Connectivity to Back Office Takes Precedence When Buying an OMS

Panel finds that integration with the back office and vendor track record are key in decision making process.

The core functionality of an order management system is not the only component an investment management firm should consider when buying a new solution. Speaking at the Financial Technology Expo in New York City, a panel of officials from the order management system community agreed that the particular system's ability to integrate into a firm's existing technological framework, specifically with the back office, takes precedence in the search process. Another factor not to be taken lightly is the vendor's track record.

Steve Levy, a panelist and CEO of the MacGregor Group, believes that the OMS system will become the nexus of straight-through processing. He explains that portfolio management systems tend to import and export data on a batch basis, a method that is not conducive to a T+1 settlement cycle. He adds that portfolio management system vendors will have to catch up or be left in the cold. Interoperability with the back office has, in fact, become the preeminent goal for a money manager looking for a new order management system.

Tim Rudlin, DST International's sales manager, North America, agreed with Levy, asserting that, the best option is to acquire a front- to back-office enterprise-wide system. Coincidentally, DST sells such a package. Rudlin asserts that buying a single package avoids the headaches associated with a best-of-breed approach.

Jeremy Hurwitz, a principal at InvesTech Consulting Group, adds that the creation of interfaces from a stand-alone trading system to a portfolio management system tends to be the costliest and timeliest part of installation. However, he pointed out, that OMS vendors are able, typically, to employ newer technology on a more rapid basis, versus vendors that are attempting to take on the whole trade cycle.

Levy also implored that money managers consider a vendor's track record. He adds, "Go to firms that have installed the system two, three years ago ... They are the ones who can give you an honest response."

On a separate note, the three vendors represented replied hesitatingly when asked about the future role of the Internet in the order management arena. Jeff Weiner of the Longview Group contended that the firm was looking into "Web-enabling" its product Landmark. Rudlin, most emphatic of the group, exclaimed that the Internet as it pertains to OMS was nothing more than "industry hype ... lots and lots and lots of hype."