Joe Pagano insists that he is looking forward to work in the months ahead as "Microsoft has never released more value in its platforms for financial service firms than it has with the current wave."
That value comes from products that appeared late last year and others-such as Microsoft Office 2010-to be released in the first half of 2010.
These include PowerPivot for Excel 2010 - a feature of the new Microsoft Office-and .NET Framework 4.0, used in concert with Visual Studio 2010.
The first release "is a big deal," Pagano says, because PowerPivot will enable analysis of massive data sets from virtually any data format down to the desktop, allowing financial firms to make better decisions far faster and at lower cost. The latter product-a .NET extension-facilitates the extremely complex task of programming multiple threads of instructions that run simultaneously on multiple core processors in racks of trading servers. These multi-thread, multi-core workloads more readily achieve the low latencies and high trading volumes that financial firms seek.
In December, Pagano himself became Microsoft's new managing director of Banking and Capital Markets in its Worldwide Financial Services Industry Group, after 15 years with the firm.
While based in New York and experienced in serving clients such as Barclays Bank, Citicorp, Credit Suisse and JP Morgan Chase, Pagano says he makes frequent trips to company headquarters in Redmond, Washington and locations around the globe, to meet with and counsel representatives of his international client base.
Pagano said he has done everything from sales to product development and architecture design in his tenure at Microsoft. This has included the development of Microsoft Exchange's disaster recovery program and management of corporate initiatives such as the Intel-Microsoft Alliance, to ensure the compatibility of Intel's processor products with Microsoft's servers.
Recently, Pagano spoke with Contributing Editor Katherine Heires about the state of technology for capital markets, new product launches for 2010-including in risk management, compliance, advanced analytics and additional finance-friendly features for its Excel spreadsheet program-and recent market challenges faced by Microsoft.
How would you characterize the current state of technology for the capital markets industry? What's the current focus of customers?
We see customers starting to turn the corner on cost-cutting and invest more on innovation, especially where they can gain deeper insight on their customers and overall business. While there are a few more points to be made on cost-cutting efforts focused around virtualization and enterprise architecture efforts that can increase overall operational efficiency, we are seeing more interest in solutions that foster innovation around products and services, especially those that help improve customer experience and attract new retail customers. We are seeing very strong interest in next-generation collaboration and enterprise social networking capabilities, such as those that we are providing with Sharepoint 2010 because this improves productivity as well as the ability to generate new ideas for products and services.
Where are there opportunities for Microsoft to sell new products to the financial services sector?
On the risk and compliance side, we see an increasing need to provide simplification and automation, especially in capital markets; It's not just about managing Value at Risk and asset positions. There is an idea that operational risk is just as important.
Working with our systems management engineering team in Redmond, we studied research by AMR ("The Governance, Risk Management, and Compliance Spending Report, 2008-2009: Inside the$32B GRC Market") that showed us that in the U.S., incredible amounts of money are being spent by enterprises on risk and compliance efforts-over $1 trillion per year-and two thirds of this is around activities that pertain to manual labor activities, head count costs and consulting functions. What that told us is that there are many opportunities to provide technology to help with automating these functions.
Our goal now is to facilitate this type of automation. In December, we released two software packages-Compliance and Risk Process Management Pack for Systems Center Service Manager 2010 and IT Compliance Management Library-in beta format that offer an IT compliance management library of functions. They lever off of regulations and help capital market companies automate their compliance functions, whether they pertain to Basel II, Sarbanes-Oxley or the pending regulations. These packages are currently in pilot mode and are scheduled to be released this year.
What do you think will be hot seller Microsoft products for trading firms in 2010?
One important release-formerly known as "Project Gemini" and now known as Microsoft PowerPivot for Excel 2010-is a data analysis add-in that delivers unmatched computational power directly within Excel and works on Excel 32-bit and Excel 64-bit versions.
As part of Office 2010, PowerPivot allows Excel to be turbo-charged, letting users analyze hundreds of millions of rows of data on the desktop, compared to just the one million they can now analyze on Excel 2007.
And while PowerPivot can be used as a standalone add-in for Excel, it can also be used in conjunction with SharePoint and SQL Server 2008 R2, allowing users to bring large scale data analytics to the Office 2010 desktop, with full integration, so that you can share and manage large quantities of data from SharePoint sites.
With the 64-bit version in Office 2010, we can process virtually an unlimited amount of data and we can import different types of data in almost any kind of format including those from Microsoft SQL Server, Oracle, Teradata, Sybase, Informix, data feeds, Excel workbooks or text files and analyze it in a way that we are calling "self-service business intelligence."
The capabilities of SQL Server R2 allow companies to break down disparate data sets, better connect the data on their customers and better understand market patterns, something that is becoming increasingly important in capital markets. It can also facilitate sharing and collaborations of user-generated business intelligence solutions in a Microsoft SharePoint Server 2010 environment, and enables IT organizations to increase operational efficiencies, such as analyzing massive data streams and do so with extremely low latencies.
Yet another capability built into Excel 2010 is Sparklines. What it does is, as you are analyzing the data, it automatically puts a trend graph into the data set in Excel so that you can visually identify data trends in your business, without doing any additional work. It's an automatic visual representation of your business trends.
Who in particular will benefit from these new features? And what is the key benefit?
We think these capabilities will be very important to the institutional client platform user. These are people who need to analyze data in real-time, to make business decisions in real-time and identify trends in their business. We believe such capabilities are going to help them identify opportunities faster and in a more relevant way, allowing them to break down data silos on the desktop level and thus, create ore value for their customers.
Are there other products that will attract the interest of the financial service firms?
We are seeing incredible interest in Windows 7, released in October of 2009, and what we think will be popular is an encryption capability called BitLocker that allows you to scramble and encrypt and protect your data, whether you are in the office or on the go.
We also have a voice processing platform-TellMe software-that is starting to be used in new and innovative ways in banking and capital markets. In addition to managing inbound call traffic, the software can be used to build interactive, proactive call services, to monitor transactions, drive payments visibility or create new revenue sources. One bank is using the service to deliver fraud alerts and authentication models.
The TellMe software can be used on a pay-as-you-go model. Customers simply pay for what they use, no more, no less.
What has been the impact of the news that in the aftermath of more than one trading shut-down, the London Stock Exchange is now swapping Microsoft technology for a different platform?
Microsoft continues to deliver mission-critical solutions across the industry and LSE continues to use Microsoft for mission-critical, low-latency scenarios. Recently, Microsoft completed proof-of-concept projects for a major, international stock exchange that demonstrated that Windows Server 2008 and Microsoft .Net can successfully support very low latency trading activities in the 100-microsecond range using standard 1 Gigabit Ethernet. With the addition of Microsoft Network Direct, the latency is further reduced by 50%.
Aite Group predicts that this year, many capital market firms will focus on technology to help upgrade their core underlying infrastructure. Where does Microsoft fit in?
In Microsoft's .Net development platform, we are taking the tool set and lowering the bar for developers who wish to take advantage of multi-core processor technology. This is important as the industry has increasingly shifted to writing programs for multi-core processors, but it is hard to do. Many developers do not necessarily have experience in writing for multiple processor systems.
In April in Visual Studio 2010, we are releasing a parallel extension for .Net that will significantly simplify development for multi-core, multi-thread applications to achieve linear scale.
And what is Microsoft doing to help financial service firms better manage their back-office operations?
We are seeing a need for modernization in back-office operations as more consolidation occurs among financial service firms with operations facing extra sets of databases built with different formats and directory models and resulting in a great deal of complexity. We offer core infrastructure optimization solutions such as Microsoft System Center, as well as straight through processing solutions for core banking with firms such as Temenos.
In the case of banking firms, BizTalk, SQL Server and Sharepoint are three platforms that can make the difference when it comes to modernizing back-office operations. In fact, in the next generation of Sharepoint, out in the first half of 2010, we are putting business intelligence capabilities right into the product to provide meaningful, graphical views of back-office operations.
This article can also be found at SecuritiesIndustry.com.
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