SIA SHOW: Eagle, Now Under the Mellon Umbrella, Continues to Grow

Eagle Investment Systems, a provider of investment-management software, is continuing to grow and develop new software as part of the Mellon Financial Corporation.

Mellon, a global financial-services provider with $2.7 trillion in assets under management, administration or custody and $590 billion under management, acquired Eagle in November of last year. Eagle's Chief Executive Officer Jack Riley says that his company treats Mellon like a "mega-client."

"They have given us some analysts to help on some initiatives we're doing," he says. One major joint initiative sees Eagle helping Mellon prepare to launch an outsourcing solution for investment mangers, a new business which will see Mellon competing with the likes of State Street and the Bank of New York -- two firms already active in the nascent space.

Mellon plans to launch the service on July 1. "It will include a system-model environment which is Eagle's technology integrated with Mellon's internal custody and clearing systems, along with pricing and corporate actions," says Riley.

In terms of its own initiatives, Riley says that Eagle is currently building out a version of its software to support mutual-fund accounting, which should be released at the end of July, as well as offering a new version of its software for the hedge-fund industry, which was developed in tandem with Morgan Stanley's prime-brokerage division. That product is scheduled to come out in September with a full production release slated for year's end. Riley says Eagle is also developing global-attribution software due out before January.

Additionally, Riley says that by July, Eagle will have completed porting its Pace data hub and portfolio-management system from NT to Unix. Moving the system to Unix, he says, will allow Eagle to scale the software for some of its larger clients, such as Charles Schwab, UBS, Janus and Schroders.

Tim Lind, a senior analyst in the investment-management practice at TowerGroup, a Mass.-based firm following the impact of technology on financial services, says that Mellon's acquisition of Eagle has been a double-edged sword for the software company.

He says that, on the one hand, firms that were burned taking chances on smaller start-ups during the Internet boom may be more likely to take a chance on the younger Eagle since it now has the deep, deep pockets of Mellon behind it. That notion rings even more true in the world of investment-accounting packages, which need to be integrated with many other systems in a buy-side shop, meaning entering into a relationship with an unreliable or unstable partner could spell years of trouble and millions of wasted dollars.

On the other hand, Lind says that if an asset manager is down to two products, one being InvestOne from SunGard and the other being from Eagle, some will go with SunGard merely because it does not manage money, whereas divisions of Mellon, such as Standish Mellon Asset Management, Newton Investment Management and The Dreyfus Corporation, do.

"I've talked to buy-side clients who said, 'If I buy Eagle then I'm putting money into the pockets of Dreyfus and Standish," he says.

Lind also says that there may be some concern that, as its parent, Mellon will dominate Eagle's attention. "The question is: What amount of time can I expect in support when they have such a big parent?" he asks. "But, at the end of the day, I just have to get software that works."