Open Sources | Rodrigues & Urlocker » Financial Services: fed up with proprietary integration hassles

December 15, 2006 | Comments: (0)

Financial Services: fed up with proprietary integration hassles

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In financial services, enterprises are fed up with proprietary integration / middleware price gouging and architecture lock-in, and actively on the prowl for open source alternatives. Vijay Oddiraju, Founder and CEO of data management vendor Volante Technologies, shared his views about the integration pains and increasing open source inclinations that his company is seeing at financial services customer environments.

1. Tell us a little bit about some of the common application integration issues that financial services organizations are facing today. Are there any integration issues that are specific to (or intensified in) the financial services industry?

Financial services companies usually have a combination of new and legacy systems in house making application integration complicated. They deal with data volumes and speed issues that no other industries face. Specific challenges include -

- multiple complex message formats (SWIFT, XML, FIX, ASCII, proprietary)

- high throughput and low latency requirements

- pressure to reduce time to market for new applications

- integration headaches with legacy infrastructures and demanding new applications (often because of acquisition/mergers)

2. What sorts of frustrations do you typically hear about in financial services with respect to proprietary integration solutions? How are today's proprietary integration / middleware vendors failing to meet the expectations of financial services users?

Proprietary integration solutions and middleware platforms are fraught with impediments. A typical financial services company has to spend four or five dollars on consulting services for every one dollar they invest on proprietary integration products. Once they've made this investment it takes time to bring applications into production and high performance is nearly impossible to achieve. Additionally, they deal with little or no ability to reuse integration logic, a lack of support for complex messaging formats, and few resources available to them because of the proprietary nature of these platforms.

3. What sorts of advantages do you see open source introducing for financial services organizations on the integration front?

As Service Oriented Architectures (SOA) gain wider acceptance in the financial services industry, the demand to run business applications in open source environments is increasing. The benefit to Wall Street is a higher level of flexibility and cost effectiveness and access to a wider range of support resources. Additionally, access to open standards means users aren't locked in to one proprietary solution which gives them many more options for reducing risk and implementing durable solutions.

4. Do you see open source as an alternative introducing any new pricing pressures that are going to change the behaviors / pricing schemas of the proprietary vendors?

The problem is not just pricing, it is also the inflexibility of the proprietary vendor products. Common customer complaints are being locked in to one vendor, not having any flexibility with infrastructure or applications, and difficulty using these cumbersome and limiting solutions. These roadblocks lead to longer development times to put integration products into production, higher maintenance costs and wasted effort in creating code that can't be reused. It becomes like choosing between a Democratic Government and a Dictatorship. These vendors will likely reduce their costs but it won't provide relief for any of these problems.

5. Why do you suppose that some financial services shops are aggressively seeking open source-based integration alternatives, while others continue to write exorbitant checks to proprietary middleware vendors? Is it a lack of education in the market? What needs to happen next for open source middleware to take off to the same degree that Linux disrupted the operating system market?

The financial services industry is constantly changing. Time to market is key and the desire to reduce costs in order to remain profitable drives the need for innovation. The first hurdle for financial services companies was for them to become completely comfortable with the capabilities of open source products and to recognize that they could support enterprise customers with this model. Now that this has happened we need to see more vendors offering support for open source tools so that financial customers feel they can get as much assistance and protection as they would with a proprietary solution. Once these vendors reach a critical mass in the marketplace there will be no reason at all to spend money on proprietary middleware products.

Side note:
This is post #1000 on Open Sources. Congrats to me and Matt

Posted by Dave Rosenberg on December 15, 2006 10:59 AM

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