Vendors change their product roadmap over time. Sometimes the changes are abrupt but other times, they are gradual. From the time of product selection, the priorities for the vendor can change considerably, leading to under-investment in features that are priorities for a subset of existing clients.

Vendors that are subject to M&A activity change their strategic direction. Sometimes the merger with another software firm or an infusion of investment capital can lead to improvements in the solution, the result of a product extension, or the integration of specialist market or technology expertise. Other occasions, such as a complete buy-out, lead to under-investment in key features of the software clients purchased before the M&A activity.

Vendors pay attention to the competitive landscape, but not always in the pursuit of sales. Some vendors seek only to retain a minimum viable product to maintain their existing user base. This steady state strategy may be unacceptable for clients that have critical operations that are subject to changes in physical and financial products, logistics, risk management, exchanges, settlements, accounting standards, regulations and more.

Key Concerns

  • How far into the future does the product roadmap extend?
  • Which features have been added in recent years, and which features are on the horizon?
  • When a new feature is required, how quickly is that feature made available?
  • Will the vendor invest and build on their own or must all features be co-developed with a paying sponsor?
  • Does the vendor consistently fix functionality that did not work well, or will clients continue to see challenges in areas such as P&L reporting, Inventory Valuation, and others?
  • If the customer is forced to upgrade, is there enough value added by new features and functions in the newest version to warrant an upgrade?

Recent Examples

  • The product roadmap extends for one year. All organizations, in reality, have a plan that extends beyond one year. If your vendor shared a plan that extends for only one year, odds are high that more is there that is NOT being shared. At times, this can indicate a plan to either invest little in your market segment or they plan to pivot away from your market and invest elsewhere. Neither of those is the right outcome for your business.
  • Many vendors do not stay up to date on trading exchange updates, or only react after they are implemented. For example, when ICE changed their fix protocol, many vendors were scrambling to solve it. The same is true of the recent changes to ICE eConfirm. 
  • Collateral management has changed a lot since 2008. There are specialist vendors that handle collateral for bilateral, cleared and listed derivatives as well as repo and security lending. There are new requirements for initial margin and variation margin. Initial margin calculations continue to evolve. The operational anxieties are evident to teams because of increasing strain on collateral and disputes over calculations. Vendors should stay on top of changes in the market – not wait for their clients to be solely responsible for changes to product.
  • Derivative Regulation requirements and changes have caused plenty of stress and frustration to customers required to comply. Some vendors have some of the functionality, but do not stay up to date with the requirements. It is imperative that a vendor that is relied upon for timely and accurate compliance reporting be up to date. 
  • Multiple customers in the energy space have been forced to upgrade to a newer version despite the new version lacking any key features important to their business. However, if they do not upgrade, they are forced to pay higher support and maintenance costs. The customer is then stuck either paying for an upgrade implementation, or paying higher annual support fees. 
  • Customers who have struggled to get accurate P&L reporting out of systems will create customizations or work-arounds to get it right. Then the customer upgrades to a newer version, and is forced to do the same customizations or workarounds, or to pay BAs to reconcile the data. 
  • A vendor who bought another vendor completely dropped the roadmap for one large area of the software, leaving the customers to wonder what to do next. Even worse, the vendor has not informed the customers in that space. It is likely that the vendor will recommend moving to another software they own, which will be even more costly to the customer. 

What to Do

We have seen examples of vendors acting in each of these ways in recent years. If any of the above sounds familiar, contact us

We can put you in contact with other organizations who may be able to corroborate the anecdotal evidence and develop a fuller, more accurate picture.

We also may be able to offer advice on specific incidents that arise with a vendor to stabilize problems as they arise.

And continuing this series, in future papers we will describe a pattern to follow that will increase the agility of your operations, reset the balance in the vendor relationship, and simplify support by using more popular applications.

Categories: Enterprise Vendors

Lucido Group

Lucido Group LLC is a product and services company that helps clients leverage enterprise investments and prepare for the next steps in their derivatives technology management journey. With extensive backgrounds in Findur delivery and work with a client base across corporates, insurance, banking and asset management, our team works with clients on a variety of projects as well as sharing best practices and trends impacting the sector.