Notes from Waters USA 2012 Conference

04 December 2012
By Alexei Miller, Managing Partner

I attended this year’s Waters USA 2012 in New York and on the content side, it did not disappoint – the content and the panelists, many familiar faces among them, were fresh and at times funny, some truly original. However I felt that this time around, there were few people from the buy-side in the audience, which largely consisted of IT folks from large investments banks. While there were a few buy-side speakers, overall the program weighed heavier on the brokerage and banking world. Little that was said, however, applied well for the proverbial mid-size Asset Manager. It seems the Buy-Side Technology Summit, held in October, is a better fit.

A few notable takeaways from the panelists:

A CIO panel was unusually direct in saying that next year’s IT budgets will be down anywhere between 5 and 30%. Getting more done with less is on top of everyone’s mind – hence continued investment in cloud infrastructure, which promises better control of IT spending and Agile development method, which delivers better value on the application side Panelists also mentioned their increased concern over relative lack of innovation in enterprise technology – “west coast startups are not thinking enough of what the enterprise needs” as well as some key supplier risks – RIM and HP being singled out as companies that may have lost their way a bit.

On the subject of outsourcing and offshoring the panel split – some have said they are ramping up and finding success in nearshore locations in Latin America and “Western” Eastern Europe, like Poland and Ukraine, whereas others made a point in saying that they are actively in-sources, or pulling back roles that were previously outsources. Yet again, outsourcing proves to be a practice where everyone writes their own rules. What is clear, though, is everyone is searching for value, that low cost does not cut it anymore.

In a separate presentation, a chief economist from the SEC’s rule-writing division shed some light into the process of creating and refining regulation. The SEC is heavily investing in analytical and research staff and tries to model out the impact of new regulations before they are put in effect. They invite market participants to submit their opinions of proposed rules, promising they will get attention even outside of the public comment window, but these opinions better be data-heavy. For example, the SEC received thousands of opinion letters saying simply “we like Volcker rule” or “we don’t like Volcker rule” – both of which do not help them much in understanding the true implications and costs of compliance. The more data the market participants can provide the better. One area where such industry input is playing a role is the emerging set of rules for OTC derivatives, which was a very slow moving process at the SEC.

Inevitably, several panels covered the buzzwords du jur – cloud, big data and the consumerization of technology. In many ways, IT finds itself between a rock and a hard place – business wants “retail experience” in speed, efficiency and flexibility while regulators prescribe a very tight regime for procedures, audits, record keeping etc. Making matters more complicated, this “consumerization” of technology means that IT buying decisions are often no longer in IT’s hands. If a third-party provider can offer hosted services directly to the business, internal IT may be an afterthought. On cloud, the point was made that IT should focus on building a business-specific PaaS layer on top of industry-standard IaaS (hosted or internal) – thus putting control over provisioning and management of computing resources into developer’s hands, rather than IT ops. Interestingly, this was noted to drive better quality – if developer knows there is no middle man to fix production issues, he takes better care to ensure the system really does work.

On mobile, the quote of the day came from someone in the Wealth Management: “I am often asked, What is your mobile strategy? I answer: There is no mobile strategy. Mobile is the strategy.”


Add Comment

Name Mail Website Comment