Cloud computing and corporate twists


One major corporate event was announced on 9th June 2010, with an agreement by Misys to sell its 54.6 per cent interest in its healthcare subsidiary, Allscripts. All of the proceeds, around $1.3 billion, would be returned to shareholders, and the deal would pave the way for Allscripts’ merger with Nasdaq-listed Eclipse. The move was greeted favourably by analysts and basically left Misys to focus on the financial services sector. Ramji and new CTO, Robin Crewe, had by this time started


to set product priorities, with ‘hot-housing’ (short, competing development projects) and cloud computing to the fore. For cloud computing, ‘Midas on the cloud’ and other offerings delivered by this model would become a reality. There were conversations involving the customers and Misys’ salesforce, said Crewe, ‘and I think we will soon reach a tipping point’. A lot still said it was too early, with aspects such as data security continuing to be raised as objections, ‘but a significant number of people are saying, this is what I want to do’. One benefit of cloud computing for Misys was that functionality, if delivered as web services, meant ‘technology is entirely irrelevant’, said Crewe. Ramji emphasised the functionality within Misys’ older systems by pointing to a recent instance of a bank in Central Europe that was looking to move into Germany. It needed a solution that could handle all of the regulatory and accounting peculiarities of the new country as well as its domestic market. ‘Midas did all of it. There was nothing that the CFO wanted that we didn’t do.’ If the IT department objected to the Midas technology (RPG code, IBM iSeries) then this could be negated by a cloud model. The model could also facilitate a move to a more utility-


based approach for some back office activities. It might also support Ramji’s belief that,


increasingly, multiple Misys


systems could form tailored solutions for banks. He gave the example of Actinver in Mexico, which was planning to kick off with Bankfusion for 47 branches, covering conventional retail banking, but was looking at some innovative products, including a new type of collateralised consumer loan. Loan IQ, and/or the Midas lending module might be used to support this, wrapped by Bankfusion. There was a pricing challenge here, said Crewe, with clearly no way that Misys could look to command traditional licence fees for each of the multiple systems. ‘There are some challenges about bundling, marketing and pricing some of these things.’ Misys’ belief was still that tier one banks would adopt Bankfusion although all of the takers by late 2010 were outside of the top two tiers and all but Actinver were already Misys customers. ‘We went to sell where we could sell and, for example, the Mexican bank wanted [a system] today,’ said Ramji. He felt larger banks would come round to the approach and system over time. And the growth rates of some of the smaller banks should not be underestimated, he pointed out, citing CRDB in Tanzania, which was growing rapidly and had ambitious goals.


The hot-housing and cloud computing approaches were seen as something Misys needed to move towards, ‘otherwise


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the maths doesn’t work’, said Ramji. This was in relation to its intended ramp up of projects (‘we want a rhythm of two [projects] per week’), reflected in a stated aim of adding £250 million incremental revenues to the banking systems business (not including treasury and capital markets) over the next five years.


Not long after Ramji and Crewe set out the vision, Misys


announced that it was bringing Bankfusion onto Microsoft’s Windows Azure cloud. Dermot Briody, Misys’ sales director for Europe at the time (he left the company in late 2011), claimed this to be the only offering of its kind (others have followed). He emphasised that it was ‘not just a demo, but is an actual product that is capable and developed’. Microsoft and Misys were devising detailed plans on the geographies and types of financial institutions to focus on initially, as well as target numbers and figures. He cited start-ups in Western Europe as an example, as this category required flexibility of cost of ownership, scalability and fast time-to-market. However, he insisted that the ultimate vision was ‘any bank in any geography’.


Misys and Microsoft had been working together on the development of mission critical applications for over a year, but the Bankfusion/Azure tie-up had progressed ‘in a matter of months’, said Karen Topping Cone, GM, worldwide financial services at Microsoft. ‘The speed with which this initiative has developed is symbolic of what the cloud brings – agility, fast time-to-market and flexibility. Banks today need to move much faster than they ever have,’ she stated. ‘Working with partners like Misys means that we can offer banks not just an environment but also pre-existing solutions for it, like Bankfusion. We define this whole concept as “IT as a Service”.’ Furthermore, the introduction of Microsoft’s Windows


Azure private cloud in the next couple of years ‘will break the traditional data centre configuration’, believed Cone, as it would offer ‘all the benefits of the cloud on premises, with the appliance, which is like a data centre in a box – literally a container of servers, technology and so on – and it comes with Bankfusion’.


At a corporate level, the conclusion of the sale of the Allscripts healthcare business meant Misys was now focused entirely on the financial sector. However, there was considerable speculation in the market, particularly within the investor community, that the agenda was now around selling the rest of the business in the next year or so, in part due to the dynamics of Lawrie’s contract when he moved across from ValueAct. Ramji’s response was that ‘we never say never’ and Misys was always open to someone offering a good price ‘but we really mean to build it’. Crewe pointed out that this was his incentive for joining the company. He had a long association with Ramji, having first worked with him at Swiss Bank, and was appointed in August 2010 to replace Eaves, who had been brought in by Lawrie on a contract basis. Misys did indeed consider an offer for the company, in mid- 2011. It initially announced to the market in June that there had


Universal Banking Systems Market Report | www.ibsintelligence.com


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