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Ivan Martin CEO Misys Banking Division

Ivan Martin CEO Misys Banking Division. Misys Banking Division Strategy Ivan Martin Business Drivers Steve Gowers Product Management Jerry Luckett Break Three Great Stories SummitFT Georges Bory MidasPlus Andrew White EquationPlus Andrew Derrer Summary Ivan Martin

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Ivan Martin CEO Misys Banking Division

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  1. Ivan Martin CEO Misys Banking Division

  2. Misys Banking Division Strategy Ivan Martin Business Drivers Steve Gowers Product Management Jerry Luckett Break Three Great Stories SummitFT Georges Bory MidasPlus Andrew White EquationPlus Andrew Derrer Summary Ivan Martin Questions and Answers All Agenda

  3. 1. Banking is a large and growing software market 2. Misys is well positioned to benefit from this growth 3. Misys leads in functionality and technology 4. Misys is growing its market share in key markets 5. Retail is key growth sector going forward Key messages

  4. Where were we? What did we do? Where are we now?

  5. Where were we? What did we do? Where are we now?

  6. What did we see in 2002? In 2002 you told me … “Products are old legacy back office systems” “Losing market share to competitors” “We see no product roadmap for the future” “There is a risk the business will not benefit from a recovery in spending”

  7. What did we see in 2002? Banking Division ILF 150 100 Revenue £m 50 - ILF moving annual total - Smoothed ILF trend line 1996 1998 2000 2002

  8. Where were we? What did we do? Where are we now?

  9. Portfolio Management Talent Management Product Management What did we do? Columbus Services R&D investment

  10. Banking software market Significant opportunities in target markets Securities US Retail Asset Mgmt Treasury International Retail Corporate Addressable market > $5bn

  11. Misys Wholesale Banking Systems Misys Banking Division Healthcare Systems Division Financial Services Division Banking Division Misys Retail Banking Summit Systems Misys Risk Management Systems

  12. Portfolio Management Talent Management Product Management What did we do? Columbus Services R&D investment

  13. Investment Banking Private Banking SUMMIT LOAN IQ Retail Banking Corporate Banking RISK OPICS GMS EQUATION MIDAS BANK MASTER Universal Banking Misys and Banking Systems Market Over $100 bn Asset size of Bank Below $5 bn Boxes represent market coverage – not size of business

  14. Portfolio Management Talent Management Product Management What did we do? Columbus Services R&D investment

  15. Portfolio Management Talent Management Product Management What did we do? Columbus Services R&D investment

  16. Operation Evaluation Development Customer requirements Market Engagement Market drivers Business as usual Launch Design Qualification Definition Outline Market Understanding Misys vision Build Alpha & Beta Competitor information “Go external” to beta Technology innovations “General release” Decision “Build” Decision Lifecycle mgmt Introduction Growth Maturity ‘Delivering the solutions our customers want, when they want them’ Decline Product management

  17. Portfolio Management Talent Management Product Management What did we do? Columbus Services R&D investment

  18. Portfolio Management Talent Management Product Management What did we do? Columbus Services R&D investment

  19. R&D (,000) R&D Man Days 140 Front-office 100 + 55% Technology 60 20 Back-office 0 2003/4 2006/7 Increasing offshore capacity

  20. Where were we? What did we do? Where are we now?

  21. Banking software markets are generally improving Conditions vary significantly between sectors Retail banking continues to show sustained growth Wholesale banking and capital markets have stabilised Marked regional differences; activity in emerging markets Underlying market drivers still apply Cost containment Regulation Rising consumer expectations Long term trends continue Move away from in-house software to third party packages Banking market conditions

  22. Market structure - banking software revenues Source: 2002 financial statements & Misys estimates Source: Annual Reports and Private Company estimates.

  23. Global power – local knowledge Auckland BahrainBangalore BangkokBeijingBrusselsDubai Dublin FrankfurtHong KongJakarta Jo’burgKuala LumpurLisbonLondon Lux’bourg MadridManilaMexico Miami Milan Moscow Munich New York ParisRiga Sao Paolo SeattleSingapore Slough Sofia SydneyTokyo Utrecht Warsaw White Plains Zurich

  24. Achievements in 2004 Portfolio moved to new areas of growth Increased investment in R&D Retail benefiting from market facing structure Increased Treasury & Capital Markets market share Strong evidence of traction in our installed base

  25. Achievements in 2004 Best increase in H2 order intake in 3 years Closing order book up strongly Maintenance revenues stable H2 professional services grew by 20% Professional Services backlog grew by greater than 70%

  26. Business Drivers Steve Gowers Business Development Director Misys Banking Division

  27. Misys focus • Misys is focused on providing business critical systems in specialist vertical markets • Characteristics of vertical markets: • Depth of industry knowledge • Depth of software IPR • Specialist skills able to rapidly deliver solutions • Demand for mature and proven systems • Long lead times • Different drivers from ‘horizontal’ markets (e.g. ERP)

  28. How do vendors compete in vertical markets? What drives growth in vertical markets?

  29. How do vendors compete in vertical markets? What drives growth in vertical markets?

  30. 1. Breadth of product portfolio 2. Depth of IPR 3. Size & quality of development capability 4. Breadth and depth of geographic network 5. Ability to sell into installed base Competitive dynamics in vertical markets

  31. Investment Banking Private Banking SUMMIT LOAN IQ Retail Banking Corporate Banking RISK OPICS GMS EQUATION MIDAS BANK MASTER Universal Banking Breadth of product portfolio Over $100 bn Asset size of Bank Below $5 bn Boxes represent market coverage – not size of business

  32. Depth of IPR MidasPlus • Midas represents14 millionlines of code in total, with 168 functional modules • MidasPlus release was 3 years in the making, delivering 3 million lines of new software • IAS Compliance was 50 man years of investment SummitFT • Summit represents 6 million lines of code in total • SummitFT release was 3 years in the making • SummitFT and MUST alone represent an investment of over 75 man years

  33. More than 1,000 software engineers Size and quality of development 2,600 specialist staff F&A Support Services Sales and Marketing Software Development Product Management

  34. Breadth and depth of network Auckland BahrainBangalore BangkokBeijingBrusselsDubai Dublin FrankfurtHong KongJakarta Jo’burgKuala LumpurLisbonLondon Lux’bourg MadridManilaMexico Miami Milan Moscow Munich New York ParisRiga Sao Paolo SeattleSingapore Slough Sofia SydneyTokyo Utrecht Warsaw White Plains Zurich

  35. Ability to sell into installed base 3 Core systems • Midas 450 Wholesale and international banks • Equation 270 Retail banks • BankMaster 190 Retail and Universal banks 4 Departmental solutions • Summit 110 treasury & capital markets operations • Opics 130 treasury departments • GMS 800 banks, funds and corporates • Loan I/Q 30 banks Enterprise Risk • Risk Vision 30 banks Count is number of discrete Banks Total = more than “1400 customers” because many clients have multiple systems

  36. 45% of Misys contracts were for extensions of existing business 55% of Misys contracts were for new product and new customers Ability to sell into installed base Contracts signed in FY03/04 Upgrades/Extensions Funded dev/Other Additional volume New customer New product Analysis based on numbers of contracts

  37. How do vendors compete in vertical markets? What drives growth in vertical markets?

  38. 1. New technology cycles 2. Growth in underlying business volumes 3. Increasing burden of regulation/reporting 4. A return to IT spending for competitive advantage 5. Trend to use of third-party vendors Drivers of growth in vertical markets

  39. 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 Growth drivers – technology cycles IT Spending Cycles Mini- computers Euro and Y2K Client- Server Services Oriented Architecture ISV’s Source: Bureau of Economic Affairs

  40. Swift estimate that Misys systems generate 15% of all transactions in their network. Misys is at the heart of banking Growth drivers – underlying volume Transaction Volumes 2,007,551,750 messages 2.0 billion 1.8 billion 1.6 billion 1.4 billion 1.2 billion 1.0 billion 0.8 billion 0.6 billion 0.4 billion 1994 1996 1998 2000 2002 2004

  41. Misys GMS confirms approximately 7% of the world’s $1.4 trillion daily foreign exchange transactions This equates to $100 billionper day through Misys GMS ASP solution Growth drivers – underlying volume Global FX Volumes $1.4 trillion per day $1.50 trillion $1.25 trillion $1.00 trillion $0.75 trillion $0.50 trillion $0.25 trillion 1994 1996 1998 2000 2002 2004

  42. 2004 1984 Growth drivers – regulation/reporting Simple Lightly Regulated Old Boy Network Complex Highly Regulated Performance Culture

  43. Customer Service Cost Reduction Other Service Quality Service Costs Cost Growth drivers – competitive advantage 88% of CIO’s 70% of Customers

  44. NatWest Growth drivers – quality imperative Fails/Million 1 3K 50K 100K

  45. Maintenance v New Projects New Projects Internal v External Software Maintenance Growth drivers – shift to third-parties Fails/ Million Bank IT budget allocation Source: Celent – IT Spending Europe 2004

  46. Functionally rich Component based Engineered on Java & .NET With compliance built in ‘Delivering the solutions our customers want, when they want them’ The new era and Misys

  47. Product Management and Development Process Jerry Luckett Product and Strategy Director Misys Wholesale Banking Systems

  48. Product management objectives Target Market Market Requirements Solutions to Meet Requirements Internal Return Resource Allocation

  49. Operation Evaluation Development Customer requirements Market Engagement Market drivers Business as usual Market- Launch Design Qualification Definition Outline Market Understanding Misys vision Build Alpha & Beta Competitor information “Go external” to beta Technology innovations “General release” Decision “Build” Decision Lifecycle mgmt Introduction Growth Maturity Decline Product management process

  50. Customer involvement Strategic Development Partnerships Customer Advisory Boards Funded Development Market Research User Groups

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