From Pigeons to Consulting

Its first brush with ‘high-technology’ (or what passed for it at the time) was 150 years ago when it used Pigeons to deliver news. Now, the company most associated with the delivery of news and financial information wants everyone to know about its consulting and software solutions

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By  Massoud Derhally Published  November 8, 2001

Introduction|~||~||~|You might be forgiven for looking at Reuters as just a media company given its strong presence in the news delivery business, but Reuters wants to counter that view, particularly here in the region. The company is ploughing full spead ahead with the launch of its consulting and solutions divisions, plans that remain unchanged in spite of the current economic climate. “These two business units represent a strategic line of business for Reuters and as such have attracted a multi million dollar investment from the company at a corporate level; and yes, we are significantly increasing our capacity in the Gulf area,” says Ian Evans, sales manager of Reuters Solutions. “To give you an idea, we now have over 20 direct specialists working in these groups compared with 3-4 at the start of 2001.”

Reuters’ strategy is becoming customer focused rather than merely product based as it tries to do in the Middle East what it has done in the USA and Europe. “From its establishment, Reuters has been heavily applying and investing in relevant technological advancement to enhance the delivery and the value of news and information. Information becomes much more powerful if technology and telecommunications are added to it,” says Michael Kuli, managing director of Reuters in the Gulf. “Reuters is in some ways unique because it succeeded in intelligently integrating these three prime components of modern civilization in a way that would increase their combined values,” adds Kuli.

The company’s technological adaptation throughout its 150 years in existence has led to the development of various products and services for non-traditional audiences such as financial markets. The company has tried to understand what the financial markets wanted and needed, believed it could provide value and started building applications that would provide add value in the financial world. One example of this is risk management systems, where banks use various financial instruments to trade currencies, stocks or derivatives, and time has proved that when you are dealing with so many instruments you need to develop systems that allow you to know your risk position at every moment.

Reuters fulfilled this need by developing a prime flagship application called Kondor+ that addresses risk management and online equity and currency trading solutions. “Because we understand news and information as well as the financial markets, we have been able to build leading edge technology that relates to the needs and requirements of these financial markets. For example, if you take our dealing machine, which is installed at most banks in the world, it is a private, independent, safe, secure and reliable means of trading currencies between banks. This product has been in use at these institutions for about 20 years,” explains Kuli.
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In the Middle East, where the company started reporting on the Alexandria Cotton Exchange in 1891, it has expanded its services from delivering news and information to catering to the technological needs of the financial community. Through its US-based technology subsidiary TIBCO, Reuters built the actual technology platform that the Nasdaq uses to process all the transactions it hosts and deployed the same technology for Nasdaq’s European counterpart, Easdaq. So it should come as no surprise the company has around 12 clients from the financial industry in the Middle East for its risk management software systems only.

The best local case study, one that Reuters prides itself on, is that of Emirates Bank International (EBI). EBI wanted to address a technical shortcoming and it turned to Reuters to provide a middleware solution. Reuters’ Gulf based IT specialists assessed the needs of EBI and came up with a solution that would provide the bank with a uniform technological platform that would serve its needs with real time information, scalability, messaging, a single interface and a publish/subscribe environment.

Reuters Consulting, a specialised business unit that was officially launched in the Middle East at Gitex 2001 in Dubai, acts as the implementation arm for Reuters solutions to put in place systems like an Enterprise Application Integration solution (EAI). The solution, based on TIB Middleware, helps to deliver straight through processing (STP) for the bank’s trading, finance, and core activities. But that is not the only thing Reuters Consulting does: its suite of consultancy services comprises six practices, organised in a way that tries to focus on the key challenges facing many businesses today.

They include: real time data, integrated systems, trading with customers, real time trade matching, risk management and engineering databases to optimise the sourcing and deployment of data. “This [Reuters Consulting] is a new kind of service and value that we have started offering to our clients and the wider market. It is a further evidence of the evolution of Reuters as a technology company,” says Kuli. “The new consulting business is the implementation arm that delivers technology and makes it work. The company’s strategy is to provide the region with this unique value proposition of content, technology and connectivity as the Middle East steadily and rapidly develops its economy around IT and finance,” explains Kuli.

The new consulting arm of Reuters examines customers’ problems in detail and creates a solution from Reuters products in addition to other vendors’ products. Reuters Consulting sees itself as the integrator of choice for all the Reuters products, as it draws on a mix of financial and technology expertise. So what differentiates Reuters Consulting and its products from the competition, say IBM?

“One of the primary benefits of Reuters is that we are a genuine solutions provider. We have our own products and access to those of our subsidiaries, which is not very common, so we get the very-best-of-breed approach. We actually go to our clients to conduct a study and then come up with solutions. Rather than being product led, we are client led. We have a broad spectrum of products and solutions and we tend to be a technology partner to the banks rather than a classic supplier,” says Evans.
||**||The Market|~||~||~|
As well as its software solutions, Reuters, through its Greenhouse venture capital division, identifies seed companies, grows them and then distributes their products when they reach maturity. “Another important point that supports Reuters solutions is our commitment to Reuters Consulting as an organisation, which allows us to have the software, delivery and the consulting channel all under one roof in the Gulf, all very heavily governed by the Reuters quality assurance,” argues Evans. “So what you are getting realistically is a global supplier with a local feel to it.”

It all sounds expensive and complex. So will top institutions be the only clients who can afford Reuters products, or will small and medium size enterprises (SME) also have the ability to buy and use some of this technology? “Our solutions are immensely scaleable to the very largest financial institutions in the world. However we are currently focusing on the SME marketplace because our solutions are equally affordable and provide the same return on investment to smaller companies,” insists Evans. “All organisations, regardless of size, can ultimately benefit from the technology provided by Reuters solutions.”

It has to be that way, since in comparison to global international banks, Gulf banks are slightly smaller whilst still having equally sophisticated requirements. “A solution we would deploy for a medium sized Gulf bank could be very similar to a solution that we have supplied to some of the top ten banks in the world,” says Evans.

Because of the increasingly ‘modular’ nature of modern software solutions, users can buy as much as they need and no more —the ‘mix and match’ approach. The company insists that entry level pricing for Reuters solutions can be in the tens of thousands rather than the millions of dollars.

Reuters has also been approached by a number of countries in the Middle East for its solutions and consulting services to either help build stock exchanges or further develop their existing exchanges. With ongoing discussion about linking stock exchanges in the Middle East or creating regional ones, does Reuters believe it is feasible? “I think eventually we will get there and with our existing technology we can help make it happen as we did with Nasdaq and Easdaq,” says Kuli. “The good news is that not all the stock exchanges in the region are directly run by the governments in their countries and therefore have a bigger practical margin to plans for the expansion of their activities.”
Creating a unified regional stock market won’t be easy, however.

“To take a decision that would link all the exchanges of the region together means every country and exchange has to accept that it is becoming part of this network,” says Kuli. “There is also a legislative issue on top of the political dimension. Different countries have different laws so you have to make sure that when you electronically link the exchanges together you will function in a legal framework that would make the market a uniform and investor-friendly environment. Another issue is an economic one of liquidity, and this, I believe, is a relatively easy one because from a long-term perspective, there is money in the region,” he adds. If it does happen, Reuters will definitely be there or thereabouts.—By Massoud A. Derhally
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