service provider for CheckFree EPL, which means CIS manages and distributes the solution to customers across its own network.
Change is always difficult, but CIS expects customers to embrace CheckFree EPL as more of the solution’s account management modules are released. Customers currently can use the Workflow for New Accounts module and reconciliation functionality. In fall 2005, customers will begin beta testing the remaining modules.
"Some clients may be reluctant to make the change right away," admits CheckFree’s Smith. "That’s why we’ve been working with early adopters to show them just how much easier and faster the new system is. The learning curve on the old system was long. CheckFree EPL will make it much easier for customers to flexibly access and use data, improve communication with their own customers, and customize reports. It’s all about TCO."
A financial solution raised to the power of two
When Microsoft was looking for an IT services organization to partner with on a financial services re-architecting project for CheckFree Investment Services (CIS), a provider of remote processing services based in Jersey City, N.J., it knew where to turn.
"We’ve had a long relationship with Satyam,” says Bill Hartnett, general manager of Financial Services Strategy and Solutions for Microsoft about the Hyderabad, India-based global consulting and IT services firm. “In fact, Satyam even helped Microsoft build our BizTalk Accelerator for SWIFT tool.” SWIFT is the Society for Worldwide Interbank Financial Telecommunication, a cooperative of 7,500 financial institutions in more than 200 countries. The Microsoft tool provides financial messaging capabilities for those in banking, capital markets, payments, and corporate finance.
Satyam Computer Services Ltd. uses a global delivery model, which means it optimizes time-to-market and development costs by splitting the project work between on-site activities at CIS and its own development centers in countries such as India, China, and Hungary. “This highly scalable delivery model enables us to significantly accelerate speed-to-market,” explains Anil Kumar, senior vice president and head of the financial services business unit at Satyam.
Right Tools for the Job
Charles Smith, vice president of product strategy for CIS, explains that Satyam has the financial experience CIS needs and has been able to adjust quickly to the financial services company’s business practices. Satyam is handling functional requirements, designing the main system, advising on the architectural makeup, and providing quality assurance in the redevelopment of the CheckFree EPL (Enhanced Portfolio Lifecycle) portfolio management product via Microsoft .NET.
Smith points out that tools such as Microsoft Visual Studio and the Microsoft .NET Framework have shown their ability to scale the enterprise. In addition, there’s minimal training of developers. Microsoft’s Hartnett points out that "the developers don’t have to learn a new language, because the tools let them bring their existing skills forward to work with the new concepts in .NET. And because a company is leveraging those skills, it’s reducing its IT services and maintenance budget. Overall, .NET is reducing complexity in the development environment."
Satyam’s knowledge of both Microsoft tools and the financial market won over CheckFree. More than 40% of Satyam’s customers are in the financial services industry, and a vast majority of those customers are joint Microsoft-Satyam customers looking for economies of scale, scalability, and high availability in their technology implementations, explains Kumar.
When Satyam begins a project, it often works with the CIO and the key technology executives within the IT organization to pick the right platforms and databases. "Because we’re vendor-neutral, we’re not caught up in the politics of choosing a provider," says Kumar. "We pick the best provider. In CheckFree’s case, the company had already decided on the provider that would have been our choice for migrating from its old system to its new."
Microsoft patterns & practices Assets
Microsoft patterns & practices are Microsoft's recommendations for how to design, develop, deploy, and operate architecturally sound applications for the Microsoft application platform.
Microsoft patterns & practices contain deep technical guidance and tested source code based on real-world experience. The technical guidance is created, reviewed, and approved by Microsoft architects, product teams, consultants, product support engineers, and by Microsoft partners and customers. The result is a thoroughly engineered and tested set of recommendations that you can follow with confidence when building your applications.
The patterns & practices ‘Application Blocks’ are reusable source-code components that provide proven solutions to common development challenges. They can be integrated as is into applications, or they can be extended or customized. Microsoft patterns & practices Application Blocks address specific recurring problem domains such as data access, logging, user interface process, and composite user interfaces.
Some of the Patterns & Practices Enterprise Library blocks we are using extensively in the Checkfree applications are:
Logging & Instrumentation
Exception Handling
Data Access
Configuration
Some of the key benefits we have observed from using these blocks are:
Significant reduction in development time for cross-cutting concerns like Logging, Exception Handling etc.
All blocks are based on similar design pattern hence the learning curve is less
The core functionality is encapsulated within the blocks. The level of abstraction provided helps in shielding the developers from knowing all the technical nuances.
Since the core functionality of all blocks is well tested this would result in less error free code for the end application