Celent has consulted on many securities firm legacy modernization projects. At the outset of these projects, Celent asks the CEO and CIO a number of questions similar to those below.
- How much time and money were required the last time your firm had to rework connections to exchanges, settlement and verification institutions, clearing and settlement institutions and respond to system reform?
- What is your average cost per transaction? What is your average cost per customer?
- How many systems must a call center staff member access to answer customer questions? What is the average time required? The average cost?
- How many staff members are required to work on applications to open a new account? How many systems must be accessed?
- What are the foreseen costs and risks associated with outsourcing IT department operations?
- What are your legacy systems and what are candidates for modernization?
- What was the volume of code that need to be modified the last time your firm had to rework connections to exchanges, settlement and verification institutions, clearing and settlement institutions and respond to system reform?
- How easy is it for you to integrate existing and new applications?
- Are you spending more on maintenance or new projects?
- Is your IT certainly capable of supporting new business acquisitions?
- How many systems are there for risk management, compliance management and reporting to authorities? How much are your costs to maintain your IT?
- Do you have any maintenance contracts that will be ending soon?
These are among the questions that executives need to ask themselves when they look to tackle IT challenges (e.g., data model rigidity, lack of application flexibility, IT duplication, and associated labor efforts). If you already know the answers to these questions, then the typical challenges securities firms face spelled out in this post likely do not exist for you. The issues broached here are not the kind of challenges that can be resolved by improving peripheral systems or patchwork core systems solutions.
For financial institutions that have designed, developed, operated, and maintained core systems themselves, formulating a replacement strategy is akin to putting together a plan to travel to an unknown world. Such a situation requires correct understanding, which mandates a bird’s-eye view or systems map of the entire firm (as-is state) coupled with recommendations for the system to be (to-be state).
Moreover, companies must select the solution that best matches their needs from existing solutions in the market. The key is the business requirements document (BRD). This means defining the operational functions and system requirements that will satisfy the next system’s needs. Often, understanding the current situation accurately is not easy, the ideal system goes unrealized, and companies end up with something approximating a reproduction of the legacy system. Thus, it is crucial to distinguish between the legacy and modern systems.
Legacy Systems and Modern Systems: A Comparison：
To be continued – Click to read more