BST first developed the software, dubbed SAM (SAving Methodology), last year as a bespoke project for a key client, and will now sell it as an add-on to FinOffice.

"This allows our clients to produce a management report that details overall trends in market data costs, and provides a breakdown of why costs are moving in a certain direction," says Philipp Meier, director at BST.

SAM uses data from FinOffice's inventory management software, which automatically captures and tags all relevant changes, such as the addition or cancellation of positions and the impact of cost-saving initiatives. This is then used to generate reports that break down overall spending changes into two key categories-"business-as-usual" and "strategic activities"-which each comprise further sub-categories and line items.

Business-as-usual spend is broken down into "steerable" and "non-steerable" activity, representing factors that are within and outside of the company's control, respectively. Steerable activities include items such as changes in the overall number of market data users, changes in spending on systems and services, and any potential discounts negotiated by the firm. Non-steerable activities include factors such as fluctuations in exchange rates, which can affect the cost of services paid for in a foreign currency, and changes to the standard list price and allocation price per user for vendor products, which can depend on total user numbers if vendors use sliding price scales.

Strategic initiatives include two key types of projects-those where market data executives embark on a user-profiling exercise and cut back services deemed unnecessary for each user type, and those where market data users elect which services to keep or cut as part of a cost-saving initiative. Within these two broad categories, SAM provides line items for dollar-value savings achieved as a result of changes in usage of specific products, such as vendor terminals, news services, exchange license fees, reference data and specialist data services.

By breaking down changes in market data spend into more detailed categories, data managers and administrators can see the interplay between all factors influencing their data budget, and can generate management reports to highlight these.

"You might have generated significant savings through cost-cutting initiatives, but on the other hand, you might have suffered price increases from vendors and exchanges or added more users, so your total budget might be higher. Management would like to know why this is the case," Meier says.

Drill, Baby, Drill

In a separate development, BST also recently released "drill-down" functionality that allows all users of its FinOffice reports to obtain more detailed insight into market data inventories by drilling down into specific line items such as individual exchange licenses and product subscriptions.

The vendor originally developed this drill-down functionality as part of its Web Reporting application, and is now rolling it out to all FinOffice clients, Meier says.

Jean-Paul Carbonnier

Source:

© Incisive Media Ltd. 2009

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