Reuters Redefines Gazelle, Faces Tough Second Half

LONDON--In an internal memo updating Project Gazelle, Graham Albutt, president of Reuters Business Technology Group, highlights successes in Gazelle and the Reuters.Net instant messaging service, Inside Market Data has learned. However, some analysts awaiting this week's earnings report are skeptical about such claims and believe that Reuters faces a tough second half.

According to Albutt's internal memo, the aims of Gazelle "remain as valid now as they were when we began."

He goes on to outline the progress made by Gazelle, noting that Reuters now has "a single, coherent architecture based on accepted standards, and we have created the technical systems to implement and support this architecture." This refers to Reuters Enterprise Architecture, previously known as Reuters Trading Solutions Architecture (Trading Technology Week, April 4, 2000).

Albutt says the next phase of Gazelle, dubbed "200-day," is on track for delivery on Aug. 28. It will provide electronic bill presentment and payment, streaming quotes, news and charts via the Active Viewer; and structured negotiation and initial trust capabilities in preparation to launch Dealing for Swaps.

The following phase, "300-day," will deliver capabilities to prepare for the launch of the Reuters.Net messaging service. Work will continue on other capabilities only where it does not significantly impact instant messaging, says Albutt. This means, for example, that the Global Data Distribution data center fan-out will be delayed into 2002, according to a memo sent to Reuters employees by Albutt.

The main obstacle to acceptance of messaging in the City and on Wall Street is the corporate firewall, says Reuters Group CTO Mike Sayers in an interview with IMD's sibling publication, Trading Technology Week.

He says Reuters can help by creating a standard, but some say there already is a messaging standard for the financial markets: Bloomberg. While Bloomberg's messaging system may be "clunky," according to one banker in London, it does work and is relied on by Bloomberg devotees worldwide.

The messaging initiative has been something of a pet project of Glocer's, who told IMD last year that messaging was one of the key components he was looking to add to 3000 Xtra (IMD, June 19, 2000). Reuters.Net instant messaging is one of the fruits of the vendor's partnership with Microsoft (IMD, March 26).

But critics of Project Gazelle say that Reuters has failed to deliver on many of its promises and that the company is trying to put a positive spin on very few concrete developments.

Furthermore, Reuters' imminent purchase of Bridge Information Systems' North American assets is adding to the confusion, sources say. While Reuters revises and revamps Gazelle deliverables, it also needs to assess Bridge's technology--particularly that which falls within Reuters' I-Finance space--before decisions can be made about further Gazelle spending. But that will have to wait until after the regulators clear the deal, the sources note.

Regarding Bridge, Albutt says in his memo, "We will be looking at the opportunities to exploit synergies and for innovation as a result of this acquisition."

A source close to Reuters says, "Reuters looked at the Bridge stuff and found that it was easier to integrate than they thought. Some of the Gazelle stuff will go as a result, but some of the Bridge stuff will also go."

In his memo, Albutt also highlights the Internet enabling of Reuters Market Monitor (RMMI) as a "significant achievement"; the launch of customer relationship management centers in London, Geneva and Sydney; and the improvement of snapshot news, quotes and charts for integration into future services.

A US-based industry source says, "To boast about RMMI seems to underline a sense of modest accomplishment. And we still haven't been able to get them to talk about its rollout on this side of the Atlantic."

Still, despite persistent rumblings that Project Gazelle is not going as well as it could be, few analysts expect Reuters to slow its investment. The vendor spent £139 million last year on the program and has budgeted £150 million for 2001. The project is expected to generate £150 million in cost savings by 2003 (IMD, Feb. 19).

A spokesperson for Reuters says Gazelle will be addressed in the company's first half results next week but declines to elaborate further.

Anticipating those results, many analysts believe Reuters may be in for a tough second half, largely because of the current technology downturn.

Reuters' first half-year results, to be posted on July 24, are expected to be "pretty grim," say analysts. Analyst Neil Carter at ABN Amro says, "Reuters' client base is shot through, and Instinet volumes are down, particularly in Europe."

An analyst at JP Morgan is less downbeat, however. He expects incoming CEO Tom Glocer to outline how the company will report its figures in the future, given the new vertical product focus (IMD, June 25). He says shareholders will be looking for "a new ethos, a new personality now that Glocer's at the helm."

This analyst says the new team is something of a mystery to shareholders: "Job and Rowley are being replaced by much less experienced people who are not journalists."

Peter Job, outgoing CEO, steps aside at the end of this month, and Rob Rowley, chief executive of Reuterspace and previously finance director, is to retire from Reuters and step down from the board at the end of the year (IMD, June 11).