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they were stripping out hundreds
of millions of dollars of costs and
then significantly exceeded those
targets. This pattern of behaviour
from very large firms is to make
their offerings effectively sunset;
whether they officially make them
sunset or not becomes irrelevant,
because once the strategic develop-
ment capacity is stripped away the
offering is effectively sunset.
If you look at the space Itiviti op-
erates in, where the majority of our
business is sell-side order manage-
ment, it is dominated by these very
large players with their now-legacy
offerings. That poses problems
to customers of those offerings.
Typically, if you take the order
management space, the big thing
is that the banks need to reduce
the cost of their operations so they
can offer lower cost executions to
their buy-side customers, and if
they are locked into very expensive
high-touch infrastructures, that
constrains their ability to reduce
the cost of their operations.
So, we see them looking to move
more flow to low-touch or hybrid
OMS, and we see a continuing
trend that they need to get the cost
of their infrastructure and the cost
of operations down. The enterprise
technology firms that serve the
financial markets have generally
been doing a poor job of helping
them achieve that aim.
The large firms have to determine
themselves the extent to which
they are willing to invest, but I
would suggest that they have taken
a fairly short time horizon and have
been looking to reward their share-
holders at the expense of their staff
M A C K AY ]
and customers. On a slightly longer
time horizon, if you focus on your
customers and serving your cus-
tomers, as well as your staff, that
pays off very well. This naturally
leads to behaviour where you in-
novate, where you are interested in
acquiring growth companies rather
than looking for acquisitions that
bring scale and continue to bring
in declining revenue. So I think it
“I expect to see consolidation from the big firms
because stripping out cost is a scale game and I
see the innovation coming from small-to-mid-
sized firms.”
68 // TheTrade // Fall 2019
comes down to the time horizon
that leaders in the large firms use
when planning their business.
We’ve seen some large M&A deals in
the last few years in the tech vendor
space and consolidation appears
to be picking up pace; what do you
think will happen to this space in
the mid- to long-term and how is
Itiviti poised to take advantage?
RM: Historically many of these
mid-sized firms were founder-led
and now that is very much a rarity.
So we have very large firms, typical-
ly sitting on legacy technology, fo-
cused on getting shareholder value
through cutting cost with very little