Case study

Big Bang without big problems

Comprehensive delivery: Murex MX.3 upgrade and new Murex module-based securities back office
Does global Front Office-Back Office system integration inevitably mean disruption? Or, with the right approach, can it overcome the complexities and deliver the desired benefits, including low latency and higher performance?

Introduction
Pressures on global financial institutions to modernize and rationalize operations, reduce costs (including FTEs), increase volumes by enabling Straight Through Processing and meet both internal and regulatory demands for transparency and risk management are well known. But what are the factors really needed to turn desire for leading-edge, consistent and cost-effective front-to-back systems into reality? The answer is a combination of the most appropriate technology, the best skills and experience, a high degree of determination to overcome the complexity inevitably involved, and a unique environment of collaboration between technology vendor, systems integrator and client. When all these factors coincide, the result is Big Bang positive global change for the institution concerned. It takes cooperation and above all trust. A recent and highly successful experience proves it is possible.

which roughly 25% are located Sweden, another 25% in Germany with the remainder in Eastern Europe and the Former Soviet Union. The clients main focus is on Northern Europe, but they have offices in all the worlds important financial centers. Customers include around 2,500 large companies and institutions, 400,000 small and medium-sized companies, as well as 5 million private customers.

The situation
Our client wanted effective delivery against the following key objectives:

Reduction of Operational Risk for both their Securities Finance and Structured Equity trading business, through the implementation of an integrated Front Office-Back Office trading solution.

Increased levels of STP, overall improved trade and event handling and significantly reduced manual processes. An integrated trading platform aligned with the clients IT architecture goal, harmonizing applications, in order to increase staff efficiency and realize cost savings. Enhanced capability of business units to considerably increase business revenues, due to improved ability to deliver client solutions, and the removal of volume caps.

The client
A leading Nordic financial institution, prominent in a number of areas including cash management, foreign exchange trading, security trading, asset management and private banking. They have over 20,000 employees in more than 20 countries and operate more than 500 branch offices of

The approach
Existing initiatives in the Front and Back office were consolidated into one program to streamline and better synchronize key activities. From a systems perspective a major Upgrade was needed, as the target functionalities required in the Front but especially the Back Office and Accounting department were only available in the latest version of Murex (version MX 3.1), which was at that time only used in the Front Office (version MX Generation 2000 2.11). The identified functionality gaps in the Back Office had to be closed over the project journey, as the result of a substantial element of new functionality development. This highly important move (and significant associated investment) was necessary to provide new in-scope Front Office functionalities and to implement the Murex Back Office and Accounting modules. Although the industry was in the middle of the crisis, (Lehman collapsed just a couple of weeks later) our client approved this major financial commitment to address identified operational risks and strengthen their business departments for future growth.

vendor confirmed the existing CFD module was not supported in MX.3. The implementation paradigm that had to be adopted in the end included not just mandatory changes, but system enhancements of existing modules (new ERS for example) and deployment of new functions that in turn would involve new modules and/or new processes.

Big Bang without big problems

To achieve the benefits of this approach, while minimizing risk and disruption, was a challenge that required systems integration and consulting excellence to match the new technology. The source of that excellence proved to be Capco. Capcos dedicated Murex Practice comprises over 200 professionals in the UK, Europe and North America, backed by developers in offshore locations. With over 600 successful Murex assignments to its credit, Capco has been working closely with Murex for over a decade and is an official Murex Alliance Partner.

The technology provider Murex

Background Our client had worked successfully with Murex as a Front Office system for almost a decade. A feasibility study had previously been launched to identify the best fit target solution to address the lack of Back Office and Accounting functionality in the set-up as it stood. This lack of functionality led to significant reconciliation breaks and operational risk. Given the complexity of the underlying business it was decided to choose a dedicated silo solution, having one single, integrated trading platform. Upgrading to MX.3 - a major decision A full upgrade to MX.3 is not a decision taken lightly. Our clients preferred initial approach was the like for like route, with implementation only of changes made mandatory by the upgrade. But, three months into the project, detailed scoping in collaboration with the system

Capco and Murex delivering on the promise of partnership

Given the close relationship between them, Murex decided they would do more than simply involve Capco. The two companies developed a joint proposal that created a single, fully integrated consulting and delivery team to handle every aspect of this challenging project, from scoping to implementation. The team leveraged Capcos strong track record in delivering Front-Back Murex architectures across all major asset classes. Our client opted for the joint proposal from Capco and Murex. The delivery team itself comprised end users from the client, together with Capco as systems integrator leading and delivering the program, and Murex specialists onsite, backed by their support and development teams in Paris. Given the great degree of complexity faced, a key issue was robust team structure with all contributing roles (including the clients) closely coordinated and with clear ongoing communication to all key stakeholders.

Implementation in action
Analysis The client committed nearly 12 months to analysis of the new Front Office-Back Office platform. Scope setting, new functionality levels, cost/benefit relationship and a clear implementation strategy were all considered and defined before the investment decision was taken. Implementation strategy Given the architecture change from the MX Generation 2000 platform to the new MX.3 version, the upgrade and the implementation strategy necessitated close planning and the involvement of Murex itself, leveraging the lessons learned from the two other MX.3 upgrade projects still running at that time.

Key learnings
1. Moving to MX.3 requires extremely thorough preparation:

Many technical and business tasks can and should be performed in advance Key examples include review and clean-up report and data architecture, early adoption of new MX report and interface technologies, definition of operating model and review of trade lifecycle handling

2. Make sure to leverage Murex and Capcos upgrade methodology system sanity checks, platform diagnostic and other useful tools:

Run three to four initial migrations pre-project start and focus on a broad set of data reconciliation Utilize Capco Test Automation and Diffing Tools to significantly reduce test time cycles and increase quality

3. A major advantage is an experienced and competent project team we offered the client a very good blend of Murex MX.3 system, business and technology skills

Implementation paradigm driving complexity

As stated, our clients initial preference was for the most simple and pragmatic like-for-like implementation paradigm. The Big Bang option, being the most complex, was not the initial option when work began. Three months later however, it was accepted that a higher degree of complexity would have to be dealt with. Despite these challenges, the clients, Murexs and Capcos highly committed delivery teams overcame numerous obstacles to deliver driving the clients agenda of important change to completion.

4. As a result, we had a good understanding of our clients needs (essential) 5. Success demands close co-operation of project staff onsite and any remote staff 6. Even a highly complex project never loses control when it is well managed this requires good overall steering, priority setting and organization of tasks Technology vendor/SI relationship is key there was a significant degree of leverage of the Capco partnership with Murex and this made implementation smoother at times when the project team was facing delivery challenges.

Implementation timetable
Phase I. Preparation study FO-BO platform (4 months) Phase II. Upgrade of Murex platform of all Murex trading desks from MX 2.11 to MX.3 (11 months) Phase III. Decommission legacy Back Office systems and manual processes enable an integrated Back Office and Accounting solution for our clients Securities Finance and Structured Derivatives business (18 months)

Capco and Murex - a strong and proven combination

Today, our client is a satisfied user of the new system, with high expectations of, and confidence in, the technology and its functionality. The client has acknowledged the very professional and committed project delivery approach adopted by Murex and Capco team members an unstoppable determination in the face of considerable complexity. The project scope and mandate broad and commercially/operationally high-impact have been successfully delivered, proving that even the challenge of a Big Bang Murex upgrade can be overcome with the right levels of skill, cooperation and focus.

About Capco
Capco, a global business and technology consultancy dedicated solely to the financial services industry. We work in this sector only. We recognize and understand the opportunities and the challenges our clients face. We apply focus, insight and determination to consulting, technology and transformation. We overcome complexity. We remove obstacles. We help our clients realize their potential for increasing success. The value we create, the insights we contribute and the skills of our people mean we are more than consultants. We are a true participant in the industry. Together with our clients we are forming the future of finance. We serve our clients from offices in leading financial centers across North America and Europe.

Worldwide offices
Amsterdam Antwerp Bangalore Chicago Frankfurt Geneva London New York Paris San Francisco Toronto Washington DC Zrich

To learn more, contact us at +1 212 284 8600 (+44 20 7426 1500 from outside the United States or Canada), or visit our website at CAPCO.COM.

2010 The Capital Markets Company NV. All rights reserved.