The elephant in the server room: unleashing agility when using third- party software

Andrea Pirino, Head of valantic FSA’s Solutions, in an interview with Harrington Starr’s “The financial technologist”

In the dynamic world of electronic trading, where market conditions can shift in an instant, financial firms are constantly striving for agility in their product development processes. This becomes even more crucial when these firms rely on software developed by third-party vendors, with challenges and opportunities to achieve optimal agility coming from the choice of a vendor’s technology and engagement models.

The Essence of Agility Agile – in all its variants, from Scrum, to Kanban to hybrid implementations – is at its core a risk management practice: when the outcome of a project with multiple actors is not known beforehand, an organizational engine is created to maximize alignment among multiple actors involved in a project, front-load key decisions and facilitate course correction based on insights gained from iterative cycles.

Agile methodologies can be used to incrementally design the product – the how – that solves a known problem – the what -, in a way discovering along the way the path to the project’s north star. They also enable experimentation, leveraging initial outcomes to make informed decisions regarding further investments. Adopting them has value, and complexity, that change depending on the number and types of actors involved.

The challenge of agility in large ecosystems

The adoption of agile practices in the context of financial firms employing third-party solutions introduces complexities that vary based on the number and types of actors involved. In Capital Markets, a common scenario arises when a firm utilizes a vendor’s multi-component setup as part of a long-term contract.

Like other software characteristics such as performance, resource usage, and robustness, agility can, in principle, be measured. Answering the question, “Is it agile?” relies on the firm’s assessment of facts and figures provided by the vendor.

This assessment is crucial since the agility of the vendor directly impacts the firm’s ability to anticipate or react quickly to ever-shifting market conditions— an elephant in the office that cannot be ignored.

Measuring Agility and Responding to External Events

Ultimately, a firm evaluates the quality of non-functional aspects of a software product by comparing some metrics with what is considered optimal, or good enough, for their workflows. Agility is key to respond to unexpected events, typically external: a regulatory change, a new promising business, a new technology potentially disruptive. This means that it’s assessed based on the ability to respond quickly and efficiently to risk and opportunities.

Assessing agility should extend beyond the software development process alone. The clock starts ticking when a risk or opportunity presents itself, and an agile process encompasses everything from recognizing the need to finding a solution. Engaging with the vendor, scoping the project, receiving a commercial proposal, conducting analysis, implementation, user acceptance testing (UAT), and rollout are all part of the agile journey.

While numerous factors contribute to agility, two key elements determine how a vendor contributes to overall agility: their technology and development methodologies, and the engagement model established with them.

“These platforms enable
rapid prototyping and
incremental solution
building, empowering
development teams
to respond swiftly to
changing requirements.”

Leveraging Low-Code Development and Engaging with Vendors

Recent technological advancements, such as low-code development platforms, have emerged as valuable tools in facilitating agile projects. These platforms enable rapid prototyping and incremental solution building, empowering development teams to respond swiftly to changing requirements. In cases where legacy solutions or vendor relationships hinder critical initiatives, low-code platforms offer the possibility of augmenting existing systems with new functionality, effectively relocating the elephant from the office to the server room and creating space for innovative solutions.

Unlike traditional no/low code platforms that are suited for generic use cases, Velox is an example of toolkit the applies proprietary low-code techniques to cover the most Capital Markets use-cases. It is designed to easily build applications that capitalize on a clean data model, therefore enabling a firm’s development teams to move the elephant to the server room.

The same technology can be used by a vendor tasked with the full implementation in an engagement model where a firm’s needs are assessed with a joint design process. This collaborative approach enriches project analysis with working prototypes, ensuring that the proposed solution meets the firm’s actual requirements. The agreed-upon prototype then seamlessly transitions into the implementation phase, eliminating any disconnect between analysis and development. With this approach, firms delegate the shepherding of the elephant to the server room, which can be in the cloud, maintained and evolved by the vendor.

Tackling Bigger Challenges

Throughout its existence, agility has proven instrumental in adapting strategies and execution to evolving market conditions. Today, there are even more ways to overcome larger challenges and banish the elephants from your office for good.