How NYSE Is Winning the Technology Arms Race
- Legacy environment that became more and more difficult to manage
- Disparate and complex corporate systems, desktop environments and staffing models
- Lowering the exchanges' operating expense
- Support corporate and enterprise applications and desktop environment
- Provide 24x7x365 critical services for email environment
- Manage 35 applications and office automation with more than 10,000 end user devices
- Realized savings of approximately 30 percent over four years, combined with significantly improved service levels and well-defined scalable processes
- Global best practices and processes tailored to NYSE Euronext environments
- Reduction in major incidents and outages by more than 50 percent
Moving Beyond the $2.5 Trillion Worth of Transactions
NYSE Euronext, which represents one-third of the world's equities trading and the most liquidity of any global exchange group, is also moving beyond the $2.5 trillion worth of transactions it manages each day to offer commercial technology, connectivity and market-data products and services
Dieter Eisinger joined the NYSE in 2006, initially as chief of staff and chief administrative officer. Because of his consulting background, he was responsible for post-merger integration and strategic cost-efficiency initiatives. Currently, Eisinger is SVP and chief procurement officer for NYSE Euronext, leading a team of 25 professionals in charge of acquisitions and strategic-sourcing activities in the U.S., EU and Asia.
As a global exchange with trading operations in New York, Chicago, San Francisco, London, Paris, Brussels, Amsterdam and Lisbon, the NYSE consumes a lot of technology. The NYSE's main sourcing categories are hardware, software, telecommunications and IT services.
CSC is an important part of the constant drive to lower the exchanges' operating expense. Since it began as a small consulting engagement in 2005, CSC's partnership with NYSE Euronext has grown significantly in scope and strategic importance for both companies. Eisinger spoke with CSC World about NYSE Euronext's evolving IT strategy and partnership with CSC.
What are the major IT initiatives at NYSE Euronext?
To really understand our IT priorities, you need to understand the broader picture. The exchange industry has most likely been one of the most dynamic industries over the past decade. When I started at the NYSE, cash equities were the New York Stock Exchange’s core business. With the Arca merger in 2005 – 2006, we added exchange-traded funds, options, bonds and the fastest electronic trading platform to the portfolio.
With the NYSE Euronext merger in 2006 – 2007, we increased our global reach in all products and added a premier derivatives business and a new business line to the mix: technology solutions. Lots of smaller acquisitions followed. All of that merger and acquisition activity happened during a time of rapid change, with more trading venues emerging. Today, there are more than 50 trading venues for equities in the United States.
How have those changes in the industry affected your business?
The demands on our trading systems increased. Our technology teams constantly had to reinvent the ways they were thinking about speed, reliability and capacity in an environment characterized by new order types and increased competition.
After realizing that cash equities trading and our acquisitions around our core business will not provide us with the quantum leap required to stay ahead of the competition, we took a look at the exchange value chain.
Since 2008, we started filling in the blanks across the value chain. We built two state-of-the-art data centers, invested in our technology business, and added to our equities and derivatives businesses through bolt-on acquisitions. The acquisition of NYSE Euronext by Atlanta-based InterContinental Exchange (ICE), announced in December, represents the continuation of the exchange consolidation.
A World-Sourcing Strategy with CSC
What challenges were you facing before working with CSC?
The ‘technology arms race’ in our core trading businesses led to the decision to find an expert to deal with our noncore technology processes, including corporate applications, office automation and other projects, such as data center migration and consolidation.
This is all part of the continuous effort to drive costs further down to counter constant margin pressure due to declining and volatile trading volumes in some of our core businesses. NYSE Euronext is no different from other companies in terms of having grown through mergers and acquisitions without ever revamping its noncore technology assets. Instead, the typical
quick fixes led to a legacy environment that became more and more difficult to manage.
Our challenges included disparate and complex corporate systems and desktop environments and staffing models inherited from past mergers and acquisitions. NYSE Euronext’s business units have been accustomed to an all-you-can-drink model, which places cost pressures solely on the technology managers when demand increases and budget decreases. Service levels were nonexistent — and if we did have them, they were inconsistent across the estate.
Why did you choose CSC as an IT partner?
Beginning in 2009, we launched full-blown RFPs with the usual suspects. Given NYSE’s strong preference for a ‘high-touch’ managed-services approach, some service providers withdrew from the bidding process as their core competency focused on a fully outsourced model, where economies of scale are achieved with the vendor bearing the bulk of the delivery responsibilities and decisions.
Some others lacked the global delivery competency in Europe and the United States, respectively, and would have been required to subcontract at least 50 percent of the solution. This led to a smaller number of finalists.
All companies presented strong proposals, but in the end, senior management from the business and technology side felt very comfortable with the CSC approach and the CSC team. CSC was especially strong in the areas of defined scope of services, agreed-upon service levels, articulated transition process and staffing model, and provided full clarity on committed savings and pricing.
Could you describe the importance of the work CSC supports?
CSC supports our corporate and enterprise applications, such as Oracle, PeopleSoft, Salesforce.com and our desktop environment. If you have worked on Wall Street, then you know that the email environment, BlackBerrys, or nowadays, iPhones, are the lifeblood of any Wall Street organization and a critical service that needs to be up 24x7x365.
In total, CSC covers a scope of roughly 200 full-time equivalents, 35 applications and the entire office automation with more than 10,000 end user devices. We realized savings of approximately 30 percent over four years, combined with significantly improved service levels and well-defined scalable processes.
All of that was achieved through a world-sourcing strategy with CSC support centers ranging from Canada to the United Kingdom, India and Vietnam.
Managed Services: Cost Savings, Best Practices, Incident Reduction and New Ideas
How does working with a managed-services provider contribute value to NYSE Euronext?
CSC provides us cost savings. That is why we chose a managed services provider originally, and we are achieving savings in line with our original business case. CSC also moved us up the ladder on process maturity. Activities in the past were not structured well and not organized for efficiency and effectiveness. CSC’s experience in IT processes and process reengineering helped us implement a much more robust IT operating model.
CSC brought global best practices and processes and tailored them to our NYSE Euronext environments. The net result was that we were able to implement key initiatives (such as a Notes-to-Exchange conversion), while deploying new global processes and tying in key performance metrics. All of this helped us understand and proactively manage our environment and provide better, more consistent service to our worldwide employee population, while reducing cost and risk.
One example is the reduction in major incidents and outages by more than 50 percent since the beginning of our relationship. There are many others. CSC helped us achieve similar results in the other areas it supports.
CSC also brought and still brings new ideas to the table. The CSC team has helped us improve beyond what we captured in our business case by collaborating and providing insights and ideas for improvements above the scope of our contract. When NYSE needs help to improve our business or solve a challenge, CSC assists by providing experience, points of view and best practices.
Some examples include building an offshore development center, reviewing our trading operations production processes, collaborating on the supply chain side and improving total cost of ownership for data storage. The thing I value very much about working with CSC is that it has always brought a partnering approach and not a sales pitch. CSC provides insights and ideas even if there is no project for it on the horizon.
What are your expectations for what CSC can do for your company going forward?
The partnership between NYSE Euronext and CSC has evolved positively. We both invested in our partnership and the collaborative approach we take to working with one another. CSC brought tools to help us focus on what is important and deal with the issues on a factual basis rather than an emotional one.
Over the past few years, NYSE Euronext has faced significant business challenges, such as the rapid consolidation of the industry, the global financial crisis and our own merger activity. As we developed strategies and initiatives to address those challenges, we could always count on CSC to provide insight and points of view that supported and augmented our plans. The CSC team members have become trusted and respected members of the NYSE Euronext team.
My expectations of CSC in the short term are for it to continue to do what it is doing for us. Going forward, there will be much change at NYSE Euronext as the ICE–NYSE Euronext merger integration unfolds in 2014 and beyond. Through that change, I am sure CSC will continue to provide excellent support. I am confident that CSC will continue to be a reliable partner.