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Temenos agrees Odyssey acquisition

28 September 2010  |  12295 views  |  0
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Temenos has inked an $81 million deal to buy Luxembourg-based Odyssey Financial Technologies, which provides application software to the private banking and wealth management (PWM) market.

Temenos and Odyssey: deal analysis by an ex-insider

06 October 2010  |  4446 views  |  0

The over 100 USD m deal (81 cash paid by Temenos and 20m take over debt) was announced early morning by the press, and was extensively commented by the participants of the Financial Summit in Geneva.

Many questions arise about the future synergies and evolution of Temenos. As I’ve worked over 6 years at Temenos and 3 years at Odyssey, I’d like to offer my personal point of view of the possibilities and challenges of this deal.

The actors

Temenos, based in Geneva commands 3’500 employees and is active in over 125 countries with a client basis of over 1000 banks. Last year the public company obtained a turnover of 370m, from 20% are dedicated to R&D.

Odyssey

Private owned company, with his official base in Luxembourg but with a large operational quarter in Lausanne, counts with 110 clients in over 35 countries and has a workforce of 400 employees and contractors, spread thru several development centers located in Toronto, Lausanne, London and Glasgow.

What happened?

The first interesting point to mention is the way the deal was announced by both companies, while Temenos announced it thru a press release with the clear statement that “announces that it has signed an agreement to acquire Odyssey Group S.A. (Odyssey)”, the Odyssey website announced in an almost ingenuous way that “is pleased to announce that it will join forces with Temenos (SIX: TEMN).

What will happen?

Does this pre-announce a rough wake-up for my ex-colleagues from Odyssey in the next future? Transitioning 400 employees from a small start-up like structure to a mature international company surely won’t be an easy endeavor for the Temenos HR Team. There will be inevitably some casualties in the process. Will this affect the current installed Odyssey client basis? Triple’A maintenance and support relies mostly on the long years expertise of the in-house Odyssey specialists; thus in opposition to Temenos T24 practice, where a large expert community of independent contractors has built up along the last decade. A big challenge for Temenos will be to ensure the knowledge transfer from the European R&D Odyssey centers to its own in London and Chenney (in India).

And the Banks?

110 Banks relies on Triple’A to perform critical business operations, many of them are also Temenos clients, many of them will wait with great expectation the future developments: usually Triple’A releases are depending factors for the introduction of new Banking Products. Even if an hypothetical worst case scenario in the HR integration between Odyssey and Temenos could trigger a flush of Triple’A specialist into the market, there still are core modifications which require the intervention of R&D.

What about the T24 installed client basis? Surely, many of them, especially located in emerging economies and with growing “Private Banking” requirements will be interested in Wealthmanager and Triple’A demos, however the Temenos sales force will have to provide clear answers and strait story regarding the integration road map of the functionalities of the front office products in order to be integrated with the installed T24. Moreover, it’s unlikely that Temenos will go away from his policy of “one company, one product”.

Technological Challenges

Triple’A uses exclusively Sybase as Database, Wealthmanager uses Oracle and there are currently plans to move to DB2. T24 runs on the Temenos proprietary Jbase and at few clients on Oracle, and there is also a DB2 supported version. This will be also a challenge for the joint efforts of the Odyssey and Temenos engineers, the outcome will be of course a decision factor for the Banks when they will measure the Total Cost of Ownership of any new solution offered by Temenos.

In the meanwhile the stock market has received with optimism the news of the deal. The perspective of a future T24 covering all the business process: from Prospecting, Client on-boarding, Compliance, documentation and KyC, Investment offering and strategy as well as the traditional back office operations, can surely appear as extremely appealing for a Bank. However, as many Banks know from own experience the “devil lies in the details”

more posts on this topic in my Blog at Wordpress

Everybody's happy so far...!

Comments: (1)

A Finextra member
A Finextra member | 08 October, 2010, 07:08

Not disagreeing with any of the comments here, and certainly looking forward to be offinging a broader product base to our T24 based custoimers, but just a clarification that T24 also runs (as we have it here) on a full Microsoft stack - using SQL 2008 in our case.  So they really have managed to gain database independence and I am sure will want that as an outcome for all the software they operate.

 

They would want to be certain of winning a sale without falling prey to the database priests of any potential client, so I am sure there will be some good engineering challenges as they contemplate the Odyssey offerings.

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