What companies in industries other than securities trading could benefit from technologies that focus on reducing transaction processing times?
What companies in industries other than securities trading could benefit from technologies that focus on reducing transaction processing times?
Wachovia and Others: Trading Securities at the speed of light
1. What competitive advantages can the companies described in the case derive from the use of faster technology and co-location of servers with the exchanges? Which would you say are sustainable, and which ones temporary or easily imitable? Justify your answer.
2. Tony Bishop of Wachovia stated that “Competitive advantage comes from your math, your workflow and your processes through your systems.” Referring to what you have learned in this chapter, develop opposing viewpoints as to the role of IT, if any, in the development of competitive advantage. Use examples from the case to support your positions.
3. What companies in industries other than securities trading could benefit from technologies that focus on reducing transaction processing times? Provide several examples.
Wachovia and Others: Trading Securities at the speed of light
Securities trading is one of the few business activities where a one-second processing delay can cost a company big bucks. Wachovia Corporate and Investment Bank is addressing the growing competitive push toward instantaneous trading with a comprehensive systems overhaul. In a project that has cost more than $10 million so far, Wachovia is tearing down its systems silos and replacing them with an infrastructure that stretches seamlessly across the firm’s many investment products and business functions.“Competitive advantage comes from your math, your workflow and your processes through your systems. Straight through processing is the utopian challenge for Wall Street firms,” says Tony Bishop, senior vice president and head of architecture and engineering. The first step in the project, according to Bishop, was to prepare a matrix that crossreferenced every major function (such as research, risk management, selling, trading, clearing, settlement, payment, and reporting) to each major product (debt and equity products, asset-backed finance, derivatives, and so on). The project team then had to take a hard look at the existing systems in each cell. “We looked at the current systems and said, ‘Where can we build standardized frameworks, components and services that would allow us to, instead of building it four different times in silos, build it once and extend it into one common sales platform, one common trading platform and so on?’”The resulting Service Oriented Enterprise Platform is connected to a 10,000-processor grid using GridServer and FabricServer from DataSynapse Inc. In its data centers, Wachovia brought in Verari Systems Inc.’s BladeRackswith quad-core Intel processors. Bishop says he’s creating a “data center in a box” because Verari also makes storage blades that can be tightly coupled with processing blades in the same rack. The processing load at the bank involves a great deal of reading and writing to temporary files, and the intimate linkage of computing and storage nodes makes that extremely efficient.“We now do pricing in milliseconds, not seconds, for either revenue …………………..
1. What competitive advantages can the companies described in the case derive from the use of faster technology and co-location of servers with the exchanges? Which would you say are sustainable, and which ones temporary or easily imitable? Justify your answer.
2. Tony Bishop of Wachovia stated that “Competitive advantage comes from your math, your workflow and your processes through your systems.” Referring to what you have learned in this chapter, develop opposing viewpoints as to the role of IT, if any, in the development of competitive advantage. Use examples from the case to support your positions.
3. What companies in industries other than securities trading could benefit from technologies that focus on reducing transaction processing times? Provide several examples.
