EDITTORIAL

Weird.

I mean, who would have thunk it?

The back office? I know I for one have been trying to avoid it for years. But that no longer seems possible.

The back office is hot. So hot, in fact, that almost every single vendor at the SIA show that I spoke with either already had or was planning to respond to the GSTPA RFP. And I do mean everyone: Reuters, Sungard, Thomson, Swift, Sybase and Oracle all have intentions to bid. So do Andersen, IBM and PricewaterhouseCoopers. But then so do Javelin, HIE, 110 and just about every other small shop.

Why the crush? Well, think about it. The back office is the one place firms generally haven't spent a great deal of money upgrading. In fact, it's where you'll find some of the oldest, creakiest systems (in many cases 10- to 15-years-old) in the house. OK, so not every back office is built of straw, but by and large, it's pretty musty back there.

Yes, folks had to wipe away the dust to address the Y2K problem, but the real challenge lies ahead. That's right. T+1. And getting there is gonna be a bitch.

The GSTPA is intended to provide a utility, a standard mechanism to process cross-border trades and reduce the settlement cycle. And building it will probably require some combination of network provider, middleware vendor, systems integrator and software vendor. Though the pricetag will probably include a thin margin for profit, the real reward is knowing every line of code it took to build the system. That information will inform every solution the vendor builds. Each product can then be specifically tailored to plug and play into the back office. And that, as every vendor knows, spells straight through processing. And not just any old straight through processing. This vendor would be building an industry-approved STP solution.

Guess that makes for a pretty compelling business case. Most vendors certainly think so. But as you might have guessed, nothing is as simple as it seems. You see, not everyone's convinced that the GSTPA plan won't prevent someone from doing an end run. After all, developing an industry-wide solution will require a somewhat generic utility, which will then have to be tailored to fit. And what if you could get it for less and get it custom-built?

Well, I guess we'll just have to wait and see. After all, there are a lot of folks that are a lot smarter than me trying to figure this one out. And maybe the GSTPA will nip it in the bud when they formally write the RFP.

One thing's for sure. The back office is coming to the fore.