Can Merrill Overcome its Legacy?
How exactly is Merrill going to integrate all those legacy systems with one another and with the new, online front-end in such a short period of time?
Good news for Merrill is that most of it had been completed before the announcement of ML Direct, largely a result of Merrill’s ongoing Trusted Global Advisor project, the retail brokerage system that Merrill’s FC’s use for everything from research to order entry. Merrill has spent the past two years, upgrading TGA to a Web-based platform, called the Distributed Order Management System (DOMS), and has been leveraging much of that work for ML Direct. So much of MLOL will derive from TGA that it’s fair to call the Web site TGA Online-lite.
"I would say that possibly 30 to 40% is leveraging/porting or borrowing from TGA," Gilligan says. "If we were writing all this stuff from scratch we would be in a bad spot, it would just be too much."
For example, Merrill is porting MLOL’s front-end to the Managed Client Finances (MCF) system, a sophisticated set of Web-based portfolio management and analysis tools. MFS allows the user to traverse a set of accounts, drill down through holdings and balances, account for tax lots, as well as many other functions typical of portfolio management.
"When you go on to ML Direct and MLOL on December 2, rather than see the view you see today, which by design is fairly simple, you will see a much richer set of account information screens, which, if you choose to, will drill down to a lot more detail," Gilligan explains.
Another example of TGA technology that is being ported is a sophisticated mutual funds research system where you can search by mutual fund symbol, look up specifics about mutual funds and search for a mutual fund based on specified criteria.
All of these applications route back to the TGA Database, a data warehouse developed last year that is sourced by what Gilligan calls the "deep legacy" systems. The benefit of a warehouse is that an application can be added to the system without having to adjust the deep legacy systems, the workhorses that connect to the exchanges. Similarly, by pointing MLOL to the TGA Database, any added features will not require an updating of an older system, only a connection to the data repository which is far more flexible.
"Merrill Lynch Online used to point back to the deep legacy, but we changed it and are pointing it back to the TGA Database, so the Merrill Lynch Online client and the financial consultant are going to the exact same physical and logical repository," Gilligan says. "We’re expanding that database to ML Direct because we need to accommodate new account types with different pricing structures, and it’s easier to expand the scope of this newish system rather than older ones."
MESSAGING PROTOCOL IS THE ANSWER
Although it’s easy to say that all Merrill needs to do is connect those various legacy systems to the Web front-end, and Gilligan admits that sometimes he may sound flippant about it, but it’s no easy matter. The firm is relying on some industry standards as well as proprietary technology to accomplish the task.
One of the most widely used protocols is TGADP (TGA Data Protocol), obviously another technology to emerge from its TGA system, which allows NT servers, the bulk of Merrill’s Web and application boxes, to communicate with a DB/2 mainframe architecture. Because of its widescale applicability, Merrill is selling the messaging protocol to CISCO for a hefty sum of money, Sorgen says.
The firm has also developed DSA, or Distributed Systems Architecture, which will handle much of the load balancing between various servers, from market data to order management.
"If I’m running out of capacity on market data, and I have two servers there, I can add four more servers and the application doesn’t need to know anything about it," Gilligan explains. "This middle layer, this application architecture layer, is the piece that knows about those market data servers. They register their presence to this middle layer, and it just intelligently loadbalances across those end devices."
He points out that DSA, as well as much of the technology, has been in existence for some time, allowing Merrill to further engineer it and work out all the kinks, so that when the firm unleashes MLOL, it will be doing so with "mature" software. The firm will also rely heavily on industry standards such as XML wherever it can. Standards are heavily supported by the software industry which in turn provides many options to solve a solution. ""If you don’t have standards, there’s a tremendous amount of extra work to be done, and you might be precluded from making applications changes in the future,"" explains John McKinley, Merrill’s chief technology officer. ""One of the key impact areas is in the XML area, which is still an emerging standard.""
Merrill plans to use XML extensively in the research reports portion of its site because it tags not only the reports, but individual sections, so that clients will be able to drill down more efficiently than any technology has allowed previously. McKinley quips, ""XML is EDI on steroids!"
STEAK AND SIZZLE
Technology is all well and good, but it’s only as good as the end result. And, Merrill intends to use all this technology to release a financial Web site that rivals, if not surpasses, the best out there. The firm cannot be content with a site that is good. Its site, come December, has to be nothing short of great.
"I think that a lot of their reputation is being staked on this," contends Tower Group’s Koontz. "If it comes out as good as Schwab, it will be a respectable service, but not an admired one, and that comes harder and harder when firms like Schwab continue to refine their services."
Sorgen and his team are well aware of this, and as Sorgen puts it, "we’re in this game big-time now."
"The answer to everyone’s questions is it’s going to be an extremely substantive offering, every bit as good as what is with Schwab today ... if not better," he declares. "Our ML Direct offering will be a tremendous amount of sizzle, a tremendous amount of steak."
What is this steak and sizzle? Release 1 of the new MLOL site, the same site for UnLimited Advantage and ML Direct clients, will offer order entry for equities–both long and short positions–fixed income and mutual funds. The site will include near-institutional quality financial calculators, what-if calculators, trackers and a host of market information and data including news, charts, e-mail alerts, real-time quotes and real-time positions and balances.
The site will include an IPO Lottery. All MLOL clients will have access to Merrill’s IPOs, with those bidding first on the fixed amount of available shares winning. "You say you want 100 shares, we only have so many available, but you got in there, you get those 100 shares," Sorgen exclaims, almost as excited as a little kid at a candy shop. "To me that’s not steak, that’s what I call sizzle!" Sorgen admits that the exact processes have not yet been figured out, but, make no mistake, the IPO Lottery will definitely be a part of ML Direct if he gets his way.
But, it’s the real-time account update for equities which has received a great deal of attention from Sorgen’s group. The firm has plugged ILX servers into its server farm that are accessed by application servers which connect to the Web front-end. Merrill will retain both real-time and daily pricing, the latter residing in the TGA Database.
"Pricing is one of most complex topics in the financial securities industry and equities is just one piece of it," Gilligan explains. "We have a very sophisticated pricing infrastructure where we’re pricing all types of fixed- income products, mutual funds, annuities and equities. A lot of that data comes form external sources, JJ Kenny and pricing sources like that, and we update the data warehouse with those prices so that we have an official close of business pricing for everybody’s portfolios."
Clients will also be able to personalize their front-end, just as many sites currently provide, but Merrill chose not to use a vendor-provided product and created its own: the UI Framework. "There are some vendor products that do this, but a lot of them are not as rich as we wanted it to be," Gilligan explains. "But, what we’ll do is plug in this UI Framework into a vendor product like enCommerce to get the best of both which is the vendor product with automation tools and the flexibility we want to give on the front-end."
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