Vendors don’t like to talk about it publicly, but they do love a technology initiative that is mandatory and has a fixed deadline. Y2K was a good example, and they could talk about it freely since the imposing target date was the result of old applications with their two-digit year designations and the relentless march of the calendar. It was just a real force of nature.

Regulatory requirements can be just as valuable for vendors. Trade order management systems (see page 25) are selling well not just because they enable algorithmic trading. They also can provide a record of what prices were available at the time and provide justification for executing in a particular venue. Other add-ons to the systems can track the research a buy-side firm is consuming and provide a match against commissions paid to help a firm decide where to direct its trades, and provide an audit trail in case a regulator comes to examine order flow and see why a fund has spent the money it has with a particular broker.

When it was suggested that the OMS vendors should sponsor a dinner in honor of the SEC, and perhaps Senators Sarbanes and Oxley, one executive could see the logic, but doubted the practicality. “I don’t think that would be very popular with our clients,” he said.

Hedge funds are buying new order management systems and filling in the gaps between their existing systems (see page 45) because they are facing new registration requirements. If the regulators don’t require better information from hedge funds, prospective investors certainly will. As institutions continue to expand their presence in the hedge fund marketplace they demand detailed reporting that they can use to make and justify their investment decisions.

In the arena of business growth, as compared to regulatory justification, Microsoft has developed a methodology to help business decision-makers and IT organizations communicate more clearly (see page 21). Called Motion, it might seem to rank a YAWN factor of 4, but at a logistics company that suffers from separate silos every bit as well-constructed as those in financial services, a Motion exercise helped define processes in clear English. (It’s not always a language spoken at Microsoft, but they have promised to keep acronyms to a minimum in Motion engagements.) Once the firm’s internal processes were defined, it found an overlap of 60 percent in business functionality. Now the firm’s IT organization has a clear view of functions that can be built once and provided to all the groups as a service with service-oriented architecture. The CIO estimates he can save 20 percent in capital expenditures as a result. See what a little clear communication can achieve?