Geoffrey Moore’s classic marketing text -
Crossing the Chasm - explores the challenges of successfully marketing new technologies and so it is interesting to look at the world of
Desktop Interoperability or
Integration Platforms (DIPs) through this lens. Key to Moore’s book is how to move from just selling to early adopters and to capturing the mainstream as well. It seems to me, that this is exactly the challenge for DIP vendors, especially in capital markets.
The problem that DIPs solve for is clear - traders need to access information from multiple different systems and yet, because these systems come from different vendors that use different technologies, they don't talk to each other. This leads to convoluted
workflows, errors and inefficiency. The historical solution was simply to add another physical screen to the desktop - to the point that the amount of screen real estate you had almost became a badge of honour. The truth, however, is that this was really just
a sad indictment of how technology has failed to solve the problem. And, today, employees and customers insist upon the same hyper personalised and contextualised experiences that they enjoy in their everyday lives. On top of this, the new distributed economics
of the industry mean that throwing more screens at the problem just isn't viable.
The solution is equally simple - use the latest DIP software to build workflows through the different applications and so share context and data between them. In this way, the systems work with the user rather than the users having to invent manual processes
to get around the problem.
So, with such an obvious problem and solution, why is it that DIPs haven't yet become standard everywhere? Helpfully, Moore gives us some pointers as to why.
If you haven't read his book yet, then the core thesis is that the early adopters of a new technology exhibit very different buyer behaviour to the early or late majority and crossing this chasm is the goal for all technology vendors.
Early adopters tend to be technology enthusiasts that can see how a new technology can be put to work within their business. They have the patience and, crucially, the resources in terms of budget and personnel. They also have the internal power base to
take a risk. The early majority don't have these luxuries and so are looking to solve real business problems rather than necessarily follow their gut instinct. The late majority are even more cautious and wait until an established standard emerges.
So how does all this relate to a DIP? The CEO of one DIP vendor recently commented that his customers were complaining that their DIP projects were either taking too long or were much harder than they thought. This is exactly the response from buyers that
represent the early majority customer segment.
The reasons for this frustration stem from a number of factors:
Incomplete Product Features
As with all new technologies, DI vendors have incomplete products and, in fact, two of the market leaders started out in completely different product categories (elegant charting and a browser for finance). Having a complete feature set then is clearly a
critical success factor. Selecting the right DI vendor is another element to this piece of the puzzle. As with all new technologies it can be hard to know how to run the selection process and avoid getting swept up in the hype and slick demoware. If you want
to see a comprehensive and impartial review of the top three vendors, then I would point you to
this report from Norman & Sons.
Where to Start
The potential for desktop integration is so huge in capital markets that figuring out where to start can be a daunting prospect. Understanding exactly how different users navigate their existing journeys through the multitude of applications they use is
the obvious starting point, but this can be a resource hungry exercise. Thankfully there are a number of software solutions that can automate this. DIP firms that can bundle application behaviour analytics with their integration tech should be at an advantage
when it comes helping their customers get the best possible outcomes.
Despite its technical elegance, DIPs still need some level of support from the owners of the incumbent applications. This is fine if these applications are built in-house, but 3rd party vendors need to put their shoulders to the wheel too. A strong network
of committed partners, therefore, is another element to successfully cross the chasm.
The Data Problem
Related to this is the perennial challenge of data standards. Instrument IDs can vary from vendor to vendor and so, inevitably, some level of data mapping is required. Making sure your DIP partner has a strong grasp of this is another way to avoid customer
frustration. As with all roads to standardisation some see it as a potential threat to their IP, But, just as we saw with the rise of FIX, there is always plenty of room for firms to compete on top of the standards.
Early and especially late majority buyers are fearful that they will make the wrong choice and that something else becomes the de facto standard. The adoption of FIX for order routing is a good example of how to solve this problem as it neutralised what
system was at each end of any particular buy side to side sell side link. In the same way, the role of FDC3 will become equally important in allowing different DIP solutions to co-exist
Ready Built Solutions
One of the most powerful arguments Moore makes is that early and late majority adopters don't have the time or patience to work out how to use a new technology - they want specific solutions to real business problems. This makes the buying process simple
as a straightforward cost benefit analysis can then be made. Breaking the overall DI opportunity into a set of bite sized, out of the box solutions is important, therefore, and provides a much gentler glide path into the technology. This approach also requires
a lower level of commitment and comes with a much quicker ROI. So, maybe firms with a broad range of niche solutions will be at a distinct competitive advantage.
Moore’s book is over 25 years old, but its core concepts are even more valid today as the way we interact with, and what we expect from, technology is changing so much. It will be interesting to see which vendors adopt his teachings first.