2017-03-15 by Fredrik Ulvenholm
In today’s marketplace for financial systems, there are really only two types of product; 1. A standard product with a standardized set of features that you configure to your needs, and 2. A consulting platform that has a unique code base for every customer.
The drive for a true product company is to create a product that has all necessary features for the domain, particularly so in the highly regulated financial market, to keep the product compliant but still leave enough flexibility to allow you to offer your products to the market. What characterizes a standard product is that the customer gets access to a stable and standardized set of features. Other hallmarks are that the system is “feature complete” meaning that since many organisations contribute to the road map, it gives a product that meets most customer’s needs. To make sure the product adapts to the unique requirements of different organisations, necessary customizations for a customer are done through configuration of features or by built-in modularity and plugins.
So how can you tell the difference? The way to manage configurations differ and two approaches are typically seen in the market.
- Configuration through simple and easy UI interfaces on one end, typically done by the business people inside the organisation (typical for a product)
- Configuration through coding or through configuration that is complex enough that is could as well pass for coding, either using a commercially available framework, like .NET, Java, or a proprietary framework with a unique language (typical for a consulting platform).
In the former, you will be able to configure close to everything needed straight in the UI without much assistance from the vendor, which is what you should expect from a true product vendor.
For the latter, personnel with coding skills are required to adjust the system to your needs. Many times, the language used is proprietary to the vendor, and hence you end up being dependent on the supplier for most changes to the system, which is a not an unusual result after having bought a consulting platform.
Depending on your unique requirements and the availability in the market, finding a standard system that meets the majority of your requirements out of the box, and where you can configure the rest on your own is not only the most cost efficient way – it also reduces the risk. In rare cases where there is a lack of available good standard systems, you might need to go with a system that requires lots of configuration done by the vendor.
The consulting platform vendor often promises to sell a product, but in reality this frequently turns out to be nothing but a consulting platform in disguise. Beware! The consulting platform is really a vehicle for selling services. And in most cases these services are also quite expensive – since they rarely can be bought elsewhere!
On the vendor side, a major disadvantage of the consulting platform offering is that the vendor must set up a separate team for each customer. This means that all generic improvements to the “product” must be cross-retrofitted to each customer’s solution. E.g. when a new regulation is stipulated on the financial market, the supplier must develop or merge this multiple times, one time for each and every customer – a costly operation, and you can probably guess who will bear the costs. This is not only expensive but also increases the operational risk as the system will not be as thoroughly tested.
As a customer, it is crucial to ask the right questions to understand if the vendor is selling a real product or a consulting platform:
- Will we share the same code base as your other customers?
- How is system configuration made? Can we do it ourselves?
- How do you handle our requirements – do you accept anything or will you align the requirements with your product roadmap to ensure a single codebase?
If the answers to these questions are Yes!, you will get a real product, and you will hopefully end up with a solution that is technically and functionally up-to-date, where you need to worry less about new regulations, and instead focus on developing your business.
We’ are convinced that the best path forward is to go with a flexible standardized product that you can configure yourself, preferably on the business side of the organisation.