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Cristina McEachern
Cristina McEachern
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How Low Can You Go?

A difficult economy is fueling big changes in the market-data space as end users want more cost effective, streamlined solutions and vendors are charting a new course to revitalize business.

As one example, he points to a recent deal between SunGard and Salomon Smith Barney, in which the desired price point per workstation came down to an ""uneconomically low"" $19 - much lower than the hundreds of dollars per workstation that can be charged, he adds.

Although Salomon officials, through a spokesman, would not comment on the deal, they did not deny that this was the new price point when asked specifically about it. SunGard Market Data Services representatives would not comment on the specifics of the deal.

Lower price points and uneconomic deals are also changing the market-data landscape by driving consolidation among the vendors. The industry source says that business is getting tougher for vendors as pressures are lowering costs and short-term thinking has taken over.

In addition, the broker/dealers have been evolving to more of a customer-oriented financial-adviser position, ultimately changing their data needs. Previously, these broker/dealers may have had a telephone and quote screen on their desks but that primitive technology just won't cut it in today's changing economic climate, says Tabb.

""They need a much more sophisticated set of tools and if the market-data providers can create platforms that include CRM and other tools, it opens up their market to more than just providing a quote,"" he adds.

As the Tide Changes, The Vendors Get On Board
Reuters is also jumping on the workstation bandwagon with the launch of its Reuters Intelligent Advisor product in the second quarter of this year.

The new product will be based on technology that is lightweight and easy to deploy, says Alex Hungate, president and chief marketing officer of Focus Group Accounts at Reuters. ""We're focusing on the ease of use and integrated workflow, so the end-user can move seamlessly form one perspective to another,"" he says.

The Reuters Intelligent Advisor product will also offer integration with CRM systems through alliances already formed with Siebel and Onyx or any other provider, says Hungate. The new offering also aims to lower the overall cost point for this type of technology.

""The cost of ownership of this type of next-generation product will also be lower than current platforms,"" he adds. ""It's more cost effective in the long run because it's a thin client which means less equipment on the client site and less support and training required.""

Cort Williams, vice president of corporate development at FT Interactive Data, says that the need for centralized, consistent data services is an important driver in the changing market-data space. ""Institutions are moving to a more centralized approach in the way they want to receive, store and access information and they want a consistent content set that can serve as many needs as are feasible,"" he says.

Users are also under great competitive and cost pressures, says Williams, which is driving them to look to a handful of market-data or information partners.

""We're hearing from customers that they want to be in control of their decisions about using data,"" says Williams. He adds that while certain user groups will still require an off-the-shelf solution, in most cases users are looking to create their own solutions because they want open access to data. Such an approach will help them piece together the solution that is most appropriate.

Williams says that while FT Interactive Data has traditionally focused on the real-time and delayed delivery of content, the company is now also focused on partnering with application providers to deliver the interfaces that clients need. The company already has interfaces to key portfolio-management-system providers including Portia, Advent, Camra, DST and ADP.

In terms of cost, Williams says that client sentiment revolves around not just the cost of data, but the rising cost of making that data usable.

""Clients are saying that what they spend on data is dwarfed by what they spend to implement that data,"" says Williams. ""So how do you make the information accessible and easily integrated into applications so customers can start chipping away at what the major portion of their cost challenge is.""

This, in part, has led to the trend towards open solutions as opposed to proprietary technology which can be difficult to integrate with third-party applications, he adds. ""Firms and institutions are looking to their preferred information provider to provide a broader range of information services,"" says Williams. ""They are moving more toward the tailored solutions, but in a very cost-effective manner.""

The Changing Role of Market-Data Professionals
Internally, the roles of market-data professionals have also been evolving, says Leslie Jacobs, vice president and lead analyst in the Credit and Financial Information Group at Outsell Inc., a research-advisory firm covering the information-content industry.

""There have been layoffs on the market-data services side and that means the remaining staff is going to need to start understanding how applications are used across the firm,"" she says. ""Vendors are going to have to serve multiple applications across the firm and the market-data professionals are going to have to have a greater understanding of the content that the vendor is offering and match that to user needs.""

Jacobs adds that with these cutbacks to market-data groups -both personnel and products - there is a greater need to realize additional value from resources already in place.

""In a lot of firms, market-data people concentrated solely on real-time market data and they may or may not have been partnering with others parts of the company in identifying what other content needs to be on the desktop,"" explains Jacobs. ""Now they need to be more aware of other groups that are evaluating and purchasing the data and partner with them more. They are going to have to look at a much broader landscape.""

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