Report Highlights Benefits of Managed Services vs DIY
Posted by Colin Lambert. Last updated: February 10, 2022
A new report by Celent, sponsored by managed services provider Transaction Network Services, has found, perhaps unsurprisingly, that managed services providers can offer “unique” value-added services for capital markets firms.
The survey, Colocation of Financial Markets Infrastructure identifies the pros and cons of this approach compared to a “DIY”, or in-house management model, and features a decision framework that serves, TNS says, as a vital aid for trading firms that are considering which option to adopt, or whether a hybrid strategy would best suit their needs.
The “unique” benefits include cost savings, trade efficiency, and simplified access to data as well as network infrastructure support, thus enabling trading firms to focus on their core business competencies.
Celent interviewed trading firms and data and trading technology providers and found that the key decision criteria when deciding to engage a managed service provider included consultation and expert advice on the ideal configuration of hardware, network connectivity, location, data feeds and network bandwidth; the need for agility and flexibility; access to high-end network services, leveraging high-speed solutions, including ultra-low latency, in-data centre Layer 1 connectivity to link to trading venues, new customers and other service providers; and the need for operational efficiency and future proofing.
“Trading organisations looking to co-locate in data centers need to seriously consider if they have the skills, understanding, resources and bandwidth themselves,” says Jeff Mezger, vice president of product management at TNS. “This report provides a comprehensive, easy to use framework to identify the benefits of outsourcing operations to a managed hosting, co-location and connectivity service provider.”
Monica Summerville, head of capital markets at Celent, adds, “There is a combination of technical and business drivers behind the decision to co-locate. Businesses need to carefully weigh their options, especially if they currently or potentially require access to multiple trading venues across different locations. This report aims to promote understanding of that critical cost benefit analysis.”