Decisions, Decisions
COST
The consensus is that this project will cost millions of dollars, and estimates are anywhere from $50 to $100 million. Crosby declined to comment on the cost of the project.
Although the cost has not yet been ascertained, one thing is clear, the selected bidders will be expected to make substantial investments on the part of the consortium. What shape the investment will take has not yet been discerned'whether it be in intellectual property, work in kind, labor, cash, software or hardware, according to one bidder. Much of the additional funding will come from the GSTPA members who pay anywhere from a $15,000 to $200,000 membership fee.
What is also being ironed out is an income structure to be used once the TFM is in place to help the industry and the contracted vendors redeem some of the investment cost and fund the project going forward. Being considered are at least three scenarios: fee-based, commissions-based and royalties-based. Bidders are asked to come up with what they think is the best scenario and estimate costs as part of the RFI.
Despite the fact that the vendors are planning to come out none the richer as a result of this huge undertaking, getting this mandate is a status symbol. Not only will it reinforce a vendor's technical prowess or business savvy, but it also will acknowledge its leading position in the industry. Furthermore, there are expected to be several offshoot projects coming out of this one, for which GSTPA participating vendors will likely be selected, notes one bidder.
WHO'S GOT THE EDGE?
Crosby says at this point he has no idea who has an edge, as he hadn't seen any of the proposals yet. He emphasizes that the Association has no preference as to which vendor is selected, and that ""within the first 100 firms, there were some extraordinary firms that were not chosen."" And, he added, there will be some in the 22 that also are not chosen. He points out that KPMG, ""has been given no directive as far as preference. Our goal is to keep this straight up and fair. The chips are going to fall where they may.""
ROUNDING OUT THE WHEEL
One of the big questions swirling through the industry is who is joining forces with whom to provide a complete solution. And many are pondering whether those that join with S.W.I.F.T. will have an edge.
According to one industry official preferring to remain anonymous, S.W.I.F.T. will not necessarily have an edge. ""The network provider is not the key. The TFM is the key, along with the way the project is managed. Essentially, any one of the 22 can provide the network, connectivity and messaging base."" He skeptically adds, ""It is also questionable whether the GSTPA will want to turn over all of this business to yet another financial utility or whether they want to turn it over to a commercially viable company that has a commercial sales force that can support it.""
But many industry experts say that they believe S.W.I.F.T. will be involved in some way, whether they are chosen now, or brought on afterward.
S.W.I.F.T. seems to have put together a strong group. It is joining forces with the Depository Trust Company, Andersen Consulting, Hewlett-Packard and Oracle, according to a DTC spokesman. H-P and Oracle are involved more indirectly, through the work they plan to do on S.W.I.F.T.'s next generation network project, says the same anonymous official.
Also said to be joining forces are Reuters and IBM. In a separate group are PricewaterhouseCoppers and Automatic Data Processing. In addition, British Telecomm and Computer Sciences Corp. are said to be allying. One industry official says that Thomson is considering cozying up with S.W.I.F.T.'s alliance, but it may also just ""go it alone."" 'Thomson and S.W.I.F.T. are in discussions as we speak," says another industry official. Thomson officials declined to comment.
Just because vendors choose to form their own groups, doesn't mean the GSTPA cannot pluck a vendor or service provider out of the consortium. Crosby notes, ""We reserve the right to take apart the consortiums ..."" But he says this isn't likely. ""At this phase we don't intend to do that. We intend to let the efficient market place work naturally so that people will align with those firms that they are comfortable working with." He adds that this is a significant undertaking, and these folks need to work out the kinks in their relationship before they come to us.
Bidders say they'd find it hard to go ahead with the project if they were chosen without their partners. But what is at stake here is the chance to be an industry leader and build one of the central enablers of T+1.
Indeed CIO of S.W.I.F.T., Joseph Eng, agrees. Eng, who acknowledges that S.W.I.F.T. is working with DTC and Andersen Consulting, says, ""We are bidding together. I think GSTPA has the right to pull us apart, but whether or not we choose to acknowledge that and say that we are willing to do that is a bridge we'd have to cross if we come to it."" Eng emphasizes the strengths of the three working together as a team, and declines comment as to whether S.W.I.F.T. is working with H-P and Oracle.
REALISTIC GOALS?
Most industry experts believe that getting the TFM up and running by 2001 is a realistic goal. The challenge seems to be in getting the remaining industry players on board. Kirby notes, ""Fortunately we haven't experienced a reluctance to participate." Now the membership totals 55 institutions in 12 countries. That figure may only represent 30% of the world-s fund managers, but it also represents over 75% of the world's cross border trades and 80% of assets in global custody. He adds that the GSTPA message is also taking off in communities in Japan, Hong Kong, Singapore and Australia.
Time is of the essence. In the time it takes to create this system, competing models could arise. ""Although what we've got is a large number of the major players subscribing, it is not a monopoly. Part of the challenge of the GSTPA is getting the utility up and running before other organizations also develop similar ideas and gain market share,"" says Cap Gemini-s Webb.
""We have a market place that is changing very rapidly in all parts of the world and we believe that the GSTPA is a weigh station on the way, it's not an end game. Having said that, it's going to be an important building block. As far as that global vision is concerned for the future, there are lots of different opinions as to how that will develop and a lot of different considerations as to what will be the model the industry will go for.""
Now all the vendors can do is await the outcome and hope that once this thing is up and running it fulfills all of the GSTPA's promises as well as the industry's high expectations.
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