Filling in the Outsourcing Blanks

By Derrick Harris

September 26, 2008

I know what you’re thinking: Is there any more information about financial firms and outsourcing that wasn’t included in Derrick’s epic-length article from earlier this week? The answer: Yes (but just a little).

The Credit Crisis …

Has — at most — next to nothing to do with IT. So says everyone I asked, at least. For his part Alex of Tabb of the Tabb Group believes the turmoil was caused in large part by poor strategic vision and a quest to make more money by following the leader. Whether the leader was acting intelligently, though, is a whole other question. However, as noted in the article, Tabb does see wise IT investments in playing a huge role in the areas in which IT can help. My paraphrasing of his quote might make me come off as Mr. Obvious, but there is some depth below that statement. An IT system that combines low latency, high availability, high security and fault tolerance, as well as the right people to run it, can help avoid a whole range of ill consequences that might fall short of disastrous, but can have major negative impacts nonetheless.

Savvis’ Roji Oommen says outsourcing, in particular, can help traders mitigate losses that can occur in the aftermath of such a mess. If you’re hosting your trading platform with a provider like Savvis, for example, you can make the decision to ease off North American trading for a while and focus in less-affected markets like Asia and EMEA, all the while maintaing low latency due to the provider’s interconnected infrastructure. And then there is the benefit of reducing spending while budgets remain in limbo. Oommen says Savvis is seeing “a large spike” in inquiries about managed services from customers which Savvis would not have targeted for those services.

A Little More on the Companies

Xasax:

  • Xasax offers several solutions, including xsProximity, xsFeed, xsRoute, xsEntitle and xsStore. It all runs on Xasax’s infrastructure, which CEO Lieske says is built to run back-office tasks like information population, data feeds, execution capabilities for order management systems. machine management automation, customer portals, etc. From a customer’s point of of view, it has been optimized to launch customer software as a service.
  • To reduce latency in xsStore, Xasax uses Voltaire InfiniBand switches and software. The service allows customers to access storage at 20 Gbps over an InfiniBand backplane. Voltaire also is the vendor of choice for inter-machine connectivity and transporting data from ticker plants to clients. Xasax encourages customers to bring what they want to the network, but Voltaire likely will remain the dominant provider for high-speed interconnect needs.
  • Customer-wise, Lieske says Xasax is focusing on a limited number of high-quality customers on whom the company can invest appropriae amounts of time and resources. Currently, there are more than a dozen such customers, with their end-users counting in the tens of thousands. This model, Lieske added, gives Xasax “excellent financial stability.”
  • Gartner’s Ted Chamberlain foresees a market for companies that provide the layers of service beyond what the infrastructure providers like Savvis or BT Radianz can provide. By not selling wholesale service but rather going up the stack and providing management, compliance, etc., he sees providers like Xasax being able to carve out their own niches.

Savvis:

  • Oommen says that although it doesn’t disclose exact numbers, financial solutions comprise a large percentage of Savvis overall business.
  • He believes Savvis is “uniquely positioned” to be a dominant player in the space. Among the reasons for this are that Savvis has the advantage of being able to cite the actual exchanges as customers, and that the company’s services allow banks to augment what they’re doing instead of necessarily replacing what they’re doing. Finally, he says, everyone is into risk management, but ut requires some heavy computing to do it right. Savvis lets customers turn up computing and storage on demand to meet whatever demands their risk management algorithms might throw at them.
  • Speaking of computing, Savvis also offers a straight-up utility computing service. Oommen says the company has two “pretty large” banks running gridsof thousands of CPUs on Savvis’ global infrastructure. These companies like to call their grids the “brains” of their IT operations, he added. The grids are dedicated for the firms, but individual units within the banks can utilize the resources in a shared services model. According to the Savvis Web site, “these blade-based servers are dedicated to a specific customer but operated within a multi-tenant chassis to provide quick provisioning service capability.”

IBM:

  • IBM’s Computing on Demand infrastructure includes datacenters in New York, London and Japan, and customers can take advantage of mutlicore Xeon or IBM System p boxes. Customers also can secure their own collocated collection of IBM iDataPlex servers managed by Big Blue, but over which customers retain root access.
  • Time options are flexible, as users can rent resources by the hour, day or week, or during particular time frames throughout the week — like after hours Monday through Friday for financial customers, suggested IBM’s Christina Cunningham.
  • Although Cunningham says IBM counts several large financial customers among its customers for the Computing on Demand service, the only referenceable one thus far is BNP Paribas.
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